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TMI Blog1969 (7) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... me to time relating to the matters specified in the Act. Cochin State was integrated with Travancore on April 1, 1960 in order to form the new .State of Travancore-Cochin. On that date, after the Constitution came into force the State of Travancore-Cochin became a Part B State and by the Finance Act, 1960 the Central Excise and Salt Act 1 of 1944 was extended to the Travancore-Cochin State. Section 13(2) of the Act provided that if immediately before the first day of .April, 1960 there was in force in any State other than Jammu & Kashmir a law corresponding to, but other than, an Act referred to in sub-s. (1) or (2) of s. 11, such law was repealed with effect from such date. In consequence of this provision in the Finance Act rules which were in force on April 1, 1950 were changed in Cochin and by a notification dated August 3, 1950 the system of auction sales of A and B Class shops was done away with and instead graded licence fees were introduced for various classes of licences including 'C' class licences. The State of Travancore-Cochin was collecting licence fee from the respondents for the period from August 17, 1950 to December 31, 1967 on the strength of the said rules frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the balance. On December 16, 1963 the Government of Kerala Promulgated Ordinance I of 1963 which was later replaced by Act 9 of 1964. The Ordinance was promulgated in order to avoid the effect of the decision of this Court in A.B. Abdulkhadir & Ors v. The State of Kerala([1962] Supp. S.C.R. 741) in respect of the period from August 17, 1950 to December 31, 1957. Section 3 of the Act provides: "For the period beginning with the 17th day of August, 1950 and ending on the 31st day of December, 1957 every person rending or stocking tobacco within any area to which this Act extends shall be liable and shall be deemed always to have been liable to pay a luxury tax on such tobacco in the form of a fee for licence for the vend and stocking of the tobacco, at such rates as may be prescribed not exceeding the rates specified in the schedule." Section 4 confers rule making power and states: "(1) The Government may, by notification in the Gazette, make rules to carry out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for :-- (i) the prohibition of the vending of tobacco except under a licence; (ii) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force." The notification dated January 25, 1951 issued under the Cochin Tobacco Act of 1084 reads as follows: "In exercise of the powers conferred by section 5 of the Cochin Tobacco Act VII of 1084 as subsequently amended and as continued in force by the Travancore-Cochin Administration and Application of Laws Act Vl of 1125 and in supersession of all previous notifications and Rules on the subject, the following Rules are prescribed under sanction of His Highness the Raj Pramukh for the import, export, sale, transport, possession, disposal of things confiscated and the grant of rewards under the said Act and for generally carrying out the provisions thereof. . . . . . . . . . Clause 16: (i) Holders (stockist or 'A' Class licences shall be entitled to purchase tobacco from any dealer within or without the State without any quantative restriction. This class of licencees shall sell only to other 'A' Class licencees or to 'B' class licencees. (ii) the annual fees for these licencees shall be as follows: Variety of tobacco stocked Maximum Quantity Cds Minimum fee Prescribed Rs. Fee payable for stocking additional quantities Rs. A. Jaffna tobaco 100 1500 100 for ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest; Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President." The true scope and effect of those Articles was the subject matter of consideration in Atiabari Tea Co. Ltd. v. The State of Assam([1961] 1 S.C.R. 809).' The majority view vas expressed by Gajendragadkar J. at p. 860 as follows: "In construing Art. 301 we must, therefore, have regard to the general scheme of our Constitution as well as the particular provisions in regard to taxing laws.The construction of Art. 301 should not be determined on a purely academic or doctrinnaire considerations; in construing the said Articles we must adopt a realistic approach and bear in mind the essential features of the separation of powers on which our Constitution rests. It is a federal Constitution which we are interpreting, and so the impact of Art. 301 must be judged accordingly. Besides, it is not irrelevant to remember in this connection that the Article we are co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether ss. 8(2) and 8(5) of the Central Sales Tax Act, 1956 were intra vires of Arts. 301 and 303 of the Constitution. It was pointed out that an Act which was merely enacted for the purpose of imposing.tax which was to be collected and to be retained by the State did not amount to a law giving or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, merely because of varying rates of tax prevailing in different States. At p. 150 of the report Shah, J., speaking. for the Court observed: "The flow of trade does not necessarily depend upon the rates of sales tax: it depends upon a variety of factors, such as the source of supply, place of consumption, existence of trade channels, the rates of freight, trading facilities, availability of efficient transport and other facilities for carrying on trade. Instances can easily be imagined of cases in which notwithstanding the lower rate of tax in a particular part of the country goods. may be purchased from another part, where a higher rate of tax prevails. Supposing in a particular State in respect of a commodity the rate of tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was .manufactured within the State and consequently no excise duty was being levied on any locally manufactured 'foreign liquor' countervailing duty could not be charged on such liquor brought from outside the State and that the impost was in violation of Arts. 301,303 and 304 of the Constitution. It was held by the majority of Judges that the notification dated March 31,1961 enhancing the levy by Rs. 30 per L.P. Gallon infringed the guarantee of freedom under Art. 301 and may be saved only if it falls within the exception contained in Art. 304. As no liquor was produced or manufactured within the State, the protection of Art. 304 was not available. The decision was based on the assumption that the notification dated 31-3-1961 enhancing duty, on foreign liquor infringed the guarantee under Art. 301 and may be saved if it fell within the exceptions contained in Art. 304 of the Constitution. The Court did not intend to lay down the proposition that the imposition of a duty or tax in every case would be tantamount per se to an infringement of Art. 301. As we have already pointed out it is well established by numerous authorities of this Court that only such restrictions or impedimen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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