9911796707
TMI Blog2007 (8) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... defines "importer" as a person who brings specified goods into the local area from any place outside the State for consumption, use or sale including for consumption or use of such goods in works contract. "Local area" and "purchase value" are defined in section 2(1)(e) and (h), respectively. Sub-section (1) of section 3 of the principal Act provides for levy of tax on goods specified in the schedule, containing of 7 (seven) items, on entry into any local area for consumption, use or sale therein at the rates shown against each item of goods in the said schedule. Sub-section (2) stipulates that such tax shall be paid by every importer on the purchase value of the goods, provided that no such tax shall be payable on the entry of goods, which are meant for the exclusive use or consumption of, the Defence Department of the Government of India, of the Union of India and also on the goods brought for the purpose of sale or use under the Assam Public Distribution of Articles Order, 1982. Sub-section (3) confers power on the State Government to grant exemption and sub-section (4) of section 3 authorises the State Government to add to, amend or otherwise modify the schedule to the Act incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outside the State for consumption, use or sale therein, the ultimate recipient or the refinery, as the case may be, of such crude oil shall be deemed to be importer. Sub-section (1) of section 3, which is the charging section, has also been substituted by a new sub-section (1), which provides that there shall be levied and collected an entry tax on the entry of goods specified in the schedule into any local area for consumption, use or sale therein at such rate, not exceeding 20 per centum, as the State Government may by notification, fix in this behalf and different rates may be fixed for different class or classes of specified goods and such tax shall be paid by every importer of such goods, whether he imports such goods on his own account or on account of his principal or any other person or takes delivery or is entitled to take delivery of such goods on such entry. By the said second amendment sub-section (4) of section 3 has been omitted and the schedule to the said Act stands substituted by a new schedule, as per section 7 of the said Second Amendment Act. Two new sections being section 8A and section 8B have also been inserted in the principal Act. Section 8A confers a dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to its omission, on the ground of excessive delegation of legislative functions. Imposition of entry tax on specified goods has also been challenged in those writ petitions on the ground of violation of sections 14 and 15 of the Central Sales Tax Act, 1956 and also being contrary to the provisions of Additional Duties of Excise (Goods of Special Importance) Act, 1957 apart from on the ground of violation of article 14 of the Constitution of India. Necessary amendments were carried out in writ petitions filed prior to the Second Amendment Act of 2005, after such amendments. The said writ petitions were resisted by the respondent-State by contending that as the State Legislature has enacted the impugned Act in exercise of the powers under article 246(3) read with entry 52 of List II of the Seventh Schedule to the Constitution with Presidential sanction prior to the enactment of the principal Act and as the impugned notifications have been issued by way of delegated legislation in exercise of the power conferred under sub-section (4) of section 3 of the said Act, which is not violative of article 301 of the Constitution of India and there being no discrimination between the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of Excise (Goods of Special Importance) Act, 1957? (iii) Whether the entry tax imposed on the goods, which forms the subject-matter of the present set of writ petitions, is violative of article 301 read with article 304(b)? (iv) Whether the Assam Entry Tax Act, 2001, is in violation of articles 14 and 304(a) of the Constitution of India? The learned single judge answered the first and third points for determination formulated, against the State and the second and fourth points against the writ petitioners. Hence, the present appeals. After conclusion of hearing of argument as well as after disposal of the writ petitions by the aforesaid judgment(1) and order passed by the learned single judge, a number of writ petitions have also been filed by various petitioners challenging the vires of the notifications issued by the State (1)Reported as ITC Limited v. STate of Assam [2007] 9 VST 250 (Gauhati). Government from time to time in exercise of powers conferred under subsection (4) of section 3 as well as the provisions of the impugned Act, both principal as well as the amendments Acts, on the various grounds, including the grounds on which it was challenged in the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lative of article 304(a) of the Constitution? The learned AAG relating to the contention of the writ petitioners that the impugned levy is discriminatory because of the exemption granted to the goods specified in the schedule and taxable under the Assam Value Added Tax Act, 2003, which are produced and manufactured within the State of Assam, by virtue of section 5 of the 2001 Act, has submitted that the goods in respect of which the discrimination is alleged do not suffer from any discrimination. It has further been contended that the impugned ct makes no discrimination between the goods imported from outside the State and the locally manufactured goods. According to the learned AAG exemption under section 5 of the 2001 Act has been granted only with a view to avoid double taxation. The learned AAG further contends that levy of entry tax on the specified goods and the sales tax levied on subsequent sale or purchase thereof inside the State are two distinct levies, independent of each other and when the Legislature in its wisdom has chosen to exempt the goods, which are subject to the local sales tax, from payment of entry tax, it cannot be regarded as discriminatory, when both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such provision, according to the learned Senior Counsel, is that such goods produced or manufactured in the State shall not be liable to tax under the impugned legislation and on the other hand, the goods imported from other States or Union Territories into the State, to which the provisions of the Assam Value Added Tax Act are not applicable, are subjected to tax, thereby discriminating against the goods imported from outside, thereby violating the provision of article 304(a). According to the learned Senior Counsel, the learned single judge in holding that the impugned legislation is non-discriminatory did not consider this aspect of the matter, though argued. Mr. Ganesh relying on the Constitution Bench decision of the apex court in Firm A.T.B. Mehtab Majid & Co. v. State of Madras reported in [1963] 14 STC 355; AIR 1963 SC 928 has submitted that even article 304(a) of the Constitution prohibits the State to consider whether the goods imported from outside the State or whether the goods manufactured or produced in the State were subjected to other tax and what is required to be seen is whether the impugned levy is discriminatory in nature and once it is found that the same is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of the writ petitioner that the goods imported by them and subjected to tax under the impugned Act are not produced or manufactured in the State. Mr. Dutta in support of his contention has placed reliance on the decision of this court in Kalyani Stores v. State of Orissa reported in AIR 1966 SC 1686. Mr. Dutta further contends that certain goods, which the petitioner imports from out of the country, have also been subjected to tax by the impugned Act, though it is beyond the legislative power of the State. Mr. Sahewalla, the learned Senior Counsel appearing in some of the writ petitions referring to the various provisions of the impugned Act, has contended that the impugned Act is discriminatory as the goods produced in one local area in the State, if used, consumed or sold in that local area has not been subjected to tax, whereas similar goods imported from outside into that local area is subjected to such tax. Similarly, the goods manufactured in a local area in the State when used, consumed or sold in that local area while not subjected to tax, the similar goods brought into that local is subjected to tax under the impugned Act. The learned counsel, therefore, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not treat a tax simpliciter as restriction, but a discriminatory tax or a tax, which creates a tariff barrier as a restriction. Article 304(a) has been inserted in Part XIII not because it was necessary to give a power to tax goods as that power has been given by the legislative entries, but because it was necessary to limit that power so as to prevent discrimination against imported goods and since the discriminatory tax against outside goods operate as a fiscal barrier to trade, commerce and intercourse, article 304 prohibits them. The learned AAG, in support of such contention has placed reliance on the decisions of the apex court in G. K. Krishnan v. State of Tamil Nadu AIR 1975 SC 583; [1975] 1 SCC 375, Indian Cement v. State of Andhra Pradesh [1988] 69 STC 305; [1988] 1 SCC 743 and V. Guruviah Naidu [1976] 38 STC 565; [1977] 1 SCC 234. Referring to the decision in Jindal Stainless Ltd. v. State of Haryana [2006] 145 STC 544 (SC); [2006] 7 SCC 241, [in short, "Jindal Stainless (2)"] it has been submitted that the apex court in the said Constitution Bench judgment has held that article 304(a) authorises a State Legislature to impose a non-discriminatory tax on goods imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not comply with the requirements of the proviso to article 304(b). It has further been contended that the concept of freedom of trade, commerce and intercourse envisaged by article 301 must be understood in the context of an orderly society and as a part of a Constitution which envisaged a distribution of power between the State and the Union and if so understood, the concept must recognise the need and the legitimacy of some degree of regulatory control, whether by the Union or by the State, irrespective of the restrictions imposed by other articles of Part XIII of the Constitution. According to the learned AAG, the entry tax being a levy permitted by entry 52 of List II of the Seventh Schedule and such levy having to conform to article 304(a), the contention of the assessees that the notifications issued under section 3(4) of the principal Act, Ordinance of 2005 and the Second Amendment Act of 2005 are not sustainable for not conforming with the proviso to article 304(b) is wholly untenable. Referring to the decision in Automobile Transport AIR 1962 SC 1406 it has been contended that as in the said case it has been held that nonobstante clause vis-a-vis article 304(a) enables t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conjunction "and" appearing between article 304(a) and (b), though literally is to be read conjunctively, however, in the context in which conjunction "and" has been used in article 304, it has to be read disjunctively, having regard to the legislative intent, as proviso to article 304(b) cannot be made applicable to a nondiscriminatory tax imposed within the constraint of article 304(a). It has further been contended that article 304(b) does not speak about imposition of tax but it speaks about imposing reasonable restriction in public interest and therefore, the proviso to article 304(b) would be attracted to a legislation by State Legislature, only when reasonable restrictions are sought to be imposed as distinguished from tax simpliciter or non-discriminatory tax, otherwise the proviso which is limited to article 304(b) only, if applied to article 304(a), the same would be contrary to the express provisions of the Constitution. The learned AAG in support of his contention that the conjunction "and" is to be read disjunctively has placed reliance on the decision of the apex court in Vidyacharan Shukla v. Khubchand Baghel AIR 1964 SC 1099, Ishwar Singh Bindra v. State of U.P. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d AAG that the said decision cannot be construed as an authority for the proposition that a non-discriminatory tax in order to pass the test of article 301 must also for its validity satisfy the requirements of article 304(b). It has further been contended that as in Hansa Corporation [1980] 4 SCC 697 the apex court did not examine whether the levy is compensatory in character or not, the said decision is not applicable in the case in hand as unlike in Hansa Corporation [1980] 4 SCC 697 the State in the present, has contended that the tax imposed is compensatory in character. That apart, the issue as to whether a non-discriminatory tax levied within the constraints of article 304(a) must for its validity also satisfy the requirements of article 304(b) did not fall for consideration in the said case, in the absence of the plea that levy is compensatory in character. According to the learned AAG, the meaning of the conjunction "and" and appearing between article 304(a) and (b) also did not fall for consideration in the said case. Such decision, according to the learned AAG, cannot at all be applied in the case in hand, as a decision is an authority for what it actually decides and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it has been submitted by Mr. Ganesh, the learned Senior Counsel that the levy of entry tax by the impugned Act amounts to restriction directly and immediately on the movement of goods, which is forbidden by article 301. Relying on the decision of the apex court in Atiabari Tea Co. AIR 1961 SC 232, it has been submitted that as by the impugned levy, by way of notification and subsequent amendment, the restriction has been placed on free movement of goods into the State it can be done so only by satisfying the requirements of article 304(b) and in the instant case, the Presidential assent to the Second Amendment Act of 2005 having admittedly not been obtained as prescribed by article 304(b), the impugned legislation is void. Mr. Ganesh placing reliance on the decision of the apex court in Hansa Corporation [1980] 4 SCC 697 has submitted that even if a legislation is non-discriminatory as envisaged by article 304(a), but, the same, if it imposes restriction on free movement of goods, like the entry tax, the Presidential assent as required under article 304(b) is a must. In support of his contention, Mr. Ganesh has also placed reliance on the Constitution bench decision of the apex c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales tax, which does not put any hindrance on the free movement of the goods, are not at all applicable to the facts of this case and the question whether nondiscriminatory tax still needs to comply with the requirements of article 304(b) having not been raised or decided, the said decisions are not applicable in the present batch of cases. Dr. Saraf has further submitted that the decision in Shree Mahavir Oil Mills' case [1997] 104 STC 148 (SC); [1996] 11 SCC 39 in fact supports the plea of the writ petitioners as the apex court has observed that clause (a) of article 304 is not really an exception to article 301, notwithstanding the non obstante clause under article 304 and it is but a restatement of a facet of total freedom guaranteed by article 301. Referring to the decision in United Motors [1953] 4 STC 133 (SC); AIR 1953 SC 252 on which the learned AAG has placed reliance, it has been contended that the issue involved in the said case being, as to which State shall levy the sales tax prior to the enactment of the Central Sales Tax Act, 1956 the observations made relating to Part XIII of the Constitution of India cannot be applied in the present case, more so when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o impose restriction on such freedom in public interest. It has been submitted that article 303(1) further emphasises that the Parliament even though has the power to make law imposing restriction in public interest under article 302 but it is debarred from making discriminatory law, which restriction, however, has been relaxed by clause (2) of article 303 by empowering the Parliament to make discriminatory law to deal with situation arising from scarcity of goods in any part of the territory of India. It has further been submitted that the ban imposed by article 303(1) on the State Legislature to make discriminatory law has not been lifted by clause (2) of article 303, which, has been emphasised in article 304(a) by providing that the State shall not make discriminatory law imposing any tax on the goods manufactured or produced in the State and the goods imported from other States or Union Territories. According to the learned Senior Counsel, the scheme of Part XIII of the Constitution does not permit State Legislature to make discriminatory law, which has been permitted by the Constitution to the Parliament that too only in the event of scarcity of goods in any part of the territ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32 in so far as it held that if the State Legislature wanted to impose tax to raise resources necessary to maintain roads, that can only be done after obtaining sanction of the President as provided in article 304(b) has practically been overruled in Automobile Transport AIR 1962 SC 1406. Relying also on the decision of the apex court in G.K. Krishnan AIR 1975 SC 583; [1975] 1 SCC 375 and referring to the pleadings in the affidavit filed by the State, it has been submitted by the learned AAG that impugned levy is compensatory in nature and the revenue generated by the operation of the impugned Act is utilised by the State in the establishment of roads, markets and maintenance of roads, waterways and other facilities in the local areas. It has been contended that the State has been transferring sufficient fund collected out of the levy of the tax to the local bodies for the development of infrastructure, to facilitate trade and commerce in the local areas and the quantum of such transfer is commensurate to the amount of entry tax collected by the State. The learned AAG has, in support of his contention, placed reliance on the affidavits filed by the State including the chart appende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs furnished by the State in the consolidated affidavit-in-opposition dated March 3, 2006 and the additional affidavit dated March 23, 2007 fulfil the requirements laid down by the apex court in Jindal Stainless [2006] 145 STC 544; [2006] 7 SCC 241 and demonstrate the compensatory nature of the impugned levy. Mr. Ganesh, the learned Senior Counsel has submitted that the Presidential sanction, as mandated by article 304(b) of the Constitution, before imposing any reasonable restriction on the freedom of trade, commerce and intercourse by State Legislature, in public interest, is not required, provided the State could show to the satisfaction of the court that such levy is compensatory in nature. According to the learned Senior Counsel, whether a tax is of compensatory nature or not, which is a judicially evolved concept, what is required to be seen is whether imposition of such tax is to facilitate trade and commerce or operates as hindrance. According to the learned Senior Counsel, whether tax is compensatory or not, though cannot be made to depend on the preamble of the statute imposing it, the working test for deciding the same is to-whether the State has spent or is to spend th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Ganesh that the purpose of the enactment is not to provide some special facilities to the trading communities, i.e., to the payers under the Act, but augmentation of general revenue. It has further been contended that it appears from paragraphs 7 and 9 of the affidavit-inopposition filed by the State before the writ court that the tax collected by the impugned levy has not been spent or to be spent to facilitate the trade, i.e., for providing some trading facilities to the trading community but for maintaining the roads, etc., which is not trading specific. Mr. Ganesh, referring to section 8A of the impugned legislation as inserted by Second Amendment Act with effect from May 12, 2005, has further contended that the said provision though has stated about utilisation of the proceeds of the tax, it neither lay down the guidelines nor provide that the tax, collected shall be spent for providing trading facilities. That apart, the Government has also failed to produce any material before the court relating to the utilisation of such proceeds of tax for development of any trading facilities or other infrastructures in the local areas for the payers of the tax under the Act. Mr. Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement/recompense for the quantifiable and measurable benefit provided or to be provided to its payers which, according to the learned Senior Counsel, the State has failed to do. Referring to the pleadings of the State in the affidavit-in-opposition filed in W.P. (C) No. 8445 of 2003 (Britannia Industries Ltd. v. State of Assam(1)) in W.P. (C) No. 5827 of 2002 (Fish Traders & Packers Association v. State of Assam) and in the consolidated affidavit-in-opposition filed in W.A. No. 462 of 2006 (State of Assam v. Chhotabhai Jethabhai Patel Tobacco) and in W.A. No. 465 of 2006 (State of Assam v. Indian Tobacco Co. Ltd.) it is submitted by the learned Senior Counsel that the State has in that respect taken a contradictory stand. According to the learned Senior Counsel the stand of the State being that the revenue raised due to the implementation of the Act or other taxation Act are utilised by the State in laying and maintenance of roads, waterways, warehouses, cold storage, establishment of markets, etc., and to find alternative source of revenue to keep various programmes and other Governmental function going on, in view of declaration of the levy on luxurious goods ultra vires by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in [2007] 8 VST 69. Mr. Misra submits that in any case, the concept of the compensatory nature of tax being more or less in the nature of fee, the tax collected by imposing entry tax is to be spent for the benefit of the taxpayers, i.e., to facilitate the trading facilities to the trading community and the apex court in Kewal Krishan Puri v. State of Punjab reported in [1980] 1 SCC 416 has observed the circumstances in which a tax can be classified as compensatory in nature, which was followed by the apex court in Ram Chandra Kailash Kumar & Co. v. State of U.P. reported in [1980] Suppl. SCC 27. According to the learned Senior Counsel such view of the Constitution Bench of the apex court was somewhat diluted in Southern Pharmaceuticals and Chemicals v. State of Kerala reported in [1981] 4 SCC 391, in Municipal Corporation of Delhi v. Mohd. Yasin reported in [1983] 142 ITR 737 (SC); [1983] 3 SCC 229 (in short, "Mohammad Yasin") and in Sreenivasa General Traders v. State of Andhra Pradesh reported in [1983] 4 SCC 353 by evolving the "some connection" theory. It is further submitted that the view expressed by the Constitution Bench of the apex court in Atiabari Tea Co. case AIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the learned AAG has placed reliance on the decision of the apex court in Syed Ahmed Aga v. State of Mysore [1975] 2 SCC 131, Subodhaya Chit Fund (P) Ltd. v. Director of Chits, Madras [1991] Supp 2 SCC 131 and Widia (India) Ltd. [2003] 132 STC 360 (SC); [2003] 8 SCC 22. It has been submitted that the question of Presidential sanction under proviso to article 304(b) would arise only when additional restrictions are sought to be imposed by the amendment, which is not in the case in hand. The learned AAG has further submitted that the decisions cited by the learned Senior Counsel for the appellants/writ petitioners in support of their contention, in that regard, do not lay down the law that the subsequent amendments made to the Principal Act, which received the previous Presidential sanction, can only be saved by obtaining fresh Presidential sanction. According to the learned AAG, as by the impugned notifications no additional restrictions have been imposed, the Act cannot be held to be bad for not complying with the requirements of article 304(b). Relating to the stand of the State that the presidential sanction having been obtained in the year 2000, before promulgation of the Prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the learned AAG in Syed Ahmed Aga [1975] 2 SCC 131, Widia (India) Ltd. [2003] 132 STC 360 (SC); [2003] 8 SCC 22 and Subodhaya Chit Fund [1991] Supp 2 SCC 131, it has been submitted by Mr. Ganesh that the said decisions of the apex court do not support the contention of the learned AAG that subsequent Presidential sanction is not required in respect of the subsequent amendments of the Act. Referring to the Constitution Bench decision of the apex court in Kaiser-I-Hind [2002] 8 SCC 182 it has been contended that the Presidential sanction having been obtained in respect of seven items only, originally included in the schedule to the Act, the subsequent amendment requires further sanction of the President to save the same from violation of article 301, which, admittedly has not been done in the present case. Regarding the requirement of the Presidential sanction to the Amendment Acts amending the provision of principal Act, supporting the argument of Mr. Ganesh, it has further been submitted by Dr. Saraf, that by the First as well as Second Amendment Acts amending the provisions of section 2(b) and section 2(d) as well as section 2(4) and also section 3(1), the object for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the learned AAG that the provision of section 3 of the Act, i.e., the charging section may be read down to the extent that the goods which are directly imported by an importer are not within the purview of section 3, has not pressed this issue. Mr. Dutta, however, referring to the single-bench decision of this court in Primus Imaging Pvt. Ltd. v. State of Assam reported in [2007] 9 VST 528; [2007] 1 GLR 757 has submitted that the imposition of entry tax on the goods directly imported from abroad was held to be illegal against which no appeal has been preferred by the State. Mr. Choudhury, the learned AAG has submitted that the State, in so far as the said question is concerned, has accepted the decision of the learned single judge in the said case. (v) Whether section 3(4) of the impugned Act, as it stood till May 12, 2005, suffers from vice of excessive delegation of legislative functions? The learned AAG has submitted that the legislative power could be delegated as long as the Legislature does not divest itself of its essential legislative functions, but what is prohibited is the conferment of arbitrary power upon another body without the Legislature reserving to itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 909 it has been submitted that it is not unconstitutional for the Legislature to leave it to the executive to determine the details relating to the working of the taxation laws, such as selection of persons on whom the tax is to be levied, rates at which it is to be charged in respect of different classes of goods and the like. Referring to the decision in Consumer Action Group v. State of Tamil Nadu [2000] 7 SCC 425, the learned AAG submitted that the guidelines for the delegate to choose the person who is to be taxed and the rate at which it is to be taxed can be gathered from the Preamble and the Statement of Objects and Reasons as well as other provisions of the impugned Act, as the Preamble clearly lays down the policy/guidelines towards the levy of the tax on the entry of the schedule goods into any local area in Assam for consumption, use or sale therein and for matters connected therewith. Therefore, according to the learned AAG, section 3(4) as it stood prior to May 12, 2005 and thereafter, section 3(1) as amended, cannot be said to have conferred any unbridled or uncanalised power on the executive, bereft of any guideline or policy. The learned AAG, therefore submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Wvg.) Co. Ltd. v. Assistant Commissioner of Sales Tax reported in [1974] 33 STC 219 (SC); [1974] 4 SCC 98, in Kerala State Electricity Board v. Indian Aluminium Corporation Ltd. reported in [1976] 1 SCC 466 and in Agricultural Market Committee v. Shalimar Chemical Works Ltd. reported in [1997] 5 SCC 516. (vi) Whether omission of section 3(4) in the impugned Act, by Second Amendment Act, with effect from May 12, 2005, saves the actions taken under the said provision of law prior to May 12, 2005? The learned AAG further submits that though by the Second Amendment Act, sub-section (4) of section 3 has been omitted, but in substance, it is not omission but substitution of the said provision by new section 3 and therefore, section 6 of the Assam General Clauses Act is applicable and all actions taken under section 3(4) of the said Act, prior to the Second Amendment Act, stood saved. The learned AAG, in support of his contention, has placed reliance on the apex court judgment in Kolhapur Canesugar Works Ltd. v. Union of India reported in [2000] 2 SCC 536. It has been contended by Mr. Ganesh, the learned Senior Counsel that as section 3(4) of the impugned legislation has been omitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondents in writ appeals, in view of the decision in Raymond Ltd. [2001] 1 SCC 534 have no application. Countering the stand of the State relating to the applicability of the doctrine of prospective overruling, Mr. Ganesh has submitted that the High Court cannot apply the doctrine of prospective overruling and it is only the Supreme Court, which can overrule the constitutional provision prospectively. In support of his contention Mr. Ganesh has placed reliance on the decision of the apex court in L. C. Golak Nath v. State of Punjab AIR 1967 SC 1643 and State of Himachal Pradesh v. Nurpur Private Bus Operators Union [1999] 9 SCC 559 (in short, "Nurpur Pvt. Bus Operators Union"). Dr. Saraf, in reply to the submission made by the learned AAG in respect of the prospective overruling, while supporting the argument of Mr. Ganesh, referring to the decision of the apex court in Gupta Modern Breweries v. State of Jammu and Kashmir [2007] 8 RC 688 has submitted that the State cannot be allowed to retain the tax already collected in the interregnum, in the event the levy is held to be ultra vires and in view of the provision contained in section 50 of the Assam Value Added Tax Act, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned AAG, therefore, submits that the law laid down by the apex court in the said case has to be followed in case of claim for refund of the tax paid. According to the learned AAG, the assessees having failed to discharge their burden to establish that the tax collected has not been passed on to the consumers, are not entitled to refund. On the question of refund, Mr. Ganesh has submitted that though the learned single judge initially passed an interim order the same was modified by the appellate court only on the basis of the undertaking given by the learned AAG. According to the learned Senior Counsel, the stand of the State in that respect is not acceptable at all and the decisions cited by the learned AAG also do not support the contention that AAG having no authority to give any undertaking on behalf of the Government, such undertaking would not bind the Government. Mr. Ganesh has submitted that the order having been passed by the writ court on the basis of the undertaking given by the counsel appearing on behalf of the State, such undertaking has to be honoured and the amount of tax paid has to be refunded. The concept of undue enrichment, according to the learned Sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Ganesh has submitted that when the charging section is no longer in existence and void, all other actions taken under the said provision also automatically go and hence section 8B of the Act in any case cannot be applied. It has been submitted by Dr. Saraf that there being no provision in the Act for passing on the tax liability to the consumer and such liability being on the importer, there cannot be any passing over of the tax liability to the consumer. It has further been submitted that entry tax having been levied on the sale, use and consumption of the specified goods and the taxable goods sold in the State of Assam and chargeable under the Assam Value Added Tax Act having been exempted from the payment of entry tax, the two eventualities left for levy of the entry tax, i.e., use or consumption. If the specified goods is consumed by the importer by itself there is no question of passing on the tax liability to the consumer. When such specified goods is used by the importer for, e.g., the raw material for production of finished product, then also the tax is not passed on to the consumer as has been levied as entry tax. Therefore, there is no question of passing on the tax t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods in any part of the territory of India. Clause (2) of article 303, therefore, does not lift the ban imposed on the State Legislature in making discriminatory law as imposed by clause (1) of article 303. Article 304 also opens out with a non-obstante clause, namely, "notwithstanding anything in articles 301 and 303". Article 304(a) of the Constitution provides that the Legislature of a State may, by law, impose on goods imported from other States or the Union Territories any tax to which similar goods manufactured and produced in the State are subject so, however, as not to discriminate between the goods so imported and goods so manufactured and produced. Article 304(a) does not prevent levy of tax on goods but it prohibits such levy of tax on goods as would result in discrimination between the goods imported from other States and similar goods manufactured or produced within the State. Article 304(b) enables the State Legislature to enact law imposing such reasonable restrictions on the freedom of trade, commerce and intercourse with or within that State, in the public interest. The power of the State Legislature to impose reasonable restrictions in public interest, as envisage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article 304 (a) as well as article 301 of the Constitution, which provides for free trade, commerce and intercourse throughout the territory of India. In such eventuality, it would amount to impeding the free movement of goods into a State which imposes such discriminatory tax. The learned AAG also, during the course of arguments, has admitted that the imposition of tax on the specified goods mentioned in the Schedule in the principal Act, prior to any of its amendments, appears to be discriminatory, as similar goods manufactured or produced in the State have not been subjected to such tax. The learned AAG, however, has submitted that as such discrimination has been removed by the First Amendment Act of 2001 and the prior Presidential sanction for enactment of the Principal Act containing such discrimination has been obtained, such defect has been cured, as according to the learned AAG a discriminatory tax can be imposed by the State Legislature subject to Presidential sanction. We shall discuss such submission of the learned AAG, while discussing the issue No. II, in this judgment. It is, therefore, evident that, subject to decision on the aforesaid point urged by the learned AAG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er State(s) cannot be subjected to countervailing duty, if similar alcoholic liquors are not produced in the State. It is in this context the apex court in our considered opinion, has observed that article 304(a) can only be effective if the tax or duty imposed on similar goods manufactured or produced in that State are such that there is no discrimination against imported goods and as no liquor was produced or manufactured in the State, the protection of article 304 was not available. The apex court in A.B. Abdul Kadir AIR 1970 SC 1912 has observed that in Kalyani Stores AIR 1966 SC 1686 the court did not intend to lay down the proposition that the imposition of a duty or tax in every case would tantamount per se to an infringement of article 301. In Hansa Corporation [1980] 4 SCC 697 the apex court has also observed that the decision in Kalyani Stores AIR 1966 SC 1686 is limited to that case only and has not laid down any proposition of universal applicability. The next controversy which requires our consideration is whether the impugned levy is discriminatory in view of the provision contained in section 5 of the impugned Act relating to the exemption from payment of ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in other States. The apex court in Video Electronics Pvt. Ltd. [1990] 77 STC 82; [1990] 3 SCC 87, has observed that it would be wrong to denude the people of the State of the right to grant exemptions, which flows from the plenary powers of legislative heads in List II of the Seventh Schedule of the Constitution. It is further observed that in a federal polity all the States have powers to grant exemption to specified class for limited period, such granting of exemption cannot be held to be contrary to the concept of economic unity and the concept of economic unity by the people of India would necessarily include the power to grant exemption or to reduce the rate of tax in special cases for achieving industrial development or to attain economic equality in growth and development. The apex court has further observed that it is open to the State to realise tax and thereafter remit the same or pay back to the local manufacturers in the shape of subsidies and that would neither discriminate nor be hit by article 304(a) of the Constitution. In N.K. Nataraja Mudaliar [1968] 22 STC 376, the apex court has held that the free flow of trade may not necessarily be deemed to have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced in the local area, when it is used, consumed or sold in that local area is not subjected to tax though the same goods brought into that local area is subjected to tax, so also the goods imported from outside the State into that local area, the levy of tax is discriminatory and hence violative of article 304(a) of the Constitution, also cannot be accepted as article 304(a) has no relevance to such differential treatment as there is no discrimination in the impugned enactment between the goods imported from outside the State and the goods locally manufactured or produced in the State, in the matter of levy of tax. Such microscopic distinction relied upon by the learned counsel for the respondents that there is differential treatment accorded to goods produced within a local area and those imported from outside the local area is hardly relevant for the purpose of article 304(a). (Hansa Corporation [1980] 4 SCC 697). In view of the aforesaid discussions, we are of the view that the impugned levy is not discriminatory and therefore not violative of article 304(a) of the Constitution, except the discrimination as held above in respect of the principal Act as it stood prior to its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevance so far the State Legislature is concerned, as article 302 does not deal with the Legislature of the State and hence, non obstante clause can only be made applicable to the Parliament. It has further been held that non-obstante clause vis-a-vis article 304(a) may have some relevance in so far as the article 301 is concerned which enables the State Legislature to impose impediment on the free movement of trade, in spite of freedom declared under article 301, but it has no relevance to article 303 which only prohibits the State Legislature from making discriminatory law. It has also been observed that with reference to article 304(b), non obstante clause has no significant meaning in regard to article 303, as clause (b) of article 304 lifts the ban imposed by article 303, subject to limitations mentioned therein. Therefore, the non-obstante clause must be meant to apply only to the appropriate clause of article 304. It is evident from the aforesaid discussion that the apex court in Automobile Transport AIR 1962 SC 1406 while affirming the views expressed in Atiabari Tea Co. AIR 1961 SC 232 has, however, held that if the levy is compensatory in nature, the requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not offend article 301 unless it directly impedes the freedom of movement of transport of goods. In Guruviah Naidu [1976] 38 STC 565; [1977] 1 SCC 234, the apex court has held that article 304(a) does not prevent levy of tax on goods, what it prohibits is such levy of tax on goods as would result in discrimination between the goods imported from other States and similar goods manufactured within the State. In G.K. Krishnan AIR 1975 SC 583; [1975] 1 SCC 375 the notification issued by the Government of Tamil Nadu enhancing the motor vehicle tax on omnibuses under the Madras Motor Vehicles Taxation Act, 1931 was challenged. One of the grounds on which the said enhancement was challenged was that it imposes restriction on the freedom of trade, commerce and intercourse guaranteed by article 301 of the Constitution of India and as the same was not passed after obtaining the previous sanction of the President of India, it is unconstitutional. The three-judge Bench of the apex court while considering the nature of levy in question as well as the different provisions of Part XIII of the Constitution and taking note of the decision in Atiabari Tea Co. case AIR 1961 SC 232, Automobile Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, which encumbers movement of trade and commerce, a tax on intra State sale, if it involves movement from one part of the State to another part of the same State, would encumber the movement part of it and is a restriction on the freedom of trade and commerce. It has further been observed by the apex court that generally speaking, selling and buying involves delivery of goods sold and bought and imposition of sales tax by a State on intra State sale, at any rate, when the sale involves movement of goods will be restriction of trade and commerce and unless the law imposing it has received the previous sanction of the President, it would be bad, if such imposition of tax is neither regulatory nor compensatory. The apex court, however, did not pursue the said matter further after observing that in case the President refused his consent, the State will be bereft of the source of revenue, which the Constitution has expressly given to the State as the notification impugned in the said case was found to be compensatory in character and, therefore, could not restrict the freedom of trade and commerce. From the discussion of the judgment of the apex court in G.K. Krishnan AIR 1975 SC 583; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are imposed by the State Legislature provided they fulfil the conditions, that it must be reasonable, it must be in public interest and subject to procurement of prior sanction of the President before introduction of the Bill. In paragraph 48 of SCC (in paragraph 45 of STC) it is also observed by the apex court that when any legislation, whether it would be taxation legislation or a non-taxation legislation, is challenged before the court as violative of article 301, it is to be seen whether it has chosen the activity like the movement of trade, commerce and intercourse throughout India, as the criteria of its operation and if yes, the next question to be seen is what would be the effect of operation of law on the freedom guaranteed under article 301. It has further been observed that if the effect is to facilitate free flow of trade and commerce then it is regulation and if it is to impede or burden the activity, then the law is a restraint. After finding the law to be a restraint/restriction, it is to be seen whether the impugned law is enacted by Parliament or by State Legislature as the Parliament as well as the State Legislatures are conferred with the power under articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent Presidential assent is obtained. The learned AAG has also placed reliance on Indian Cement [1988] 69 STC 305 (SC); [1988] 1 SCC 743 wherein the notification issued under the Andhra Pradesh General Sales Tax Act, 1957 was under challenge. In the said case, the question, which is being presently dealt with, did not arise for consideration. The question that arose for decision by the apex court in the said case was whether the law was violative of article 304(b) of the Constitution and not whether a non-discriminatory tax still requires to satisfy the conditions contained in article 304(b) of the Constitution. The decision in United Motors (India) [1953] 4 STC 133 (SC); AIR 1953 SC 252 cannot also be applied in the present case as the same relates to the question-which State has the power to levy sales tax, prior to the enactment of Central Sales Tax Act, 1956 which decision was also overruled by the apex court in Bengal Immunity [1955] 6 STC 446; AIR 1955 SC 661. The decision in A.T.B. Mehtab Majid [1963] 14 STC 355; AIR 1963 SC 928 of the apex court does not help the State as the apex court in the said decision has observed that taxing laws can be restrictions on trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njunction "and" appearing between article 304(a) and article 304(b) of the Constitution should be understood as "or", cannot also be accepted as clause (a) of article 304 of the Constitution deals with levy of tax on goods imported from outside the State and contains discriminatory levy and clause (b) of the article 304 of the Constitution provides for relaxation in respect of regulatory restrictions on the freedom of trade, commerce and intercourse, so long as it is a reasonable restriction, in public interest and it received the previous Presidential sanction. Both the provisions operate in different areas and therefore the question has to be independent under each provision and in the context of impugned legislation. A statute imposing tax though may be non-discriminatory, if the effect of such levy is on the free movement of goods, i.e., the freedom of trade, commerce and intercourse, it does attract clause (b) of article 304. The movement in context of trade can only be on the movement of goods and the effect of levy of tax is one to discourage or curb such movement and it is necessarily one, which impedes free movement of goods. In Vidyacharan Shukla AIR 1964 SC 1099, the ape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en rejected by the apex court in Automobile Transport case AIR 1962 SC 1406. In Khyerbari Tea Company AIR 1964 SC 925, a Constitution Bench of the apex court has observed that while examining the constitutionality of a statute it must be assumed that the Legislature understands and appreciates the needs of the people and the laws it enacted are directed to problems which are made manifest by experience and that the elected representatives assembled in a Legislature enacts laws which they considered to be reasonable for the purpose they are enacted. Presumption is, therefore, in favour of constitutionality of an enactment. It has further been observed that the position with regard to the onus to demonstrate that an enactment is unconstitutional, being in contravention of article 304(b), would be same as that under article 19(1) of the Constitution. Hence, once it has been proved that there is restriction on the free movement of goods, the onus shifts to the State. The apex court in the said case has also observed that the very fact that a law is passed under article 304(b) means clearly that it purports to restrict the freedom of trade and that being so, as soon as its shown that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006 and in other similar cases, by the principal Act, are unconstitutional being violative of article 301 of the Constitution. In view of the aforesaid discussion, we are of the view that the learned single judge has rightly decided the aforesaid question against the State. ISSUE NO. III This issue assumes importance in view of the decision in issue No. II, as the compensatory tax being regulatory in nature is not a restriction within the meaning of article 304(b) and hence does not offend article 301 of the Constitution. The concept of compensatory tax though not provided in the Constitution, has been judicially evolved, as a part of regulatory charge. In Atiabari Tea Company's case AIR 1961 SC 232 the Supreme Court propounded the doctrine of "direct and immediate effect" of the operation of the law impugned, on the freedom of trade and commerce under article 301 of the Constitution. In Automobile Transport case AIR 1962 SC 1406 the apex court evolved the concept of compensatory tax as an exception to article 301, though the basis for that concept was not discussed. A Constitution Bench of the apex court in Jindal Stainless [2006] 145 STC 544; [2006] 7 SCC 241 having disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sreenivasa General Traders [1983] 4 SCC 353 by evolving "some connection" theory. The nature of compensatory tax being like fee the principles laid down in respect of the fee is applicable in ascertaining whether an impugned levy is of a compensatory nature or not. The working test for determining whether a tax is compensatory or not laid down in Automobile Transport's case AIR 1962 SC 1406, i.e., to enquire whether the trade is having the use of certain facilities for the better conduct of its business and not paying patently much more than what is required for providing the facilities, has been deviated from in Bhagatram's case [1995] 96 STC 654 (SC); [1995] Supp. 1 SCC 673 as well as in Bihar Chamber of Commerce's case [1996] 103 STC 1 (SC); [1996] 9 SCC 136 by propounding the "some connection" theory, which necessitated the apex court in Jindal Stripe Ltd. [2004] 134 STC 303; [2003] 8 SCC 60, in referring the matter to the Constitution Bench for interpretation of article 301 vis-a-vis compensatory tax. The apex court in Jindal Stainless Ltd. [2006] 145 STC 544; [2006] 7 SCC 241 accordingly, having considered earlier decisions including Atiabari Tea Co.'s case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he High Court to deal with the basic issue whether the impugned levy was compensatory in nature. In view of the authoritative pronouncement in Jindal Stainless [2006] 145 STC 544 (SC); [2006] 7 SCC 241 wherein the concept of "some connection" theory enunciated in Bhagatram's case [1995] 96 STC 654 (SC); [1995] Supp 1 SCC 673 as well as in Bihar Chamber of Commerce's case [1996] 103 STC 1 (SC); [1996] 9 SCC 136 were held to be not a good law, we need not burden this judgment by discussing the decisions cited by the learned AAG in details in International Tourist's case [1981] 2 SCC 318, Bhagatram's case [1995] 96 STC 654 (SC); [1995] Supp 1 SCC 673 as well as Bihar Chamber of Commerce's case [1996] 103 STC 1 (SC); [1996] 9 SCC 136. The question, therefore, whether the impugned levy is compensatory or not largely depends upon the provisions contained in the Act and/or also whether the State is providing the quantifiable/measurable benefit to the payers of the tax for reimbursement/recompense. The preamble and the Statement of Objects and Reasons for which the Act has been enacted is quoted below: "Preamble.-Whereas it is expedient to provide for the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y tax is levied to check the evasion of taxes. In the consolidated affidavit-in-opposition filed in W.P. (C) No. 2650 of 2005, (1)Reported as ITC Limited v. State of Assam [2007] 9 VST 250 (Gauhati). which gave rise to W.A. No. 462 of 2006, the State has taken the stand that the "impugned Act was enacted inter alia to expand the tax net basis by imposing tax on items, namely, textile, sugar and tobacco". However in the said affidavit, it has been stated that the revenue generated by the operation of the tax and other taxation laws are utilised by the State for establishment and maintenance of markets, laying down and maintenance of roads and waterways. In the said additional affidavit the State has also taken the stand that sufficient fund collected by the impugned levy has been transferred to the local bodies for development of the infrastructures to facilitate trade and commerce in the local areas commensurate with the amount of entry tax collected by the State. A table illustrating the amount of entry tax collected by the State beginning from 2001-02 to 2004-05 and the amount so transferred to various local bodies of the State for developmental activities has also been furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s share 2501 do. 59.15 114.78 85.14 143.67 176.00 289.92 267.00 85. Compensation and assignment of the local bodies, Panchayati Raj Institutions 3604 do. 3.89 7.54 12.35 13.11 10.89 18.00 138.31 Total 101.69 149.60 115.74 195.83 249.29 431.91 567.12 Though the impugned Act initially does not provide any stipulation for providing the facilities to the taxpayers to facilitate the trade, section 8A has been inserted by the Second Amendment Act of 2005 with effect from May 12, 2005, which is reproduced below: "8A. Utilisation of the proceeds of the tax.-Subject to such condition as may be prescribed, such amount of the proceeds of the tax, as may be determined by the State Government shall be spent by the State Government for the purpose of development of trading facilities, maintenance of roads and other infrastructures in the local area." From the provision of section 8A as inserted by the Second Amendment Act of 2005, it is evident that the amount collected by way of tax is proposed to be spent for maintenance of roads, for the purpose of development of trade facilities and other infrastructures. The provision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m is to be spent. In view of the aforesaid discussions, we are of the view that the State has miserably failed to substantiate that the substantial portion of the entry tax collected under the impugned enactment has been spent or is to be spent for providing the facilities to its payers so as to facilitate the trade, by producing materials before the court. The contention of the learned AAG supporting the "some connection" theory cannot be accepted. In view of the working test laid down by the apex court in Jindal Stainless Ltd. [2006] 145 STC 544; [2006] 7 SCC 241 in determining the compensatory nature of tax, and also in view of our aforesaid discussion, we do not consider it necessary to discuss the judgments of various High Courts relied upon by the learned counsel for the assessees on this issue. In view of the aforesaid discussion, we hold that the impugned enactment does not satisfy the test laid down for compensatory tax and hence cannot be held to be compensatory in nature. The judgment and order of the learned single judge, is affirmed, on this point. ISSUE No. IV Article 304(b) of the Constitution provides that notwithstanding anything contained in article 301 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanction, has held in that case that mere change in the form, from statutory rules to statutory provisions, could hardly constitute even an additional regulation. The apex court, therefore, has refused to accept the plea from the point of view of article 304(b), which requires Presidential sanction, in case of additional restriction, as the amendments were found to have not gone beyond a regulation, which was fully authorised by the language of the provisions of the Act involved in that case. In Subodhaya (P) Ltd. [1991] Supp 2 SCC 131, the Presidential sanction under article 304(b) was held to be not required, as the amendments impugned therein were found to have no restrictiveness at all in the matter. In Widia (India) Ltd. [2003] 132 STC 360 (SC); [2003] 8 SCC 22 the levy impugned was held to be compensatory in nature and therefore, the apex court has held that the imposition of compensatory or regulatory tax does not attract the requirement of Presidential assent under article 304(b) of the Constitution. From the discussions of the aforesaid decisions of the apex court, as cited by the learned counsel for the parties, it, therefore, appears that if the amendment made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of amendment thereby obstructing the free movement throughout the territory of India as mandated by article 301 of the Constitution the amendments to the Principal Act for its validation must either have prior Presidential sanction as required under article 304(b) or the Presidential assent subsequent to such enactment. There being no dispute to the fact that no Presidential sanction/assent has been obtained for such amendments either prior to or after introduction of such amendments, the same are unconstitutional, as the previous Presidential sanction obtained prior to enactment of the Principal Act, cannot save the subsequent amendments. The said position, in fact, was known to the State as it has obtained Presidential sanction in respect of 7 items prior to the enactment of the Principal Act. The judgment and order of the learned single judge, in so far as it relates to this question, is, therefore affirmed. ISSUE NO. V The Constitution of India has created three great instrumentalities and entrusted them with certain basic powers legislative, judicative and executive. Abdication of these powers by the concerned instrumentalities, it is axiomatic, amounts to betrayal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the enactment and, therefore, that area will be left to be filled in by the delegate. To ascertain as to whether any particular legislation suffers from excessive delegation, the scheme, the provisions of the statute including its preamble and the facts and circumstances of the background of which the statute is enacted, the history of the legislation, the complexity of the problems which a modern State has to face, will have to be taken note of and if, on a liberal construction given to a statute, a legislative policy and guidelines for its execution are brought out, the statutes, even if skeletal, will be upheld to be valid, but this rule of liberal construction should not be carried on by "the court to the extent of always trying to discover a dormant or latent legislative policy to sustain an arbitrary power conferred on the executive". (Kishan Prakash Sharma v. Union of India [2001] 5 SCC 212). A Constitution Bench of the apex court in Gwalior Rayon Mills [1974] 33 STC 219; [1974] 4 SCC 98 referring to the earlier decisions on the subject of delegated legislation including the decision in Banarsi Das [1958] 9 STC 388 (SC); AIR 1958 SC 909, Liberty Cinema AIR 1965 SC 1107, B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower to fix the rate of tax is legislative power, if the impugned enactment provides the necessary guidelines, that power can be delegated to the executive. In Banarsi Das [1958] 9 STC 388 (SC); AIR 1958 SC 909 it has also been held by the apex court that the fixing of rates may be left to the non-legislative body but the Legislature must provide guidelines for such fixation. In the Liberty Cinema AIR 1965 SC 1107 the same view has been taken by the apex court. In Birla Cotton AIR 1968 SC 1232 the apex court has held that the essential legislative functions though cannot be delegated by the Legislature and the Legislature must retain on its own those legislative functions, it can delegate the necessary power for implementing the purpose and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere. In Agricultural Market Committee [1997] 5 SCC 516 the apex court has observed that the essential legislative function consists of the determination of the legislative policy and the Legislature cannot abdicate essential legislative function in favour of another, however, power to make subsidiary l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executive to exercise their power under delegated legislation, as from the preamble as well as the objects and reasons and the provisions of the Act, it is evident that the same are not compensatory in nature, which is the basic requirement for an enactment imposing entry tax. The counter argument of the learned AAG is that the preamble, objects and reasons and the different provisions of the Act clearly lay down the legislative policy as well as the guidelines to the executive. As discussed above, when a particular enactment is tested on the ground of excessive delegation of legislative function, what is required to be seen is, whether such particular enactment has laid down any definite legislative policy and also the guideline, from the point of view of that enactment and not from the perspective of whether such enactment is compensatory in nature within the meaning of article 304(b) of the Constitution, as the question of excessive delegation of power by an enactment is one thing and whether it is compensatory in nature, another. The preamble of the impugned Act, reproduced above, reflects the clear legislative policy laid down by the Legislature by providing that the Act has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing to fix the rate of tax has abdicated its essential legislative functions, without laying down the legislative policy and indicating the guidelines. The objects and reasons of the Act clearly provide the guidelines as to what to tax, whom to tax and at what rate. It is one thing that the Legislature by delegating the power has abdicated its essential legislative function and another thing to say that the delegatee has acted beyond the authority delegated to it. The petitioners have not challenged the action of the delegatee on the ground that it has acted beyond its delegated power or arbitrarily. The petitioners have challenged the provision of section 3(4) of the Act, as it stood till May 12, 2005, only on the ground of excessive delegation of legislative function. In view of the aforesaid discussion, we are of the opinion that the provision of section 3(4) of the Act, as stood prior to May 12, 2005, does not suffer from the vice of excessive delegation of legislative function and hence the finding of the learned single judge, in that regard, is set aside. ISSUE NO. VI Section 3(4) of the impugned Act, as discussed above, was omitted by the Second Amendment Act with e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing not in force or existing at the time at which the repeal takes effect, or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act had not been passed. It is apparent from the provision of section 6 of the Assam General Clauses Act that the said provision applies to the repeal of any enactment. In the instant case admittedly the provision of section 3(4) of the 2001 Act was not repealed but was omitted from the statute. There is also no provision made in the Second Amendment Act, by which such provision was omitted, saving the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 12, 2005, from which date section 3(4) has been omitted, cannot be allowed to continue as the actions initiated under the said provision of law have not been saved and section 3(4) of the Act has been unconditionally omitted. Hence all the proceedings pending on May 12, 2005 relating to realisation of tax by virtue of the power conferred by section 3(4) of the impugned Act, have to be declared as null and void, without, however, affecting the proceedings, which have already been finalised prior to May 12, 2005. In that view of the matter, the judgment and order of the learned single judge is set aside to the extent indicated above. ISSUE NOS. VII AND VIII Having held that imposition of entry tax under the impugned Act is illegal being unconstitutional, in so far as the issues involved in this batch of cases, the next question, which requires determination is whether the appellants/writ petitioners are entitled to the refund of the tax paid. The 9 (nine) judges Bench of the apex court in Mafatlal Industries Ltd. [1998] 111 STC 467; [1997] 5 SCC 536, upon consideration of all the earlier pronouncements on the subject of refund, has summarised the propositions in paragraph 99 (pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reasons, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition. The doctrine of unjust enrichment is a just and salutary doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the court is not meant to be exercised for unjustly enriching a person. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of the court any statement either in the writ petition or in any subsequent affidavit to the effect that the tax realised by the State from them has not been passed on to other persons. The writ petitioner in W.P. (C) No. 4685 of 2006 except by making a self-serving statement that the tax burden has not been passed on to others, i.e., its consumers, have not produced any materials to substantiate such plea, which the claimant for refund is bound to substantiate in view of the decision of the apex court in Mafatlal Industries case [1998] 111 STC 467; [1997] 5 SCC 536. In the absence any such plea/materials no finding can be recorded by this court in that regard in the present proceeding. The contention of Mr. Ganesh as well as Mr. Saraf, the learned Senior Counsel, that since the earlier interim order passed by the learned single judge staying recovery of the entry tax subject to furnishing bank guarantees for the full amount of tax, has been stayed by the Writ Appellate Court in Writ Appeal No. 412 of 2005, preferred against such interim orders, on the basis of the assurance given by the learned AAG that the entire amount of entry tax collected would be refunded along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excises and Salt Act, 1944, for preferring appeal, is not also applicable in the present case. Similarly the decision of the Gujarat High Court in Gujarat Insecticides Ltd. [2005] 183 ELT 9 cannot also be applied in view of the aforesaid discussions. For the same reason, the decisions of the apex court cited by Dr. Saraf in Gupta Modern Breweries [2007] 8 RC 688, Delhi Cloth and General Mills Co. Ltd. [1971] 28 STC 331 and of this court in Goalpara Roller Flour Mill Ltd. [2007] 12 VST 478; [2007] 2 GLT 952, cannot be applied in the facts and circumstances of the present case and in view of the aforesaid discussion, more particularly, in view of the 9 (nine) judges bench decision of the apex court in Mafatlal Industries case [1998] 111 STC 467; [1997] 5 SCC 536. It appears from the impugned judgment, that the learned single judge has directed the refund of the entry tax paid by the assessees solely on the basis of the interim direction passed in the writ petition as well as the interim order dated June 22, 2005 passed in W.A. No. 412 of 2005, which was filed challenging the interim direction issued by the learned single judge, as well as the final order dated January 5, 2006 passe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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