Mobile View
Main Search Advanced Search Disclaimer
Cites 10 docs - [View All]
the Central Sales Tax Act, 1956
Section 15 in the Central Sales Tax Act, 1956
Article 32 in The Constitution Of India 1949
Section 12 in the Central Sales Tax Act, 1956
Article 14 in The Constitution Of India 1949
Citedby 14 docs - [View All]
Park View Enterprises vs State Government Of Tamil Nadu on 18 October, 1989
Park View Enterprises vs State Government Of Tamil Nadu on 18 October, 1989
Spences Hotel Pvt. Ltd. And Anr vs State Of West Bengal And Ors on 15 February, 1991
M/S. Satnam Overseas (Export) ... vs State Of Haryana & Anr.Etc.Etc on 24 October, 2002
Karnataka Bank Ltd vs State Of A.P. & Ors on 21 January, 2008

User Queries
View the actual judgment from court
Supreme Court of India
M/S. Steelworth Ltd vs State Of Assam on 16 January, 1962
Bench: B.P. Sinha, Cj, J.L. Kapur, M. Hidayatullah, J.C. Shah, J.R. Mudholkar
           PETITIONER:
M/s. STEELWORTH LTD.

	Vs.

RESPONDENT:
STATE OF ASSAM

DATE OF JUDGMENT:
16/01/1962

BENCH:


ACT:
     Sales Tax-Provincial legislation imposing tax
in certain  circumstances-Constitutional validity-
Amendment-Effect-Assam Sales  Tax  Act,1947  (Act,
XVII of	 1947), as  amended  by	 Assam	Sales  Tax
(Amendment Act,	 1960) (Act,  XIII of  1960) s. 15
(1) (b)	 (i) (b)  and (c)-Constitution	of  India,
Arts. 14, 19 (1)(f).



HEADNOTE:
     The  petitioner   carried	on   business	of
manufacturing,	selling	 and  supplying	 iron  and
steel materials	 in the State of Assam. Before the
Assam Sales  Tax Amendment  Act of 1960, it held a
registration  certificate   under  which  all  its
purchases for  use in manufacture or production of
goods taxable  under the  Act were  exempted  from
Sales Tax,  but	 after	the  amendment	it  became
liable to pay tax on those goods. It was contended
that by	 omission of  sub-cl. (b),  discrimination
was   introduced    by	 differentiating   between
materials  bought  for	articles  to  be  supplied
against a  contract and articles produced and sold
by  the	  petitioner  and  that	 this  was  not	 a
reasonable classification
590
based  on   any	  intelligible	 differentia   and
therefore, the	amendment by Act XIII of 1960, was
violative  of  Arts.  14  and  19(1)  (f)  of  the
Constitution.
^
     Held, that the object of the amending Act was
to raise  revenue for  the State.  It was  for the
legislature to	decide	as  to	what  articles	it
should tax and what articles it should not tax and
if  it	decided	 to  impose  the  tax  on  certain
articles it thought necessary, that was a question
of policy  into which  the courts cannot enter and
in  such   circumstances  per	se  there   is	no
discrimination.	 Besides,  the	provision  against
discrimination was  not on articles but on persons
and  the   petitioner  failed	to  show  how  the
imposition  of	 this  tax   was  an  unreasonable
restriction on the right to carry on trade.



JUDGMENT:

ORIGINAL JURISDICTION Writ Petition No. 184 of 1961.

Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights.

C. B. Agarwala, R. L. Agarwala and P. C. Agarwala, for the petitioner.

Naunit Lal, for the respondents. 1962. January 16. The Judgment of the Court was delivered by KAPUR J.-This is a petition under Art. 32 of the Constitution challenging the legality of the amendment introduced in s. 15 of the Assam Sales Tax Act, 1947 (Act XVII of 1947), by s. 2 of the Assam Sales Tax (Amendment) Act, 1960 (Act XIII of 1960), by which sub-s. (b) of item (i) of sub-cl.

(b) of cl. (1) was deleted and thereby sales of goods to a registered dealer intended for use in production of goods for sale became liable to sales tax.

The appellant Company is a limited company carrying on in the State of Assam its business of manufacturing, selling and supplying iron and steel materials. It held a Registration Certificate under the Assam Sales Tax Act, as it was before the amendment of 1960. Under that Act all its purchases for use in manufacture or production of goods taxable under the Act were exempt from sales tax but after the amendment of the Act there was a deletion in 591 the Registration Certificate of certain goods, e.g., cast iron, iron plates, steel bars and galvanised wire which were used by the petitioner in the manufacture of its finished products which were also taxable in the State. Consequently it has become liable to pay tax on those goods purchased for use in the manufacture of goods and the cost of production has thereby gone up.

Three points were raised by the petitioner:- (1) that the amendment introduced by Act XIII of 1960 is violative of Art. 14 because it discriminates between manufacturers who supply goods according to orders received and others who manufacture goods on their own account and sell them;

(2) that the restriction imposed by the Amending Act is excessive and violative of Art. 19 (1)(f); and (3) that the refusal to amend the Registration Certificate by not reinstating the articles mentioned above affects the rights of the petitioner Company under Art. 19(1) (f).

For the purpose of deciding these questions it is necessary to refer to the scheme of the Assam Sales Tax Act, 1947 (Act XVII of 1947). By s. 2(2)(a)(b) of that Act 'Contract' is defined as:

"2. In this Act, unless there is anything repugnant in the subject or context,-
(2) "contract" means any agreement for carrying out for cash or deferred payment or other valuable consideration,-
(a) the preparation, contruction, fittingout, improvement or repair of any moveable property or of any building, road, bridge or other immoveable property, or 592
(b) the installation or repair of any machinery affixed to a building or other immoveable property."

Section 9 of that Act provides for compulsory registration. Section 12 provides that a dealer registered under s. 9 shall be granted a certificate of registration which shall specify the class or classes of goods in which the said dealer carries on business and such other particulars as may be prescribed. Section 15(1)(b)(i)(b) and (c) deals with exemptions. It reads:-

"15 The net turnover shall be determined by deducting from dealer's gross turnover during any given period-
(1) his turnover during that period on.
(a) ... ... ... ... ... ... .... .....
(b) sale to a registered dealer of-
(i) goods specified in the purchasing dealer's certificate of registration as being intended by him for-
	  (a) ...  ... ...  ... ...  ...     .....
.....
(b) use in manufacture or production of any goods, the sale of which is taxable under this Act,
(c) use in the execution of any contract."

Sub-clause (b) has now been omitted by the amending Act above referred to as a result of which from the gross turnover of a dealer goods specified in the certificate of registration as being intended by him for use in manufacture or production of any goods for sale has now been omitted.

The argument raised was that by the omission of sub-cl. (b) discrimination was intended as between materials which were to be used for manufacture of goods and to be sold on their own account by the petitioner Company and materials which were purchased for use in the execution of any contract, 593 It was also contended that the object of the amendment of the Sales Tax Act was to prevent evasion of Sales Tax by manufacturing goods and sending them out of the State and therefore that object could have been achieved by taxing only those material which were so intended. The amending Act is really a part of the General Sales Tax Act of the State of Assam the object of which is to raise revenue in the State. It is for the Legislature to decide as to what articles it should tax and what articles it should not tax and if it decided to tax certain articles in order to effectuate its policy it is difficult to see how that would introduce discrimination. But it was argued that discrimination is introduced by differentiating between materials bought for articles to be supplied against a contract and articles produced and sold by the petitioner and that this was not a reasonable classification nor was there any intelligible differentia in this classification. In our opinion this argument is without force. The Legislature, having chosen the articles on which it thinks necessary to impose a tax, has decided to impose the tax and it is difficult to see how it can be said that the goods supplied against a contract and goods manufactured and sold by the petitioner are similarly situated. Besides the provision against discrimination is not on articles but on persons.

It has not been shown how the imposition of this tax is an unreasonable restriction on the rights of the petitioner to carry on trade, but it was submitted that by this means the petitioner will not be able to compete with the manufacturers outside the State of Assam. Assuming that this is so, it is clear that goods which are purchased are put to different uses and if the legislature thinks that certain classes of goods should pay the tax and not others that is a question of policy into which the courts cannot enter. We can only say that in such circumstances, per se there is no discrimination. There is no force in the second contention either.

594

In view of our decision on these two points the third point, that is, the refusal of the Sales Tax Officer to amend the registration certificate will have no force.

In the result this petition fails and is dismissed and the rule is discharged. The petitioner will pay the costs of the respondent.

Petition dismissed.