TMI Blog1994 (2) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... lapally, Senior Advocates (K.J. John, Advocate, with them), for the respondent in C.A. No. 672 of 1994. Dr. V. Gauri Shankar, Senior Advocate (S. Rajappa and M. Veerappa, Advocates, with him), for the respondent in W.P. No. 278 of 1991. K.V. Viswanathan, Advocate, for the appellant in C.A. No. 2494 of 1993. Dr. V. Gauri Shankar, Senior Advocate (S. Rajappa and M. Veerappa, Advocates, with him), for the respondents in C.A. Nos. 1550 of 1985, 2494 of 1993 and 694 of 1994. Soli J. Sorabji, Senior Advocate [Sunil Gupta, Advocate, and S. Sukumaran, Advocate (of J.B. Dadachanji Co., Advocates) with him], for the appellant in C.A. No. 1550 of 1985. Soli J. Sorabji and R.M. Jaitley, Senior Advocates (Karanjawala Co., Advocates, with them), for the appellant in C.A. No. 694 of 1994. G. Viswanatha Iyer, Senior Advocate (M.M. George and M.A. Firoz, Advocates, with him), for the appellant in C.A. No. 672 of 1994. -------------------------------------------------- The judgment of the Court was delivered by B.P. JEEVAN REDDY, J. -The question in this batch of appeals is whether the publishers of newspapers are entitled to the benefit of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power." (Underlining Here italicised. is ours) Clause (b) thus refers to three categories of goods, viz., (i) goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him; (ii) goods specified in the certificate of registration of the registered dealer purchasing the goods for use by him in the manufacture or processing of goods for sale, subject to any rules made by the Central Government in that behalf; (iii) goods of the class or classes specified in the certificate of registration of registered dealer purchasing goods for use by him in mining or in the generation or distribution of electricity or any other form of power. We are concerned herein with the second category among the said three. Sub-section (4) of section 8 says that provisions of sub- section (1) shall not apply to any sale unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not want to tax both the raw material and the finished goods at the full rate. Where the finished goods are meant for sale, the raw material utilised or consumed for the manufacture of said finished goods is taxed at the concessional rate, for the reason that the State derives revenue again by taxing the sale of the finished goods. However, it is not necessary that the finished goods are actually subjected to tax on their sale-for they may be exempted either by the Act or by a notification issued thereunder. It is enough that the finished goods are meant for sale. Ordinarily, of course, their sale is taxed. The expression "goods" is defined in clause (d) in section 2. As originally enacted, the definition read: "(d) goods includes all materials, articles, commodities and all other kinds of movable property but does not include actionable claims, stocks, shares and securities". (The Central Sales Tax Act, 1956, came into force on January 5, 1957.) By amending Act 31 of 1958, the word "newspapers" was inserted in the said definition after the words "but does not include" and before the words "actionable claims, stocks, shares and securities". After the amendment, the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.L.P. (C) 2 of 1991 in this batch. Leave granted. The Karnataka High Court, however, took a contrary view in Printers (Mysore) Ltd. v. Assistant Commercial Tax Officer [1985] 59 STC 306 which decision too is the subject-matter of an appeal [C.A. No. 1550 (NT) of 1985] in this batch. The decision in Printers (Mysore) Ltd. [1985] 59 STC 306 (Kar) was followed by the Karnataka High Court in the case of other newspapers as well against which S.L.P. (C) 3439 of 1992 [preferred by Indian Express (Madurai)] and C.A. No. 2494 of 1993 (preferred by M/s. Kasturi Sons Ltd.) have been preferred. They too are included in this batch. Leave granted in S.L.P. (C) No. 3439 of 1992. If a literal construction is adopted, it is conceded on all hands that the view taken by the Karnataka High Court is the correct one. But what the Madras and Kerala High Courts have done is to take the spirit behind the amendment of the definition of the expression "goods" as well as the scheme underlying entry 54 of List II read with entries 92 and 92-A of List I of the Seventh Schedule to the Constitution and hold on that basis that the expression "goods" occurring in the latter half of clause (b) of section 8(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the coming into force of the Constitution, the Parliament enacted the Taxes on Newspapers (Sales and Advertisements) Repeal Act, 1951, whereby taxes levied earlier on the sale of newspapers and on the advertisements published therein was repealed. It may be recalled that under the Government of India Act, 1935, entry 48 in List II of the Seventh Schedule did not exclude the sale of newspapers from its purview and on that account, they were liable to pay tax on their sale. It is this feature which was sought to be put an end to by the aforesaid repealing Act. Entry 92-A of List I, it is relevant to notice, while empowering the Parliament to levy tax on sale or purchase of goods taking place in the course of inter-State trade or commerce, specifically excluded newspapers from its purview which means that no tax can be imposed upon the inter-State sale or purchase of newspapers. In short, the position is: no tax can be imposed on the inter-State sale of newspapers and no tax is imposed on their intra-State sale. This special treatment of newspapers has a certain philosophy and an historical background behind it which may briefly be noticed. Freedom of press has always been a cherish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial reasons or excessive competition, descends to undesirable levels and may cause positive public mischief but the difficulty lies in the fact, recognised by Thomas Jefferson, that this freedom "cannot be limited without being lost". Thomas Jefferson said, "it is, however, an evil for which there is no remedy; our liberty depends on the freedom of the press and that cannot be limited without being lost." (In a letter to Dr. J. Currie, 1786). It is evident that "an able, disinterested, public-spirited press, with trained intelligence to know the right and courage to do it, can preserve that public virtue without which popular Government is a sham and a mockery. A cynical, mercenary, demagogic press will produce in time a people as base as itself. The power to mould the future of the Republic will be in the hands of the journalism of future generations", as stated by Joseph Pulitzer. This does not mean that the press is immune either from taxation or from the general laws relating to industrial relations or from the State regulation of the conditions of service of its employees, as has been emphasised by this Court in Express Newspapers (Private) Ltd. v. Union of India AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of coverage for news and views. Reference must be made in this connection to the judgment in Indian Express v. Union of India [1986] 159 ITR 856 (SC); (1985) 1 SCC 641 wherein not only the importance of freedom of press was emphasised, it was also held that a newspaper cannot survive and sell itself at a price within the reach of a common man unless it is allowed to take in advertisements. (See para 84). This decision is significant for the reason that it seeks to place freedom of press on a higher footing than other enterprises. E.S. Venkataramiah, J., as he then was, speaking for the Bench, said: "In view of the intimate connection of newsprint with the freedom of the press, the tests for determining the vires of a statute taxing newsprint have, therefore, to be different from the tests usually adopted for testing the vires of other taxing statutes. In the case of ordinary taxing statutes, the laws may be questioned only if they are either openly confiscatory or a colourable device to confiscate. On the other hand, in the case of a tax on newsprint, it may be sufficient to show a distinct and noticeable burdensomeness, clearly and directly attributable to the tax." Now com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned to it in clause (d). Ordinarily, that is so. But where the context does not permit or where the context requires otherwise, the meaning assigned to it in the said definition need not be applied. If we keep the above consideration in mind, it would be evident that the expression "goods" occurring in the second half of section 8(3)(b) cannot be taken to exclude newspapers from its purview. The context does not permit it. It could never have been included by Parliament. Before the said amendment, the position was: the State could not levy tax on intra-State sale of newspapers; the Parliament could but it did not and entry 92-A of List I bars the Parliament from imposing tax on inter-State sale of newspapers; as a result of the above provisions, while the newspapers were not paying any tax on their sale, they were enjoying the benefit of section 8(3)(b) read with section 8(1)(b) and paying tax only at 4 per cent on non-declared goods which they required for printing and publishing newspapers. Their position could not be worse after the amendment which would be the case if we accept the contention of the Revenue. If the contention of the Revenue is accepted, the newspapers would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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