STATE OF RAJASTHAN Vs. RAJASTHAN CHEMIST ASSOCIATION

JUDGEMENT

(1.) Challenge in this appeal is to the legality of the judgement rendered by a Division Bench of the Rajasthan High Court, Jodhpur holding that 4A of the Rajasthan Sales Tax Act, 1994 (in short the 'Act') as introduced by the State Finance Act, 2004 was not legally sustainable to the extent that tax on first point sale of drugs, medicines or any formulation or for that matter any other commodity by a manufacturer/wholesaler/distributor to retailer where "Minimum Retail Price" (in short 'MRP') is published on package, measure to which rate of tax is to be applied cannot be with reference to such published MRP which is neither charged nor chargeable by the wholesaler from the retailer whether the tax is charged on sales or on purchase by the parties to sale under Section 4A and the concerned Notification in this regard. Writ application filed by the respondent-Association was allowed to that extent.

(2.) The controversy arose in the following background:

(3.) In support of the appeal, learned counsel for the appellants submitted that there is a source of power of the State to levy tax under Article 246 read with Entry 54 of List II of Schedule VII of the Constitution. A plain reading of the Entry clearly demonstrates that tax under the said Entry can be levied on the event of sale or purchase of goods. The said Entry nowhere requires or mandates that the same can only be on the sale price of goods. Strong reliance is placed on decisions in Andhra Sugars Ltd. V/s. State of A.P. and Ganga Sugar Corpn. Ltd. V/s. State of U.P. to contend that the Constitution empowers the States to levy and collect tax on the happening of the taxable event and thereafter the quantum of tax to be levied and the measure on which the same can be levied is necessarily left for the State to decide.