Full Judgment Text
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PETITIONER:
VRAJLAL MANILAL AND CO. AND ANOTHER
Vs.
RESPONDENT:
STATE OF MADHYA PRADESH AND ANOTHER
DATE OF JUDGMENT02/04/1986
BENCH:
MADON, D.P.
BENCH:
MADON, D.P.
SEN, A.P. (J)
CITATION:
1986 AIR 1085 1986 SCR (2) 98
1986 SCC Supl. 201 1986 SCALE (1)1113
ACT:
Madhya Pradesh General Sales Tax Act 1958/Madhya
Pradesh General Sales Tax (Amendment) Act, 1968 :
Section 8(1) - Effect of Amending Act 1968 - Tendu
leaves treated different from ’raw materials’ - Increase in
rate of tax - Whether within legislative competence of State
Whether violates Articles 14, 19(1)(g), 301 and 304 of
Constitution.
HEADNOTE:
The Madhya Pradesh General Sales Tax Act, 1958 came
into force on April 1, 1959 repealing all the earlier sales
tax laws in force in the State. With effect from that date
the Central Government or a State Government or any of their
departments or offices which buy, sell, supply or distribute
goods, directly or otherwise, for cash or other
considerations, is to be deemed to be a ’dealer’ for the
purposes of the Act irrespective of the fact whether such
purchase, sale, supply or distribution of goods is in the
course of business or not.
By the Madhya Pradesh General Sales Tax (Amendment) Act
1968, which came into force from April 15, 1968 sub-s. (1)
of s. 8 of the M.P. Sales Tax Act was substituted and tendu
leaves ceased to be raw material for the purposes of s. 8
and consequently became exigible to tax at the rate of 7%
under s.6 read with residuary Entry No.l in Part VI of
Schedule II.
By s. 10 of the Madhya Pradesh General Sales Tax
(Amendment and Validation) Act, 1971 certain amendments,
including the amendments made by clause (i) of s.2, were
deemed to have formed part of the M.P. Sales Tax Act from
the date of its commencement. A new sub-cl. (i) was
substituted for the original sub-cl. (i) and a further
Explanation II was inserted in cl. (d) of s.2 with
retrospective effect from April 1, 1959. By the 1971 Act
sub-s. (1) of s.8 was again substituted and a new sub-s. (3)
was inserted in s.8, and they
99
came into force on May 6, 1971. With effect from that date
the provisions of s.8 ceased to apply to sales of any goods
made by the Forest Department of the State Government or any
of the offices under that Department, but where goods were
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purchased by a registered dealer from the Forest Department
or any of the offices of that Department and used by him as
a raw material for the manufacture of other goods for sale
within the State of Madhya Pradesh or in the course of
inter-State trade or commerce or in course of export out of
the territory of India such dealer became entitled to a set-
off of an amount equal to the difference between the tax
payable at the full rate on such goods as mentioned in
Schedule II and the tax payable on raw material at the rate
of 2%. Purchases of Tendu leaves by the registered dealers
from the Forest Department of the State Government or any of
the offices under that Department did not, however, qualify
for the set-off.
The appellant-firm carried on business as manufacturers
of bidis and dealers in tendu leaves. It filed a petition
under Art. 226 of the Constitution challenging the validity
of the amendment made in sub-s. (1) of the Madhya Pradesh
General Sales Tax Act 1958 by the Madhya Pradesh General
Sales Tax (Amendment) Act 1968 to the extent that the said
amendment treated tendu leave differently from other raw
materials.
After the enactment of the Madhya Pradesh General Sales
Tax (Amendment and Validation) Act 1971, the writ petition
was amended to challenge also the validity of the
amendments. Similar writ petitions were also filed by other
bidi manufacturers and dealers in tendu leaves. The High
Court dismissed all these petitions.
In the Appeal to this Court on behalf of the appellants
it was contended : (i) that as sales and purchases of tendu
leaves cease to be exigible to tax under s.8 by reason of
the amendments made therein and as tendu leaves were not
mentioned in any of the entries in Schedule II to the M.P.
Sales Tax Act, sales and purchases of tendu leaves could not
be made exigible to tax under s.6 read with the residuary
Entry No. 1 in Part VI of Schedule II; (ii) that neither the
State Government nor any of its departments including the
Forest Department or its offices was a dealer as defined in
cl. (d) of s.2; (iii) that the impugned amendments to s.8
are
100
violative of Arts. 14, 19(1)(g) 286(3), 301 and 304 of the
Constitution as tendu leaves were discriminated against
hostilely as compared with other raw materials in that the
rate of tax on the sales and purchases of tendu leaves was
made much higher than the rate of tax on the sales and
purchases of other raw materials; that there was no
reasonable basis for making a distinction between tendu
leaves and other raw materials inasmuch as the only use to
which tendu leaves were put was as a raw material in the
manufacture of bidis; that without amending the definition
of "raw material" given in cl. (1) of s. 2 of the M.P. Sales
Tax Act, a different rate of tax cannot be levied upon tendu
leaves; and that by taxing tendu leaves at a higher rate
than in the neighbouring States, the cost of bidis
manufactured in the State of Madhya Pradesh increased
considerably and thus it impeded the freedom of trade and
commerce throughout the territory of India.
Dismissing the Appeal,
^
HELD: 1. Schedule I to the M.P. Sales Tax Act 1958 sets
out the list of goods which are exempted from payment of tax
under s.10. Parts I to V of Schedule II set out the
different classes of goods and the rate at which tax is
payable. The residuary Entry No. 1 of Part VI states that
the rate of tax on sales and purchases of "All other goods
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not included in Schedule I or any other part of this
Schedule" shall be the one specified in that Entry.
Therefore, sales or purchases of any class of goods not
specifically mentioned in any of the Entry in Schedule I or
any of the Entries in Parts I to V of Schedule II are
exigible of tax at the rate shown in the residuary Entry,
unless there is any specific provision in the Act to the
contrary as there is in s. 8. [112 D-F]
M/s. Anwarkhan Mahboob Co. v. The State of Bombay (Now
Maharashtra) and others. [1961] 1 S.C.R. 709, relied upon.
2. Merely because a particular provision in a statute
is labelled as an Explanation it does not mean that it is
inserted merely with a view to explain the meaning of words
contained in the section of which it forms a part. The true
scope and effect of an Explanation can only be judged by its
express language and not merely by the label given to it.
The language of Explanation II to cl. (d) of s. 2 of M.P.
Sales
101
Tax Act shows that its purpose is to create a legal fiction,
and that while under the main clause for a person to be
dealer, he must carry on the business of buying, selling
supplying or distributing goods, even if the Central
Government or a State Government or any of their departments
or offices does not carry on such business, if it buys,
sells, supplies or distributes goods, it is to be deemed to
be a dealer for the purpose of the Act, that is, for the
purposes of the levy and collection of the tax under the
Act. After the amendment of cl. (d) by the 1971 Act it is
irrelevant for the purposes of the levy of tax under the Act
whether the Central Government or State Government or any of
their departments or offices have bought or sold goods in
the course of business. [114 B-F]
Orient Paper Mills Ltd. v. The State of Madhya Pradesh
and others, [1971] 28 S.T.C. 532, referred to.
3. Tendu leaves do not stand on the same footing as
other raw materials. Their only use appears to be as a
consumable packing material or container for tobacco in the
manufacture of bidis just as a cigarette paper is used in
the manufacture of cigarettes. Thus, tendu leaves from a
separate class of commercial commodity and it is open to the
State to tax them differently from other commercial
commodities falling in the class of goods known as "raw
material" [119 H; 120 A]
Messrs Mohanlal Hargovind of Jubbulpore v. Commissioner
of Income-tax, C.P. and Berar,Nagpur, L.R. (1948-49) 57 I.A.
235, 237; S.C. A.I.R. 1949 P.C. 311, approved.
Khazajan Chand etc. v. State of Jammu and Kashmir and
Others, [1984] 2 S.C.R. 858; State of Orissa ant others v.
The Titaghur Paper Mills Company Ltd. and another, [1985] 3
S.C.R.26, 65; T.G. Venktataraman, etc. v. State of madras
ant another, [1969] 2 S.C.C. 299; Jaipur Hosiery Mills (P)
Ltd. Jaipur v. The State of Rajasthan and others, [1971] 1
S.C.R. 396, ant Hoeshst Pharmaceutical Ltd. and Another etc.
v. State of Bihar ant Others, [1983] 3 S.C.R. 130, relied
upon.
4. Tendu leaves cannot by any stretch of imagination be
equated with bidis or tobacco because just as cigarettes
paper used for rolling cigarettes cannot be equated by any
stretch of imagination with cigarettes or tobacco. [123 A]
102
5. The increase in the rate of tax on a particular
commodity cannot per se be said to impede free trade and
commerce in that commodity. [124 A]
State of Kerala v. A.B. Abdul Khadir and others, [1970]
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1 S.C.R. 700, relied upon.
6. In the instant case there was nothing to show that
impugned increase in the rate of tax on the sales and
purchases of tendu leaves has put an end to that trade or
has caused that trade to decline nor was there any material
to show that by reason of the increase in the rate of tax on
the sales and purchases of tendu leaves, the trade in bidis
manufactured in the State of Madhya Pradesh had stopped or
had deceased. Art. 301 to 304 were neither enacted to
safeguard the pleasure derived by bidi smokers from an
indulgence in their habit to ensure that bidi smokers would
continue to get for all time bidis manufactured in Madhya
Pradesh at the same price. The increase in the rate of tax
on the sales and purchase of tendu leaves does not also
amount to an unreasonable restriction on the right to carry
on trade or business in tendu leave or bidis. [124 D-E; 124
H; 125 A]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2635 of
1972.
From the Judgment and Order dated 14th October, 1971 of
the Madhya Pradesh High Court in Miscellaneous Petition No.
317 of 1971.
Rameshwar Nath for the Appellants.
A.K. Sanghi for the Respondents.
The Judgment of the Court was delivered by
MADON, J. The First Appellant is a partnership firm
registered under the Indian Partnership Act, 1932, (Act No.
IX of 1932). The Second appellant is one of the partners of
the First appellant Firm. The First appellant Firm carried
on at all relevant times business as manufacturers of bidis
and dealers in tendu leaves. The Appellants filed a writ
petition
103
under Article 226 and 227 of the Constitution of India,
being Miscellaneous Petition No. 317 of 1971, against the
State of Madhya Pradesh and the Divisional Forest Officer,
Raisen Division, challenging the validity of the Amendment
made in sub-section (1) of section 8 of the Madhya Pradesh
General Sales Tax Act, 1958 (M.P. Act No. 2 of 1959), by the
Madhya Pradesh General Sales Tax (Amendment) Act, 1968 (M.P.
Act No.
9 of 1968) to the extent that the said amendment
treated tendu leaves differently from other raw materials
and for an appropriate writ, order or direction quashing the
levy of Sales tax on tendu leaves disposed of by the State
Government and for restraining the State Government and its
Officers from enforcing or giving effect to the Madhya
Pradesh General Sales Tax (Amendment) Act, 1968, to the
extent that it amended section 8(1) of the Madhya Pradesh
General Sales Tax Act, 1958. In view of the reliefs claimed
in the said writ petition, it is difficult to understand how
Article 227 of the Constitution could at all come into the
picture. This obviously was the result of the general laxity
in drafting pleadings which is unfortunately becoming more
prevalent as each year passes. The said writ petition was in
reality a petition filed under Article 226 of the
Constitution. After the enactment of the Madhya Pradesh
General Sales Tax (Amendment and Validation) Act 1971 (M.P.
Act No. 13 of 1971), which inter alia amended the definition
of ’dealer’ in clause (d) of section 2 with retrospective
effect and further amended section 8, the Appellants amended
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their writ petition to challenge also the validity of the
said amendments. The said writ petition was heard along with
sixty-four similar writ petitions filed by other bidi
manufacturers and dealers in tendu leaves and by a common
judgment delivered on October 14, 1971, all these writ
petitions were dismissed with costs. The Appellants
thereafter obtained from the High Court under sub-clause (a?
of clause (1? of Article 133 of the Constitution. as it
stood prior to the amendment of clause (1) by the
Constitution (Thirtieth Amendment) Act, 1972, a certificate
of fitness to appeal to this Court on the ground that the
amount or value of the subject matter of the dispute in the
High Court, namely, the liability to pay tax, as also of the
dispute on appeal was more than Rs. 20,000 and the
Appellants have accordingly filed the present Appeal.
104
Prior to April 1, 1959, there were different laws in
force in the State of Madhya Pradesh relating to the levy of
tax on the sales and purchases of goods, each of them
applying to different regions of the State. These laws were
the Central Provinces and Berar Sales Tax Act, 1947, the
Madhya Bharat Sales Tax Act, Samvat 2007, the Central
Provinces and Berar Sales Tax Act, 1947, as extended to and
in force in the Vindhya Pradesh and Bhopal regions, the
Rajasthan Sales Tax Act, 1954, as in force in the Sironj
region, and the Vindhya Pradesh Sales Tax on Coal Ordinance,
1948. With a view to consolidate and amend all these laws
and to replace them by a uniform law for the levy of tax on
the sales and purchases of goods in the entire State of
Madhya Pradesh, the Madhya Pradesh Legislature enacted the
Madhya Pradesh General Sales Tax Act, 1958 (M.P. Act No. 2
of 1959). This Act will hereinafter be referred to in short
as "the M.P. Sales Tax Act". Under sub-section (2) of
section 1, the M.P. Sales Tax Act extended to the whole of
Madhya Pradesh and under sub-section (3) of section (1) it
was to come into force on such date as the State Government
may, by notification, appoint in that behalf. The M.P. Sales
Tax Act was brought into force on April 1, 1959, by the
Madhya Pradesh Separate Revenue Department Notification No.
622-1586-V-SR dated March 21, 1959, published in the Madhya
Pradesh Gazette dated March 27, 1959, Part 3, Section I, at
page 50. By the M.P. Sales Tax Act all the earlier sales tax
laws in force in the State of Madhya Pradesh were repealed.
All fiscal enactments are fair game for the amending
zeal of the Legislatures and the M.P. Sales Tax Act has not
been an exception to this rule. We are, however, concerned
in this Appeal with only a few sections of the M.P. Sales
Tax Act and with only certain amendments made therein and we
will confine ourselves to referring to them only.
Section 4 of the M.P. Sales Tax Act provides for the
incidence of taxation. Under it every dealer whose turnover
exceeds the limit specified in sub-section (5) of section 4
for a particular period is liable to pay tax on his taxable
turnover in respect of his sales or supplies of goods
effected in Madhya Pradesh. Clause (d) of section 2 defines
the term "dealer". The relevant provisions of that
definition as originally enacted were as follows :
105
"(d) ’dealer’ means any person who carries on the
business of buying, selling, supplying or
distributing goods, directly or otherwise, whether
for cash, or for deferred payment, or for
commission, remuneration or other valuable
consideration and includes - B (i) the Central
or a State Government or any of their departments,
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a local authority, a company, an undivided Hindu
Family or any society (including a co-operative
society), club, firm or association which carries
on such business;
x x x x x x ."
By clause (i) of section 2 of the Madhya Pradesh General
Sales Tax (Amendment and Validation) Act, 1971 (M.P. Act No.
13 of 1971) (hereinafter referred to as "the 1971 Act"),
clause (d) of section 2 was amended. By this amendment, a
new sub-clause (i) was substituted for the original sub-
clause (i) and a further Explanation to the said clause (d)
was inserted as Explanation II. This substituted sub-clause
(i) is as follows:
"(i) a local authority, a company, undivided Hindu
Family or any society (including a co-operative
society), club, firm or association which carries
on such business".
The new Explanation II is as follows :
" Explanation The Central or a State Governments
or any of their departments or offices which,
whether or not in the course of business, buy,
sell, supply or distribute goods, directly or
otherwise, for cash or for deferred payment, or
for commission, remuneration or for other valuable
consideration, shall be deemed to be a dealer for
the purposes of that Act."
By section 10 of the 1971 Act certain amendments, including
the amendments made by clause (i) of section 2, were deemed
to have formed part of the M.P. Sales Tax Act from the date
of its commencement. The new sub-clause (i) was thus
substituted
106
and the new Explanation II was thus inserted in clause (d)
of section 2 with retrospective effect from April 1, 1959.
By section 11 of the 1971 Act, all assessments, re-
assessments, levy or collection of any tax or imposition of
any penalty made or purported to be made and any action or
thing taken or done or purported to have been taken or done
in relation to such assessment, re-assessment, levy,
collection or imposition under the M.P. Sales Tax Act before
the commencement of the 1971 Act were validated as if they
had been made, taken or done under the M.P. Sales Tax Act as
amended inter alia by section 2 of the 1971 Act. The 1971
Act came into force on May 6, 1971.
Section 6 of the M.P. Sales Tax Act provides for the
levy of tax. As originally enacted section 6 read as follows
"6. Levy of tax -
The tax payable by a dealer under this Act shall
be levied on his taxable turnover relating to
goods specified in Schedule II, at the rate and at
the point mentioned in the corresponding entry in
columns 3 and 4 respectively, of the said
Schedule.
Schedule II to the M.P. Sales Tax Act is divided into
several parts. Part VI is the residuary part and contains
only one entry which is as follows :
PART VI
"1. All other goods not 4 per cent On the point of
included in Schedule I first sale
in or any other part of the State by a
this Schedule. dealer liable
to tax. "
Section 11 of the M.P. Sales Tax Act confers upon the State
Government the power to amend, by notification, any entry in
Schedule II. By Notification No. 2741-1789-V-ST dated August
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29, 1967, the rate of tax mentioned in the said residuary
entry was increased from four per cent to seven per cent
with effect from September 1, 1967. Schedule I mentioned in
the said residuary entry contains the list of goods which
are
107
exempted from tax by section 10 of the M.P. Sales Tax Act.
Under Entry 42 of Schedule I to the M.P. Sales Tax Act,
tobacco, manufactured or unmanufactured, cured or uncured,
and tobacco products including cigarettes, cigars, cheroots
and bidis are exempt from tax. Section 7 provides for the
levy of purchase tax. As originally enacted (omitting the
proviso thereto which is not material for our purpose)
section 7 was as follows :
"7. Levy of purchase tax. -
Every dealer who in course of his business
purchases any taxable goods, in circumstances in
which no tax under section 6 is payable on the
sale price of such goods and either consumes such
goods in the manufacture of other goods for sale
or otherwise or disposes of such goods in any
manner other than by way of sale in the State or
despatches them to a place outside the State
except as a direct result of sale or purchase in
the course of inter-State trade or commerce, shall
be liable to pay tax on the purchase price of such
goods at the same rate at which it would have been
leviable on the sale price of such goods under
section 6:
X X X X X X X ."
Clause (1) of section 2 of the M.P. Sales Tax Act, as
originally enacted and as it stood at all relevant times,
defined the expression "raw material". This definition was
as follows :
"(1) ’raw material’ means an article used as an
ingredient in any manufactured goods or an article
consumed in the process of manufacture and
includes fuel and lubricants required for the
process of manufacture, but does not include
bullion and specie".
Section 8 provides for the rate of tax in the case of raw
materials. As originally enacted, section 8 provided as
follows :
108
"8. Rate of tax for raw material. -
(1) Notwithstanding anything contained in this
Act, but subject to such restrictions and
conditions as may be prescribed, the rate of tax
payable on the sale to or purchase by a registered
dealer of any raw material for the manufacture of
other goods for sale in the State of Madhya
Pradesh or in the course of inter-State trade or
commerce shall be one per cent of the sale or
purchase price of such raw material.
(2) Where any raw material purchased by a
registered dealer under sub-section (1) is
utilised by him for any purpose other than a
purpose specified in the said sub-section, such
dealer shall be liable to pay tax at the full rate
mentioned in column 3 of Schedule II on the
purchase of such raw material, together with such
penalty not exceeding twenty-five per cent of the
amount of the sales-tax payable by such dealer as
the Commissioner may determine having regard to
the circumstances in which such use was made."
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Section 8 was amended several times. It is unnecessary to
refer to those amendments except to mention that by the
substitution of section 8(1) made by the Madhya Pradesh
General Sales Tax (Amendment and Validation) Act, 1967 (M.P.
Act No. 23 of 1967) the rate of tax on the sale or purchase
of raw material was increased to two per cent. This
amendment came into force on December 21, 1967. We are
concerned in this appeal only with the amendments made by
the Madhya Pradesh General Sales Tax (Amendment) Act, 1968
(M.P. Act No. 9 of - 1968) (hereinafter referred to as "the
1968 Act"), which was brought into force from April 15,
1968, and the 1971 Act. By the 1968 Act sub-section (1) of
section 8 was substituted as follows :
"(1) Notwithstanding anything contained in section
6 or section 7 but subject to such restrictions
and conditions as may be prescribed, the rate of
tax payable on the sale to or purchase by a
registered dealer of any raw material other than
tendu leaves
109
for the manufacture of other goods for sale in the
State of Madhya Pradesh or in course of inter-
State trade or commerce shall be two per cent of
the sale or purchase price of such raw material :
Provided that when the tax payable on the sale or
purchase of such raw material under sections 6 or
7 is payable at a rate lower than two per cent,
the tax payable under this sub-section shall be
calculated at such lower rate.
"By the 1971 Act sub-section (1) of section 8 was again
substituted and a new sub-section (3) was inserted in
section 8. The amendments made in section 8 by the 1971 Act
were not retrospective and they, therefore came into force
on May 6, 1971, namely, the date of the coming into force of
the 1971 Act, Section 8, as it emerged after the amendments
made by the 1971 read as follows :
"8. Rates of tax for raw material. -
(1) Notwithstanding anything contained in section
6 or section 7 but subject to the provisions of
sub-section (3) and to such restrictions and
conditions as may be prescribed, the tax payable
under section 6 or section 7, as the case may be,
on the sale or purchase by a registered dealer of
any raw material other than tendu leaves for the
manufacture of other goods for sale in the State
of Madhya Pradesh or in the course of inter-State
trade or commerce or in the course of export out
of the territory of India shall be levied at 2 per
cent of the sale or purchase price of such raw
material :
Provided that when the tax payable on the sale or
purchase of such raw material under section 6 or 7
is payable at a rate lower than two per cent, the
tax payable under this sub-section shall be
calculated at such lower rate.
(2) Where any raw material purchased by a
registered dealer under sub-section (1) is
utilised H
110
by him for any purpose other than a purpose
specified in the said sub-section, such dealer
shall be liable to pay as penalty an amount not
less than the difference between the amount of tax
on the sale of such raw material at the full rate
mentioned in column (3) of Schedule II and the
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amount of tax payable under sub-section (1) and
not exceeding one and one-quarter times the amount
of tax at such full rate as the Commissioner may
determine having regard to the circumstances in
which such use was made :
Provided that no such penalty shall be imposed on
a registered dealer where any raw material
purchased by him under sub-section (1), is sold by
him, subject to such restrictions and conditions
as may be prescribed, to another registered
dealer, for the purpose specified in that sub-
section :
Provided further that where such registered dealer
subsequently purchasing the raw material as
aforesaid, utilises it for any purpose other than
the purpose specified in sub-section (1) he shall
be liable to pay the penalty specified under sub-
section (2).
(3) Nothing in this section shall apply to the
sales of any goods made by the Forest Department
of the State Government or any of the offices
under that Department :
Provided that where any goods other than tendu
leaves purchased by any registered dealer from the
Forest Department or any of the offices under that
Department are used by him as a raw material for
the manufacture of other goods for sale in the
State of Madhya Pradesh or in the course of inter-
State trade or commerce or in the course of export
out of the territory of India, the dealer shall be
entitled, in such manner, as may be prescribed to
a set off of an amount equal to the
111
difference between the tax payable at the full
rate on such goods as mentioned in Schedule II and
the tax payable on raw material at the rate
specified in sub-section (1)."
The result of the various amendments to the M.P. Sales
Tax Act referred to above is fourfold, namely,
(1) with effect from April 1, 1959, the Central
Government or a State Government or any of their
departments or offices which buy, sell, supply or
distribute goods, directly or otherwise, for cash
or other consideration, is to be deemed to be a C
dealer for the purposes of the M.P. Sales Tax Act
irrespective of the fact whether such purchase,
sale, supply or distribution of goods is in the
course of business or not;
(2) with effect from April 15, 1968, tendu leaves
ceased to be raw material for the purposes of
section 8 of the M.P. Sales Tax Act and
consequently became exigible to tax at the rate of
seven per cent under section 6 read with the
residuary Entry No. 1 in Part VI of Schedule II:
(3) with effect from May 6, 1971, the provisions
of section 8 ceased to apply to sales of any goods
made by the Forest Department of the State
Government or any of the offices under that
Department, but where goods were purchased by a
registered dealer from the Forest Department or
any of the offices of that Department and used by
him as a raw material for the manufacture of other
goods for sale within the State of Madhya Pradesh
or in the course of inter-State trade or commerce
or in the course of export out of the territory of
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India, such dealer became entitled to a set-off of
an amount equal to the difference between the tax
payable at the full rate on such goods as
mentioned in Schedule II and the tax payable on
raw material at the rate of two per cent; and
112
(4) purchases of tendu leaves by registered
dealers from the Forest Department of the State
Government or any of the offices under that
Department did not, however, qualify for the set-
off mentioned above even though the condition
prescribed for obtaining such set-off was
fulfilled.
Before we turn to the challenge to the constitutional
validity of the impugned amendments to section 8, it will be
convenient to dispose of two other contentions which were
raised in this Appeal. The first contention was that as
sales and purchases of tendu leaves cease to be exigible to
tax under section 8 by reason of the amendments made therein
and as tendu leaves were not mentioned in any of the entries
in Schedule II to the M.P. Sales Tax Act, sales and
purchases of tendu leaves could not be made exigible to tax
under section 6 read with the residuary entry No. 1 in Part
VI of Schedule II. This argument requires merely to be
stated in order to be rejected. Schedule I to the M.P. Sales
Tax Act sets out the list of goods which are exempted from
payment of tax under section 10. Parts I to V of Schedule II
to the M.P. Sales Tax Act set out the different classes of
goods and the rate at which tax is payable in respect of the
sales and purchases thereof. The residuary Entry no. 1 of
Part VI states that the rate of tax on sales and purchases
of "All other goods not included in Schedule I or any other
part of this Schedule" shall be the one specified in that
Entry. Therefore, sales or purchases of any class of goods
not specifically mentioned in any of the entries in Schedule
I or any of the entries in Parts I to V of Schedule II are
exigible to tax at the rate shown in the residuary entry,
unless there is any specific provision in the M.P. Sales Tax
Act to the contrary as there is in section 8 which
originally provided that its provisions would apply
notwithstanding anything contained in the M.P. Sales Tax Act
and after the amendment of section 8 by the Madhya Pradesh
General Sales Tax (Amendment) Act, 1961 (M.P.Act No. 20 of
1961), which was brought into force on June 1, 1961,
provided that they would apply notwithstanding anything
contained in section 6 or section 7 of the M.P. Sales Tax
Act. No authority is necessary for a proposition so obvious
as this but if one were required, we need only refer to the
decision
113
of a Constitution Bench of this Court in M/s. Anwarkhan
Mahboob Co. v. The State of Bombay (now Maharashtra) and
others, [1961] 1 S.C.R. 709 in which this proposition was
laid down where a similar residuary entry fell to be
construed.
The next contention was that neither the State
Government nor any of its departments including the Forest
Department or its offices was a dealer within the meaning of
that term as defined in clause (d) of section 2 as none of
them carried on the business of buying, selling, supplying
or distributing goods and that Explanation II which was
inserted in the said clause (d) did not have the effect of
enlarging the concept of a dealer as defined in that clause.
In support of this contention reliance was placed upon a
decision of the Madhya Pradesh High Court in Orient Paper
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Mills Ltd. v. The State of Nadhya Pradesh and others, [1971]
28 S.T.C. 532 in which it was held that the State Government
or the Forest Department could not, merely by selling the
forest produce grown on their land, be regarded as carrying
on any business of buying, selling, supplying or
distributing goods and, therefore, in respect of mere sales
of forest produce, neither the State Government nor the
Forest Department was a dealer within the meaning of the
definition of that term contained in clause (d) of section
2. As the Statement of Objects and Reasons to the
Legislative Bill which, when enacted became the 1971 Act,
expressly states it was in view of the judgments of the
Madhya Pradesh High Court on various provisions of the M.P.
Sales Tax Act whereby the State stood to lose a considerable
amount of revenue by way of tax and penalty, that it was
proposed to amend the M.P. Sales Tax Act suitably in the
light of the said judgments in order to safeguard the
revenue of the State and to validate the imposition of
penalty and that amongst the amendments which were being
made was that the definition of "dealer" was proposed to be
amended in the light of the judgment in the case of Orient
Paper Mills Ltd. v. The State of Madhya Pradesh and others,
[1971] 28 S.T.C. 532, so as "to include the Central
Government or a State Government selling goods not during
the course of business". In this context, it is pertinent to
note that for a person to be a dealer within the meaning of
clause (d), he must be one who carries on the business of
buying, selling, supplying or distributing goods and the
definition as originally enacted included within
114
its scope the Central Government or a State Government or
any of their departments which carried on such business.
This definition was retrospectively amended by the 1971 Act,
and the reference to the "Central Government or a State
Government or any of their departments" in sub-clause (I) of
clause (d) was omitted from that sub-clause and Explanation
II was added which expressly provided that "the Central
Government or a State Government or any of their departments
or offices which, whether or not in the course of business,
buy, sell, supply or distribute goods, directly or
otherwise, for cash . . . Or for other valuable
consideration shall be deemed to be a dealer for the
purposes of this Act". Merely because a particular provision
in a statute is labelled as an Explanation, it does not mean
that it is inserted merely with a view to explain the
meaning of words contained in the section of which it forms
a part. The true scope and effect of an Explanation can only
be judged by its express language and not merely by the
label given to it. The language of Explanation II shows that
its purpose is to create a legal fiction, and that while
under the main clause, for a person to be a dealer, he must
carry on the business of buying, selling, supplying or
distributing goods, even if the Central Government or a
State Government or any of their departments or offices does
not carry on such business, if it buys, sells, supplies or
distributes goods, it is to be deemed to be a dealer for the
purposes of the M.P. Sales Tax Act, that is, for the
purposes of the levy and collection of tax under the M.P.
Sales Tax Act. After the amendment of clause (d) by the 1971
Act, it is irrelevant for the purposes of the levy of tax
under the M.P. Sales Tax Act whether the Central Government
or a State Government or any of their departments or offices
have bought or sold goods in the course of business. There
is, therefore, no substance in the above contention and it
must accordingly be rejected.
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The challenge to the constitutional validity of the
impugned amendments to section 8 was founded upon Articles
14, 286(3), 301 and 304 of the Constitution.
So far as the challenge under Article 14 is concerned
the submissions made in support thereof were that by the
impugned amendments tendu leaves were discriminated against
hostilely as compared with other raw materials in that the
rate of tax on the sales and purchases of tendu leaves was
115
made much higher than the rate of tax on the sales and
purchases of other raw materials, not only within the State
of Madhya Pradesh but also as compared with the rate of tax
in the neighbouring States, and that there was no reasonable
basis for making a distinction between tendu leaves and
other raw materials in as much as the only use to which
tendu leaves were put was as a raw material in the
manufacture of bidis. As pointed out by Lord Greene
delivering the opinion of the Judicial Committee of the
Privy Council in Messrs Mohanlal Hargovind of Jubbulpore v.
Commissioner of Income-tax C.P.and Berar, Nagpur, L.R.
[1948-49] 57 I.A. 235, 237; S.C. A.I.R. 1949 P.C. 311
bidis are country-made cigarettes composed of tobacco
contained or rolled in leaves of a tree, known as tendu
leaves, which fulfil a corresponding function in the
finished cigarette to that played by a cigarette paper.
Thus, without the use of tendu leaves bidis cannot be
manufactured. Until the amendment to section 8 made by the
1968 Act, for the purpose of levying tax on the sales and
purchases of tendu leaves the State of Madhya Pradesh had
throughout treated tendu leaves in the same manner as other
raw materials. From this, however, it does not follow that
there was any constitutional or legal obligation upon the
State to continue doing so far all time. The structure of
our Constitution is federal in character. A salient feature
of such a Constitution is the distribution of legislative
and administrative powers between the federated unit and the
federating units, that is, between the Central or Federal
Government and the State or Provincial Governments. In
keeping with its federal character, our Constitution has
bifurcated the field of taxation as regards sales and
purchases of goods between the Union and the State. Under
clause (1) of Article 246 of the Constitution, Parliament
has exclusive power to make laws with respect to any of the
matters enumerated in List I in the Seventh Schedule to the
Constitution which is headed the "Union List". Under clause
(2) of the same Article, the Legislature of any State has
the exclusive power to make laws for such State or any part
thereof with respect to any of the matters enumerated in
List II of the Seventh Schedule to the Constitution which is
headed the "State List". The M.P. Sales Tax was enacted
after the Constitution was amended by the Constitution
(Sixth Amendment) Act, 1956. Under the Constitution as so
amended, taxes on the sale or purchase of newspapers and on
advertisements published therein and taxes on
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the sale or purchase of goods other than newspapers, where
such sale or purchase takes place in the course of inter-
State trade or commerce, fall within the exclusive
legislative field of Parliament under Entries 92 and 92A
respectively in the Union List, while under Entry 54 in the
State List taxes on the sale or purchase of goods other than
newspapers fall within the exclusive legislative field of
the State Legislatures subject to the provisions of Entry
92A in the Union List. It is unnecessary to dilate upon this
subject for all that is required to be done is to quote the
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following passage from the judgment of this Court in
Khazajan Chand etc. v. State of Jammu and Kashmir & Ors.,
[1984] 2 S.C.R. 858 (at pages 873-4):
"Our Constitution is federal in its structure and
a salient feature of a federal polity is
distribution of legislative and administrative
powers between the federated unit and the
federating units, that is between the federal
government and the State governments. Thus,
matters in respect of which our Constitution-
makers felt that there should be uniformity of law
throughout the country have been placed by them in
Union List (List I in the Seventh Schedule to the
Constitution) conferring exclusive power upon
Parliament to make laws with respect thereto,
while matters which they felt were of local
concern and may require laws to be made having
regard to the particular needs and peculiar
problems of each State have been assigned to the
State Legislatures by placing them in List II of
the Seventh Schedule, that is, the State List.
Inter-State trade and commerce is a matter which
affects all the States in India and thus the whole
country. It is for this reason that in the Seventh
Schedule to the Constitution the subject of taxes
on the sale or purchase of goods taking place in
the course of inter-State trade or commerce has
been put in List I and made a Union subject. Taxes
on the sale or purchase of goods taking place
within the State affect only those who carry on
the business of buying and selling goods within
the State and, therefore, this subject has been
put in List II of the Seventh Schedule, namely,
the State
117
List. Sales tax is the biggest source of revenue
for a State and it is for the State to decide how
and in what manner it will raise this revenue and
to determine which particular transactions of sale
or purchase of goods taking place within that
State should be taxed and at what rates, and which
particular transactions of sale or purchase of
goods should be exempted from tax or taxed at a
lower rate having regard to the subject-matter of
sale, as for instance, where particular goods
constitute necessities for the poorer classes of
people or where the goods in question are of such
a nature as are required to be exempted from tax
or taxed at a lower rate in order to encourage a
local industry. Consideration of these matters
must, from the nature of things, differ from State
to State. Similarly, it is for each State to
determine the methods it will adopt to collect its
revenue from this source and to decide which
methods would be most efficacious for this
purpose. The provision of the sales tax law of
each State must, therefore, necessarily differ in
various respects from the provisions of sales tax
laws of other States. If the provisions of the
legislation of every State on a particular topic
are to be identical in every respect, there is no
purpose in including that topic in the State List
and it may as well be included in the Union List.
Merely because the provisions of a State law
differ from the provisions of other State laws on
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the same subject cannot make such provisions
discriminatory." F
Further, as pointed out by this Court in State of Orissa and
others v. m e Titagarh Paper Mills Company Ltd. and another,
[1985] 3 S.C.R. 26, 65, a State is free when there is a
series of sales in respect of the same goods to tax each one
of such sales or purchases in that series or to levy the tax
at one or more points in such series of sales or purchases.
Legislations of all States in this respect are not uniform,
some States having adopted a single point levy, others a two
point levy, and yet others a multi-point levy.
Just as section 2 of the M.P. Sales Tax Act contains a
definition of the terms "raw material", it also contains in
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clause (g) of that section a definition of the term
"goods". Under that definition, the term "goods" inter alia
means "all kinds of movable property other than actionable
claims, newspapers, stocks, shares, securities or Government
stamps and includes all materials, articles and
commodities". If the contention that sales and purchases of
all raw materials must be taxed at the same rate were true,
it would necessarily follow that sales and purchases of all
goods must also be taxed at the same rate. A submission
which leads to such an absurd result can hardly be
contenanced by the Court.
Arguments such as those advanced before us have been
consistently rejected by this Court. We need give only four
instances. In T.G. Venkataraman, etc. v. State of Madras and
another, [1969] 2 S.C.C. 299, a notification issued under
the Madras General Sales Tax Act, 1959, which imposed tax on
sales of cane jaggery and exempted sales of palm jaggery,
was challenged on the ground that it violated Article 14
because it was discriminatory and opposed to equal treatment
under Article 14. This challenge was repelled by the Court
holding that cane jaggery and palm jaggery were commercially
different commodities. In Jaipur Hosiery Mills (P) Ltd.,
Jaipur v. The State of Rajasthan and others, [1971] 1 S.C.R.
396, a notification issued under the Rajasthan Sales Tax
Act, 1950, which exempted from tax the sale of any garment
the value of which did not exceed four rupees but excluded
"hosiery products and hats of all kinds" from this
exemption, was challenged under Article 14. Repelling this
challenge, this Court held (at Pages 397-8) :
"It is well settled that although a taxing statute
can be challenged on the ground of infringement of
Art. 14 but in deciding whether the law challenged
is discriminatory it has to be borne in mind that
in matters of taxation the legislature possesses
the large freedom in the matter of classification.
Thus wide discretion can be exercised in selecting
persons or objects which will be taxed and the
statute is not open to attack on the mere ground
that it taxes some persons or objects and not
others. It is only when within the range of its
selection the law operates unequally and cannot be
justified on the basis of a valid classification
119
that there would be a violation of Art. 14".
In Hoechst Pharmaceuticals Ltd. and Another etc. v. State of
Bihar and Others, [1983] 3 S.C.R. 130 the Constitutional
validity of sub-section (3) of section 5 of the Bihar
Finance Act, 1981, was challenged inter alia under Article
14. Sub-section (1) of section 5 provided for the levy of a
surcharge, in addition to the tax payable, on every dealer
whose turnover during a year exceeded rupees five lakhs
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while sub-section (3) of section 5 prohibited such a dealer
from collecting the amount of surcharge payable by him from
the purchasers. This challenge was repelled. In the course
of the judgment this Court said (at page 190) :
"On questions of economic regulations and related
matters, the Court must defer to the legislative
judgment. When the power to tax exists, the extent
of the burden is a matter for discretion of the
law-makers. It is not the function of the Court to
consider the propriety or justness of the tax, or
enter upon the realm of legislative policy. If the
evident intent and general operation of the tax
legislation is to adjust the burden with a fair
and reasonable degree of equality, the
constitutional requirement is satisfied. The
equality clause in Art. 14 does not take from the
State power to classify a class of persons who
must bear the heavier burden of tax. The
classification having some reasonable basis does
not offend against that clause merely because it
is not made with mathematical nicety or because in
practice it results in some inequalities."
In Khazajan Chand etc. v. State of Jammu and Kashmir and
others, a challenge to section 8(2) of the Jammu and Kashmir
General Sales Tax Act, 1962, on the ground that it was
violative of Article 14 as it hostilely discriminated
against dealers in the State of Jammu and Kashmir as
compared with dealers in other States in the matter of the
rate at which interest was payable when default was made in
payment of tax by the prescribed time was negatived by this
Court.
Tendu leaves do not stand on the same footing as other
120
raw materials. Their only use appears to be as a consumable
packing material or container for tobacco in the manufacture
of bidis just as a cigarette paper is used in the
manufacture of cigarettes. Thus, tendu leaves form a
separate class of commercial commodity and it is open to the
State to tax them differently from other commercial
commodities falling in the class of goods known as "raw
material". The High Court has justified the different
treatment given to tendu leaves as compared to that given to
other raw materials by a reference to the Madhya Pradesh
Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 (M.P. Act No.
29 of 1964), which was passed in order to control the trade
in tendu leaves. The long title of that Act is "An Act to
make provision for regulating in the public interest the
Trade of Tendu leaves by creation of State monopoly in such
trade". In pursuance of the rule-making power conferred by
section 19 of the said Act, the State Government made rules
called the Madhya Pradesh Tendu Patta (Vyapar Viniyaman)
Niyamavali, 1966. Under the said Act, the State Governments
to appoint agents in respect of different units for the
purpose of purchase of and trade in tendu leaves and no
person other than the State Government or an officer of the
State Government authorized in writing in that behalf or an
agent in respect of the unit in which the tendu leaves have
grown can purchase or transport tendu leaves. Further, the
State Government is authorized by the said Act to fix, In
consultation with the Advisory Committee to be set up there
under, the price at which tendu leaves are to be purchased
by it or its authorized officer or agent from the growers of
tendu leaves other than the State Government in the Revenue
Commissioner’s Division. The said Act received the assent of
the President on November 3, 1964, which assent was
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published in the Madhya Pradesh Gazette Extraordinary on
November 28, 1964, and was brought into force in the whole
of Madhya Pradesh with effect from November 28, 1964, by
Forest Department Notification No. 14334-X-64 dated November
28, 1964, published in the Madhya Pradesh Gazette
Extraordinary dated November 28, 1964, at page 3368. The
said Act, created a monopoly in the State Government with
respect to the trade in tendu leaves in the State as tendu
leaves are a major natural produce of the State. According
to the High Court, the said Act, therefore, put the trade in
tendu leaves in a separate class from the trade in other raw
materials and consequently it provided a reasonable basis
for treating the trade in tendu
121
leaves differently from the trade in other raw materials. In
our opinion, it was strictly not necessary for the High
Court to go to the said Act for the purpose of seeking
justification for levying tax on the sales and purchases of
tendu leaves at a rate different from that on the sales and
purchases of other goods. As pointed out earlier, tendu
leaves constituted a different commercial commodity and it
was open to the State to tax them at a rate different from
the rate of tax on other commodities. The said Act would be
a justification for treating differently the State as a
dealer in tendu leaves from other dealers in tendu leaves.
We may mention that the validity of the said Act was upheld
by a Constitution Bench of this Court in H/s. Anwar Yhan
Mehbaob & Co. v. State of Madhya Pradesh and others, [1966]
2 S.C.R. 40.
In support of the challenge under Article 14, it was
further contended that without amending the definition of
"raw material" given in clause (1) of section 2 of the M.P.
Sales Tax Act, a different rate of tax cannot be levied upon
tendu leaves. Section 8 was amended both by the 1968 Act and
the 1971 Act but the definition of "raw material" was not
amended and it continued to remain the same. We are unable
to understand what difference this makes. By section 8 tendu
leaves are expressly excluded from the concessional rate of
tax in respect of other raw materials. Clause (1) of section
2 defines the term "raw material". This cannot, however,
prevent the State from taxing different classes of raw
materials at different rates. If this contention of the
Appellants was to be accepted, it would lead to the absurd
result that as goods are defined clause (g) of section 2 to
mean all kinds of movable property excluding certain
specific articles mentioned therein, section 6 and Schedule
II to the M.P. Sales Tax Act which provide for different
rates of tax on different classes of goods are also bad in
law. This contention is thus wholly without any substance.
Turning now to the challenge under Article 286(3) to
the validity of the impugned amendments, we find this
challenge to be as hollow and untenable as the challenge
under Article 14. Clause (3) of Article 286, after its
amendment by the Constitution (Sixth Amendment) Act, 1956,
provided as follows:
"(3) Any law of a State shall, in so far as it
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imposes, or authorises the imposition of, a tax on
the sale or purchase of goods declared by
Parliament by law to be of special importance in
inter-State trade or commerce, be subject to such
restrictions and conditions in regard to the
system of levy, rates and other incidents of the
tax as Parliament may by law specify."
Clause (3) of Article 286 was substituted by the
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Constitution (Forty-sixth Amendment) Act, 1982. Clause (3)
as so substituted does not affect the position so far as
goods declared by Parliament by law to be of special
importance in inter-State trade or commerce are concerned.
In pursuance of the power conferred by Article 286(3)
Parliament has declared by section 14 of the Central Sales
Tax Act, 1956 (Act No. LXXIV of 1956), certain goods to be
of special importance in inter-State trade or commerce.
Amongst the goods so declared is "tobacco, as defined in
Item No.4 of the First Schedule to the Central Excises and
Salt Act, 1944". The relevant provisions of the said Item
No.4 are as follows :
"4. TOBACCO -
’Tobacco’ means any form of tobacco, whether cured
or uncured and whether manufactured or not, and
includes the leaf, stalks and stems of the tobacco
plant, but does not include any part of a tobacco
plant while still attached to the earth.
I. Unmanufactured tobacco -
x x x x x
II. Manufactured tobacco -
x x x x "
Under the sub-heading "Manufactured tobacco" are set out
cigars and cheroots, cigarettes, and bidis in the
manufacture of which any process has been conducted with or
without the aid of power. Tendu leaves nowhere feature in
the said Item No.4 though tobacco and bidis do. It is,
therefore, tobacco
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and bidis which are goods of special importance in inter-
State trade and commerce and not tendu leaves. Tendu leaves
cannot by any stretch of imagination be equated with bidis
or tobacco just as cigarette paper used for rolling
cigarettes cannot be equated by any stretch of imagination
with cigarettes or tobacco. This being the position, it is
wholly unnecessary to consider the other arguments advanced
in support of this challenge.
The challenge to the impugned amendments under Articles
301 and 304 of the Constitution was that by taxing tendu
leaves at a higher rate than in the neighbouring States, the
cost of bidis manufactured in the State of Madhya Pradesh
increased considerably and thus it impeded the freedom of
trade and commerce throughout the territory of India.
Article 301 provides as follows :
"301. Freedom of trade, commerce and intercourse.
Subject to the other provisions of this Part,
trade, commerce and intercourse throughout the
territory of India shall be free."
Under clause (b) of Article 304 of the Constitution, the
Legislature of a State may by law impose such reasonable
restrictions on the freedom of trade, commerce or
intercourse with or within that State as may be required in
the public interest. The Bill or any amendment of an Act for
the purposes of clause (b), is, however, not to be
introduced or moved in the Legislature of a State without
the previous sanction of the President. It may be mentioned
that the M.P. Sales Tax Act had received the assent of the
President on February 27, 1959, but neither the 1968 Act nor
the 1971 Act was submitted to the President for his sanction
and the question, therefore, of either of these Acts
receiving the sanction of the President cannot arise.
The only question, therefore, is whether taxing the
sales and purchases of tendu leaves at a higher rate than in
the neighbouring States violates Article 301 by impeding the
free trade and commerce in tendu leaves throughout the
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territory of India. An increase in the rate of tax on the
sales and purchases of tendu leaves would necessarily result
in an
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increase in the cost of manufacture of bidis and
consequently in their sale price. An increase in the rate of
tax on a particular commodity cannot per se be said to
impede free trade and commerce in that commodity. In State
of Kerala v. A.B. Abdul Khadir and others, [1970] 1 S.C.R.
700, after referring to and explaining the earlier decisions
on this subject, this Court held as follows (at page 710) :
"As we have already pointed out it is well
established by numerous authorities of this Court
that only such restrictions or impediments which
directly and immediately impede the free flow of
trade, commerce and intercourse fall within the
prohibition imposed by Art. 301. A tax may in
certain cases directly and immediately restrict or
hamper the flow of trade, but every imposition of
tax does not do so. Every case must be judged on
its own facts and in its own setting of time and
circumstance."
There was no material before the High Court and no
material before us to show that the impugned increase in the
rate of tax on the sales and purchases of tendu leaves has
put an end to that trade or has caused that trade to decline
nor was there any material before the High Court or before
us to show that by reason of the increase in the rate of tax
on the sales and purchases of tendu leaves, the trade in
bidis manufactured in the State of Madhya Pradesh has
stopped or has decreased. Far from this happening, on the
contrary, all factors point to the opposite conclusion.
Tendu leaves are a major natural produce of the State of
Madhya Pradesh and had the impugned increase in the rate of
tax on the sales and purchases of tendu leaves the effect of
putting an end to the trade in tendu leaves or bidis or of
causing a decline in that trade, the revenue of the State
would have suffered and the State would have once again made
the sales and purchases of tendu leaves exigible to a lower
or concessional rate of tax. What the State, however, has in
fact done is to increase the rate of tax mentioned in the
residuary entry, namely, Entry No. 1 in Part VI of Schedule
II to the M.P. Sales Tax Act, and consequently on the sales
and purchases of tendu leaves, so that as from October 1,
1978, the rate is ten per cent. After all, we must bear in
mind that Articles 301 to 304 were
125
neither enacted to safeguard the pleasure derived by bidi
smokers from an indulgence in their habit nor to ensure that
bidi smoker would continue to get for all time bidis
manufactured in Madhya Pradesh at the same price.
The validity of the impugned amendment was also
challenged under Article 19(1)(g) of the Constitution. No
attempt was made to argue this point nor any materials in
support thereof were produced either in the High Court or
before us and we fail to see how the increase in the rate of
tax on the sales and purchases of tendu leaves amounted to
an unreasonable restriction on the right to carry on trade
or business in tendu leaves or bidis. The only points argued
before us were those which we have dealt with above.
In the result, this appeal fails and is dismissed with
costs.
A.P.J. Appeal dismissed.
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