TMI Blog1962 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... their order of reference dated 11th May, 1962, directed the Sales Tax Tribunal under section 24(3) of the Act to state a case and refer the aforesaid question to this Court. In such a position, it is well settled that the High Court is not precluded from answering the question referred. The High Court in directing the Tribunal to refer the question must necessarily have come to the conclusion that the decision of the Tribunal in declining to refer the question was not correct, in other words, the Tribunal was not right in holding that the question did not arise out of its order and therefore it was not open to the High Court to go behind that decision. This disposes of the preliminary point in favour of the dealer. 3.. Coming to the merits, the relevant facts are these: The petitioner Sri K.S. Vasudevan of M/s. South Indian Hotel of Cuttack Town is a dealer carrying on business of running a hotel registered under the Orissa Sales Tax Act. He was assessed by enhancement of turnover in respect of quarters commencing from quarter ending on 31st March, 1955, to quarter ending on 31st March, 1957. The Tribunal reduced the assessment to some extent except for the last quarter ending on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of profit; as a general proposition, those merchants doing the largest amount of trade are enabled to secure the highest type of management. The question raised on behalf of the dealer is whether or not in such a background the Sales Tax Act read with rule 65, providing for graduated rate of calculation, taxes sales in an unequal and arbitrary way, classifying them for the imposition of different rates without reference to any real or substantial distinction, as the dealer insists. It is on this line of reasoning that it is submitted on behalf of the dealer that rule 65 is discriminatory and therefore offending Article 14 of the Constitution of India. 5.. The Sales Tax Department, on the other hand, submits that under rule 65 the rate of tax is the same, namely, three quarters of an anna in the rupee on a percentage; the slab or the sliding scale is only for computation; it merely prescribes the mode of calculation and it does not purport to fix graduated or different rates as the dealer contends. In support of this the Sales Tax Department submits that section 5(1), proviso 2, of the Act shows that Government may by rules prescribe conditions for the purpose of compounding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and are liable to be struck down if they do not. There is a strong presumption in favour of the validity of legislative classification and it is for those who challenge it as arbitrary and unconstitutional to establish it beyond all doubt. Thus it is for the person who assails a legislation as discriminatory to establish that it is not based on a valid classification and this burden is all the heavier when the legislation under attack is a taxing statute. 7.. The only point for consideration is whether the classification involved in the slab or sliding scale laid down in rule 65 is unreasonable or that it has no relation to the object of the Act. The object of the Act is imposition of tax on sale of goods in Orissa. The scheme of taxation under the Act is broadly laid down in sections 4, 5 and 6 of the Act. Section 4 on incidence of taxation provides to the effect that every dealer whose gross turnover on sales which have taken place in Orissa exceeds Rs. 10,000 shall be liable to pay tax under the Act on sales. Section 5 on rate of tax lays down that the tax payable by a dealer under the Act shall be levied at the rate of one quarter of an anna in the rupee on his taxable tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made on or after the date of commencement of this Act: Provided that a dealer to whom clause (a) does not apply but clause (b) applies shall not be liable to pay the general tax in respect of his turnover upto Rs. 30,000, as computed from the first day of April 1952. * * * (5) The general tax payable by a dealer under this section shall be in addition to the tax payable on special goods under section 10." "10. Incidence and rate of special tax.-(1) Every dealer,- (a) who immediately prior to the date of commencement of this Act was liable to pay the special tax under the Bombay Sales Tax (No. 2) Ordinance, 1952, or (b) whose turnover in respect of all sales of special goods exceeds Rs. 5,000 during the year commencing on the 1st day of April 1952, shall be liable to pay a special tax at the rates specified against them in column 2 of Schedule 11 on his taxable turnover in respect of sales of special goods made on or after the date of commencement of this Act: Provided that a dealer to whom clause (a) does not apply, but clause (b) applies shall not be liable to pay the special tax in respect of his turnover of sales of special goods upto Rs. 5,000 as computed from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned rule 65 are to be cumulatively considered and, if so looked at, they will afford a reasonable basis of classification which has a rational nexus with the object sought to be achieved. Rule 65 puts different hotel-keepers in distinct categories on the basis of the extent of the gross annual turnover on sales. The question arises whether a dealer in each of these different categories has distinct economic characteristics which have any relation to the object sought to be achieved. The object of the Act, as set out in the preamble, is to provide for imposition of a tax on the sale of goods in Orissa. But every taxing legislation makes a genuine attempt to adjust the burden with a fair and reasonable degree of equality. It also aims to apportion the burden equitably on different categories of persons with distinct economic characteristics. It is impossible in the nature of things to aim at absolute equality in the matter of taxation. The State resorts to the principle of classification in an attempt to harmonise the doctrine of equality with differences inherent in the categories of persons assessed. In the present case, the object to provide for imposition of a tax on the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early distinguishable, on facts, in that the impugned provisions in the American case are somewhat different, both in language and purport, from the impugned rule 65 in the present case. 13.. It was argued on behalf of the Sales Tax Department that rule 65 is an option to the dealer, in that it is an alternative method of assessment which, it is submitted on behalf of the department, is open to the dealer to avail himself of for being assessed in case the dealer cannot or does not show the taxable turnover. On that Mr. P.V.B. Rao, learned counsel for the dealer, conceded that if there is such an option left to the dealer, then the dealer can have no grievance about the impugned rule 65. The point, whether or not rule 65 is optional, is outside the scope of the present reference, and so we express no opinion thereof. 14.. On the question referred, we are of opinion that old rule 65 of the Orissa Sales Tax Rules is not discriminatory and therefore not offending Article 14 of the Constitution of India. The answer to the question is accordingly in the negative. The reference is answered accordingly. There will be no order for costs. DAS, J.-I agree with my learned brother that ol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is at the option of the assessee, it cannot in any way be said to operate as discriminatory against the dealer. Under rule 90 the title has been changed to "Special mode of assessment in certain cases". That heading appears to be more appropriate in view of the special mode of assessment prescribed for the hotel-keeper. New rule 90-A, however, now permits composition of taxes in all cases. 4.. It was next contended by Mr. Rao that in its practical application the old rule 65 operates as discriminatory even amongst the various classes of hotel-keepers. According to him, the rule is discriminatory inasmuch as the classification made here is unreasonable and has no relation to the object of the Act. That there is some discrimination even at the stage of fixation of initial turnovers at a certain sum so as to exempt a party altogether from taxation, cannot be doubted. In fact, it was rightly conceded that such discrimination is bound to exist. The real grievance of the assessee is that the slab under rule 65 operates as a discriminatory measure in its practical application amongst different hotel-keepers and as such is void as offending Article 14. No doubt, in its application the ..... 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