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1953 (3) TMI 16 - SC - VAT and Sales Tax
Whether the Bombay Sales Tax Act, 1952, and the rules made thereunder except Rule 5(2)(i) do not contravene the provisions of Article Articles 301 or 304 or 286?
Held that:- The delivery State would tax both local and out-of-State dealers equally without discrimination against either and that, we think, is the only measure of protection which Article 286 could reasonably be supposed to accord to inter-State sales or purchases, when it is construed in the light of Articles 301 and 304.
In the present case the tax is imposed, in ultimate analysis, on receipts from individual sales or purchases of goods effected during the accounting period, and it is therefore possible to separate at the assessment the receipts derived from exempted sales or purchases and allow the State to enforce the statute with respect to the constitutionally taxable subjects, it being assumed that the State intends naturally to keep what it could lawfully tax, even where it purports to authorize the taxation of what is constitutionally exempt. The principle, as it is tersely put in the American case, is that severability in such cases includes separability in enforcement.
We accordingly set aside the declaration made by the Court below and quash the writ issued by it except in regard to Rule 5(2)(i). An injunction shall, however, issue restraining the appellants from imposing or authorising the imposition of a tax on sales and purchases which are exempted from taxation by Article 286 as interpreted above. Appeal allowed.