TMI Blog2005 (1) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... ortantly the ADE Act of 1957 under which no sales tax can be levied on tobacco at all if the State was to take the benefits under that Act. Given the language of entry 62 and the legislative history we hold that entry 62 of List II does not permit the levy of tax on goods or articles. In our judgment, the word "luxuries" in the entry refers to activities of indulgence, enjoyment or pleasure. Inasmuch as none of the impugned statutes seek to tax any activity and admittedly seek to tax goods described as luxury goods, they must be and are declared to be legislatively incompetent. - Writ Petition (Civil) No. 567-569 of 1994, 123-125 of 1995, 6891, 7870 of 1996, 2123, 2124, 2125, 2126, 2127, 2552, 2553 of 1999, 6365 of 2000 - - - Dated:- 20-1-2005 - LAHOTI R.C., RUMA PAL, ARUN KUMAR, MATHUR G.P. AND THAKKER C.K. JJ. Other Advocates: Pallav Shishodia, Mrs. Kavita Dahiya, Ms. Sushma Sharma, Sanjeev Dahiya, Ajay Aggarwal, Ms. Meghalee Barthakur, Rajan Narain, Vivek Vishnoi, Arohi Bhalla, Gaurav Kejariwar, Punit Dutt Tyagi, Mukesh Verma, Pavan Kumar, Ms. Promila, Tushar Rao, A. Ramesh, E.R. Kumar, Ms. Ranjeeta Rohatgi, P.H. Parekh, Ajay K. Jain, Nand Kishore, Pramod Dayal, Ms. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... although the principal question to be resolved would be the ambit of entry 62 of List II, the arguments require a determination of the nature of the tax sought to be levied by the three statutes in dispute before us, before we resolve the question. 4.. Uttar Pradesh Tax on Luxuries Act, 1995: On May 14, 1994, an Ordinance known as the Uttar Pradesh Tax on Luxuries Ordinance, 1994 (being U.P. Ordinance No. 8 of 1994) was promulgated. The object of the Ordinance, as stated in the preamble was to "provide for levy and collection of tax on supply of tobacco and matters connected therewith or incidental thereto". It consisted of a few sections of which relevant ones are quoted. 5.. Section 3 of the Ordinance which provided for the levy of luxury tax read as follows: "Levy of luxury tax. -Every tobacconist shall be liable to pay luxury tax on his turnover of 'receipts' at such rate, not exceeding twenty five per cent, as the State Government may, by notification, specify and different rates may be specified for different classes of tobacco: Provided that a 'tobacconist' who does not manufacture or receive tobacco from outside the State shall be liable to pay tax on his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of doubts, it is clarified that a person: (1) who exclusively supplies unmanufactured tobacco whether or not in a sealed container but not under a brand name; or (2) not being a person referred to in sub-clause (iii) who exclusively obtains tobacco by way of purchase or otherwise from a registered tobacconist; shall not be deemed to be a tobacconist for the purposes or this clause;" 7.. Briefly therefore the U.P. Act provides for the levy of luxury tax on the receipts from the supply of tobacco by a tobacconist. It is the act of supply which is the taxable event. Indeed the preamble of the U.P. Ordinance as it originally stood said that the object was to provide for "levy and collection of tax on the supply of tobacco". Here we may briefly indicate the core of the controversy between the parties: If the Act is in pith and substance referable to entry 54 of List II within the words "taxes on the sale or purchase of goods" in that entry as the assessees claim, then the tax would be subject to certain constitutional curbs on the power of the State to levy sales tax on tobacco. If on the other hand it is referable to entry 62 of List II as a "tax on luxury" there would be no suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negatived. It was held that tobacco could not be put on par with liquor which had been held by this Court to be "res extra commercium". It was also held that the impugned levy was not in any way a regulatory measure. The High Court also came to the conclusion that classification for the purpose of levy of the tax in respect of products of tobacco had been made on an arbitrary basis. The writ petitions were accordingly allowed and the levy of luxury tax was struck down on the ground that it violated articles 14 and 301 of the Constitution. Special leave petitions have been filed from the decision of the Allahabad High Court both by the writ petitioner (to the extent that the High Court held that the levy was legislatively competent) as well as the State of Uttar Pradesh which assailed the ultimate conclusion of the High Court. 11.. Leave was granted in the several special leave petitions on January 2, 1995. The appeals were directed to be tagged with the writ petitions under article 32. Interim relief was granted to the effect that the dealers (tobacconists) would file their returns with the competent authority in accordance with the impugned Ordinance. No action on the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the tobacco products so sold at the time of or before the delivery thereof and the price, if charged separately, of any primary or secondary packing; and (b) in respect of the supply of luxuries of tobacco products made by him otherwise than by way of sale, the normal price at which such tobacco products are sold." 16.. "Tobacconist" has been defined in section 2(kkk) as: " 'Tobacconist' means a person who supplies whether by way of sale or otherwise luxuries, like, tobacco products manufactured by him or purchased from other States or from other persons in this State and includes any person who for the purpose of business gets the manufacturing done from any person whether or not on job work basis." 17.. Several writ petitions were filed before the A.P. High Court challenging the amendment to the Act claiming that the tax was a tax on the sale of goods and in so far as it violated the constitutional discipline of articles 286, 301, article 246 read with entry 52, List I and article 14, was ultra vires. These were dismissed by a common judgment dated November 12, 1998. The High Court upheld the validity of the A.P. Act and held that the State was competent to enac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the State Government may by notification fix in this behalf, and different rates may be fixed for different class or classes of luxuries." 20.. "Stockist" has been defined in section 2(i) as: " 'stockist' means a person who has, in customary course of busi- ness, in his possession of, or control over, a stock of luxuries whether manufactured, made or processed by him in West Bengal, or brought by him into West Bengal, either on his own account or on account of others, from any place outside West Bengal, for stocking, vending, supplying or distributing such luxuries in West Bengal." 21.. The other relevant definition is contained in section 2(h) which defines "stock of luxuries" as meaning: "the quantity of luxuries that a stockist receives in, or procures for, his stock, or records or accounts for in his books of account, in West Bengal during any prescribed period for stocking, vending, supplying or distributing to a wholesaler, dealer, retailer, distributor or any other person, but shall not include any quantity or such luxuries held by him in stock on the first day of such prescribed period." 22.. The luxury tax payable by a stockist under the Act is to be levied und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals and writ petitions arising out of the decision of the Allahabad High Court. No stay was granted. One applicant challenged the decision of the Tribunal before the Calcutta High Court under article 226 of the Constitution. The High Court, by its judgment dated September 29, 2000, dismissed the writ petition and upheld the validity of the Act. The decision of the High Court is also impugned before us and is listed as Civil Appeal No. 6365 of 2000. 27.. According to Mr. Harish Salve, appearing for some of the assessees, the word "luxuries" could not be construed to mean goods and the State's power to legislate in respect of luxuries under entry 62 of List II of the Seventh Schedule to the Constitution did not extend to tax the sale, manufacture, or import of any goods. It is submitted that a tax on goods would have to mean a tax on some facet of the goods commencing with its manufacture and ending with its consumption. Taxation on each and every facet of goods had been specifically provided for in the legislative Lists in the Seventh Schedule. For example excise duty on the manufacture of goods is covered under entry 84 of List I, tax on the sale of goods is covered by entri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring for the assessees sub- mitted that the language in entry 62 List II read "taxes on luxuries including entertainment, etc.". It is submitted that the word "includ- ing" should, in the context, be interpreted as illustrative. Therefore, on the principle of noscitur a sociis, "luxury" would have to mean something in the nature of entertainments, amusements, betting and gambling. The argument is also that entry 62 of List II uses two phrases, namely, "tax on luxury" and "tax on entertainment, amuse- ments, betting and gambling". There are, therefore, two kinds of taxes envisaged under the entry. The clubbing together of these two kinds of taxes would indicate that this was done because of a com- mon element in the nature of the taxes to be imposed, the link being that both referred to a kind of activity. Mr. Venugopal also submitted that the tax sought to be imposed under the West Bengal Luxury Tax Act was in certain applications in fact a duty of excise in so far as it sought to levy tax on goods manufactured in India, it was in fact a tax on the import of goods in so far as it sought to levy a tax on goods manufactured outside India and brought into the State and it was a sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted the contentions of the assessees and has submitted that the luxury tax in U.P., A.P. and W.B. was in fact a tax on the sale and pur- chase of tobacco and that the levy of the tax was contrary to the scheme of collection and distribution of taxes under which the Centre alone may levy taxes on goods declared to be of special importance. 31.. Mr. S. Gupta, representing the State of Uttar Pradesh, has submitted that the word "luxury" has been defined authoritatively in Abdul Kadir [1976] 2 SCR 690 as, "something which conduces to enjoyment over and above the necessaries of life. It denotes something which is superfluous and not indispensable and to which we take with a view to enjoy, amuse or entertain ourselves". It is submitted that this definition should not be cast aside since it had held the field for several decades. According to Mr. Gupta, the object of a luxury tax is the occurrence or event of luxury which itself means, "the happening of indulgence, extravagance, pleasure, comfort, grati- fication of the senses, etc.". It is submitted that the word "luxury" was applicable both to commodities and services and that this has been expressly held in Express Hotels P. Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn to our attention that the amendment to article 366(29A)(f) extending the definition of sale of goods occurred subsequent to the incorporation of luxury tax as a specific field of legislation by the States. Therefore, what was taxable as luxury by the States under entry 62, List II, from before remained so taxable even after the amendment to article 366(29A). Thus the U.P. Act which was framed within the legislative parameters of entry 62 of List II was not a tax on the aspect "supply". It would follow that if the tax imposed by the State was not actual sale or deemed sale, there was no question of the infringement of article 286 nor was there any question of the Act being a device to avoid the consequence of the ADE Act. 32.. The State of West Bengal was represented by Mr. R. Dwivedi. He endorsed the stand of the U.P. Government on the scope of entry 62 of List II and has said that the word "luxuries" must be construed to include not only services but also goods. According to Mr. Dwivedi, the legislative history of the entry starting with the Government of India Act, 1919, would show that betting, gambling, amusements and luxury tax had been treated as distinct and sepa- ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. It is argued that the fact that the tax was levied on luxury goods with reference to the manufacture or sale of goods would not mean that it was a tax on the manufacture or sale of the goods. The manufacture or sale are only measures of the luxury tax leviable. With particular reference to the West Bengal Act, it was submitted that the tax was on luxury goods or commodities although it was with reference to the value of the commodities as stocked or as imported. The tax is merely levied when the commodity is stocked. The response to the assessees' arguments that the excise duty, sales tax, customs duty, etc., all provide for higher rates in respect of luxury goods, is that the same did not detract from the fact that those taxes remained taxes on activities in respect of goods and were not taxes on the goods themselves. 33.. Mr. Gopal Subramanium appearing for the State of Andhra Pradesh has submitted that entry 62 of List II should be construed bearing in mind that there were no restrictive words in the entry itself nor was there any restrictive content in any other entry which would modify or impact on entry 62. It is submitted that the word "consumption" used elsewhere in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel for the assessees the word 'luxury' is distinct from an article of luxury and for the purpose of entry 62 of List II means the activity of indulgence, comfort, enjoyment. (b) The argument of learned counsel for the State of U.P. and A. P. as to the meaning of 'luxury' is somewhat ambivalent. On the one hand it was contended that 'luxury' is a component and aspect of the goods and that entry 62 relates to the exclusive jurisdiction of the State to levy a tax on such component or aspect of the goods. On the other hand it was contended that luxury may arise from the use or consumption of certain kinds of goods or services or indulgence in certain kind of activities which are luxurious in nature. (c) According to counsel for the State of West Bengal, 'luxuries' comprehends both goods and services which have an element of enjoyment, extravagance and which are not necessaries. Therefore, the State can tax goods which are per se 'luxury goods in the absolute sense like tobacco, liquor, jewellery, etc., or other goods by imposing a sufficiently high price limit, the sufficiency being determined according to standards of the middle class'." 35.. The word luxury ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to whether tobacco can be considered to be an article of luxury. The word 'luxury' in the above context has not been used in the sense of something pertaining to the exclusive preserve of the rich. The fact that the use of an article is popular among the poor sections of the population would not detract from its description or nature of being an article of luxury. The connotation of the word 'luxury' is something which conduces enjoyment over and above the necessaries of life. It denotes something which is superfluous and not indispensable and to which we take with a view to enjoy, amuse or entertain ourselves." 37.. It appears to have been assumed that the phrase "tax on luxuries" in entry 62 of List II meant a tax on articles of luxury and the only question was whether tobacco was such an article. The as- sessees in the present case do not dispute that tobacco is an article of luxury but contend that articles of luxury are not covered by entry 62. That was an argument neither raised nor considered in Abdul Kadir. 38.. The concept of "luxuries" in entry 62 of List II was also considered in the Federation of Hotel Restaurant Association of India v. Union of India [1989] 74 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volume IV, page 887). According to this definition, American courts appear to have opted for the definition of the word as submitted by the assessees and have held that it is an activity. However, we have also been referred by counsel for the States to other authoritative works such as Black's Law Dictionary (6th edition) in which a "luxury tax" is said to be a generic term for excise imposed on purchase of items which are not necessaries, e.g., tax on liquor or cigarettes. This definition is inconclusive as it merely defines what may have in fact been the subject-matter of tax in a particular statute. 42.. But theoretically "luxuries" is capable of covering each of the several meanings ascribed to the word. The question is how the word is to be construed in the Constitutional entry. Neither the dic- tionary meaning nor the meaning ascribed to the word judicially (for the reasons stated) resolves the ambiguity. The solution must be found in the language of the entry taking into consideration the Constitutional scheme with regard to the imposition of taxes and the collection of revenues. 43.. Before we proceed further we would like to clear the ground. Whatever be the similari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation has been taken over by the Constitution of India with like beneficial results." 45.. This view has also been reiterated in Hoechst Pharmaceu- ticals Ltd. v. State of Bihar [1984] 55 STC 1 (SC); [1985] 154 ITR 64 (SC). [1983] 3 SCR 130: "A scrutiny of Lists I and II of the Seventh Schedule would show that there is no overlapping anywhere in the taxing power and the Constitution gives independent sources of taxation to the Union and the States. Following the scheme of the Government of India Act, 1935, the Constitution has made the taxing power of the Union and of the States mutually exclusive and thus avoided the difficulties which have arisen in some other Federal Constitutions from overlap- ping powers of taxation...... Thus, in our Constitution, a conflict of the taxing power of the Union and of the States cannot arise." (see also State of West Bengal v. Kesoram Industries Ltd. [2004] 2 RC 298. [2004] 1 JT 375). 46.. Therefore, taxing entries must be construed with clarity and precision so as to maintain such exclusivity, and a construction of a taxation entry which may lead to overlapping must be eschewed. If the taxing power is within a particular legislative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the tax. 49.. Under the three Lists of the Seventh Schedule to the Indian Constitution a taxation entry in a legislative List may be with respect to an object or an event or may be with respect to both. Article 246 makes it clear that the exclusive powers conferred on the Parliament or the States to legislate on a particular matter includes the power to legislate with respect to that matter. Hence where the entry describes an object of tax, all taxable events pertaining to the object are within that field of legislation unless the event is specifically provided for elsewhere under a different legislative head. Where there is the possibility of legislative overlap, courts have resolved the issue according to settled principles of construction of entries in the legislative Lists. 50.. The first of such settled principles is that the legislative entries should be liberally interpreted, that none of the items in the List is to be read in a narrow or restricted sense and that each general word should be held to extend to ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. [United Provinces v. Mt. Atiqua Begum AIR 1941 FC 16, West ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist II and cannot be held to be an authority for the proposition that articles or goods are, as a matter of construction, fairly and reasonably includible in that entry. 54.. The argument of Mr. Salve is in fact that the breadth of an entry is curtailed by the second principle of construction. The second principle is that competing entries must be read harmoniously. The proper way to avoid a conflict would be to read the entries together and to interpret the language of one by that of the other [Governor General in Council v. Province of Madras [1945] FCR 179 at pages 191-192), State of Bombay v. Narottamdas Jethabhai [1951] SCR 51, Bar Council of U.P. v. State of U.P. (1973) 1 SCC 261, D.G. Gouse and Co. (Agents) P. Ltd. v. State of Kerala (1980) 2 SCC 410, Federation of Hotel Restaurant Association of India v. Union of India (1989) 3 SCC 634, 657, 667-668, State of West Bengal v. Kesoram Industries [2004] 1 Scale 425, 462 in the matter of Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act AIR 1939 FC 1, 8, 40]. 55.. The argument of the assessees is that the tax leviable under entry 62, List II cannot be a tax on goods as that would not only allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cannot in our opinion be equated with direct taxes on goods themselves." 57.. Therefore, according to the States, the argument of the assessees that the existing entries on taxation indicated that entry 62 of List II could not cover goods was without substance. 58.. The submission of the assessees proceeds on two premises: the first that taxation of an object can only be with reference to a taxable event and second-that all taxable events have been covered by the legislative entries. As far as the first premise is concerned, it may be that a tax on a thing or goods can only be with reference to a taxable event, but there is a distinction between such a tax and a tax on the taxable event. In the first case the subject-matter of tax is the goods and the taxable event is within the incidence of the tax on the goods. In the second the taxable event is the subject-matter of tax itself. 59.. The first premise paraphrased is that even a tax on goods is really a tax on a taxable event. The decision in the Sea Customs Act case [1964] 3 SCR 787. which was rendered by this Court in its advisory capacity under article 143 was concerned with the construction of article 289 of the Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxation, such a tax if specifically provided for under one legislative entry effectively narrows the fields of taxation available under other related entries. It is also natural "when considering the ambit of an express power in relation to an unspecified residuary power, to give a broad interpretation of the former at the expense of the latter". (Province of Madras v. Boddu Paidanna Sons AIR 1942 FC 33, 37 per Gwyer, C.J.). For example the State cannot under the garb of luxury tax under entry 62, List II, impinge on the exclusive power of the Union under entries 83 and 84 of List I by merely describing an article as a luxury. Of course the States do have the exclusive power under entry 54 of List II to legislate with respect to "Taxes on the sale and purchase of goods other than newspapers", but that power has been explicitly made "subject to the provisions of entry 92A of List I". 61.. Entry 92A of List I speaks of "Taxes on 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." 62.. Apart from this limitation on the States' jurisdiction to levy sales tax, are the restrictions plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object of the Act was to impose additional duties of excise in replacement of the sales tax levied by the Union and the States on sugar, tobacco and mill-made textiles and to distribute the net proceeds of these taxes, except the proceeds attributable to Union territories, to the States. Provision was made that the State which levy a tax on the sale or purchase of these commodities after the April 1, 1958, could not participate in the distribution of the net proceeds of the additional levy under the ADE Act. Provision was also being made in the Act for including specified goods in the category of goods declared to be of special importance in inter-State trade or commerce so that, following the imposition of uniform duties of excise on them, the rates of sales tax if levied by any State were subject from April 1, 1958, to the restrictions in section 15 of the Central Sales Tax Act, 1956. 66.. Section 3 of the ADE Act is the charging section under which additional excise duties are leviable on specified goods manufactured or lying in stock. Sub-section (1) of section 3 reads: "3. Levy and collection of additional duties.-(1) There shall be levied and collected in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to whom such transfer, delivery or supply is made;" 69.. However, while widening the scope of entry 54 of List II, the powers of the State to levy such tax are subjected to a corresponding restriction as a consequence of the constitutional curbs imposed on sales tax under article 286 read with sections 14 and 15 of the Central Sales Tax Act, 1956, and the ADE Act, 1957. "The tax leviable by virtue of sub-clause (b) of clause (29A) of article 366 of the Constitution thus becomes subject to the same discipline to which any levy under entry 54 of the State List is made subject to under the Constitution. The position is the same when we look at article 286 of the Constitution. If any declared goods which are referred to in section 14 of the Central Sales Tax Act, 1956, are involved in such transfer, supply or delivery, which is referred to in clause (29A) of article 366, the sales tax law of a State which provides for levy of sales tax thereon will have to comply with the restrictions mentioned in section 15 of the Central Sales Tax Act, 1956. 70.. No State can therefore by describing an item as a luxury, seek to levy tax on its supply. It cannot be disputed that as far as U. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62 of List II does not cover goods. It is not possible therefore to hold merely on such a construction of the legislative Lists and the taxation entries therein, that entry 62, List II does not permit the States to levy tax on articles of luxury. 75.. Having rejected the second premise contended for by Mr. Salve, the next question is whether the language of entry 62, List II would resolve the issue. The juxtaposition of the different taxes within entry 62 itself is in our view of particular significance. The entry speaks of "taxes on luxuries including taxes on entertainments, amusements, betting and gambling". The word "including" must be given some meaning. In ordinary parlance it indicates that what follows the word "including" comprises or is contained in or is a part of the whole of the word preceding. The nature of the included items would not only partake of the character of the whole, but may be construed as clarificatory of the whole. 76.. It has also been held that the word "includes" may in certain contexts be a word of limitation (South Gujarat Roofing Tiles Manufacturers Association v. State of Gujarat (1976) 4 SCC 601. In the context of entry 62 of List II this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to (HL) per Viscount Simonds, at 461. agriculture. The idea seems to be to remove any doubts on the point whether waste land or forest land could be held to be capable of being held or let for purposes ancillary to agriculture." 79.. In the present context the general meaning of "luxury" has been explained or clarified and must be understood in a sense analogous to that of the less general words such as entertainments, amusements, gambling and betting, which are clubbed with it. This principle of interpretation known as "noscitur a sociis" has received approval in Rainbow Steels Ltd. v. Commissioner of Sales Tax* (1981) 2 SCC 141, 145 although doubted in its indiscriminate application in State of Bombay v. Hospital Mazdoor Sabha AIR 1960 SC 610. In the latter case this Court was required to construe section 2(j) of the Industrial Disputes Act which read: "Section 2(j) provides that 'industry' means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen." 80.. It was found that the words in the definition were of very wide and definite import. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n there is no other factor except contiguity to suggest the "societas". But where there is, as here, a term of wide denotation which is not free from ambiguity, the addition of the words such as "including" is sufficiently indicative of the societas. As we have said the word "includes" in the present context indicates a commonality or shared features or attributes of the including word with the included. 84.. Furthermore where articles have been made the object of taxation, either directly or indirectly, the entries in the legislative Lists have specifically said so or the impost is such that the subject- matter of tax follows by necessary implication. In List II itself, the State Legislature has been given the right to levy taxes on the entry of goods under entry 53, on "carriage of goods and passengers" under entry 56, on "vehicles" under entry 57 and on "animals and boats" under entry 58. There is no instance in any of the legislative Lists of a tax being leviable only with reference to an attribute. An attribute as an object of taxation without reference to the object it qualifies would lead to legislative mayhem, blur the careful demarcation between taxation entries and upse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial powers of legislation thereby leaving every other subject within the legislative powers of the Centre. In 1921, the Devolution Rules came into force. Schedule I to the Rules contained two parts. Part I of Schedule I contained the subjects which could be legislated for by the Indian Legislature. Provincial subjects were classified under Part II. The sources of provincial revenue included in the Schedules to the Scheduled Taxes Rules were retained in Part II with the provinces. 89.. Schedule VII of the Government of India Act, 1935, which repealed the 1915-1919 Act also classified the legislative powers between the Federation and the Provinces. It contained two exclusive Lists and one concurrent List. List I of the Schedule was the federal legislative List and comprised matters exclusively assigned to the Federation. Entry 45 read "Duties on excise on tobacco and other goods manufactured or produced in India ". List II which was the Provincial Legislative List contained an entry No. 48 "Taxes on the sale of goods" and on advertisements. Entry 50 read: "Taxes on luxuries including tax on entertainment, amusement, betting and gambling". Here too there is no evidence of any tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 755, Spences Hotels P. Ltd. v. State of West Bengal (1991) 2 SCC 154 and East India Hotels Ltd. v. State of Jammu Kashmir (1994) Supp 2 SCC 580]. 93.. Thus the constitutional history of entry 62 of List II would show that despite the existence of an entry pertaining to "luxury tax" in all the Constitutional Acts, from 1915 onwards, the tax was never sought (save in the case of Abdul Kadir) to be imposed on goods till 1993. The method of taxing luxury goods invariably was by subjecting them to the extant fiscal regimes of excise duties, sales tax, customs duties, etc., at heavier rates. No distinction is made in article 366(29A) or article 286 or entries 83 and 84 of List I as to the nature of the goods which may be the subject-matter of sale, excise or import be the articles of necessity or articles of luxury. This is also the sense in which States have all along understood the word as indicated in their evidence given in response to the question posed by the Taxation Enquiry Commission with reference to the levy of sales tax in 1953-54 Report of the Taxation Enquiry Commission 1953-54, Volume IV,. The question was "should there be special rates of levy, higher than the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand discharged. 97.. It was stated on behalf of the State Governments that after obtaining interim orders from this Court against recovery of luxury tax, the appellants continued to charge such tax from consumers/ customers. It is alleged that they did not pay such tax to respective State Governments. It was, therefore, submitted that if the appellants are allowed to retain the amounts collected by them towards luxury tax from consumers, it would amount to "unjust enrichment" by them. 98.. In our opinion, the submission is well-founded and deserves to be upheld. If the appellants have collected any amount towards luxury tax from consumers/customers after obtaining interim orders from this Court, they will pay the said amounts to the respective State Governments. 99.. In view of our opinion on the scope of entry 62, List II, we do not think it necessary to answer the other issues raised in these appeals which are left open. 100.. Accordingly, W. P. No. 567 of 1994; W. P. Nos. 568-569 of 1994 are allowed. C.A. Nos. 123-125 of 1995 are dismissed albeit for different reasons. C.A. No. 2123 of 1999, C.A. Nos. 2124-25 of 1999, C.A. No. 2126 of 1999, C.A. No. 2127 of 1999 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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