1963 (12) TMI 24 - SC - Central Excise

Whether the tax levied by the Act can be said to be discriminatory and as such, unconstitutional because it has selected only tea and jute as objects of taxation?

Whether the respondent has shown that the restrictions imposed by the Act by levying a tax on the movement of tea can be said to be reasonable and in the public interest?

Held that:- The mere fact that a validating statute operates retrospectively does not justify the contention that the character of the tax sought to be recovered by such retrospective operation is necessarily changed.

It is very difficult to assume that producers who were taxed under the earlier Act paid the tax without preferring an appeal or revision though they had a grievance against the validity or regularity of the assessment order. Therefore, we do not think the challenge to the validity of s. 34 can be sustained.

It is in regard to such a taxing statute which can properly be regarded as purely confiscatory that the power of the Court can be legitimately invoked and exercised. In our opinion, it would be idle to suggest that a tax imposed by the Act in the present case should be struck down because it has taxed only tea and jute.

In the present case, undoubtedly, tea has been carried over a part of the inland waterways in Assam and that satisfies the test of nexus. The argument of extra-territoriality must, therefore, fail. The argument based on the fact that the goods have been entrusted to the railway for through carriage, and so, the carriage of the goods should be held to be outside the purview of s. 3 of the Act, cannot be sustained.

The power to levy a tax which has been conferred on the State Legislature by Entry 56 cannot, therefore, be said to be controlled by the Tea Act in question. 'It would be noticed that List I does not contain any Entry by which the Central Legislature can pass an Act levying a tax on goods carried which can be said to control Entry 56 in List 11. That being so, we, must hold that there is no substance in the argument that the State Legislature has no power to levy a tax on tea which is carried over- a part of the area of the State of Assam. The result is, the petition fails and is dismissed with costs.