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TMI Blog2017 (10) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... IL APPEAL NOS. 8496-8501 OF 2011 CIVIL APPEAL NO. 8502 OF 2011 CIVIL APPEAL NO. 8617 OF 2014 CIVIL APPEAL NOS. 10374-10379 OF 2014 R.F. Nariman And Sanjay Kishan Kaul, JJ. JUDGMENT R.F. Nariman, J. 1) This batch of cases concerns Pan Masala containing tobacco and Gutka and their taxability under three State legislations, namely, the Delhi Sales Tax Act, 1975, the U.P. Trade Tax Act, 1948 and the Tamil Nadu General Sales Tax Act, 1959. The central question raised in all these appeals is the same. We shall first take up the Delhi case. 2) Under the Delhi Sales Tax Act, 1975, all sales (of goods) that are effected after the commencement of the Act, are made to suffer tax under Section 3(1) of the Delhi Act, whose marginal note reads "incidence of tax". Section 3 (1) states as under:- "3. Incidence of Tax (1) Every dealer whose turnover during the year immediately preceding the commencement of this Act exceeds the taxable quantum and every dealer who at the commencement of this Act, is registered or is liable to pay tax under the Central Sales Tax Act, 1956 (74 of 1956) shall be liable to pay tax under this Act on all sales effected by him on or after such commencement." T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [(ccc) [***] (d) in the case of taxable turnover of any other goods, at the rate of eight paise in the rupee: [PROVIDED that the Lieutenant Governor may, by notification in the Official Gazette, add to, or omit from, or otherwise amend, the First Schedule, the Second Schedule or the Fourth Schedule, either retrospectively or prospectively, and there upon the First Schedule or the Second Schedule or, as the case may be, the Fourth Schedule, shall be deemed to be amended accordingly:] PROVIDED FURTHER that no such amendment shall be made retrospectively if it would have the effect of prejudicially affecting the interests of any dealer: PROVIDED ALSO that in respect of any goods or class of goods if the Lieutenant Governor is of the opinion that it is expedient in the interest of the general public so to do, he may, by notification in the Official Gazette, direct that the tax in respect of taxable turnover of such goods or class of goods shall, subject to such conditions as may be specified, be levied at such modified rate not exceeding the rate applicable under this section, as may be specified in the notification. (2) For the purpose of this Act, "taxable turnover" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified in the Third Schedule, intended for sale or resale; (vi) such other sales as are exempt from payment of tax under section 66 or as may be prescribed: PROVIDED that no deduction in respect of any sale referred to in sub-clause (iv) shall be allowed unless the goods, in respect of which deduction is claimed, are proved to have been sold by the dealer within a period of twelve months from the date of his registration and the claim for such deduction is included in the return required to be furnished by the dealer in respect of the said sale: [PROVIDED FURTHER that no deduction in respect of any sale referred to in sub-clause (v) shall be allowed unless a true declaration duly filled and signed by the registered dealer to whom the goods are sold and containing the prescribed particulars in the prescribed form obtainable from the prescribed authority in the manner and subject to such condition as may be prescribed is furnished in the prescribed manner and within the prescribed time, by the dealer who sells the goods:] PROVIDED ALSO that where any goods are purchased by a registered dealer for any of the purposes mentioned in sub-clause (v), but are not so utilised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thousand (4) Smoking mixtures for pipes and cigarettes. Two hundred percent. ad valorem (5) Chewing tobacco. Ten per cent. ad valorem (6) Snuff. Two rupees and fifty paise per kilogram"* Effective from 1-3-75 * This is obviously a case of legislation by incorporation as a result of which the only thing that is to be looked at is "tobacco" contained in this Schedule and not subsequent amendments that have been made after the introduction of the Central Excise (Tariff) Act, 1985 w.e.f. February, 1986. It has, in any event, been argued before us that the subsequent legislation would throw light on what is contained in the earlier legislation, for subsequently under the Central Excise Tariff, Pan Masala which contains tobacco, commonly known as Gutka, is specified under Entry 2404.49 under the heading "Chewing Tobacco and preparations containing chewing Tobacco; Pan Masala containing Tobacco". In addition, it was pointed out that under the Chapter notes, para 3 in particular, the definition of "tobacco" remains exactly what it was in 1975, which now subsumes Pan Masala which includes tobacco. 5) The impugned judgment of the Delhi High Court dated 05.11.2004 has held, on a readi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was squarely raised and argued, the Madras High Court has preferred to rest its decision on only one point, which is that even though additional duty of excise may be levied on Pan Masala containing tobacco, the legislative competence of the State to enact a State sales tax levying sales tax on the same goods is not taken away. 7) It is well settled that in the area of taxation, the question of going to the measure of a tax would arise only if it is found that the charge of tax is attracted. [See Tata Sky Limited vs. State of Madhya Pradesh and Others, (2013) 4 SCC 656 at para 29] Also, in a recent Constitution Bench judgment delivered by this Court in Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika Township Private Limited, (2015) 1 SCC 1, after referring to an earlier judgment of this Court, this Court stated that the components which enter into the concept of taxability are well known and distinct. The first is the imposition of tax which prescribes the taxable event attracting the levy. The second is an indication of the "taxable person" i.e. the person on whom the levy is imposed and who is obliged to pay the tax. The third is the rate at which tax is imposed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate of tax, such amendment would take away exemption of tax of the same goods, was directly turned down by this Court, stating as under: "16. The Revenue's contention that when an exemption had already been granted to the goods concerned, if the State Legislature had specifically amended Schedule I so as to include the said goods in Schedule I and make it exigible to tax, it would be incorrect to interpret an entry in a manner so as to defeat the object of the statute, is also not tenable. In the first place, there could be nothing like exemption from tax unless goods are exigible to tax. Thus, unless the goods were specified in Schedule I or II of the KGST Act the goods would not be liable to tax at all and, therefore, there would be no question of granting exemption from tax. Thus, it would be unnecessary to specify them in the Third Schedule, unless by reason of Section 5 read with Schedule I or II, the goods were exigible to tax. The fact that "tarpaulin" was included in the First Schedule does not carry the matter any further in favour of the Revenue as it is clear that the exemption operating in favour of cotton-based tarpaulin as covered by "cotton fabrics" in the Third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as a combined notification-both for withdrawal of exemption and also for providing higher tax. When power for both the operations vests in the State and the intention to levy the tax is clear we see no justification for not giving effect to the second notification. We would like to point out that the exemption was in regard to a class of goods and while the exemption continues, a specific item has now been notified under Section 3-A of the Act." (at pages 142-143) B.C. Ray, J. dissented from this view and followed the view of the Allahabad High Court, which accords the view of this Court in the Kothari Products (supra) and Reliance Trading Company (supra) judgments. One other interesting feature of this case is whether, after Union of India vs. Raghubir Singh, 1989 (3) SCR 316 at 335-337, it can be stated that Judges of this Court do not sit in 2's and 3's for mere convenience, but that a Bench which is numerically superior will prevail over a Bench of lesser strength. If the doctrine of precedent, as applied by this Court, is to be a matter of numbers, then, interestingly enough, as has been held by Beaumont C.J. in Ningappa Ramappa Kurbar and Another vs. Emperor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -578 as follows: "669. One of the more interesting aspects of Pradeep Kumar Biswas (Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111) is that out of the 7 (seven) learned Judges constituting the Bench, 5 learned Judges overruled the unanimous decision of another set of 5 learned Judges in Sabhajit Tewary (Sabhajit Tewary v. Union of India, (1975) 1 SCC 485). Two of the learned Judges in Pradeep Kumar Biswas found that Sabhajit Tewary had been correctly decided. In other words, while a total of 7 learned Judges took a particular view on an issue of fact and law, that view was found to be incorrect by 5 learned Judges, whose decision actually holds the field today. Is the weight of numbers irrelevant? Is it that only the numbers in a subsequent Bench are what really matters? What would have been the position if only 4 learned Judes in Pradeep Kumar Biswas had decided to overrule Sabhajit Tewary while the remaining 3 learned Judges found no error in that decision? Would a decision rendered unanimously by a Bench of 5 learned Judges stand overruled by the decision of 4 learned Judges in a subsequent Bench of 7 learned Judges? Pradeep Kumar Biswas present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Judges speaking for a Bench of 7 learned Judges? This is a question which also needs to be addressed and answered. 14) An allied question, which often arises, is the discovery of the true ratio decidendi in a given case. In Harper and Others vs. National Coal Board [1974] 2 All ER 441, the Court of Appeal was faced with a judgment of the House of Lords in Central Asbestos Co Ltd vs. Dodd [1972] 2 All ER 1135 by five learned Judges. Whereas Lord Reid and Lord Morris took a particular view of the law in favour of Dodd, stating that his claim was not barred, two other learned Judges namely, Lord Simon and Lord Salmon disagreed on the law, and held that his claim was barred. Lord Pearson was stated to be the odd man out. He held that time did not run against Dodd, since Dodd did not appreciate that the appellants were at fault and that his injuries were attributable to their fault. On that ground, he agreed with Lord Reid and Lord Morris, as a result of which Dodd succeeded. However, he went on to say that he agreed with the opinion of the minority as to the proper construction of the statute in law. Faced with this, Lord Denning M.R. set out four interesting propositions on h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect. In my opinion we should adopt the reasoning which was accepted in this court in the long line of cases before the decision of the House of Lords. None of these was overruled. They may therefore be said to be binding on us. But in any case we should follow their reasoning, especially as it was accepted by two of their Lordships who were in the majority and was expressed convincingly by Lord Morris of Borth-y-Gest in the passage I have quoted." (at page 446) Stephenson LJ. concurred. The learned Lord stated: "I agree. I cannot find any discernible ratio decidendi common to the majority of the House of Lords in deciding Dodd's case. Their Lordships were divided three to two in the decision to affirm the judgment of the Court of Appeal; but in the reasons for their decision they appeared to be divided two to two, Lord Pearson taking a third view which perhaps came closer to the view of the minority. In those circumstances I do not think that we can treat the reasoning of the majority of the majority - Lord Reid and Lord Morris of Borth-y-Gest - as the ratio decidendi of the house. It is the ratio given by only two out of five. Still less can we treat the 'ratio dissen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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