1967 (7) TMI 109 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of section 3 of the Kerala Surcharge on Taxes Act, 1957.

Detailed Analysis:

1. The first contention raised was regarding the repeal of section 3 by the Kerala General Sales Tax Act, 1963. The court held that the non-mention of the Kerala Surcharge on Taxes Act, 1957, in the repealing section of the new Act indicated no implied repeal. The court emphasized that a repeal by implication is not favored unless inevitable, and in this case, both Acts could coexist without inconsistency.

2. The second contention challenged the validity of section 3 under Article 14 of the Constitution, alleging discriminatory treatment due to the exemption limit being based on total turnover rather than taxable turnover. The court ruled that the exemption limits in tax laws are inevitable and do not violate Article 14 as long as there is a rational nexus between the provision and the legislative objective.

3. The third contention invoked Article 19(1)(f) and (g) of the Constitution, asserting that section 3 infringed on the right to carry on trade or business. The court held that unless a tax law confiscates property under the guise of taxation, the reasonableness of the tax cannot be challenged under fundamental rights, and in this case, the surcharge did not amount to confiscation.

4. The fourth contention argued that section 3 imposed an income tax, exceeding the State's legislative competence. The court clarified that the surcharge was a tax on the sale or purchase of goods falling under the State List, not an income tax falling under the Union List, thus within the State's legislative domain.

5. The final contention was based on Article 276 of the Constitution, limiting taxes on professions, trades, callings, and employments. The court held that the tax imposed by section 3 was a sales tax falling under a different entry in the State List and did not qualify as a tax on professions, trades, or employments under Article 276.

In conclusion, the court dismissed the original petition and writ appeals, upholding the validity of section 3 of the Kerala Surcharge on Taxes Act, 1957, on all grounds presented by the assessees.