TMI Blog2019 (11) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the product sold in sachet under a brand name after subjecting raw tobacco to physical process of cutting, shredding and sizing so as to make it fit for consumption including the process of being packed in a sealed container, the unmanufactured tobacco ceases to be an agricultural produce as defined under the KTEG Act and the dictionary meanings. The arguments advanced on behalf of the petitioner that Entry 96 of the First Schedule does not include unmanufactured tobacco assuming to be accepted, even then, certainly it would fall under the Residuary Entry 103. Entry 103 of First Schedule encompasses all such goods which are not covered under any of the Entries enumerated in Entry No.1 to 102 except the goods mentioned in the Second Schedule. For better clarity, understanding or specification, if the Entries are expressly made, it cannot be held to be beyond the power contemplated under Section 3[1] of the Act otherwise, the Entry 103 would render redundant or innocuous - the challenge to the notification impugned fails. The Notification impugned dated 1.10.2013 issued by the Government of Karnataka insofar it relates to the amendment made to the Notification dated 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Notification dated 30.3.2002 if to be construed as including all tobacco products of all description, no sub-item(ii) would have been specified by the State Government in terms of the notification dated 01.10.2013. The action of the State Government in classifying sub item(ii) separately would indicate that the said goods are not part of sub-item (i) of item No.5 described. Unmanufactured tobacco would not come within the ambit of Entry 96 of the First Schedule. It was argued that by Act No.3 of 1995, with effect from 6.9.1994, First schedule to the KTEG Act has received the assent of the President. No sanction of the President is accorded to fix the tax liability on the unmanufactured tobacco in a sealed container. The item Nos.1 to 102 of the First schedule enumerates the goods leviable to entry tax. That being the position, no other goods are exigible to levy of entry tax even under item No.103 unless the assent of the President is accorded to. Further, no sanction is accorded by the President to any of the subsequent amendments post 2.10.2013. Hence, the Notification impugned is hit by Article 304[b] of the Constitution. 7. Learned counsel for the Revenue would submit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is hit by Articles 301 and 304[b] of the Constitution for want of assent by the President. 15. Sl.No.96 of the First schedule prescribes tobacco products of all descriptions and enlarges the scope of the entry by employing the phrase including and etc., The said entry is ex-facie exhaustive. It is the contention of the revenue that sale of gutka was prohibited as per the Notification dated 30.5.2013 issued by the Government of Karnataka. However, the prohibited gutka has been sold as a different commodity blended with arecanut powder/unmanufactured tobacco in sachets under different trade names. Hence, in the interest of the public, entry tax was fixed on the unmanufactured tobacco in sealed containers at 5% to reduce the consumption of the said unmanufactured tobacco which has nicotine content, hazardous to the health. 16. Article 301 of the Constitution of India contemplates that freedom of trade, commerce and intercourse throughout the Territory of India shall be free. Article 304 deals with restrictions on trade, commerce and intercourse among the States. Sub-clause(a) of Article 304 specifies that impose on goods imported from other States or the Union territories ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re non-fiscal in nature. Constitutional validity of any taxing statute has, therefore, to be tested only on the anvil of Article 304[a] and if the law is found to be non-discriminatory, it can be declared to be constitutionally valid without the legislation having to go through the test or the process envisaged by Article 304[b]. Should, however, the statute fail the test of non-discrimination under Article 304[a] it must be struck down for the same cannot be sustained even if it had gone through the process stipulated by Article 304[b]. That is because what is constitutionally impermissible in terms of Article 304[a] cannot be validated and sanctioned through the medium of Article 304[b]. Suffice it to say that a fiscal statute shall be open to challenge only under Article 304[a] of the Constitution without being subjected to the test of Article 304[b] either in terms of the existence of public interest or reasonableness of the levy. 19. In the light of the law declared by the Hon ble Apex Court as aforesaid, the arguments of the learned counsel for the petitioner falls to ground. Now there is no scope for examining the validity of the notification on the touchstone of Articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceases to be an agricultural produce as defined under the KTEG Act and the dictionary meanings as aforesaid. 25. The arguments advanced on behalf of the petitioner that Entry 96 of the First Schedule does not include unmanufactured tobacco assuming to be accepted, even then, certainly it would fall under the Residuary Entry 103. Entry 103 of First Schedule encompasses all such goods which are not covered under any of the Entries enumerated in Entry No.1 to 102 except the goods mentioned in the Second Schedule. For better clarity, understanding or specification, if the Entries are expressly made, it cannot be held to be beyond the power contemplated under Section 3[1] of the Act otherwise, the Entry 103 would render redundant or innocuous. This view is fortified by the ruling of the Cognate Bench of this Court in the case of United Breweries Limited V/s. State of Karnataka and Another reported in [2007] 9 VST 594. 26. Viewed from any angle, the challenge to the notification impugned fails. 27. It is submitted by the learned counsel for the petitioners that subsequent to filing of the writ petitions, reassessment orders are passed by the Assessing Authority under the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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