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O. Shinod Versus Chief Secretary to Government of Puducherry, Commissioner (C.T.) , Commercial Tax Department, The Commercial Tax Officer

2017 (7) TMI 827 - MADRAS HIGH COURT

Rate of tax - live chicken - it is contended that only in Mahe region, tax was sought to be levied at 5% and that the same is in violation of Article 14 of the Constitution of India - Held that: - Pondicherry Value Added Tax is discriminatory, and violative of Article 14 of the Constitution of India, and to the power of the Government in levying tax, classification and class legislation, rate of tax levied in the proximate State, namely, Kerala, a Hon'ble Division Bench of this Court, while upho .....

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.2 and 2 of 2014 in W.P.Nos.23794 and 25501/2014 & CMP.Nos.19848 and 19849/2016 in W.A.Nos.1609 & 1610/2016, W.A.No.244 of 2014 - Dated:- 4-7-2017 - S. Manikumar And Bhavani Subbaroyan, JJ. For the Appellant : Mr. V. Ajaykumar For the Respondents : Mr. T. P. Manokaran, Mr.K.R.Harish, Addl. Govt. Pleader (Pondy) JUDGMENT ( Judgment of the Court was delivered by S. Manikumar, J. ) The petitioner engaged in the business of purchase and sale of live chicken and also assessee, on the file of the Comm .....

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rate of tax for live chicken in Kerala, decision of the Government of Puducherry to prevent smuggling and to reduce the disparity, in the rate of tax between the State of Kerala and Mahe region of Union Territory of Pondicherry, decision of the Hon'ble Supreme Court in Sri Srinivasa Theatre and Others., vs. Government of Tamil Nadu & Others, reported in 1993 STC 201 (SC), at Paragraph No.10, the writ court held as follows: ''10. The legal principle deducible from the decisions of .....

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persons, arbitrarily selected from a large number of persons, all of whom stand in the same relation to the privilege granted and between whom and the persons not so favoured no reasonable distinction or substantial difference can be found justifying the inclusion of one and the exclusion of the other from such privilege. It was further pointed out that a classification must not be arbitrary, artificial or evasive and there must be a reasonable, natural and substantial distinction in the nature .....

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bmitted that when Puducherry Value Added Tax (Amendment) Act, 2012 (Act V/2012) was challenged by the proprietors of wholesale and retail distributors of Live Chickens and other livestocks in W.P.Nos.34105/2012 and 30480/2014, on the grounds inter alia that levy of tax, on a particular product in one region, namely, Mahe alone, as discriminatory and violative of Article 14 of the Constitution of India, a Hon'ble Division Bench of this Court, after considering the Constitutional provisions, u .....

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He, therefore contended, petitioners and others, are not small traders. 6. Learned Senior Counsel appearing for the respondents contended that unless and until, the turnover is huge, tax liability is cannot be to the tune of ₹ 13,62,73,652/-. 7. We have heard the Counsel for the respective parties and perused the material available on record. 8. Adjudicating the rival contentions on the grounds that Pondicherry Value Added Tax is discriminatory, and violative of Article 14 of the Constitu .....

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violative of Article 14 of the Constitution of India. The petitioners are dealers in live chicken registered under the provisions of the Act and carrying on business in Mahe region of the Union Territory of Puducherry. In terms of Section 20 of the Act, goods specified in the First Schedule of the Act are not liable to tax. Entry 39 of the First Schedule includes live stock. It is not in dispute that the product dealt by the petitioners namely live chicken falls within the meaning of live stock. .....

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e new Entry, under Entry No.81 as Entry 81-A including live chicken sold in Mahe region. Thus, by virtue of the amendment, live chicken sold in Mahe region was liable to be payment of tax. The rate of tax was fixed at 5%, which the Government of Puducherry, states is reasonable in the facts and circumstances. It is common knowledge that Union Territory of Puducherry consists of four regions and its unique geographical location is in close proximity with three neighbouring States. Puducherry and .....

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f the Constitution of India. It is the further submission that even a taxing statute has to satisfy the test of Article 14 of the Constitution of India. In this regard, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Karimbil Kunhikoman & Ors., vs. State of Kerala reported in AIR 1962 SC 723, and Aashirwad Films vs. Union of India & Ors., reported in (2007) 5 MLJ 170 (SC). 10. The legal principle deducible from the decisions of the Hon'ble Supreme .....

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ected from a large number of persons, all of whom stand in the same relation to the privilege granted and between whom and the persons not so favoured no reasonable distinction or substantial difference can be found justifying the inclusion of one and the exclusion of the other from such privilege. It was further pointed out that a classification must not be arbitrary, artificial or evasive and there must be a reasonable, natural and substantial distinction in the nature of the class or classes .....

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l preparation and cannot be treated differently for the purpose of sales tax on the ground of their high alcoholic content. We may pointed out that the decision in the case of Aashirwad Films (supra), would not render any assistance to the case of the petitioners as the issue which arose therein was regarding the rate of tax in respect of a medicinal preparation and it was held that there was no rational basis for discrimination between one commodity and another for the purpose of imposing tax. .....

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o. Ltd., vs. State of Kerala reported in (1970) 1 SCC 189 and East India Tobacco Co., vs. State of A.P., reported in AIR 1962 SC 1733). 13. Thus, the burden is on the petitioners to show that the impugned amendment is discriminatory and offends Article 14 of the Constitution. In taxation, the legislature possess greater freedom in classification and the petitioners to succeed in striking down the impugned amendment should be able to demonstrate that the impugned amendment makes an improper discr .....

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an improper discrimination. Therefore, it has to be seen as to whether the Government of Puducherry was justified in making such a distinction and whether the same was reasonable and had a valid basis. 15. It is not in dispute that no tax is leviable in respect of sale of live chicken in the State of Tamil Nadu and State of Andhra Pradesh. The Puducherry Value Added Tax Act grants similar exemption to its dealers, who trade in the areas in the Union Territory of Puducherry adjoining the States o .....

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erala State (border state), which is subjected to tax at 14.5% in that State. Thus, it was established that the dealers like the petitioners had availed the exemption and the benefit of the exemption was not passed on to the consumers. Therefore, the Government accepted the decision of the Empowered Committee and issued a notification with effect from 01.01.2012, which subsequently was made as an amendment to the Act (impugned Act). 16. From the counter affidavit it is seen that on account of ma .....

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