TMI Blog2016 (10) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting that pan masala on the face of it is different from tobacco and constitutes a separate class by itself. We have perused Chapters 21 and 24 of the Central Excise Tariff Act and as appearing in the compilation tendered by the petitioners from pages 88 to 90, 93, 96 and 101. The corresponding Note, namely, Note No.3 in Chapter No.21 was amended to clarify that pan masala covered by Chapter 21 would not have tobacco as an ingredient. Corresponding to that was the change brought about in column (3) to the First Schedule of the ADE Act to include Tariff Entry 2404.49, namely, pan masala containing tobacco (page 111 of the petitioners compilation). Thus until 2001, pan masala was not included in either page 24 of the Central Excise Tariff Act nor in the the First Schedule to the ADE Act. Pan masala containing tobacco is known to the commercial world as different from tobacco. Pan masala is said to be a preparation containing betel-nuts and one or more of the ingredients referred above. Unlike the other entries in Chapter 24 of the 1985 Act, essentially dealing with tobacco, pan masala may or may not contain tobacco. The State's power to legislate is not curtailed by the ADE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra vires Article 14 of the Constitution of India. 2 The petitioner also claims a similar relief to quash an order dated 22nd August, 2014, demanding a sum of ₹ 3,21,13,742/- from the petitioner on the sale of pan masala containing tobacco for the period (Financial Year) 2005-2006. This order has been passed by respondent No.3. 3 The writ petition is filed by contending that the petitioner in this writ petition is a private limited company, incorporated and registered under the Indian Companies Act, 1956, having its registered office at the address mentioned herein above. 4 Respondent Nos.1 to 4 are the authorities exercising powers together with the State itself under the Maharashtra Value Added Tax Act, 2002 (for short MVAT ). 5 The petitioner, inter-alia, engages itself in the business of manufacturing pan masala. During the period under dispute, namely, Financial Year 2005-2006, the petitioner has manufactured and sold pan masala with or without tobacco. The petitioner claims that it has discharged its VAT liability under the MVAT Act. The petitioner manufactures pan masala not containing tobacco under the brand name Star Pan Masala classifiable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ala, that is to say, any preparation containing betel nuts and tobacco and any one or more of the following ingredients, namely :- (i) Lime, and (ii) Kattha (Catechu) whether or not containing any other ingredient such as cardamom, copra and menthol. 11 With effect from 1st March, 2006, pan masala containing tobacco falling under 24039990 of the First Schedule to ADE Act, 1957, was liable to additional duty of excise @ 18% under the said Schedule. However, the said tobacco product was exempt from payment of additional duty of excise in view of exemption Notification No.11/2006-C.E. dated 1st March, 2006. 12 Simultaneously, the rate of basic excise duty leviable on such tobacco products under Chapter 24 of the Central Excise Tariff Act, 1985, was suitably increased with no change in total excise duty. In other words, practically there was no exemption from ADE Act, 1957. 13 Consequently, with effect from 1st March, 2006, on sale of pan masala containing tobacco, petitioners paid increased amount of central excise duty. It continued to avail exemption from payment of VAT vide Entry A-45 of the MVAT for the period from 1st March, 2006 till 31st March, 2007. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Mawa are covered under Explanation and no exemption is available for such pan masala containing tobacco. Hence, the respondent No.4 ordered part payment of ₹ 1,41,93,875/- vide order dated 26th June, 2015. A copy of the said order dated 26th June, 2015, passed by respondent No.5 is annexed as Annexure-E to the paper-book. 18 The petitioner has also brought to our notice the following changes which were made by the Taxation Laws (Amendment Act, 2007. These, according to the petitioner, are as under : 19 The Parliament omitted Chapter headings 2401, 2402 and 2403 and sub-heading and tariff item thereunder from the First Schedule to ADE Act 1957 vide section 10, Taxation Laws (Amendment) Act, 2007 (Act No.16 of 2007) effective from 1st April, 2007, without losing share of central taxes. This enabled States to levy VAT on tobacco with effect from 1st April, 2007. 20 The objects and reasons of the Taxation Laws (Amendment) Bill, 2007, read as under : 5. The Additional Duties of Excise (Goods of Special Importance) Act 1957, is proposed to be amended to drop tobacco from the First Schedule of the Act, to enable the States to levy VAT on tobacco without losing their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year to challenge the provisions of the impugned notification. 27 It is then submitted that prior to this petition being filed, the petitioners preferred an appeal against the assessment order before the Joint Commissioner of Sales Tax (Appeals), Kolhapur. That appeal is still pending. The petitioner has, inter-alia, submitted in the grounds of that appeal that it has paid additional duty of excise and the State of Maharashtra has been provided a share from the undivided pool of such duty as per the Presidential Order existing during the relevant period of time. Thus, the issues that are arising for consideration in that appeal are similar to those raised in the present petition. For this reason and when there is alternate and efficacious remedy available, already availed of, that we should not entertain this writ petition. 28 Without prejudice to these preliminary objections, it is then submitted that on merits as well, there is no substance in the writ petition. It is submitted that the petitioner is attempting to re-agitate issues already decided by the Hon'ble Supreme Court. An extensive reference is made to the findings and conclusion which can be deduced from the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is in consonance with the ADE Act and the Constitution (Distribution of Revenues) No.5 Order, 2005, (hereinafter referred to as the said Order ). The said Order is issued under Article 270 of the Constitution. It is, therefore, submitted that there is nothing contrary to the said ADE Act or the Constitution Order insofar as clause (1) of the impugned Notification. It is then elaborated as to how the ADE Act and the said Order provides that no share shall be payable to the State in a year where the State levies any tax or duty on sale or purchase of the goods described in column (3) of the First Schedule to the ADE Act. This was reflected in Schedule Entry A-45 of the MVAT Act which, at the relevant time, provided that sugar, fabrics and tobacco as described from time to time in column (3) of the First Schedule to the Additional Duties of Excise (Goods of Special Importance) Act, 1957 would not be taxed. Therefore Ground V.2 at page 30 of the petition is incorrect in interpreting Schedule Entry A-45 as providing for exemption from levy on all tobacco products when the said Entry explicitly clarifies that it is only tobacco products described in column (3) of the First Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence to the tariff item in Column (2) and is not expressly referred in Column (3) of the First Schedule to the ADE Act. 33 Since pan masala containing tobacco was no longer described in column (3) of the First Schedule to the ADE Act, it no longer fell within the definition of Schedule Entry A-45 in the MVAT Act. The impugned Notification inserted an Explanation to Schedule Entry A-45 to clarify this position. In accordance with well settled principles of law, since the Explanation is merely clarificatory, it applies retrospectively from 2005 when pan masala containing tobacco ceased to be described in column (3) of the First Schedule of the ADE Act. 34 Thereafter, the affidavit seeks to deal with Grounds V.1 to V.5 at pages 28 to 30 of the petition. It is submitted that though strictly not relevant, these Grounds substantiate the position set out hereinabove inasmuch as that indicates that the Explanation regarding pan masala was also inserted in the Bombay Sales Tax Act and operated retrospectively during the period prior to 2001 when pan masala containing tobacco was not described in column (3) of the First Schedule to the ADE Act. It is in these circumstances that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petition. 39 The petitioner then reiterates in this rejoinder the ground that a Notification dated 21st January, 2006, is beyond the powers of the State Legislature / Executive under Article 246(3) of the Constitution read with Entry No.54 of Schedule II. The contentions as raised in the writ petition are reiterated. 40 The petitioner also in paragraph 9 of this affidavit relies on Article 261 of the Constitution of India to submit that the State cannot argue and urge anything to the contrary, particularly when it has projected and assured the Central Government / other State Governments that it is complying with the stipulations in Payment Order under Article 270 and is not levying sales tax on commodities covered by the Schedule to the ADE Act. That is why it is entitled to full share of all Central taxes without any reduction whatsoever. If this is how it projects its stand before the Constitutional authority and particularly the Central Government, then, anything to the contrary should not be permitted to be canvassed. Paragraphs 9 and 10 of this rejoinder refer to this position. 41 Thereafter, it is urged that the judgment in the case of Godfrey Phillips is squar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odities shall be eligible to the share in additional duties of excise. Further, if a State chooses to reimpose sales tax on any of the above commodities, then, no sums will be paid to that State as its share in the proceeds from the additional excise duty of that commodity unless the Central Government otherwise directs. 46 Mr. Sridharan then takes us through the legislative measures to implement the above arrangement prior to 1st April, 2000. He submits that the additional excise duty levied under section 3 of the ADE Act, inter alia, on tobacco products is entirely distributed to the States as urged above. In that regard, he relies upon section 3 of the ADE Act and the First Schedule thereof. The tax levied under the ADE Act is also a duty of excise since the taxable event is manufacture. However, the duty levied under the ADE Act is over and above the duty levied under the Central Excise Act and to distinguish it from duties levied under the Central Excise Act popularly, known as additional duties of excise. Then, Mr. Sridharan relies on section 4 of this ADE Act which provides for a distribution of the additional duties of excise among the States. He also relies upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5- 2010. Mr. Sridharan submits that even the Constitution (Distribution of Revenues) No.5 Order 2005 implementing the recommendations of the Finance Commission would denote that the State of Maharashtra has been given a share of additional duties of excise on the condition that they will not levy any sales tax on the three commodities referred above. Mr. Sridharan then refers to the scheme set out in the Thirteenth Finance Commission Report for the period 2010- 2015. He submits that the State of Maharashtra has received its share of 3.5% of all Central taxes. It has accepted throughout this position that it is entitled to this share provided it does not levy VAT on pan masala containing tobacco. Therefore, Mr. Sridharan submits that levy of VAT on pan masala containing tobacco is ultra vires the Presidential order and the Constitution. He would submit that the State has also acted contrary to the judgment of the Hon'ble Supreme Court in the case of Atiabari Tea Company vs. State of Assam AIR 1961 SC 232. He submits that once the legislative and constitutional scheme is as above, then, any attempt to contravene it has to be disapproved and strongly by the Court. In su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 of the First Schedule to the Central Excise Tariff Act it is clear that pan masala containing tobacco is specifically covered under Tariff Head 24039990. Further since the said tariff item is described in column (2) of the First Schedule to the ADE Act, the additional duty of excise covered pan masala containing tobacco. Further, the supplementary Note 1 to Chapter 21 relating to Miscellaneous Edible Preparations of the First Schedule to the Central Excise Tariff Act specifically excluded pan masala containing tobacco from the ambit of Chapter 21. Chapter Heading 2403 was omitted from the First Schedule to the ADE Act only with effect from 1st April, 2007, vide section 10 of the Taxation Laws (Amendment) Act, 2007 (Act No.16 of 2007) read with the Notification dated 29th March, 2007. The Schedule Entry A-45 was amended with effect from 1st April, 2007, to delete reference to tobacco. Mr. Sridharan took us through all this to emphasize that the Schedules of the Bombay Sales Tax Act, 1959, and the MVAT Act reflected a clear and careful policy. In that regard, he refers to Schedule Entry A-15 of the erstwhile Bombay Sales Tax Act, 1959, and Schedule Entry A-45 of the MVAT Act to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication, in any event, can be effective only from 1st February, 2006, and not from 1st April, 2005. In that regard, he submits that we must give the Explanation added to Schedule Entry A-45, prospective effect. We should give the same effect only from 1st February, 2006. Section 9 of the MVAT Act which empowers the State Government to amend the Schedule does not contain the power to give it retrospective effect. Mr. Sridharan relies upon the language of section 9 to submit that delegated legislation cannot have retrospective effect unless provided in the main section. Mr. Sridharan submits that even if Schedule Entry A-45 is held to exclude tobacco products in terms of the Explanation, such exclusion shall take effect only from 1st February, 2006. The reason is pan masala containing tobacco was indeed covered and fell under the First Schedule to the ADE Act in the Financial Years 2005-2006 and 2006-2007. Mr. Sridharan submits that any submission and based on paragraphs 11 to 15 of the affidavit-in-reply of the respondents is erroneous. The respondents have ignored Note 4 of Chapter 24 of the First Schedule to the Central Excise Tariff Act, 1985, read with Note 2 to the First Sched ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Agencies Ltd. (2009) 12 SCC 209. (6) Dy. CIT v. Core Health Care Ltd. (2008) 2 SCC 465. (7) State of UP v. Renusagar Power Co. (1998) 4 SCC 59. (8) Ram Krishna Dalmia Ors.v. S.R. Tendolkar Ors. 1959 SCR 279. (9) Godfrey Phillips India Ltd. v. State of UP (2005) 2 SCC 515. (10) Kishan Chand Chellaram Ors. v. Jt. CTO Ors. 1668(2) STC 367 (Mad.) SRP 37/78 (11) K.C. Gajapati Narayan Deo Ors. v. State of Orissa 1954 SCR 1. (12) P. Vajravelu Mudaliar v. Spl. Deputy Collector for Land Acquisition 1965 1 SCR 614. 51 He has also taken us extensively through the provisions of the enactments referred in the foregoing paragraphs, the Constitution and the Objects and Reasons of the Taxation Laws (Amendment) Bill, 2007. Mr. Sridharan has also taken us through the Trade Circulars. All this has been compiled by the petitioners' advocate in two volumes of the compilation. 52 On the other hand, Mrs. Jeejeebhoy, learned special counsel appearing on behalf of the State / Revenue has submitted that as pointed out in the affidavit-in-reply, the writ petitions are not maintainable on account of the remedies available to the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under the ADE Act. (c) Apart from the decision of the Supreme Court in the case of State of Bihar v. Bihar Chamber of Commerce (supra) there are several decisions of the Supreme Court and High Court which hold that the State's power to legislate is not curtailed by the ADE Act [ See State of Kerala v. M/s. Attesee (1989) Supp 1 SCC 733 at paras 6-8 (page 51, petitioner's Compilation, Volume II); Akay Cones Pvt. Ltd. v. Lt. Governor of Delhi (2003) 129 STC 172 (Delhi DB) at para 41 (Page 325, Petitioner's Compilation, Volume I); M.R. Tobacco Pvt. Ltd. v. Union of India (2006) 14 STC 211 (Delhi DB) at page. 9 (Page 306, Petitioner's Compilation, Volume I)]. (d) The petitioners' reliance on the decision in Godfrey Phillips (supra) is misplaced for the following, amongst other, reasons. In Godfrey Phillips the Supreme Court was concerned with the ambit of Entry 62 of List II to the Constitution (para 3) and not with the legislative competence of the State to impose a tax on sale of goods on account of the enactment of the ADE Act and/or because the State is getting a portion of the taxes levied and collected under the ADE Act, which was the question r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifies that declared goods means goods declared under section 14 of the Central Sales Tax Act to be of special importance in inter-State trade or commerce. (j) Since section 14 of the Central Sales Tax Act did not include pan masala containing tobacco, neither Article 286 of the Constitution nor section 15 of the Central Sales Tax Act nor the provisions of the ADE Act would in any manner restrict the power of the State to levy sales tax on the said goods. The findings in Godfrey Phillips (supra) are not applicable qua pan masala containing tobacco and the decision in Godfrey Phillips which considers the effect of these provisions is, therefore, clearly inapplicable and irrelevant. (k) Article 270 of the Constitution, on a plain reading, provides for distribution of net proceeds between the Union and the States. It does not impose any restrictions on the legislative power of the State. All that it does is to authorise the President to do so while prescribing the manner and form of distribution of the net proceeds. In any event and without prejudice to the foregoing, the said Order issued under Article 270 of the Constitution cannot and does not impinge on the legislative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sala containing tobacco, was classified under Chapter 21 Miscellaneous Edible Preparations of the Central Excise Tariff Act,1985. Note 3 of Chapter 21 defined pan masala as a preparation containing betel-nuts, lime and kattha (catechu) and tobacco whether or not containing any other ingredient, such as copra and menthol. The said tariff item was numbered as 2106 (page 90 of the petitioners' compilation) and was not included in the First Schedule to the ADE Act. It was only pursuant to the Finance Act, 2001, that pan masala containing tobacco was classified in Chapter 24 as a separate product under tariff item 2404.49. Note 3 in Chapter 21 was amended to clarify that pan masala covered by Chapter 21 would not have tobacco as an ingredient. A corresponding change was brought about in column (3) of the First Schedule to the ADE Act to include 2404.49 pan masala containing tobacco . Therefore, until 2001 pan masala was not included in either Chapter 24 of the 1985 Act nor in the First Schedule to the ADE Act. (o) Without prejudice to the foregoing and assuming whilst denying that additional duties of excise were being levied on pan masala under the ADE Act even after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of this clause, - (a) the expression taxes on the sale or purchase of goods shall mean taxes on sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce; (b) the expression taxes on the consignment of goods shall mean taxes on the consignment of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter- State trade or commerce. (2) The net proceeds in any financial year of any such tax, except in so far as those proceeds represent proceeds attributable to Union territories, shall not form part of the Consolidated Fund of India, but shall be assigned to the States within which the tax is leviable in that year, and shall be distributed among those States in accordance with such principles of distribution as may be formulated by Parliament by law. (3) Parliament may by law formulate principles for determining when a sale or purchase of, or consignment of, goods takes place in the course of inter-State trade or commerce. 270. Taxes levied and distributed between the Union and the States. - (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clause (b), sub-clause (c) or sub-clause(d) of clause (29A) of article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify. LIST II State List 52. Taxes on the entry of goods into local area for consumption, use or sale therein. 54. Taxes on the sale or purchase of goods other than newspapers, subject to the provision of entry 92A of List I. 58 Mr. Sridharan's contentions can very well be appreciated if we analyse the Articles of the Constitution at the threshold. Mr. Sridharan has referred to the three Articles reproduced above, namely, 269, 270 and 271 which fall under Part XII titled as Finance, Property, Contracts and Suits . It is common ground that Article 264 of the Constitution in which this Chapter I 'Finance' opens with a sub-heading 'General' defines the Finance Commission to mean a Finance Commission constituted under Article 280. Article 265 which also falls in the Part declares that taxes not to be imposed, save by authority of law. Article 266 deals with consolidated funds and public account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the same Constitutional Amendment Act deals with taxes levied and distributed by the Union and the States. One would, therefore, clearly appreciate and understand that this is a scheme of distribution of the Revenue between the Union and the States and for that distribution to take place and be effective it had to be clarified that which duties could be levied by the union but collected and appropriated by the States, which taxes levied and collected by the union can be assigned to the States and the taxes levied and distributed between the Union and the States. It is in Article 270 that one finds that there is a reference to all taxes and duties referred to in the Union List except those duties and taxes referred in the preceding Articles, surcharge on taxes and duties referred to in Article 271 and any fees levied for any specific purposes shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2) of Article 270. Therefore, the scheme is to distribute the taxes and duties except those in clause (1) in accordance with the manner provided in clause (2). It is in clause (2) of Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorises the State Legislature to impose taxes on sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I. 64 We have no hesitation in agreeing with Mrs. Jeejeebhoy when she submits that these constitutional provisions create no embargo on the State's power to impose tax on the sale or purchase of pan masala containing tobacco. 65 The writ petition is filed to strike down clause (10) of the Notification dated 21st January, 2006. 66 That Notification, to the extent relevant, reads as under : ... (10) In Entry 45, in column (2), the following Explanation shall be added, namely:- Explanation:- For removal of doubts, it is hereby declared that Tobacco shall not include Pan Masala, that is to say any preparation containing Betel Nuts and Tobacco and any one or more of the following ingredient, namely :- (i) Lime; and (ii) Kattha (catechu),whether or not containing any other ingredients such as Cardamom, Copra and Menthol. 67 Therefore, in Entry 45 in the Maharashtra Value Added Tax Act, 2002, in column (2), the Explanation as above shall be added. 68 A bare perusal of this would indicate that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified in column (2) of that Schedule, then all that one has to find is whether there are any other provisions of the Act, namely, MVAT Act and the conditions or exceptions, if any, set out against each of the goods specified in column (3) in so far as pan masala with or without tobacco. It is conceded as far as the name of the commodities in Entry A- 45, is concerned, they are sugar, fabrics and tobacco as declared from time to time in column (3) of the First Schedule to the ADE Act. An Explanation has been added by the Notification and which we have reproduced above Clause (10) of the Notification dated 21st January, 2006. this entry never included Pan Masala and that is clarified by explaining that tobacco referred therein shall not include Pan Masala. What is meant by Pan Masala is then explained and clarified by the Explanation. 72 Mr. Sridharan has relied upon the Additional Duties of Excise (Goods of Special Importance) Act, 1957. That Act has been numbered as Act No.58 of 1957 and it has been brought into effect on 24th December, 1957. It is an Act to provide for the levy and collection of additional duties of excise on certain goods and for the distribution of a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... damom, copra and menthol. The description of goods so far as Chapter 21 is concerned is divided into heading number, sub-heading number, description of goods, rate of duty. Heading No.21.06 was titled as pan masala. There is a separate entry for betel-nut powder known as supari . As far as the ADE Act is concerned, that has a Schedule and annexed to it, styled as First Schedule. The petitioners rely upon Chapter 24 of the Central Excise Tariff Act, 1985, in which after the Finance Act 2001, it classified pan masala containing tobacco as 2404.09. Mrs. Jeejeebhoy is right in submitting that pan masala on the face of it is different from tobacco and constitutes a separate class by itself. We have perused Chapters 21 and 24 of the Central Excise Tariff Act and as appearing in the compilation tendered by the petitioners from pages 88 to 90, 93, 96 and 101. The corresponding Note, namely, Note No.3 in Chapter No.21 was amended to clarify that pan masala covered by Chapter 21 would not have tobacco as an ingredient. Corresponding to that was the change brought about in column (3) to the First Schedule of the ADE Act to include Tariff Entry 2404.49, namely, pan masala containing tobacco ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which levies the sales tax on one on the commodities liable to additional duties of excise, such State shall not be eligible for the share on all other commodities also. Apart from the fact that tobacco is described and referred to in the Schedule to the ADE Act and pan masala containing tobacco being a distinct commodity known to the commercial world, we do not think that this argument, even if accepted, would demonstrate and prove that the levy is unconstitutional. At best that can impact the share of the State Government in the revenues or taxes levied and collected by the Centre in the State of Maharashtra. The entire constitutional scheme and as pressed into service by Mr. Sridharan will not enable us to conclude that levy of VAT on pan masala containing tobacco is ultra vires the Constitution. There is no embargo and of the nature specified in Article 286 of the Constitution of India and pressed into service. All that is pressed into service is the Tax Rental Agreement between the Centre and the States for collection of additional duties of excise by the Centre, but distribution of the same entirely to the State Governments, the legislative measures followed to implement t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust by describing the goods as luxury goods. Then, in paragraph 67, the Hon'ble Supreme Court held thus : 67. However, while widening the scope of Entry 54 of List II, the powers of the States to levy such tax are subjected to a corresponding restriction as a consequence of the constitutional curbs imposed on sales tax under Article 286 read with Sections 14 and 16 of the Central Sales Tax Act,1956 and the ADE Act, 1957. The tax leviable by virtue of sub-clause (a) of clause (29-A) of Article 366 of the Constitution thus becomes subject to the same discipline to which any levy under Entry 54 of the State List is made subject to under the Constitution. The position is the same when we look at Article 286 of the Constitution. If any declared goods which are referred to in Section 14 of the Central Sales Tax Act, 1956, are involved in such transfer, supply of delivery, which is referred to in clause (29-A) of Article 366, the sales tax law of a State which provides for levy of sales tax thereon will have to comply with the restrictions mentioned in Section 15 of the Central Sales Tax At, 1956. 82 We do not see how any of these paragraphs would support and lend credence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of additional duties. Section 4 provides for distribution of additional duties among the States. It says that during each financial years there shall be paid out of the Consolidated Fund of India to the States, in accordance with the provisions of the Second Schedules such sums, representing a part of the net proceeds of the additional duties levied and collected during that financial year, as are specified in the Schedule. Section 5 says that any expenditure incurred under the Act shall be charged to the Consolidated fund of India. Section 6 confers the rulemaking power upon the Central Government. The proviso to Rule (2) in the Second Schedule to the Act is of crucial relevance to us. Rule (2) along with its proviso reads thus: During each of the financial years commencing on and after the Ist day of April, 1974 there shall be paid to each of the States specified in column 1 of the Table below such percentage of the net proceeds after deducting therefrom a sum equal to 1.41 per cent of the said proceeds as being attributable to Union Territories, as is set out against it in column 2. Provided but if during the financial year there is levied and collected in any State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liament has also provided the consequence that follows if any State levies tax on sale or purchase of scheduled commodities; all that happens is that the State will be deprived of its share in the proceeds of additional duties of excise for that financial year. Even this is subject to the power of the Central Government to direct otherwise. The Parliament could not, and did not, prohibit any State from making any law or levying any tax which a State can levy by virtue of the entries in List-II. The decision of this Court in State of Kerala v. M/s. Attesee [Agro Industrial Corporation] (1989 Suppl.(1) S.C.C. 73 : AIR 1989 SCC 222) does bear out our understanding. At Page 744, this Court observed: The 1957 Act also has a bearing on the sales tax levy of various States. By levying sales tax on an item covered by the schedule to the 1957 Act, the State will have to forego its share on distribution of the proceeds of the additional excise duty levied. Whether it should impose sales tax on an item of declared goods, limited by the restrictions in Section 15 pf the CST Act and at the risk of losing a share in the additional excise duty levied in respect of those very items, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the ADE Act, 1957, the impact thereof are all not relevant for our purpose. The principle that sub-ordinate legislation cannot be given retrospective effect equally is of no assistance in the facts and circumstances of the present case. We are not concerned here with tobacco but a product (pan masala) containing tobacco. Hence, the effect of the explanation as above need not be considered at all. 87 In the view that we have taken above, we agree with Mrs. Jeejeebhoy that the petitions have no merit. Rule is discharged in each of them. There would be no order as to costs. 88 At this stage, in Writ Petition No. 8572 of 2015, a request is made by the learned senior counsel appearing for the petitioner that time to comply with the order of part payment be extended by a period of six weeks. This request is opposed by the respondents' counsel. 89 Having heard the learned counsel appearing for both sides, we are of the view that interest of justice would be served if the time to make payment is extended by a period of six weeks from today. If it is made and compliance is reported, the tribunal shall decide the appeal in accordance with law. - - TaxTMI - TMITax - C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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