TMI Blog1984 (10) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... 213 of 1979. A.T.M. Sampath and P.N. Ramalingam, Advocates, for the petitioner in W.P. Nos. 4358 of 1978 and 6449 of 1980. S.T. Desai, Senior Advocate (A.V. Rangam, Advocate, with him), for the respondents. A.K. Sen, Senior Advocate (A.T.M. Sampath and P.N. Ramalingam, Advocates, with him), for the petitioner in W.P. No. 760 of 1979. -------------------------------------------------- The judgment of the Court was delivered by BALAKRISHNA ERADI, J.- In these writ petitions, the petitioners have challenged the constitutional validity of the provisions of the Tamil Nadu Additional Sales Tax (Amendment) Act, 1976 (Act No. 2 of 1976). By the said Act, section 2 of the Tamil Nadu Additional Sales Tax Act, 1970, was amended by substituting a new provision in the place of what existed before, section 3 was omitted and section 3A was newly introduced to the Act. As the points raised in all these writ petitions are identical, they were heard together and are disposed of by this common judgment. Before we proceed to set out the provisions of the impugned Act, it is necessary to narrate in brief the legislative history that preceded its enactment. The ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther liability to pay a surcharge at the rate of five per cent of such tax. The first proviso to the said section states that in the City of Madras the rate of surcharge shall be ten per cent for the period commencing on the June 19, 1971, and ending with June 28, 1971. The second proviso extended certain concessions in the rate of surcharge in respect of declared goods. Thereafter followed the impugned statute, namely, the Tamil Nadu Additional Sales Tax (Amendment) Act, 1976 (Act No. 2 of 1976), which was brought into force with effect from April 1, 1976. Section 2 of the said Act amended section 2 of the Tamil Nadu Additional Sales Tax Act, 1970, by substituting the following provision in replacement of the original section: "2. Levy of additional tax in the case of certain dealers.-(1)(a) The tax payable under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) (hereinafter in this section referred to as the said Act), shall, in the case of a dealer whose taxable turnover for a year exceeds three lakhs of rupees, be increased by an additional tax calculated at the following rates, namely: Rate of tax (i) where the taxable turnover exceeds three l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as amended by the impugned Act the petitioners have come up to this Court challenging the constitutional validity of the impugned Act of 1976 and seeking to quash the assessment orders and the notices of demand issued to them. The first contention urged on behalf of the petitioners is that since the State Legislature had already provided for the levy of a tax on sales by the Act of 1959 and had also enacted a further statute authorising the levy and collection of a surcharge which is in truth and substance the imposition of an additional sales tax, it could not legally go on legislating further enactments providing again for levy of additional sales tax. On this basis it is contended that the provisions of the impugned Act, 1976, are ultra vires and devoid of legislative competence. We see no substance in this contention. The impugned enactment has merely amended the 1970 Act. It has not introduced a new tax; what it has done is only to amend the 1970 Act by providing for a different method of computation of the additional tax leviable under that Act. The validity of the 1970 Act has been upheld by a Constitution Bench of this Court in the case of Kodar v. State of Kerala [197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect the business of the petitioners and on account of their inability to bear the heavy burden their right to carry on freely trade, commerce and intercourse within the territory of India will be adversely affected. We are spared the necessity of dealing with any of the aforesaid points in depth because everyone of them is fully covered by the pronouncement of a Constitution Bench of this Court in Kodar v. State of Kerala [1974] 34 STC 73 (SC) [1975] 1 SCR 121 afore-cited. The contention that the additional sales tax levied under the Tamil Nadu Additional Sales Tax Act, 1970, was not a tax on sales but was in reality a tax on the income of the dealers was rejected by the Constitution Bench which observed thus: "As regards the contention that the State Legislature has no power to pass the measure, we are of the view that the additional tax is really a tax on the sale of goods. The object of the Act, as is clear from its provisions, is to increase the tax on the sale or purchase of goods imposed by the Tamil Nadu General Sales Tax Act, 1959, and the fact that the quantum of the additional tax is determined with reference to the sales tax imposed would not alter its character. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, an unreasonable restriction on his fundamental rights under article 19(1)(g). The legal incidence of a tax on sale of goods under the Tamil Nadu General Sales Tax Act, 1959, falls squarely on the dealer. It may be that he can add the tax to the price of the goods sold and thus pass it on to the purchaser. But it is not necessary that the dealer should be enabled to pass on the incidence of the tax on sale to the purchaser in order that it might be a tax on sales of goods. In J.K. Jute Mills Co. v. State of U.P. [1961] 12 STC 429 at 438 (SC); [1962] 2 SCR 1 at 13 this Court said, although it is true that sales tax is, according to accepted notions, intended to be passed on to the buyer, and provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation, it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. In Konduri Buchirajalingam v. State of Hyderabad [1958] 9 STC 397 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as absolutely, than is borne by the big one. The flat rate is thought to be less efficient than the graded one as an instrument of social justice. The large dealer occupies a position of economic superiority by reason of his greater volume of his business. And, to make his tax heavier, both absolutely and relatively, is not arbitrary discrimination, but an attempt to proportion the payment to capacity to pay and thus to arrive in the end at a more genuine equality. The economic wisdom of a tax is within the exclusive province of the legislature. The only question for the Court to consider is whether there is rationality in the belief of the legislature that capacity to pay the tax increases, by and large, with an increase of receipts. 'Certain it is that merchants have faith in such a correspondence and act upon that faith. ..........If experience did not teach that economic advantage goes along with larger sales, there would be an end to the hot pursuit for wide and wider markets.......... In brief, there is a relation of correspondence between capacity to pay and the amount of business done. Exceptions, of course, there are. The law builds upon the probables, and shapes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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