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TMI Blog2009 (7) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge the burden that the classification is unreasonable and or has no nexus with the object sought to be achieved. It is not possible to hold that the notification to the extent that it denies the benefit to the petitioners is arbitrary and discriminatory. Appeal dismissed. - Writ Petition No. 1909 of 2000 - - - Dated:- 3-7-2009 - FERDINO I. AND REBELLO AND BHATIA J.H. , JJ. The judgment of the court was delivered by FERDINO I. REBELLO J. The petitioner is engaged in the business of import of fabrics which are sold after import pursuant to clearance through the customs on payment of duty within the State of Maharashtra. The State of Maharashtra has enacted the Bombay Sales Tax Act, 1959 (which hereafter shall be referred to as, the BST Act ). Parliament has enacted the Central Sales Tax Act, 1956 (hereinafter referred to as, the CST Act ). By the present petition, the petitioners seek to challenge the levy of sales tax on fabrics imported into India on which the additional duty of excise in lieu of sales tax has already been paid under the Act of 1957. The petitioners challenge the Constitutional validity of entry 9 of Schedule B of the Act. At the hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 3(1) of the CTA, fabrics imported into India are, inter alia, charged to additional duty of excise under the Act of 1957. After clearance for home consumption, such fabrics cleared on payment of duty including the additional duty of excise under the Act of 1957 cease to be imported goods as defined under section 2(25) of the Customs Act. Before May 1, 1998, entry 15 of Schedule A read as under: 15. (1) Fabrics (2) Sugar, and (3) Tobacco. as described from time to time in column 3 of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957. (Except those covered by entry 17 in part I of Schedule C.) With effect from May 1, 1998, respondent No.1 amended entry 15 of Schedule A vide Maharashtra Finance Act, 1998. Certain amendments were made in entry 15 which thereafter read as under: 15. (1) Fabrics (2) Sugar, and (3) Tobacco. as described from time to time in column 3 of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and manufactured or produced in India. From May 1, 1998 by Maharashtra Act 21 of 1998. Thus, effective from May 1, 1998, exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with section 15 of the CST Act, 1956. The contention of the petitioners that declared goods cannot be subjected to both additional duty of excise under the CST Act as well as the sales tax under the Sales Tax Act is denied. It is further explained that withdrawal of exemption of tax in respect of goods which are manufactured or produced outside India is not violative of article 301 or 304 of the Constitution of India. The excise is leviable under Schedule A, entry 15, only in respect of goods manufactured or produced in India. Entry 15 to that extent is explicit and clear. Under Schedule B , entry 9, tax at the rate of four per cent is levied on articles excluding those covered by entry 15 of Schedule A . Thus, the fabrics imported into India cease to be imported goods once the fabrics are cleared for home consumption upon payment of duties including additional duty of excise under the Act of 1957. It is denied that the levy of sales tax on imported fabrics is an unreasonable impediment towards free and smooth movement of the goods from one part of India to another and that the tax is in violation of the mandate contained in articles 301 and 304 of the Constitution of India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of section 5(2) of the Act. Does section 5(2) lead to the interpretation as sought to be advanced on behalf of the petitioners? The object to relax or omit any condition or exception specified therein pre-supposes that Schedule A contains a condition or exception specified therein which could be relaxed or omitted. The earlier part of section speaks about the power of the State Government to add to, or enlarge any entry in Schedule A . What this pre-supposes is that though Schedule A has been a part of the legislative exercises or process, the delegate has been given the power to add to or enlarge any entry or relax or omit any condition or exception specified therein. The power to add or enlarge any entry would include within its ambit the power to add a condition. In the instant case, what has been done is an addition has been made to entry 15 in the Schedule by adding the words and manufactured or produced in India . Thus, there was a power under section 5(2) to the State Government to have amended entry which included power to relax or omit any condition or exception. Such a reading would not be destructive of the principles behind section 5(2) in conferring power on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication should never be arbitrary, artificial or evasive. (7) The classification must not be arbitrary but must be rational, that is to say, it must not only be based on some qualities or characteristics which are to be found in all the persons grouped together and not in others who are left out but those qualities or characteristics must have a reasonable relation to the object of the legislation. In order to pass the test, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differential which distinguishes those that are grouped together from others and (2) that that differentia must have a rational relation to the object sought to be achieved by the Act. (8) The differentia which is the basis of the classification and the object of the Act are distinct things and what is necessary is that there must be a nexus between them. In short, while article 14 forbids class discrimination by conferring privileges or imposing liabilities upon person arbitrarily selected out of a large number of other persons similarly situated in relation to the privileges sought to be conferred or the liabilities proposed to be imposed, it does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation have a relevant norm and/or relevant to the object sought to be achieved by the legislation in question? As pointed out earlier, the BST Act is an Act for levying sales tax. The notification is to exempt sales tax on fabrics manufactured or produced in other States of India and imported into the State of Maharashtra. The notification continued the benefit of exemption to that class which imported goods into Maharashtra produced or manufactured in other States of India but withdrew the benefit of exemption in respect of goods imported from another country. The dealers of such goods may be described as dealers of goods manufactured in India and dealers of goods manufactured in foreign countries. The two classes of dealers are dealing with similar goods, no doubt but the source of the goods is different. There is therefore a intelligible difference between the two classes. We have no hesitation to hold that the classification is reasonable. Next does the classification have a rational nexus with the object sought to be achieved. The object of the Act is to charge sales tax on goods sold in the State of Maharashtra. The object of the notification is to exempt the goods noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be advanced was that it was sales tax in pith and substance. This contention was rejected. In our opinion, ratio of that judgment is of no assistance. Next our attention was drawn to the judgment in the case of Akay Cones Private Ltd. v. Lt. Governor of Delhi [2003] 129 STC 172 (Delhi); [2003] 154 ELT 22 (Del.). A similar issue as before this court was in issue before the Delhi High Court. In that case also, the challenge was levy of sales tax on imported fabrics. The Delhi High Court held that levy of sales tax on imported fabric cannot be said to be discriminatory or violative of article 14 or article 19(1)(g) or article 304 of the Constitution. The Delhi High Court relied on the judgment of the Tamil Nadu Taxation Special Tribunal in Mohd. Zackria v. State of Tamil Nadu [1999] 115 STC 697. It was there also contended that the petitioner having paid additional duties of excise on imported goods no sales tax was leviable but the contention was rejected by the Court. The learned counsel for the petitioners has sought to bring to our attention article 304 of the Constitution of India. This was in the context to point out that in respect of manufactured fabrics in India, exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturers or producers to the exclusion of foreign manufacturers or producers. The reason is found in the Finance Minister's Speech. It is true that the effect is both on the consumer and the manufacturer. The test however is a nexus with the object of the Act. The State has chosen to forego sales tax dues from manufacturers or producers in India. It is open to the State to pick and choose amongst persons as long as it is reasonable. In our opinion, the classification being reasonable and the petitioners who are left out of class which is based on the reasonable nexus with the object has been unable to discharge the burden that the classification is unreasonable and or has no nexus with the object sought to be achieved. It is not possible to hold that the notification to the extent that it denies the benefit to the petitioners is arbitrary and discriminatory. Let us deal with two judgments though not argued at the Bar, but referred to in the petition. Firstly, Weston Electroniks v. State of Gujarat [1988] 70 STC 52 (SC); [1988] 2 SCC 568. In that case, the rate of sales tax in respect of television sets imported from outside the State was reduced from 15 per cent to 10 per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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