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TMI Blog2009 (2) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... e Scheduled commodities. The Parliament has also provided the consequence that follows if any State levies tax on sale or purchase of Scheduled commodities; all that happens is that the State will be deprived of its share in the proceeds of additional duties of excise for that financial year. Even this is subject to the power of the Central Government to direct otherwise. The Parliament could not, and did not, prohibit any State from making any law or levying any tax which a State can levy by virtue of the entries in List II. The State also has got a case that goods in question, covered under HSN code 5007, are not directly taxable under the Additional Duties of Excise Act, 1957 and State has not derived any share from it for the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the financial years commencing on and after the April 1, 1995, there shall be paid to each of the States specified in column (1) of the table below such percentage of the net proceeds of additional duties levied and collected during that financial year in respect of the goods described in column (3) of the First Schedule, after deducting therefrom a sum equal to 2.203 per cent of the said proceeds as being attributable to Union Territories, as is set out against it in column (2) of the said table: Provided that if during that financial year there is levied and collected in any State a tax on the sale or purchase of the goods described in column (3) of the First Schedule, or one or more of them by or under any law of that State, no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise on the goods specified in sub-section (1). It shows that it is a tax on manufacture and storing of the goods and not on sale or purchase of goods. Section 4 mandates distribution of additional duties among States. Merely because from the additional duty collected a share is given to the State, there is no bar to the State Legislature to collect sales tax. In Godfrey Phillips case [2005] 139 STC 537; [2005] 4 RC 186, the Supreme Court was considering the legislative power of the State to charge luxury tax on goods covered under the Additional Duties of Excise Act. At paragraphs 63 and 64 of the judgment, it is stated as follows: 63. Thus Parliament has been given the overriding power to limit the rates of sales taxes which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en be evident. Similarly storage or stocking of imported goods is covered by entry 83 of List I and cannot be made the subject of levy by the States. The honourable Supreme Court held that the luxury tax or any other tax cannot be levied on manufacturing and storing of the goods concerned by naming it as luxury tax. Paragraph 69 reads as follows: 69. However, while widening the scope of entry 54 of List II, the powers of the State to levy such tax are subjected to a corresponding restriction as a consequence of the constitutional curbs imposed on sales tax under article 286 read with sections 14 and 15 of the Central Sales Tax Act, 1956, and the ADE Act, 1957. The tax leviable by virtue of sub-clause (b) of clause (29A) of article 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... honourable Supreme Court is as follows: (page 6) 3. Whether the Bihar Legislature is deprived of its legislative competence to enact the impugned Act on account of the enactment of ADE Act and/or because the State of Bihar is getting a portion of the taxes levied and collected under the ADE Act? After considering the proviso to the Second Schedule to the Act, the apex court observed as follows: (page 17 of 103 STC) The proviso states that if during a given financial year, a State levies and collects a tax on the sale or purchase of Scheduled goods or on any one or more of the Scheduled goods by or under a law of that State, no sums shall be payable to that State under this paragraph in respect of that financial year, unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id by enacting the ADE Act is that it will levy additional duties of excise and distribute a part of the proceeds among the States provided the States do not levy taxes on sale or purchase of the Scheduled commodities. The Parliament has also provided the consequence that follows if any State levies tax on sale or purchase of Scheduled commodities; all that happens is that the State will be deprived of its share in the proceeds of additional duties of excise for that financial year. Even this is subject to the power of the Central Government to direct otherwise. The Parliament could not, and did not, prohibit any State from making any law or levying any tax which a State can levy by virtue of the entries in List II. The decision of this cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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