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Showing 141 to 160 of 210 Records
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1989 (5) TMI 71
Issues Involved:
1. Jurisdiction of Customs Authorities in assessing import duty under the incorrect tariff item.
2. Applicability of the limitation period under Section 27(1) of the Customs Act, 1962.
3. Authority of the High Court to order a refund under Article 226 of the Constitution.
Issue-wise Detailed Analysis:
1. Jurisdiction of Customs Authorities in assessing import duty under the incorrect tariff item:
The petitioner, a manufacturing company, imported cable impregnating compound containing more than 70% Petroleum Mineral Oil. The Customs Authority assessed and collected import duty under Heading No. 38.01/19(1) of the Customs Tariff Act, 1975, instead of Heading No. 27.10(1). The petitioner argued that the correct tariff item should have been 27.10(1), which would have resulted in a lower duty rate. The Customs Authority did not conduct any tests and assessed the duty incorrectly, leading to an excess payment of Rs. 44,446.38. The High Court concluded that the assessment under Heading 38.01/19(1) was without jurisdiction, as the correct classification was under Heading 27.10(1).
2. Applicability of the limitation period under Section 27(1) of the Customs Act, 1962:
The petitioner applied for a refund on November 22, 1979, which was beyond the six-month limitation period stipulated in Section 27(1) of the Customs Act. The Assistant Collector of Customs, the Appellate Collector of Customs, and the Customs, Excise & Gold (Control) Appellate Tribunal all rejected the refund claim on the ground of limitation. The High Court noted that the Supreme Court in Miles India Ltd. v. The Assistant Collector of Customs held that quasi-judicial authorities are bound by the statutory time limits and cannot resort to the general law of limitation. However, the High Court also referenced other Supreme Court decisions indicating that when a tax is paid without the authority of law, the general law of limitation should apply, and a claim within three years from the date of discovery of the mistake is not barred.
3. Authority of the High Court to order a refund under Article 226 of the Constitution:
The High Court examined whether it could order a refund under Article 226 of the Constitution despite the statutory limitation. The petitioner contended that the Customs Authorities had illegally assessed the duty under an incorrect tariff item and that the excess duty was paid under a bona fide mistake. The High Court referred to the Supreme Court's decision in Salonah Tea Co. Ltd. v. Supdt. of Taxes, which established that the High Court has the power to direct a refund in cases where the tax was paid by mistake of law and the refund claim was made within three years of discovering the mistake. The High Court concluded that it had jurisdiction to order the refund and directed the Customs Authorities to refund the excess amount with interest.
Conclusion:
The High Court allowed the writ petition, declared the assessment under Heading No. 38.01/19(1) as without jurisdiction, and directed the Customs Authorities to refund the excess amount of Rs. 44,446.38 with interest at the rate of 12% per annum from the date of payment till the date of recovery. The Court emphasized that the Customs Authorities' recovery of the excess duty was without authority of law and that the writ court had the jurisdiction to order the refund under Article 226 of the Constitution.
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1989 (5) TMI 70
Issues Involved:
1. Whether goods exempted from Excise Duty under a notification issued u/r 8 of the Central Excise Rules, 1944, cease to be excisable goods within the meaning of Section 2(d) of the Central Excise and Salt Act, 1944.
Summary:
Issue 1: Definition and Exemption of Excisable Goods
The petitioner, engaged in manufacturing rubber chappals and transmission rubber beltings, contended that goods exempted from Excise Duty under Rule 8 cease to be excisable goods. The Central Government had issued notifications exempting certain goods from Excise Duty, including footwear valued not exceeding Rs. 30 per pair and goods with aggregate clearances not exceeding Rs. 5 lacs (later raised to Rs. 7.5 lacs).
Issue 2: Show Cause Notice and Licensing Requirements
The petitioner was served a show cause notice for manufacturing and clearing excisable goods without obtaining an L-4 license and without paying Central Excise Duty, as the aggregate value of clearances exceeded Rs. 20 lacs during the financial years 1979-80, 1980-81, and 1981-82. The respondents argued that the value of rubber chappals should be included in computing the aggregate value of clearances for determining the exemption eligibility.
Issue 3: Legal Precedents and Divergence of Opinions
The court noted a divergence of opinions among various High Courts. The Madhya Pradesh and Allahabad High Courts held that excisable goods cease to be excisable after total exemption from duty. However, the Patna, Delhi, Karnataka, Andhra Pradesh, and Madras High Courts, along with the CEGAT, held that exempted goods remain excisable.
Issue 4: Interpretation of 'Excisable Goods'
The court examined the definition of "excisable goods" u/s 2(d) and concluded that goods specified in the First Schedule remain excisable even if exempted from duty. The exemption does not alter their status as excisable goods, and they remain liable to excise duty unless explicitly removed from the Schedule by Parliament.
Conclusion:
The court dismissed the petition, holding that rubber chappals did not cease to be excisable goods due to the exemption granted u/r 8. The petitioner's contention was rejected, and the show cause notice and demand for duty were upheld. The petition was dismissed with costs.
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1989 (5) TMI 69
Issues Involved:
1. Levy of excise duty on broken glass/cullets under Item 23A of the First Schedule of the Central Excises & Salt Act, 1944.
2. Classification of broken glass/cullets as 'goods' or waste.
3. Applicability of Rule 56A of the Central Excise Rules, 1944.
4. Maintainability of the writ petition despite alternative remedies.
Detailed Analysis:
1. Levy of Excise Duty on Broken Glass/Cullets:
The petitioner, Hindustan Safety Glass Works Limited, challenged the levy of excise duty on broken glass/cullets under Item 23A of the First Schedule of the Central Excises & Salt Act, 1944. The petitioner argued that broken glass/cullets are waste products and not 'goods' within the meaning of the Act, thus not subject to excise duty. The Court examined whether broken glass/cullets could be considered manufactured items excisable under the Act. It concluded that broken glass/cullets arising during manufacturing cannot be construed as 'manufactured' items or by-products with marketability, and thus are not liable to excise duty under the Act.
2. Classification of Broken Glass/Cullets as 'Goods' or Waste:
The petitioner contended that broken glass/cullets are waste materials and not goods that can be bought or sold in the market. The Court referred to previous decisions, including the case of M/s. Indian Tube Co. Ltd. v. Collector of Central Excise, where spent sulphuric acid was considered waste and not excisable. The Court determined that broken glass/cullets, similar to waste pickle liquor, do not have independent market value and are not excisable. The Court also noted that broken glass/cullets do not fit within the definition of 'other glass' under Item 23A(4) of the First Schedule.
3. Applicability of Rule 56A of the Central Excise Rules, 1944:
The respondents argued that the petitioner availed proforma credit under Rule 56A for raw materials, and thus, broken glass/cullets could not be removed without payment of duty. However, the Court found that the finished goods of the petitioner were assessed under Tariff Item 68, not Item 23A, as per a Supreme Court decision. Therefore, the proforma credit taken on raw materials was not applicable, and the petitioner was entitled to a refund of the excise duty paid under Item 23A.
4. Maintainability of the Writ Petition Despite Alternative Remedies:
The respondents argued that the writ petition was not maintainable due to the availability of alternative remedies. The Court, however, decided to entertain the writ petition since it had been pending since 1982 and substantial questions were involved. The Court referred to the decision in Associated Pigments Ltd. v. Collector of Central Excise, Calcutta, which supported the view that long-pending writ petitions should be adjudicated on their merits rather than directing the petitioner to seek alternative remedies.
Conclusion:
The Court allowed the writ petition, quashed the impugned orders, and issued a writ of Mandamus commanding the respondents not to levy excise duty on broken glass/cullets under Item 23A or any other item of the First Schedule of the Act. The Court also allowed the petitioner to file for a refund of any excise duty paid, to be considered by the respondents without regard to any limitation period. There was no order as to costs, and all other orders were vacated, allowing the petitioner to withdraw any bank guarantee provided in the matter.
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1989 (5) TMI 68
The petitioners appealed against the disapproval of their classification list for a "Fire-Alarm" system/device. The Collector dismissed the appeal as untimely, but the High Court quashed the order and directed a fresh decision, noting that the appeal was filed within three months of the decision being communicated.
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1989 (5) TMI 67
Issues:
Validity of Rule 9 in Central Excise Rules, 1944 and Section 51 of the Finance Act, 1982. Challenge against orders declining permission for consumption of specified yarn without excise duty, specifying place for manufacture of yarn, and creating liability as per statutory provisions.
Analysis:
The petitioners challenged the validity of Rule 9 in Central Excise Rules, 1944 and Section 51 of the Finance Act, 1982. They contested orders declining permission for consuming specified yarn without excise duty, specifying the place for yarn manufacture, and creating liability as per statutory provisions. The petitioners argued that the amended Rule 9 conferred discriminatory discretions on excise authorities, violating various constitutional articles and statutory provisions. They also claimed that Section 51 of the Finance Act, 1982 imposing additional excise duty retrospectively was beyond legislative competence. However, the Court noted that similar pleas were addressed in a previous judgment, J.K. Spinning and Weaving Mills Ltd. v. Union of India, where the validity of Rules 9 and 49 was upheld, making intermediate goods liable for duty even in continuous processes. The retrospective effect of Section 51 was also deemed valid in that case.
The Court found that the impugned orders, including declining exemption from excise duty on yarn, specifying the manufacturing place, and other excise authorities' actions, were in accordance with valid statutory provisions and thus legally sound. The Court relied on the precedent set by the J.K. Spinning and Weaving Mills case, which addressed similar issues raised in the present petition. Consequently, the Court concluded that the decision in the previous case was applicable to the current petition and resolved all the raised pleas.
In response to the petitioners' request for payment flexibility or extension, the Court dismissed the plea, noting that excise duty and penalty recovery had been stayed during the petition's pendency. The Court highlighted that the revenue had not received its dues for several years due to the stay order. Therefore, the Court found no merit in the writ petition and dismissed it without costs, denying further concessions to the petitioners.
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1989 (5) TMI 66
Whether the date on which the vessel enters the territorial waters is the relevant date for determining whether the import of goods carried by it falls within the scope of the Customs Act?
Held that:- We have considered the matter carefully and given due heed to the submissions of learned counsel for the petitioners founded, inter alia, on the provisions of the Sea Customs Act and the amendment made in Sec. 16 of the Customs Act and we are of opinion that the view taken by the Madras High Court in M/s. Omega Insulated Cable Co. Ltd. (1969 (8) TMI 34 - HIGH COURT OF JUDICATURE AT MADRAS) represents the correct view. The amendment made in Sec. 16 of the Act appears to have been made by way of clarification and, in our opinion, does not detract from the conclusion that "the date of entry inwards of the vessel" is the date recorded as such in the Customs register. In the present case, "the date of inwards entry" is mentioned as 31 July, 1981. In the absence of anything else, we may take it that the entry was recorded on that date itself. Accordingly, the rate of import duty and the tariff valuation shall be that in force on 31 July, 1981. The contention of the petitioners that the rate of import duty and tariff valuation will be that ruling on 11 July, 1981 cannot be sustained and is rejected.
As to the question whether Sec. 15 of the Customs Act is ultra vires on the ground that arbitrary discretion has been conferred on the customs authorities in the matter of determining the date of inward entry, it seems to us that having regard to the procedure detailed above there is no scope for the submission that the provision is invalid. Appeal dismissed.
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1989 (5) TMI 65
Whether the five customer companies can be regarded as "related persons" as defined in Section 4(4) (c)?
Held that:- There is a lurking doubt that the five customer companies were the favoured Customers; but no investigation seems to have been carried out. The High Court while allowing the writ petition held that it was open to the Central Excise authorities to examine whether or not the five customer companies were the favoured customers and whether the price at which the respondent-company sold its products to these were the normal prices at which such goods were ordinarily sold by a manufacturer in the course of wholesale trade for delivery at the time and place of removal. Apparently, no such scrutiny was done. Appeal dismissed - the judgment and order of the High Court of Allahabad must be upheld
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1989 (5) TMI 64
Issues Involved:
1. Definition of "manufacturer" under Section 2(f) of the Central Excises and Salt Act, 1944.
2. Jurisdiction of the Central Excise authorities to issue a show cause notice.
3. Applicability of the limitation period under Section 11A of the Central Excises and Salt Act, 1944.
4. Validity of proceedings under the Central Excises and Salt Act, 1944.
Issue-wise Detailed Analysis:
1. Definition of "manufacturer" under Section 2(f) of the Central Excises and Salt Act, 1944:
The petitioner, Anglo-India Jute Mills Co. Ltd., argued that it should not be considered a "manufacturer" under Section 2(f) of the Central Excises and Salt Act, 1944, as it only supplied raw materials (granules) to other manufacturers who produced polythene films independently. The petitioner emphasized that these manufacturers operated with their own machinery, employees, and supervision, and the petitioner had no control over their manufacturing activities. The respondents, Central Excise Authorities, contended that the petitioner engaged in manufacturing by supplying raw materials and paying job charges, thus falling within the definition of "manufacturer" under Section 2(f). The court referenced the Supreme Court decision in Ujagar Prints v. Union of India, which clarified that job workers are liable for excise duty as they cause the "manufacture" of goods, irrespective of ownership.
2. Jurisdiction of the Central Excise authorities to issue a show cause notice:
The petitioner challenged the jurisdiction of the Central Excise authorities to issue the show cause notice dated 16-3-1982, arguing that the notice was issued after the expiry of the limitation period and was therefore illegal and without jurisdiction. The court had to determine whether the facts disclosed in the notice to show cause warranted the initiation of proceedings and whether the respondents had the jurisdiction to issue such a notice. The court found that the issue of whether the petitioner was a manufacturer needed to be adjudicated based on evidence, and the writ court was not the appropriate forum for such fact-finding.
3. Applicability of the limitation period under Section 11A of the Central Excises and Salt Act, 1944:
The petitioner argued that the notice to show cause was issued beyond the six-month limitation period specified in Section 11A of the Central Excises and Salt Act, 1944. The respondents countered that the petitioner had not disclosed the manufacturing activities, justifying the extended limitation period of five years under the proviso to Section 11A(1). The court noted that for the extended limitation period to apply, there must be evidence of deliberate withholding of information by the assessee. The court found that this issue required further adjudication by the appropriate authorities.
4. Validity of proceedings under the Central Excises and Salt Act, 1944:
The petitioner sought to quash the show cause notice and related proceedings, arguing that they were initiated with a mala fide motive and were without jurisdiction. The court examined whether the actions of the respondents were barred by limitation and whether the proceedings were justified. The court concluded that the petitioner should be given an opportunity to present evidence before the appropriate authorities, and the writ court should not interfere at this stage. The court left the issue open for adjudication by the relevant authorities and allowed the respondents to proceed in accordance with law.
Conclusion:
The court disposed of the writ petition and the Rule, vacating all interim orders. It emphasized that the petitioner should be allowed to present its case before the appropriate authorities, and nothing observed by the court would prejudice either party. The court granted a stay of operation of its order for two weeks after the Summer Holidays and made no order as to costs.
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1989 (5) TMI 63
Issues:
Challenge to duty levied on wrapping paper used for packing other varieties of papers under Central Excise Rules, applicability of Rule 56A for proforma credit, dispute over the timing of duty imposition on wrapping paper, interpretation of Section 4(4)(d)(i) of Central Excises and Salt Act, 1944, retrospective application of Rule 56A, reliance on case laws for supporting arguments.
Analysis:
The petitioner challenged the duty imposed on wrapping paper used for packing other papers, contending that duty should only be levied when goods are cleared from the factory premises. The petitioner sought proforma credit under Rule 56A of the Central Excise Rules, claiming that the duty imposition at an earlier stage was contrary to the law. The petitioner argued that duty on wrapping paper for captive consumption should not be charged until goods are removed from the manufacturing premises.
The Excise Authorities countered by stating that duty was imposed on wrapping paper used for packing other papers before they were used for wrapping. They highlighted that duty was levied on the value of the paper and the wrapper when packed paper was cleared, in accordance with Section 4(4)(d)(i) of the Central Excises and Salt Act, 1944.
The petitioner's counsel cited various decisions to support their claim for benefits under Rule 56A. They argued that there was no impediment to granting such benefits, referencing cases like Collector of Central Excise, Indore v. Orient Paper & Industries Ltd, Amlai, among others.
On the other hand, the respondents' counsel contended that the petitioner's claim for retrospective application of Rule 56A was not valid, citing the case of Union of India v. Bombay Tyre. They emphasized that the petitioner's request for such benefits did not arise.
The Court analyzed Rule 56A of the Central Excise Rules, which provides a special procedure for the movement of duty-paid materials for use in manufacturing excisable goods. It noted that the Collector could permit a manufacturer to receive materials on which excise duty had been paid for use in manufacturing, subject to prescribed conditions. The Court found that the steps taken by the respondents were not contrary to the law, as the wrapping papers were used internally and not removed from the factory premises. Consequently, the Court dismissed the writ petition, ruling in favor of the Excise Authorities and discharging the Rule without costs.
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1989 (5) TMI 62
Whether galvanised iron pipes and tubes are a commercially different commodity from steel tubes mentioned in S. 14(iv)(xi) of the Central Sales Tax Act?
Held that:- Galvanised pipes are steel tubes within the meaning of Section 14(iv)(xi) of the Central Sales Tax Act. The view taken by the High Court is erroneous. In favour of assessee.
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1989 (5) TMI 61
Whether there is justification for the differential treatment accorded between the State Trading Corporation and the private importers?
Held that:- It is true that the State dons the robes of a trader when it enters the field of commercial activity and ordinarily it can claim no favoured treatment. But there may be clear and good reason for making a departure. Viewed in the background of the reasons for granting a monoply to the State Trading Corporation, acting as an agent or nominee of the Central Government in importing the specified oils, it will be evident that policy considerations rendered it necessary to make consummation of that policy effective by imposing a concessional levy on the imports. No such concession is called for in the case of the private importers who, in any event, are merely working out contracts entered into by them with foreign sellers before 2nd December, 1978.
We are also not satisfied that any of the private importers have made out that their business will be crippled or ruined in view of the rate of customs duty visited on their imports. The material before us is not sufficient to warrant any conclusion in their favour. As the private importers are not entitled to relief, no question arises of considering whether the exemption orders should be struck down or their benefit extended in favour of the private importers also. Appeal dismissed.
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1989 (5) TMI 60
Whether the Collector is bound to issue notice to the persons from whose possession the goods are seized and to give him an opportunity to make his representation on the point whether the time for issuing notice under Section 124(a) of the Act should be extended beyond six months/
Held that:- The person from whose possession the goods have been seized is entitled to notice of the proposal before the Collector of Customs for the extension of the original period of six months mentioned in Section 110(2) of the Customs Act, and he is entitled to be heard upon such proposal but subject to the restrictions referred to earlier in regard to the need for mentioning confidentiality of the investigation proceedings. Appeal is allowed accordingly and to the extent set forth in our judgment orders of the High Court are modified
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1989 (5) TMI 59
The Supreme Court of India recalled a judgment dated 20th December, 1986, and ordered the cases to be heard again on the merits due to inconsistencies. The Court allowed the Review Petitions, stating the points raised were of substantial public importance. The judgment was restored to its original number for fresh consideration, with no order as to costs.
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1989 (5) TMI 57
Whether Bush India Ltd. was not a related person of the respondent within the meaning of section 4(4)(c) of the Central Excises and Salt Act, 1944?
Held that:- In view of the facts that have emerged in this case, the High Court came to the conclusion that the market value of the goods of the respondent herein was the price charged from Bush India Ltd. and not the market value at which price Bush India Ltd. sold to its wholesalers for the purpose of payment of excise duty. The High Court, therefore, quashed the showcause notice and the demand notice.
It is unsafe to make bad laws out of hard facts and one should avoid subverting the rule of law. Unfortunately, in the instant case, facts have not been found with such an approach by the lower authorities and the High Court had no alternative on the facts as found but to quash the show cause and the demand notices. Appeal dismissed.
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1989 (5) TMI 56
Validity of the levy of cess in respect, of tea estates under the West Bengal Rural Employment and Production Act, 1976 challenged
Held that:- For bringing the legislation within the saving provisions of article 304(b), it is necessary that the Bill or amendment should have been introduced or moved in the Legislature of the State with the previous sanction of the President. It is not disputed that the amendments to the West Bengal Act made in 1981 and 1982, did not satisfy that requirement. Indeed, it appears that the West Bengal Government had sent an earlier Bill to the President with the object of levying a tax, on the income from tea but the Presidential assent was not granted. It appears further that the Finance Minister of West Bengal made a statement in the West Bengal Legislature on February 27, 1981, stating that he would introduce the rural employment cess on despatches of tea. He referred to a Bill for amending the West Bengal Marketing (Regulation) Act, 1972, having been sent to the President and the President not having signified his consent to the amendment. Thus the impugned provisions brought into the West Bengal Act by the amendments in 1981 and 1982 so far as they purport to relate to tea estates are unconstitutional and void and cannot be given effect to. Appeal allowed & the petitioners are held entitled to the refund of cess paid by them under the impugned statutory provisions.
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1989 (5) TMI 55
Whether the appellant is right in invoking section 61 of the Estate Duty Act?
Held that:- As it appears that this litigation is woven around a private dispute among the family members. That is hardly any justification for invoking section 61 of the Act. Appeal dismissed.
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1989 (5) TMI 54
Whether, Under the Land Acquisition Act, 1894, as amended by the Land Acquisition (Amendment) Act, 1984, the claimants are entitled to solatium at 30 per cent. of the market value irrespective of the dates oil which the acquisition proceedings were initiated or the dates on which the award had been passed ?
Held that:- What Parliament intends to say is that the benefit of section 30(2) will be available to an award by the Collector or the court made between the aforesaid two dates or to an appellate order of the High Court or of the Supreme Court which arises out of an award of the Collector or the court made between the said two dates. The word 'or' is used with reference to the stage at which the proceeding rests at the time when the benefit under section 30(2) is sought to be extended. If the proceeding has terminated with the award of the Collector or of the court made between the aforesaid two dates, the benefit of section 30(2) will be applied to such award made between the aforesaid two dates. If the proceeding has passed to the stage of appeal before the High Court or the Supreme Court, it is at that stage that the benefit of section 30(2) will be applied. But, in every case, the award of the Collector or of the court must have been made between April 30, 1982 and September 24, 1984.
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1989 (5) TMI 53
Whether the depreciation for the previous years should have been calculated only on the basis of clause 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, which provided for computation of the aggregate depreciation allowance on the basis of the deduction which was actually allowed under the provisions of the Saurashtra Income-tax Ordinance, 1949 ?
Held that:- As observed in the case of CIT v. Dewan Bahadur Ramgopal Mills Ltd. [[1960 (11) TMI 12 - SUPREME Court] the basic and normal scheme of depreciation under the Indian Income-tax Act is that it decreases every year, being a percentage of the written down value which in the first year is the actual cost and in succeeding years actual cost less all depreciation actually allowed under the Indian Income-tax Act or any Act repealed thereby, etc, In that case, an anomalous situation arose because the Hyderabad Income-tax Act was not repealed by the Indian Income-tax Act but by the Finance Act, 1950, and hence, a difficulty arose in allowing depreciation to an assessee in a Part B State. In the present case also, the Saurashtra Income-tax Ordinance having been repealed not by the Indian Income-tax Act but by section 13 of the Finance Act, 1950, a similar difficulty had come into existence, and hence we fail to see how it can be said that the Government had no good basis to come to the conclusion that a difficulty had, in fact, arisen as contemplated in the case of Dewan Bahadur Ramgopal, Mills Ltd.
Unable to accept the submissions of Mr. Salve, learned counsel for the assessee that the decision of this court in CIT v. Dewan Bahadur Ramgopal Mills Ltd. [supra] was not good law or, at least, that it needed reconsideration by a larger Bench, we must follow that decision and the appeal of the assessee must be dismissed.
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1989 (5) TMI 52
Constitutional validity of legislations of different States, viz., the State of Gujarat, State of Tamil Nadu, the State of Karnataka and the State of West Bengal, imposing a tax on "luxuries" under entry 62 of List II of the Seventh Schedule to the Constitution of India is challenged.
Held that:- High Court was not in error in its understanding of the import of the concept of "luxuries" in entry 62 as a subject of tax.The concept of a tax on "luxuries" in entry 62, List 11, cannot be limited merely to tax things tangible and corporeal in their aspect as "luxuries". It is true that while frugal or simple food and medicine may be classified as necessities, articles such as jewellery, perfume, intoxicating liquor, tobacco, etc., could be called articles of luxury. But the legislative entry cannot be exhausted by these cases, illustrative of the concept. The entry encompasses all the manifestations or emanations, the notion of "luxuries" can fairly and reasonably be said to comprehend and the element of extravagance or indulgence that differentiates "luxury" from "necessity" cannot be confined to goods and articles. There can be elements of extravagance or indulgence in the quality of services and activities.
So far as the argument that fundamental rights under article 19(1)(g) are violated by a levy on a mere provision for luxury, without its actual utilisation, is concerned, it is settled law that the mere excessiveness of tax or that it affects the earnings cannot, per se, be held to be violative of article 19(1)(g).
The composite elements of lodging accommodation and services associated with it cannot be broken into components so as to distinguish some components as necessities, some others as comforts and yet others as luxuries. Even necessities and comforts which have to them the additional element of undue elegance to a point of extravagance and indulgence might become luxuries. Though the arguments on these contentions were not without their interesting facets, We must, however, express our inability to accept them as valid arguments against the constitutionality of the provisions.
Another relevant consideration is the identity and status of the repository of the power. The power is given to a high authority like the State Government. In these circumstances, it cannot be said that the power is an uncanalised power and is an arbitrary or unreasonable one. There are statutory guides governing its exercise and the guidelines are governed by well-settled principles of interpretation.
No fault can be found with this provision in section 4(3) which merely states that where the usual lodging charges are not collected for providing the lodging accommodation, tax shall be payable as if the usual charges had been collected. This is a provision against evasion. There is no merit in the challenge to the validity of this provision.
n the present case, it has not been pointed out how a tax on "luxuries" enjoyed by a person in a hotel is either discriminatory or has the direct and immediate effect of impeding the freedom of intercourse. It is no reason for extending the freedom which section 92 confers upon trade and commerce among the States to something which precedes it and is outside the freedom conferred. Appeal dismissed.
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1989 (5) TMI 51
Constitutional validity of the Hotel Receipts Tax Act, 1980 challenged on grounds of lack of legislative competence and of violation of articles 14 and 19(1)(g)
Held that:- The expression "income" in entry 82, List 1, cannot, therefore, be subjected, by implication, to any restriction by the way in which that term might have been deployed in a fiscal statute. A particular statute enacted under the entry might, as a matter of fiscal policy, seek to tax some species of income alone. The definitions would, therefore, be limited by the consideration of fiscal policy of a particular statute. But the expression "income" in the legislative entry has always been Understood in a wide and comprehensive connotation to embrace within it every kind of receipt or gain either of a capital nature or of a revenue nature. The "taxable receipts" as defined in the statute cannot be held to fall outside such a "wider connotation" of "income" in the wider constitutional meaning and sense of the term as understood in entry 82, List 1.
Hotels in which room charges were ₹ 400 or more per day per person were alone brought under the Act. The differentia was held to be both intelligible and endowed with a rational nexus to the object of the legislation, viz., bringing to tax certain class of expenditure incurred at hotels which were legislatively presumed to attract an economically superior class of clientele. Having regard to the wide latitude available to the Legislature in fiscal adjustments, the classification was found not violative of article 14. The differentia of classification presupposes and proceeds on the premise that it distinguishes and keeps apart as a distinct class hotels with higher economic status reflected in one of the indicia of such economic superiority. The presumption of constitutionality has not been dislodged by the petitioners by demonstrating how even hotels, not brought into the class, have also equal or higher chargeable receipts and how the assumption of economic superiority of hotels to which the Act is applied is erroneous or irrelevant. Appeal dismissed.
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9911796707
