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2007 (11) TMI 565 - HC - VAT and Sales TaxPower of the State to levy purchase tax under section 7A on goods purchased, the sale of which enjoyed exemption under the notification issued under section 17 and sent on consignment basis to outside the State otherwise by way of sale under section 7A(1)(c) of the Tamil Nadu General Sales Tax Act, 1959 - Wheteher is unconstitutional and beyond the legislative competence of the State under entry 54, List II of the Seventh Schedule to the Constitution of India and ultra vires entry 92B of List I of the Seventh Schedule to the Constitution and void as repugnant to article 14, violative of article 301 and not saved by article 304(b) of the Constitution of India? Held that:- The charge under section 7A need not be necessary to check exemption but certainly it is pointing at the loophole caused by the circumstances stated under section 7A. If the goods are not available in the State for subsequent taxation by reason of the circumstances mentioned in section 7A(1)(a),(b),(c), then the purchaser is made liable under section 7A. Taxation, as such, is not an infringement of the freedom guaranteed by article 301. Yet, it is settled law that tax laws are not outside the purview of Part XIII of the Constitution.However, where the levy is not discriminatory or restrictive or having a direct and immediate restriction on the trade and intercourse, on a mere inconsequential indirect remote impediment, the levy cannot be struck down under article 301. The flow of trade and commerce depends upon a variety of factors like location, availability of market, materials and other infrastructural facilities. In the circumstances, we do not find any basis to sustain this objection that the levy is restrictive of the trade and commerce. As to the contention based on article 304(b), unless and until the petitioner is able to show that the provisions of article 301 or 303 are offended, the question of invoking article 304(b) does not arise. The contentions of the petitioner cannot be upheld and the same is rejected. As already held "that section 7A is at once a charging as well as a remedial provision. Its main object is to plug leakage and prevent evasion of tax". Assessee appeal dismissed.
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