TMI Blog1973 (3) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... on is filed. Although an appeal is pending against the said order, since the vires of section 10 is challenged, the writ petition was admitted for consideration. When the matter came before Vaidya and Sriramulu, JJ., they thought that the decision of the Division Bench of this Court in W. P. No. 5500 of 1968 required reconsideration. They accordingly referred the case by their order dated 11th November, 1971, to a larger Bench and that is how the matter has come before us. Before we appreciate the main contention a few more facts will have to be given. In State of Mysore v. Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. 231 (S.C.)., the Supreme Court held that if goods are liable at a single point under the State law, Central sales tax cannot be levied on inter-State sale on those commodities at multiple points. This decision was followed subsequently in Modi Spinning and Weaving Mills Co. Ltd. v. Commissioner of Sales Tax[1965] 16 S.T.C. 310 (S.C.). (sic) and State of Mysore v. Mysore Silk House[1966] 17 S.T.C. 309 (S.C.). Five years later the Central Sales Tax Act was amended by amending Act 28 of 1969 which was published on 13th October, 1969. This amendment evidently w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case the main contention is accepted, was also advanced that if the invalid portion of section 10 granting exemption for a specified period is struck down, even then section 10 as a whole remains valid as the invalid portion is severable from the valid portion. Now the law relating to article 14 of the Constitution is no more in doubt. In order to attract article 14 it is necessary firstly to ascertain the policy underlying the impugned statute and the object intended to be achieved by it. Having ascertained the policy and the object of the Act, then the court has to examine the impugned provision in the light of the following two tests: (1) whether the classification is rational and based upon an intelligible differentia which distinguished persons or things that are grouped together from others that are left out of the group, and (2) whether the basis of differentiation has any rational nexus or relation with its avowed policy and object. It is plain that although class legislation is thus prohibited, yet this does not prohibit a reasonable classification of persons and things for the purpose of legislation. Whether such classification relates to duties, burdens or exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s obnoxious to article 14. We do not think it is. It was not disputed that prior to the Supreme Court decision given on 10th November, 1964, there was conflict of opinion as to whether the Central Government can tax a commodity at a different point or different rate than what is provided in the respective State Act. In regard to the construction of section 8 of the Act as well as section 9 there was difference of opinion. The words "in the manner" appearing in section 9 had given rise to the difference of opinion. While it was held by some courts that the said phraseology attracts only the machinery and the procedure for assessment and collection of tax existing in the State, the view of the other courts was that these words include even the rate and the point at which a tax could be levied. It is the Supreme Court that laid down for the first time that the expression "levy" means "impose". It was further said: "When section 9(1) says that under the Central Act tax shall be levied in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected, it is reasonable to hold that the expression 'levied' in sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that the argument that the dealers could not pass on the tax payable to the consumers has not much validity and that the tax is levied on the dealer and the fact that he is allowed to pass on the tax to the consumers has no relevance when the court considers the legislative competence, nevertheless the classification based on the fact of the collection or non-collection of the tax has been held to be reasonable for the purpose of article 14 of the Constitution: vide Jonnala Narasimharao and Co. v. State of Andhra Pradesh[1971] 28 S.T.C. 262 at 282 (S.C.). That is why the said classification during the specified period has not been attacked. The attack is only made because it is said that there has been invidious discrimination made between the dealers who have not collected the tax prior to 10th November, 1964, and those dealers who have similarly not collected the tax during the specified period. The contention was that both these kinds of dealers are very much placed in the same or similar position and, therefore, they ought not to have been given different treatment. We do not see any substance in this contention. Merely because different treatment has been meted out to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to tax something. It is allowed to pick and choose objects and persons for the purpose of taxation. The same wide discretion is available to the Legislature regarding grant of exemptions. It would, therefore, not be difficult to hold that in the exercise of such a wide discretion if the Legislature has reasonably classified the dealers in view of the Supreme Court decision, such classification cannot be attacked on the ground of article 14 of the Constitution. It is also pertinent to note that if the Legislature had exempted all those who had not collected the tax even prior to 10th November, 1964, it would have meant that right from 1956 till 10th November, 1964, all the assessments would have had to be opened and exemptions in such cases granted. A flood of claims for exemptions in all transactions which had been finalised would have poured in. This very thing the Legislature wanted to avoid and that is why the assessments prior to November, 1964, were validated in view of the Supreme Court decision and because of that decision exemptions were granted to certain dealers till the law was suitably amended. It is not for this court to decide whether the policy of exempting deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch decided on 4th March, 1971, by Obul Reddi and Venkateswara Rao, JJ., was rightly decided. It was held that section 10 of the Act was not ultra vires. The classification was valid. It may be that some of the reasons given in support of their conclusion may not be supported, but that would not mean that the conclusion arrived at by that Bench was erroneous. We are fortified in the view which we have taken by the following decisions: In Basappa Bros. v. Deputy Commissioner of Commercial Taxes[1971] 27 S.T.C. 241., a Bench of the Mysore High Court was concerned with this very question. Their Lordships observed that: "Before 10th November, 1964, when litigation was pending............the dealers could have foreseen that their sales would be charged to tax and therefore could have made appropriate provision to meet the tax liability. By the classification made under section 10, it cannot be said that any dealer has been selected for hostile treatment. " In Murari Lal Agrawal Sons v. Assistant Commissioner (J.), Sales Tax[1971] 27 S.T.C. 402., the same question arose before a Full Bench of the Allahabad High Court. The majority took the view for more or less the same reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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