TMI Blog1965 (11) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, to make purchases of raw materials for the purpose of manufacturing such blankets and also lubricants and other chemicals which are essential for running the machinery for their manufacture. In the year 1963-64, the petitioner was assessed under the Punjab General Sales Tax Act to a sum of Rs. 2,800.64 out of which a sum of Rs. 2,200 had already been paid and the balance was paid thereafter. The petitioner had purchased lubricants of the value of Rs. 31,656.78. Lubricants of the value of Rs. 7,396.95 out of the total quantity had been purchased from outside the State of Punjab. The quantity purchased from outside the State of Punjab was subjected to an interState tax of two per cent. under the Central Sales Tax Act, as these lubricants were purchased for using them for manufacturing purposes. Deducting the purchase price of lubricants purchased from outside the State from the gross purchase price of the entire quantity, the Assessing Authority came to the conclusion that the petitioner was liable to purchase tax at Rs. 24,259.83. Out of this amount, a sum of Rs. 3,465.69 was also deducted by the Assessing Authority as the amount spent on the purchase of lubricants used in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure by contending that the additional duty has been imposed in replacement of the sales tax levied by the Union and the States. Section 3 of this enactment authorises levy and collection of additional duty on certain articles including woollen fabrics produced or manufactured in India and the First Schedule fixes the amount of duty. Section 4 of this Act provides for the distribution of the additional duty levied, amongst the States and the Second Schedule contains the details of such distribution. Certain goods including woollen fabrics have been declared to be of special importance in inter-State trade or commerce and every sales tax law of a State, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of such declared goods, has been subjected, from 1st April, 1958, to the restrictions and conditions specified in section 15 of the Central Sales Tax Act (No. 74 of 1956). As a consequence of this Act, the Punjab Legislature passed the Punjab Textiles and Sugar (Existing Stocks) Purchase Tax and Miscellaneous Provisions Act (No. 8 of 1958) for providing for the levy of purchase tax on stocks of textiles and sugar and for abolition of tax on sales of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be founded. Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce, is certainly a subject on which the Union Parliament can make laws, but subject to this item taxes on the sale or purchase of goods other than newspapers are within the domain of the State Legislature. On the plain language of Act 58 of 1957 this enactment does not impose a tax on a transaction of sale or purchase at all, and a fortiori, nor on sale or purchase in the course of interState trade or commerce. Indeed, according to the permissible initial presumption this Act should be held only to impose excise duty. It may in this connection be remembered that there is hardly any question of intendment in a taxing statute and regard is to be had only to the clear wording of the statutory instrument. Shri Sibal has in support of the second ground of challenge referred us to Articles 301, 303 and 304 of the Constitution. These articles find place in part XIII of the Constitution headed as "trade, commerce and intercourse within the territory of India". Article 301 guarantees freedom of trade, commerce and intercourse thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that State as may be required in the public interest. There is a proviso to this article, according to which no bill or amendment for the purpose of the latter category of imposition can be introduced or moved in a State Legislature without the previous sanction of the President. The challenge to the impugned Act which is developed by the petitioner's learned counsel is that by imposing a rate of tax on the goods which are to be used by the petitioner in the manufacture of blankets in the State of Punjab at a higher rate than the rate of tax in the adjoining area known as Delhi, the petitioner is being virtually forced to buy the goods from Delhi in preference to their purchase in the State of Punjab itself. This, according to the counsel, impinges on the freedom of trade, commerce and intercourse throughout the territory of India. In other words, according to the counsel, this places some kind of a curb or a restriction on trade, commerce and intercourse between the Punjab and the adjoining State. I must confess my inability to appreciate this contention. If the petitioner is for economic reasons feeling impelled in order to make more profit, to buy the goods required in the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Wherever it is held that Article 301 applies the legislative competence of the Legislature in question will have to be judged in the light of the relevant articles of Part XIII. * * * * * The freedom of trade guaranteed by Article 301 is freedom from all restrictions except those which are provided by the other articles in Part XIII." The ratio of this decision, in my opinion, has no application to the facts before us. In the reported case, the appellants were growers of tea in West Bengal or in Assam and carried their tea to the market in Calcutta from where it was sold for consumption in the country or was exported for sale out of the country. The sale of tea inside Assam bore a very small proportion to the tea produced and manufactured by them and the bulk of produced and manufactured tea was carried out of Assam. Besides, the tea carried by rail, a large quantity was carried by road or by inland waterways from Assam to Bengal. The Assam Legislature passed an Act for the purpose of levying taxes on certain goods carried by road or inland waterways in the State of Assam. It was this Act, the constitutionality of which was canvassed before the Supreme Court and it was he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be determined. It is not possible a priori to draw a dividing line between that which would really be a charge for a facility provided and that which would really be a deterrent to a trade; but the distinction, if it has to be drawn, is, according to this decision, real and clear. For the tax to become a prohibited tax, it has to be a direct tax, the effect of which is to hinder the movement part of trade. So long as a tax remains compensatory or regulatory, it cannot operate as a hindrance. This appears to be the real ratio of this decision. As a matter of fact, I am aware of some cases in which the impositions have been struck down by the Supreme Court following the two decisions just noticed; but in those cases the taxes directly and immediately operated to hamper or hinder the movement part of the trade. Such is not the position before us. The lower rate of tax in the Delhi territory does not directly affect the movement of the trade, commerce or intercourse from Delhi to Punjab or to any other State, and indeed those who do not want to bring the goods into Punjab are wholly unaffected by the considerations which have been placed before us on behalf of the petitioner. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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