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TMI Blog2009 (9) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... ry tax and is not commensurate with the cost of facilities provided for the trade and does not pass the doctrine of working test laid down by the honourable Supreme Court in Automobile Transport's case AIR 1962 SC 1406. The tax levied under the Act of 1976 is merely to augment revenue of the State and therefore, the same is in violation of article 301 of the Constitution of India. Before entering into the grounds on which the petitioners have proposed to challenge the Act of 1976, we advert to the background in which these petitions have been filed. The constitutional validity of the M.P. Entry Tax Act, 1976 was challenged before the Division Bench of the M.P. High Court in Sanjay Trading Co. v. Commissioner of Sales Tax [1994] 93 STC 589 (MP). The Division Bench considering the Statement of Objects and Reasons of the Act and also considering the summary in respect of levy and details of allotment made to local bodies, held that budgetary provisions to compensate the municipalities were made, the subsequent statutory changes made in the Act, have no significance; entry tax remains compensatory in nature and therefore, it is immune from challenge. The finding of the M.P. High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re into the argument based on article 304(b) and the constitutionality of the Act was, accordingly, upheld. The Constitution Bench in Jindal Stainless Ltd. v. State of Haryana [2006] 145 STC 544 (SC), in conclusion, held that the doubt expressed by the referring Bench about the correctness of the decision in Bhagatram Rajeev Kumar's case [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673, followed in the case of Bihar Chamber of Commerce [1996] 103 STC 1 (SC); [1996] 9 SCC 136 was well founded. The test of "some connection" indicated in para 8 of the judgment in the case of Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673 and followed in Bihar Chamber of Commerce [1996] 103 STC 1 (SC); [1996] 9 SCC 136 is not good law. After decision was rendered by the Constitution Bench in Jindal Stainless Ltd. v. State of Haryana [2006] 145 STC 544 (SC), a two-judge Bench of the Supreme Court in Jindal Stainless Ltd v. State of Haryana [2006] 7 SCC 271 observed in para 5 of the judgment that since relevant data have not been placed before the High Courts, the parties are permitted to place them in writ petitions concerned within two months and the High Court were to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the law of the case. It was further argued that the State of Madhya Pradesh and the State of Chhattisgarh having not been noticed or heard before the honourable Supreme Court while deciding Jindal Stainless Ltd. (2) [2006] 145 STC 544 (SC), clearly establishes that Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673 has not been overruled in its entirety, and its efficacy and binding nature of the operative order upholding the validity of the Act of 1976 binds the parties. Validity of an Act once upheld cannot be reopened. Reliance is placed on the judgments in the matters of Shenoy & Co. v. Commercial Tax Officer [1985] 60 STC 70 (SC); [1985] 2 SCC 512, A.R. Antulay v. R.S. Nayak [1988] 2 SCC 602, Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 VST 95 (SC); [2006] 145 STC 91 (SC); [2006] 282 ITR 273 (SC); [2006] 3 SCC 1, Rupa Ashok Hurra v. Ashok Hurra [2002] 4 SCC 388, Director of Settlements, A.P. v. M.R. Apparao [2002] 4 SCC 638, Mahesh Kumar Saharia v. State of Nagaland [1997] 8 SCC 176 and U.P. Pollution Control Board v. Kanoria Industrial Ltd. [2002] 128 STC 26 (SC); [2001] 2 SCC 549. Shri Ravindra Shrivastava, learned senior advocate with Shri Jag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rat Aluminum Co. Ltd., repelling the arguments of the respondents with respect to their preliminary objection to maintainability to the challenge to the Act of 1976, would argue that in Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673, the appellants did not dispute the figures furnished by the State in its counter-affidavit. In these circumstances, it was held that it is settled by now that if the tax is compensatory it is immune from challenge under article 301. Thus, the question whether the impugned tax was compensatory or not was decided on the basis of concession by the parties. The honourable Supreme Court did not accept the argument of the counsel for the appellants that compensation is that which facilitates the trade only, and held that the concept of compensatory nature of tax has widened or if there is substantial or even some link between the tax and the facilities extended to such dealers, directly or indirectly, levy cannot be impugned as invalid. The Constitution Bench in Jindal Stainless Ltd. (2) [2006] 145 STC 544 (SC) considering the above "some link" theory propounded in Bhagatram Rajeev Kumar case [1995] 96 STC 654 (SC); [1995] Suppl (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position of entry tax is a restriction imposed on the inter-State trade and commerce and therefore, the Act offends articles 301 and 304 of the Constitution. The stand of the State before the High Court was that the levy of entry tax is compensatory in character, which has been imposed to compensate the municipalities for the losses of income by way of octroi which has been abolished in the State. The above contention was contested by the petitioner by pointing out that the legislative provisions indicative of the compensatory nature of the levy have been deleted and therefore, it is not open to the State to contend that the levy is compensatory in character. The High Court repelled the challenge against the vires of the M.P. Entry Tax Act, 1976 with an observation that the Statement of Objects and Reasons of the Act states that it is enacted to levy a tax on entry of goods in lieu of octroi tax collected by the municipalities and municipal corporations and to make transportation of goods trouble-free by abolishing octroi check-posts. It indicates that the statute had the view of raising financial resources to compensate local bodies consequent upon abolition of octroi with a view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment referred the concept of "even some link" theory propounded in Bhagatram Rajeev Kumar case [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673 with approval. In Jindal Stainless Ltd. (2) [2006] 145 STC 544 (SC), the Constitution Bench of the honourable Supreme Court while considering the scope of articles 301, 302 and 304 of the Constitution vis-a-vis compensatory tax, observed that taxing laws are not excluded from the operation of article 301, which means that tax laws can and do amount to restrictions on the freedom guaranteed to trade under Part XIII of the Constitution. Referring to the principles settled in the case of Atiabari Tea Co. Ltd. AIR 1961 SC 232, it was observed that whenever law is challenged on the ground of violation of article 301, the court has not only to examine the pith and substance of the levy, but in addition thereto, the court has to see the effect and operation of the impugned law on the inter-State trade and commerce as well as intra-State trade and commerce. It has been further observed that when any legislation is challenged as violating article 301, the first question to be asked is: what is the scope of the operation of the law? Whether it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... STC 654 (SC); [1995] Suppl (1) SCC 673 and State of Bihar v. Bihar Chamber of Commerce [1996] 103 STC 1 (SC); [1996] 9 SCC 136 stand overruled." In para 10 of the judgment it was observed that in Bhagatram Rajeev Kumar case [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673, the challenge was to the M.P. Entry Tax Act, 1976. In that case, although it was demonstrated by the State and not disputed by the assessee that the levy was compensatory, nevertheless, the court went on to say, vide para 8, that "the concept of compensatory nature of tax has been widened and if there is substantial or even some link between the tax and the facilities extended to such dealers directly or indirectly levy cannot be impugned as invalid". On careful reading of the judgments delivered in Sanjay Trading Co. [1994] 93 STC 589 (MP), Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673 and Jindal Stainless Ltd. (2) [2006] 145 STC 544 (SC), we find that in Sanjay Trading Co. [1994] 93 STC 589 (MP), challenge to the constitutional validity of the M.P. Entry Tax Act, 1976 was repelled keeping in view the Statement of Objects and Reasons of the Act, which states that the Act was enacted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompensate the losses suffered by the local bodies on account of abolition of octroi check-posts. The avowed purpose of abolition of octroi check-posts was to make the transportation of goods trouble-free. Thus, by confirming the order of the Division Bench of the M.P. High Court upholding the constitutional validity of the M.P. Entry Tax Act, 1976, the law declared by the honourable Supreme Court is that the statute imposing entry tax with an avowed object of compensating the local bodies for the losses suffered by them as a result of abolition of octroi check-posts, is compensatory in nature and the same is immune from challenge under article 301 of the Constitution. The question of constitutional validity of the M.P. Entry Tax Act, 1976 was neither referred to the Constitution Bench nor the same was answered in Jindal Stainless Ltd. (2) [2006] 145 STC 544 (SC). We find force in the argument of learned counsel for the respondents/State that Jindal Stainless Ltd. (2) [2006] 145 STC 544 (SC) does not overrule Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673 in its entirety but only the obiter in Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i AIR 1963 SC 553 that there was no infringement of article 19(1)(f) and the provision was valid. However, challenge to the above provision with reference to articles 14, 15, 19(1)(d) and (g) of the Constitution in the background of the preamble of the Constitution and article 39(c) of the Directive Principles of the State Policy, was entertained. Further relying upon the three Judge-Bench decision of the Supreme Court, detailed in para 19 of its judgment, it was held that the law, which was at one point of time constitutional, may be rendered unconstitutional because of the passage of time. In paras 20 and 21 it has been observed thus (page 483 in 17 VST): "20. As is manifest, the 1976 Act was held to be constitutionally valid on different parameters. Presently, the parameters have been changed by the decision rendered by their Lordships in Jindal Stainless Limited [2006] 145 STC 544 (SC); [2006] 7 SCC 241. Keeping in view the decision rendered in Mathura Prasad Sarjoo Jaiswal AIR 1971 SC 2355, Nand Kishore [1995] 6 SCC 614, Atam Prakash AIR 1986 SC 859, and Indian Handicrafts Emporium [2003] 7 SCC 589, I am of the considered opinion that once the parameters change there can be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was this common judgment that was the subject-matter of appeal before this court in Hansa Corporation's case [1980] 4 SCC 697; [1981] 1 SCR 823; AIR 1981 SC 463. When the Supreme Court repelled the challenge and held the Act constitutionally valid, it in terms disposed of not the appeal in Hansa Corporation's case [1980] 4 SCC 697; [1981] 1 SCR 823; AIR 1981 SC 463 alone, but all petitions in which the High Court issued mandamus on the non-existent ground that the 1979 Act was constitutionally invalid. It is, therefore, idle to contend that the law laid down by this court in that judgment would bind only the Hansa Corporation and not the other petitioners against whom the State of Karnataka had not filed any appeal. To do so is to ignore the binding nature of a judgment of this court under article 141 of the Constitution. Article 141 reads as follows: 'The law declared by the Supreme Court shall be binding on all courts within the territory of India.' A mere reading of this article brings into sharp focus its expanse and its all pervasive nature. In cases like this, where numerous petitions are disposed of by a common judgment and only one appeal is filed, the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and; it is precedent for itself and for all the courts/Tribunals and authorities in India. In Hoystead v. Commissioner of Taxation [1926] AC 155; [1925] All ER Rep 56 (PC) (AC at page 165), Lord Shaw observed: (All ER page 62 B-C) thus: "Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court the legal result . . . If this were permitted litigation would have no end, except when legal ingenuity is exhausted." The honourable Supreme Court in Shenoy & Co. [1985] 60 STC 70 (SC); [1985] 2 SCC 512 (paras 22 to 26), Mahesh Kumar Saharia [1997] 8 SCC 176 (para 11), and U.P. Pollution Control Board v. Kanoria Industrial Ltd. [2002] 128 STC 26 (SC); [2001] 2 SCC 549 (para 18), has held that validity of the statute once upheld cannot be reopened. Shri Ravindra Shrivastava, learned senior advocate, placing reliance on paras 16 and 20 of the decision in Bharat Sanchar Nigam Ltd. [2006] 3 VST 95 (SC); [2006] 145 STC 91 (SC); [2006] 282 ITR 273 (SC); [2006] 3 SCC 1, submitted that if a new ground is urged, the court may have to consider it on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances become arbitrary, unreasonable and violative of the doctrine of equality and even if the validity of such legislation may have been upheld at a given point of time, the court may, in subsequent litigation, strike down the same if it is found that the rationale of classification has become non-existent. . ." In paras 38 and 39 of the above judgment, it has been specifically observed that in Amarjit Singh v. Smt. Khatoon Quamarain [1986] 4 SCC 736, on which reliance has been placed by the Full Bench of the High Court for negating the appellant's challenge to section 14(1)(e), the unconstitutionality of section 14(1)(e) was neither raised nor debated with any seriousness and the observation made by the court in that regard, cannot be treated as the true ratio of the judgment, which as mentioned above, mainly rested on the interpretation of the expression "reasonably suitable residential accommodation". In Godfrey Philips [2008] 17 VST 465 (MP), the Division Bench of the M.P. High Court referring to various judgments of the Supreme Court, held that once the parameters change, there can be fresh challenge and fresh adjudication, and the argument of the State that the writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titutional validity of the M.P. Entry Tax Act, 1976 by confirming the judgment in Sanjay Trading Co. [1994] 93 STC 589 (MP) and held the imposition of tax compensatory in nature. The larger Bench of the Supreme Court in Jindal Stainless Ltd. [2006] 145 STC 544 (SC) has not overruled the above law declared by the Supreme Court holding the Haryana Local Area Development Tax Act, 2000, intra vires. The observation to the extent that "the concept of compensatory nature of tax has been widened and if there is substantial or even some link between the tax and the facilities extended to such dealers, directly or indirectly, levy cannot be impugned as invalid" made in Bhagatram Rajeev Kumar case [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673, has been overruled in Jindal Stainless Steel [2006] 145 STC 544 (SC). Therefore, fresh challenge to the constitutional validity of the Act of 1976 is not maintainable in view of the law declared under article 141 of the Constitution in Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673. Challenge to the constitutional validity of section 4A, as amended vide Amendment Act, 2001 and notifications issued under sections 3(2), 4A a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2002. However, the rate was again reduced to five per cent with effect from July 1, 2004 vide notification of annexure P3. Proviso to sub-section (1) of section 9 of the Act of 1976 provides that rate of tax in respect of any goods specified in Schedules II and III shall not exceed twice the rate of tax specified in the Schedule. Sub-section (2) of section 9 provides that revision cannot be made without previous notice in the Gazette so that the affected parties may make their representation to the State Government. Sub-section (3) further provides that every notice amending the rate of tax in Schedules II and III is required to be laid on the table of the Legislative Assembly as soon as possible. Vide Amendment Act, 2001 (annexure P4), permissible rate of tax under section 4A of the Principal Act was raised from 10 per cent to 50 per cent. The Amendment Act, 2001 was neither introduced nor moved in the Legislature of State without previous sanction of the President. Entry tax on raw material for manufacture of other goods specified in Schedules II and III was fixed at half per cent under proviso (i) to section 4(1) of the Act. The same was enhanced to one per cent with effect fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are used for expansion of the existing plants, vide notification of annexure P9. The State has been levying different rates of entry tax in different local areas leading to discriminatory taxation. Iron ore and coking coal are charged to entry tax at six per cent when entered into Bhilai-Durg Special Area whereas these materials are charged to entry tax at three per cent (iron ore) and one per cent (coal) when entered into any other areas of the State of Chhattisgarh. The petitioner has impugned the amended section 4A on the ground that it suffers from the vice of excessive delegation as it empowers the State authorities to levy tax without any guidelines, policy or principles. No control has been retained by the Legislature regarding the area, the goods and the rate at which the tax is to be levied under section 4A of the Act. Section 4A overrides the rates fixed by the Legislature under section 4 read with Schedules II and III of the Act. The above provision empowers the State to levy entry tax to the extent of 50 per cent of the value of the goods. Such a prohibitive rate is not only unreasonable, but is also confiscatory in nature and thus, ultra vires. Different rates o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying field to all the entry tax payers and to bring them at par for the purposes of imposition of value added tax (in short, "VAT") on the final product. The person purchasing goods from outside the State does not pay VAT and therefore, its landing cost is less as compared to the person purchasing goods from within the State. Keeping in view the above fact, to bring the entry tax payers at par, different rates of entry tax have been imposed for the goods brought from outside the State and the goods brought from within the State. The constitutional validity of section 4A has already been decided by the High Court of M.P. in the case of Associated Cement Co. Ltd. v. State of M.P. [1997] 106 STC 340 (MP); AIR 1996 MP 116 and M.P. Cement Manufacturer's Association v. State of M.P. [2006] 143 STC 432 (MP); [2004] 32 TLD 36. VAT on. petroleum product/diesel in the State of Chhattisgarh, as was accepted by the High Court of M.P., is levied at 25 per cent, however, when petroleum product is brought from outside the State, the State is deprived of VAT at 25 per cent as the same is purchased from outside the State on C form by paying only four per cent Central tax. Therefore, in public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The notifications have been impugned on the ground, firstly that differential rates of tax have been prescribed between the class of goods which are manufactured within the State and brought into local area and those class of goods which are manufactured outside the State and brought into the local area, such classification is wholly unconstitutional as origin or place of production of the goods has no co-relation with the recovery of the cost of service or the facility. Secondly, there is apparent discrimination between the goods brought into local area of Bhilai-Durg and the other local areas in the State of Chhattisgarh. Iron ore and coking coal are charged to entry tax at six per cent when entered into Bhilai-Durg special area (where the petitioner's business exists) whereas these materials are charged to entry tax at three per cent (iron ore) and at one per cent (coking coal) when entered into any other areas of the State of Chhattisgarh. Reliance is placed on the judgment in the matter of Weston Electroniks v. State of Gujarat [1988] 70 STC 52 (SC); [1988] 2 SCC 568. It has been further argued that the effect of differential and higher rate of taxes which are exorbitan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cinema AIR 1965 SC 1107, Vasanlal Maganbhai Sanjanwala v. State of Bombay AIR 1961 SC 4 and Municipal Corporation of Delhi v. Birla Cotton Spinning and Weaving Mills, Delhi AIR 1968 SC 1232. On the other hand, learned counsel for the respondents would submit that the source of legislative power to impose entry tax, earlier imposed by the local authorities as octroi tax, is in entry No. 52 of the State List (List II) of the Seventh Schedule to the Constitution. The Act of 1976 was enacted with an object to levy tax on entry of goods in lieu of octroi tax collected by the local bodies to make the transportation of goods trouble-free by abolition of octroi check-post for providing a single point tax for free-flow of trade and commerce. Section 4A was inserted by the Amendment Act of 1976 and the same came into force with effect from December 31, 1976. A power was conferred upon the State Government to impose entry tax to such goods, which are used or consumed in such local area or areas for manufacture of other goods, at a rate not exceeding 10 per centum. By the Amendment Act, 2001, maximum rate of tax imposable under section 4A(1) has been increased from 10 per cent to 50 per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 3(2) of the Act of 1976 as unconstitutional as also two notifications of annexure P6 dated March 31, 1999, whereby entry tax at four per cent has been imposed on telecommunication cables and accessories thereof with effect from April 1, 1999. In W.P. (T) No. 1804 of 2002, petitioner-Maharashtra Electrosmelt Ltd., has impugned the constitutional validity of section 4A of the Act of 1976 as also the notification dated April 5, 2002 issued under section 4A of the Act of 1976 enhancing the rate of entry tax from one per cent to 10 per cent in respect of "high carbon ferro manganese and high carbon ferro silico manganese" manufactured outside the State of Chhattisgarh on the ground that the very same goods manufactured within the State of Chhattisgarh are levied entry tax at one per cent, as discriminatory, arbitrary and ultra vires the Act of 1976. In order to appreciate the rival submissions made by learned counsel for the parties, it would be appropriate to refer to certain provisions of the Act of 1976. Section 2(b) of the Act of 1976 defines "entry tax", which reads as under: "2. (b) entry tax means a tax on entry of goods into a local area for consumption, use or sale therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of other goods shall be one per cent, if the rate of tax prescribed exceeds one per cent. Section 4A was inserted vide Amendment Act of 1976 and it read as under before Amendment Act of 2001: "4A. Provision for entry tax at enhanced rate on certain goods consumed or used in manufacture of other goods.-(1) The State Government may, by notification, specify the local area or areas and the goods which are used or consumed in such local area or areas mainly for the manufacture of other goods and may direct that, as from the date specified in the notification and in such manner as may be prescribed, the entry tax payable by a dealer under this Act shall be charged on his taxable quantum relating to such goods at a rate not exceeding ten per centum as may be specified in such notification notwithstanding anything to the contrary contained in section 4. (2) On the issue of notification under sub-section (1), entry tax shall not be chargeable and payable on such goods at any other rate mentioned in any other provisions of this Act." The word "ten" occurring after "rate not exceeding" in sub-section (1) of section 4A was substituted by word "fifty" vide Amendment Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the impugned notifications being violative of the first proviso to section 9(1) of the Act, are beyond the competence of the State Government, was rejected. In Vasanlal Maganbhai Sanjanwala AIR 1961 SC 4, the Constitution Bench of the honourable Supreme Court while dealing with the nature and permissible extent of delegation of legislative powers under article 245 of the Constitution observed thus: "4. It is now well established by the decisions of this Court that the power of delegation is a constituent element of the legislative power as a whole, and that in modern times when the Legislatures enact laws to meet the challenge of the complex socio-economic problems, they often find it convenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by their Acts. The extent to which such delegation is permissible is also now well-settled. The Legislature cannot delegate its essential legislative function in any case. It must lay down the legislative policy and principle, and must afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf. . ." It has been furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be impracticable to insist on a more rigid guidance. In the case of a self-governing body with taxing powers, a large amount of flexibility in the guidance to be provided for the exercise of that power must exist. In the case of a big municipality like that of Calcutta, its needs would depend on various and changing circumstances. There are epidemics, influx of refugees, labour strikes, new amenities to be provided for, such as hospitals, schools and various other such things may be mentioned, which make it necessary for a colossal municipal corporation like that of Calcutta to have a large amount of flexibility in its taxing powers. These considerations lead to the view that section 548 is valid legislation. There is sufficient guidance in the Act as to how the rate of the levy is to be fixed." In Municipal Corporation of Delhi AIR 1968 SC 1232, the Constitution Bench considering the constitutionality of the delegation of pecuniary powers to municipal corporations and the effect of Validation Act, dismissed the writ petition by upholding the Validation Act by referring to various authorities of the Supreme Court, and the principles of law propounded in the above cited two judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther body. But subject to that qualification, it is permissible for the Legislature to delegate the power to select the persons on whom the tax is to be levied or the goods or the transactions on which the tax is to be levied. In the Act, under section 3 the Legislature has sought to impose multi-point tax on all sales and purchases. After having done that it has given power to the executive, a high authority and which is presumed to command the majority support in the Legislature to select for special treatment dealings in certain class of goods. In the very nature of things, it is impossible for the Legislature to enumerate goods, dealings in which sales tax or purchase tax should be imposed. It is also impossible for the Legislature to select the goods which should be subjected to a single point sales or purchase tax. Before making such selections several aspects such as the impact of the levy on the society, economic consequences and the administrative convenience will have to be considered. These factors may change from time to time. Hence in the very nature of things, these details have got to be left to the executive. Pandit Banarsi Das Bhanot v. State of Madhya Pradesh [195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional validity of the unamended section 4A of the M.P. Entry Tax Act, 1976 has been upheld by the Division Bench of the M.P. High Court. Fresh challenge has been laid to the amendment effected in the year 2001 vide Amendment Act of 2001, whereby the State has been empowered to impose entry tax up to 50 per cent. We are in respectful agreement with the views of the Division Bench of the M.P. High Court expressed in Associated Cement Co. [1997] 106 STC 340 (MP); AIR 1996 MP 116 wherein it has been held that proviso to sub-section (1) of section 9 is not applicable to the goods which are covered under the scheme of sections 3, 4A and 12. The principles of law that may be deduced from various judgments of the honourable Supreme Court referred to above, are that 'the Legislature cannot delegate its essential legislative function in any case. It must lay down legislative policy and principle, and must afford guidance for carrying out the said policy before it delegates its subsidiary powers in that behalf. If the Statement of Objects and Reasons offers satisfactory basis for holding that the legislative policy and principle have been enunciated with sufficient accuracy and clarity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act of 1976 is to be laid on the table of the Legislative Assembly soon after issuance of the notification. Thus, the aforesaid provision also demonstrates that the notification issued under section 4A has to face scrutiny of the Legislature. The petitioners have also challenged the validity of the notifications on the ground that by the notifications the rates of tax have been arbitrarily and exorbitantly increased. The imposition of higher rate of tax by the notifications on the goods brought from outside the State is discriminatory and violative of articles 14, 19 as well as article 301 of the Constitution. Placing heavy reliance on Weston Electroniks [1988] 70 STC 52 (SC); [1988] 2 SCC 568, Loharn Steel Industries Ltd. [1997] 105 STC 30 (SC); [1997] 2 SCC 37 and State of Uttar Pradesh v. Laxmi Paper Mart [1997] 105 STC 1 (SC); [1997] 2 SCC 697, it was argued that discrimination in imposition of tax on the ground of its origin, i.e., taxing the goods brought in the State from outside the State at higher rate than the goods which is brought from within the State, is ultra vires article 301 of the Constitution as the same is impediment in free-flow of trade and commerce. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oinder, appears to be reasonable as landing cost of the iron ore for the petitioners is much less than the landing cost for other manufactures of the State. Similarly, enhancement of the entry tax on petroleum product/diesel at 25 per cent in the State of Chhattisgarh is same as was imposed in the State of M.P. We are in respectful agreement with the reasoning assigned by the High Court of M.P. in upholding the constitutional validity of imposition of entry tax at enhanced rate for the petroleum products brought from outside the State. It is settled law that though taxing laws are not outside article 14, however, having regard to the wide variety of diverse economic criteria that go into the formulation of a fiscal policy, Legislature enjoys a wide latitude in the matter of selection of persons, subject-matter, events, etc., for taxation. The tests of the vice of discrimination in a taxing law are, accordingly, less rigorous. In examining the allegations of a hostile, discriminatory treatment what is looked into is not its phraseology, but the real effect of its provisions. A Legislature does not, as an old saying goes, have to tax everything in order to be able to tax something. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns assigned by the respondents for imposing higher rates of entry tax on the goods brought from outside the State, we hold that the classification is rational as the same has been done to provide level playing field to all the taxpayers and the dealers, who purchase the goods from other registered dealers of the State. Accordingly, we hold that the impugned notifications do not offend article 14 of the Constitution and they are valid in law. On the basis of aforesaid analysis, we record our conclusion as under: (a) that the constitutional validity of the Act of 1976 has been upheld, firstly in the matters of Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673 and thereafter, in Geo Miller & Co. Pvt. Ltd. [2004] 136 STC 241 (SC); [2004] 5 SCC 209. The larger Bench of the honourable Supreme Court in Jindal Stainless Ltd. [2006] 145 STC 544 (SC) has not overruled Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1995] Suppl (1) SCC 673 in its entirety. Therefore, fresh challenge to the constitutional validity of the Act of 1976 is not maintainable, in view of the law declared under article 141 of the Constitution in Bhagatram Rajeev Kumar [1995] 96 STC 654 (SC); [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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