TMI Blog2002 (5) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate of 4% on the imported fabrics under Section 4(1)(d) of the Delhi Sales Tax Act, 1975. 4. It is alleged in the petition that the entire scheme of taxation of imported goods is designed to place the goods imported into India at par with the goods manufactured in India in so far as the taxes levied on goods manufactured in India. 5. The petitioners have drawn our attention to the statement of objects and reasons of the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The relevant portion of the said objects and reasons is as under:- The object of this legislation is to impose additional duties of excise in replacement of sales tax levied by the Union and the States on sugar, tobacco and mill made textiles and to distribute the net proceeds of these taxes, except the proceeds attributable to Union Territories, to the States.The distribution of the proceeds of the additional duties broadly followed the pattern recommended by the Second Finance Commission. Provision has been made that States which levy a tax on sale or purchase of these commodities after 1st April, 1958 do not participate in the net proceeds. Provisions made in this Act for includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified by the Central Government, the special additional duty shall be levied and collected at the rate of eight per cent of the value of the article imported into India. 9. The petitioners also contended that the levy of sales tax on imported fabrics is most unreasonable and discriminatory. Imported fabrics are sold by the dealers along with the fabrics manufactured in India and there is no distinction between the said goods. The levy of sales tax only on imported fabrics is discriminatory under Article 14 of the Constitution. Therefore, levy of sales tax on imported fabrics is against the scheme of taxation of imported goods. Hence, it is arbitrary, illegal and amounts to unreasonable restriction on the importers of fabric. 10. Mr. P.V. Kapur, the learned Senior Counsel, who appeared for the petitioners, submitted that the petitioners pay customs duty under Section 12 of the Customs Act, countervailing duty and excise duty and now they have been called upon to pay the sales tax. He submitted that the sales tax is not imposed on their counterpart - the Indian manufacturers, who are manufacturing the fabrics indigenously. He submitted that the imposition of additional duties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also been reiterated by the Hon'ble Supreme Court in the case of Hyderabad Industries Ltd. Anr. v. Union of India Ors. [1999 (108) E.L.T. 321 (S.C.) = 1999 (5) SCC 15]. 14. It is submitted by Mr. Kapur that in view of this declared policy the petitioners cannot be put in a position which is worse than the dealers dealing in goods manufactured in India, as the same would amount to hostile discrimination and would be ex-facie contrary to the policy under which various taxes have been levied. Thus, the levy of sales tax on imported fabrics is arbitrary and unreasonable. 15. Mr. Kapur further submitted that the words which have been incorporated in this Section are that the duty shall be levied at a rate to be specified by the Central Government by notification in the Official Gazette having regard to the maximum sales tax, local tax or any other charges for the time being leviable on the like article on its sale or purchase in India. Meaning thereby that the similar duty should be levied on goods or articles manufactured or produced in India by way of imposition of excise duty. In other words, the burden of taxation on indigenously manufactured/produced goods and imported go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Additional Duties of Excise (Goods of Special Importance) Act, 1957. Sub-clause (5) of Section 3A reads as under : (5) Nothing contained in this section shall apply to any article which is chargeable to additional duties levied under sub-section (1) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) . 20. On behalf of the respondents, Mr. H.C. Bhatia appeared for respondent Nos. 1 3 and Mr. Jayant Bhushan appeared for respondent No. 2. The learned counsel for the respondents submitted that the statement of the petitioners that additional duties of excise are being charged on the imported fabrics is false to the knowledge of the petitioners because duties of excise are leviable on goods produced or manufactured in India and no duty of excise is levied or leviable on goods imported into India. 21. Mr. Jayant Bhushan submitted that what the petitioners, in fact, pay is the additional duties of customs under Section 3 of the Customs Tariff Act, 1975. Merely because under Section 3 of the Customs Tariff Act the additional duty is leviable at the rates equivalent to duty of excise leviable on similar article produced or manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orkmen (AIR 1960 SC 12). Their Lordships of the Supreme Court observed that the Statement of Objects and Reasons is not admissible, however, for construing the section far less can it control the actual words used. Reliance has also been placed on another judgment of the Supreme Court in Tata Engineering Locomotive Co. Ltd v. The Gram Panchayat, Pimpri Waghere (AIR 1976 SC 2463) wherein the Supreme Court did not accept the recital in the Statement of Objects and Reasons that the amendment was made for the reason that the Panchayats could not levy tax on buildings and held that the word houses as originally used was comprehensive enough to include all buildings, including factory buildings and that the amendment only made explicit what was implicit. In Kanai Lal Sur v. Paramnidhi Sadhukhan (AIR 1957 SC 907) the Supreme Court observed that the general rule of interpretation is that the language employed is primarily the determining factor to find out the intention of the legislature. The Court further observed that the first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself. In Aswini Kumar Ghosh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed reliance on Haroon M. Adam v. State of West Bengal Ors.(2001) 121 STC 134. In this case the court dealt with constitutionally permissible classification. The Legislature in its wisdom has clearly made separate classification of India made sugar and sugar not manufactured or made in India which includes imported, foreign made, sugar. This is a constitutionally valid classification. That is the object of Entry 79 of the First Schedule and subsequently incorporated Entry 70A of the Fourth Schedule. The Legislature has to be given freedom to do such classification for the purpose of taxation. 28. Mr. Bhatia placed reliance on Md. Zackria v. State of Tamil Nadu and Others (1999) 115 STC 697 where there was a similar challenge to the levy of sales tax on imported synthetic fabrics of artificial fur. Their Lordships of the Supreme Court were of the opinion that no excise duty or additional duties of Central Excise can be collected on foreign fabrics imported into India. What can be collected on such imported goods is only customs duties. Though for the purpose of measurement or quantifying the amount of duties, Central Excise and additional duties of Central Excise are taken as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no room for applying the principles of interpretation or construction to conclude that in "pith and substance" the Act imposes a sales tax and is a colourable piece of legislation. The petitioners cannot be heard to say that though the additional duty is a duty of excise, though by a different name, it is yet a sales tax. The argument is a contradiction in itself. Duty of excise is imposed on the manufacture and sales tax is imposed on the sales. It is as simple as that. When the language of the statute is clear and unambiguous and is a valid piece of legislation under the Constitution, we do not have to refer to the Objects and Reasons of the enactment or to the deliberations which preceded the introduction of the Bill and the debates in the Parliament at the time of the passing of the enactment. 32. In Nemichand Paras Mal v. Dy. Commercial Tax Officer (1984) 55 STC 47 (Madras) the Madras High Court observed that the Additional Duties of Excise (Goods of Special Importance) Act, 1957, instead of taking away the powers of the State Legislature to impose sales tax on the items of goods covered by the Act, merely disables the State Government from getting its share of the centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court cannot assume such powers are misused or misapplied in order to increase the revenue. It is not the function of Court to restrain Legislatures from exercising their legitimate legislative powers on the specified subjects. 36. Mr. Bhatia also placed reliance on East India Tobacco Company (supra). In this case their Lordships of the Supreme Court observed that in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide latitude and discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, it would be violative of Article 14. 37. In Kerala Hotel Restaurant Association and Others v. State of Kerala and Others (1990) 77 STC 253 (SC) their Lordships of the Supreme Court observed that it is well settled that in order to tax some thing it is not necessary to tax everything. So long as those within the tax net can be legitimately classified together indicating an int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty cannot take away the State's legislative competence to enact a law under Entry 54 of List II of Seventh Schedule of the Constitution. The only consequence which can follow would be that the concerned State may not get its share of the central excise revenue. 42. It is the settled position of law that the Statement of Objects and Reasons cannot be used to determine the true meaning and effect of the substantive provision of law. The general rule of interpretation is that the language employed is primarily the determining factor to find out the intention of the legislature. In other words, when the language employed by the legislature is clear and unambiguous, then it is not necessary to take external aids for construction. 43. We find no merit in the submission that it is the declared policy of the Government of India to integrate our economy with the rest of the world and therefore, sales tax cannot be imposed on imported fabric when the same has not been imposed on indigenously produced fabrics. 44. The controversy which is sought to be raised in these petitions is squarely covered by a judgment delivered by their Lordships of the Supreme Court in the case of Md. Zackria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that Apart from the plain language of the Customs Tariff Act, 1975 even the notes to the clauses show the legislative intent of providing for a charging section in the Tariff Act, 1975 for enabling the levy of additional duty to be equal to the amount of excise duty leviable on a like article if produced or manufactured in India was with a view to safeguard the interests of the manufacturers in India. Even though the impost under Section 3 is not called a countervailing duty there can be little doubt that this levy under Section 3 is with a view to levy additional duty on an imported article so as to counterbalance the excise duty leviable on the like article indigenously made. In other words Section 3 of the Customs Tariff Act has been enacted to provide for a level playing field to the present or future manufacturers of the like articles in India . 47. There is no justification for Mr. Kapur to rely on the last sentence of the extracted passage in order to buttress his argument that a level playing field should be provided to the imported goods. The pronouncements of the Hon ble Supreme Court are plainly to the contrary. There is yet another dimension and that is that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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