2005 (2) TMI 782 - HC - VAT and Sales Tax

Summary

Issues:
1. Constitutional validity of Notification S.R.O. No. 949 of 2002 under articles 14, 19(1)(g), 301, 303, and 304 of the Constitution of India.
2. Discriminatory nature of the notification in relation to imported generators and locally manufactured generators.
3. Interpretation of article 304(a) of the Constitution regarding the imposition of entry tax.

Analysis:
1. The petitioner, engaged in supplying diesel generating sets, challenged Notification S.R.O. No. 949 of 2002, claiming it to be unconstitutional and discriminatory under various articles of the Constitution. The notification withdrew exemption on tax payable under the Kerala Tax on Entry of Goods into Local Areas Act, affecting dealers registered under the Kerala General Sales Tax Act, 1963. The petitioner contended that the notification violated fundamental rights and sought relief based on legal precedents.

2. The petitioner imported generators for contracts in Kerala and argued that the notification unfairly imposed a higher tax rate on importers compared to local dealers of generators. The Government's power to grant exemptions under section 12 of the Kerala Tax on Entry of Goods into Local Areas Act was questioned. The court examined the discriminatory impact of the notification, highlighting the differential treatment between imported and locally manufactured generators, leading to a violation of constitutional provisions.

3. The court referenced legal cases such as Firm A.T.B. Mehtab Majid Co. v. State of Madras and Shree Mahavir Oil Mills v. State of Jammu and Kashmir to analyze the constitutional implications of the notification. The judgment emphasized the importance of avoiding discriminatory taxation on goods imported from other states compared to locally produced goods. The court found that the notification S.R.O. No. 949 of 2002, by excluding generators from the previous exemption, contravened articles 14 and 304(a) of the Constitution of India.

4. The court concluded that the notification was illegal and declared it in violation of the Constitution. The judgment clarified that the petitioner was not entitled to any remission based on the declaration, and the decision would have prospective effect. The court overturned the previous judgment and allowed the writ appeal, setting aside the decision of the learned single judge.

This detailed analysis of the judgment from the Kerala High Court provides insights into the constitutional validity and discriminatory nature of Notification S.R.O. No. 949 of 2002, emphasizing the importance of upholding constitutional principles in matters of taxation and exemptions.