TMI Blog1956 (3) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... sess- ing authority, the Deputy Commercial Tax Officer, on 4th September, 1953, and a notice of demand in the prescribed form was issued to the first petitioner to pay the assessed tax. The first petitioner did not avail himself of the statutory remedies of appeal and revision for which the Act provided. He challenged the validity of the statutory provi- sion under which he was taxed, and he applied under Article 226 of the Constitution for the issue of a writ of certiorari or other appropriate writ to quash the order of assessment. The learned Government Pleader took a preliminary objection to the maintainability of an application under Article 226 of the Constitu- tion in the circumstances of this case. He pointed out that as the first petitioner had statutory remedies open to him provided by the Act itself to have the challenged assessment corrected, this Court should not in exercise of the jurisdiction vested in it under Article 226 of the Constitution issue a writ of certiorari even if the contention of the peti- tioners was well founded, that the impugned provision under which the first petitioner was taxed was invalid. The learned Government Pleader urged that the validity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of examining the validity of the impugned provision and pronouncing upon it at this stage, when the first petitioner has not availed himself of his statutory right of appeal, and his further statutory right of moving this Court in revision under section 12B of the Act, after the right of appeal to the Appellate Tribunal has been availed of. The preliminary objection fails. The relevant portion of the Act runs thus: "Section 3. (1) Subject to the provisions of this Act,- (a) Every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every rupee in such turnover: Provided that if and to the extent to which such turnover relates to articles of food and drink sold in a hotel, boarding house or restaurant, the tax shall be calculated at the rate of four and a half pies for every rupee, if the turnover relating to those articles is not less than twenty- five thousand rupees." Ex facie the impugned statutory provision, there is an apparent discrimination. One class of dealers alone are required to pay a higher tax than the other dealers. The charge is that that discrimination is irrational and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 1070. as to preclude the assumption that the classification rests upon some rational basis within the knowledge and experience of the legislators. A statutory discrimination will not be set aside as the denial of equal protection of the laws if any state of facts reasonably may be conceived to justify it." In our opinion, those principles could well apply in testing the validity of any of the Acts in this country. Even though the Legislature of the Province of Madras could not have been conscious of the limita- tion subsequently imposed by Article 14 of the Constitution when the Legislature enacted the impugned provision in 1949, if the Courts can reasonably conceive of any state of facts, which now exists, when the validity of the statutory provision is challenged, to justify the classifica- tion on which the legislative discrimination could be based, it is the duty of the Court to uphold the validity of the legislative provision. In State of Bombay v. F.N. Balsara(1), the Supreme Court laid down some of the principles that should apply in testing the correctness or otherwise of a claim of reasonable classification. Fazl Ali, J., observed: "...........(4) The principle (of eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not, therefore, necessary to decide in these proceedings, whether the principle laid down by the majority of the learned Judges of the Supreme Court of America in Stewart Dry Goods Co. v. Lewis(1), on which Mr. Venkata- subramania Aiyar relied to a considerable extent, should be applied to examine the validity of the proviso to section 3(1)(b) of the Act. No doubt in America a greater latitude is permissible in classifica- tion for purposes of taxation. It is not necessary to tax everything to tax something. At page 587 of Willis on Constitutional Law, the learned author states: "The Supreme Court permits a wider discretion in classification under the power of taxation, if possible, than it does under the police power. One reason for this undoubtedly is the urgent need for revenue by the various Governmental agencies. A State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods, and even rates for taxation if it does so reasonably. The Constitution does not say how cases shall be decided. All it says is that the States shall not deny to any person within their jurisdiction equal protection of the laws. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax the turnover of a dealer. Even after listening to the full and exhaustive arguments of the learned Government Pleader, we must confess our inability to visualise a just and reasonable relation between the impugned classification underlying the proviso to section 3(1)(b) of the Act, and the object of the Act. Dealers in articles of food and drink with a turnover of Rs. 25,000 and more are divided into two classes for purposes of taxa- tion, and those that sell such articles in a hotel, boarding house or restaurant have to pay a higher tax. Normally, of course, only articles of food and drink prepared in the kitchen of the restaurant are sold in that restaurant. Even so, articles of food and drink sold in the restaurant are subjected to a higher tax. But the articles prepared by the same dealer and probably in the same kitchen will be subjected to a lower tax if sold in a shop next door or sold from a mobile van, both of which are familiar usages of such dealers in this City. Let us take another example. A dealer who sells cakes and pastries at a shop will pay less. He will pay more by way of tax if he sells the articles in a restaurant attached to or detached from his shop. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into account only the com- paratively limited types of the articles of food and drink in the sale of which restaurants specialise, and even if we further limit the conside- ration to dealers with a turnover of Rs. 25,000 and more, there appears to be no rational basis, consistent with the scheme of the Act, for the statutory discrimination against keepers of hotels, restaurants and boarding houses, which marks them out for a higher rate of tax, under the proviso to section 3(1)(b). The learned Government Pleader urged next that restaurants specialise only in the sale of articles of food and drink, and they are, therefore, different from other dealers. That is no real answer to the charge of discrimination as between the two classes even in the limited group of dealers in articles of food and drink. A further basis for classification that the learned Government Pleader suggested was that, because of the facilities for service available in hotels and restaurants, those dealers were in a position to charge higher prices for articles of food and drink they sold than other dealers in articles of food and drink. It is not enough to seek a basis for classification. That classification m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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