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TMI Blog2015 (2) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... sale and purchase of goods. Thus, if the sale and purchase of goods take place outside the country and brought into the territory of India, no tax may be imposed but when it is brought into the State like in the present case, the State of U.P., sub-clause (b) of Article 286 does not seem to come in the way. A collective reading of the three entries; 53, 56 and 60 seem to confer power on State Government to impose tax in case goods are brought into the State of U.P. for consumption, use or sale therein or it is carried into the State of U.P. through road or on inland waterways. Entry No.60 is wider and empowers the State Government to impose tax on trades. - Thus, the case relied upon by the learned counsel for the petitioners as well as other cases referred to hereinabove, negate the State power to impose tax where transaction of sale and purchase took place outside the country. Article 286 of the Constitution does not debar the State to impose tax when an item is brought into the State. Article 286 should be read in reference to context i.e., imposition of tax on sale or purchase of goods. Subject to condition of sub-clause (a) and sub-clause (b), sale and purchase of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence granted by the Government of India the petitioner imports Polyster Yarn from Nepal which is being sent by the consignor of Nepal to the consignee in the U.P. by road after due clearance from the custom frontier of India. 4. It has been further stated that petitioner has deposited excise duty required under law. According to notification dated 17.1.2000 followed by notification dated 29.1.2000 (Annexure- 5) the yarn is taxable under the rules framed under U.P. Trade Tax Act, according to which manufacturer/importer shall be liable to pay tax @ 4 percent. It is stated that staple yarn is also included in the yarn in terms of notification dated 17.1.2000 as amended by notification dated 29.1.2000. The relevant portion from the notification dated 29.1.2000 is reproduced as under:- Serial Number Description of goods Point of tax Rate of tax percentage 1 2 3 4 50. Yarn of all kinds except those covered by any other notification M or I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 286 (1)(b) read with Article 304 A of the Constitution of India. It is further added that in view of Section 3 and 4 of the Central Sales Tax Act (CST) also it is not permissible for State Government to issue impugned notification. Alternatively, it has been submitted that it is not open for the government to impose 20 per cent tax on the goods imported from outside India for sale in the State of U.P. at higher rate than the goods manufactured and imported from other State or manufactured in the State of U.P.. The imposition of 20% tax in any way not reasonable. Reliance has been placed by learned counsel for the petitioner on the case of Shree Mahvir Oil Mills and another vs. State of Jammu and Kashmir and another reported in 1997 U.P.T.C. 227. 7. It shall be appropriate to consider the relevant provisions contained in Article 286 and 304 (A) of the Constitution of India relied upon by learned counsel for the petitioner. For convenience Article 286 and Article 304 of the Constitution of India are reproduced as under:- 286. Restrictions as to imposition of tax on the sale or purchase of goods.- (1) No law of a State shall impose, or authorize the imposition of, a tax o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case as it confers regulatory power on the State government with regard to goods imported from other States providing that the tax has not been higher than the goods manufactured produced in the respective State itself. Article 304 does not relate to goods imported from outside the country. Accordingly, reliance placed by learned counsel for the petitioner on Article 304 seems to be not sustainable. 10 Under Clause 1(a) of the Article 286 State may not impose taxes on the sale or purchase of goods where such sale or purchase took place outside the State. Clause (b) of Article 286(1) deals with situation where goods are imported into or exported outside the territory of India. Thus the purpose of Clause (b) of Article 286 seems to restrict the State power where sale and purchase of goods takes place outside country and goods are imported or exported into or outside territory of India. 11 While interpreting the provisions contained in Article 286 of the constitution of India, Clause (b) should not be read in isolation but it should be read along with Clause (1). In case we conjoin them, then it may deal with the situation where sale or purchase of goods takes place in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticularly when literal reading leads to an intelligent result. 16 In Grasim industries ltd. vs. Collector of Custom (2002) 4 SCC297 , it has been held that every word and provision of a statute should be looked at generally and in the context in which it is used and not in isolation. 17 In S.Samuel M.D. Harresons Malayalam vs. UOI (2004)1 SCC 256 , it has been held that when a word is not defined in the statute, a common parallence meaning out of several meanings provided in the dictionaries can be selected having regard to the context in which the word appeared in the statute. 18 In Deepal Girish bhai soni vs. United India insurance ltd. (2004) 5 SCC 385, it has been held that a statute has to be read in its entirety and the purport and object of the Act is to be given its full effect by applying principle of purposive construction. 19 In Pratap Singh vs. State of Jharkhand (2005) 3 SCC 551 , it has been held that the Interpretation of a statute depends upon the text and context there of and object with which the same was made. It must be construed having regard to its scheme and the ordinary state of affairs and consequences flowing there from - must be construe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scertain to what degree and to what extent, the Authority to deal with the matters falling within these classes of subjects exist in each legislature and to define, in the particular case before them, the limits of respective powers. It could not have been the intention that a conflict should exist; and, in order to prevent such a result the two provisions must be read together, and the language of one interpreted, and, where necessary modified by that of the other 24 In (2005) 4 SCC 53: State of T.N. Vs. M. Krishnappan, Hon'ble Supreme Court held that when the Constitution provides a field of legislation, it has to be read in the broadest possible terms. 25 There appears to be no ambiguity in the letter and spirit of Article 286 of the Constitution of India. It should be interpreted as a whole right from the head note i.e., beginning which indicates that it relates to imposition of tax on sale and purchase of goods. Thus, if the sale and purchase of goods take place outside the country and brought into the territory of India, no tax may be imposed but when it is brought into the State like in the present case, the State of U.P., sub-clause (b) of Article 286 does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption granted to local manufacturer/producer of edible oil is violative of Article 301 read with Article 304 (a) of the Constitution of India. The observation made by Hon'ble Supreme Court in para 24 of the judgement is reproduced as under:- Now, what is the ratio of the decisions of this Court so far as Clause (a) of Article 304 is concerned? In our opinion, it is this : the States are certainly free to exercise the power to levy taxes on goods imported, from other States/Union territories but this freedom, or power, shall not be so exercised as to bring about a discrimination between the imported goods and the similar goods manufactured or produced in that State. The clause deals only with discrimination by means of taxation; it prohibits it. The prohibition cannot be extended beyond the power of taxation. It means in the immediate context that States are free to encourage and promote the establishment and growth of industries within their States by all such means as they think proper but they cannot, in that process, subject the goods imported from other States to a discriminatory rate of taxation, i.e., a higher rate of sales tax vis-a-vis similar goods manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover on which sales tax can be levied or imposed. While considering the provisions contained in Section 3,4 and 5 of CST Act read with Article 286 of the Constitution of India their Lordship of Hon'ble Supreme Court held that though for the purpose of registration of a dealer and submission of the returns of sales tax transaction may be included in the turn over but such inclusion shall not affect non liability of these transaction to levy or imposition of sale tax by virtue of provision of Article 286 of the Constitution of India and the corresponding enactment and the corresponding provision enacted in the Act (CST). 30 In AIR 1974 SC 2272, S.Kodar v. State of Kerala , Hon'ble Supreme Court rules that State cannot impose tax beyond the legislative competence in terms of Entry 54 List II of the Constitution of India. 31 In 1983(4) SCC 45, M/s Hoechst Pharmaceuticals Ltd and others Vs. State of Bihar and others , Hon'ble Supreme Court relying upon the decision rendered in Fernandez case (supra) held as under:- The decision in Fernandez's case, supra, is therefore clearly an authority for the proposition that the State Legislature notwithstanding Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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