JYOTHI HOME INDUSTRIES Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) These 72 writ petitions are amongst the large batch of about 3000 writ petitions challenging the provivision of the Karnataka Tax on Entry of Goods into Local areas for Consumption, Use or Sale therein Act, 1979 (hereinafter to be referred to as the 'Principal Act' as amended by:

(2.) The tax under the 'Principal Act' is an impost envisaged by Entry 52 of List II of the Seventh Schedule to the Constitution and was intended to be a substitute for the 'Octroi', which, prior to 1979, was being levied by the various Local-Authorities and Municipal-bodies in the State of Kar- nataka as authorised and empowcred under the relevant statutes. From 1-4-1979 the levy of Octroi was abolished in the State. Owing to the consequent loss of revenue, the local authorities became financially crippled. The State, therefore, contemplated the raising of the necessary financial-resources by the imposition of the Entry-Tax to give those localauthorities the needed financial aid. The State, accordingly, broughtfourth the Principal Act to enable the levy and collection of a tax on the Entry of goods into local-areas for consumption, use or sale therein. Unfortunately, from the very inception, this legislative measure has bad a viscitudinuous career. Its enforcement and implementation was not smooth ; but was marked by succcessive challenges on one ground or the othe' The present batch of writ petition is. indeed, the third round of challenge

(3.) The General scheme of the Principal Act is this: S. 2 (f) defines specifically 'Local-Area', by confining it to the area within Municipal Corporations and Municipalities In the State. S. 3 authorises the levy of the tax oh the entry of goods these items were specifically enumerated in the schedule to the Principal Act into a local-area for "consumption, use or sale" therein at such rates not exceeding 2 per cent ad-valorem as the State Government may by notification specify. S. 4 requires every dealer in scheduled goods to get himself registered under the 'Act' in the prescribed manne S. 7 requires every dealer to file-monthly statements of the scheduled goods brought by him into the local-area during the month and remit the tax computed on that basis S. 5 deals with the filing of returns and the final assessment. The point to notice is that both the concept of 'local area' and 'scheduled-goods' are determinate and specifically defined by the statute itself In the 'Principal Act' the scheduled-goods were limited to three items viz., (i) "All varieties of Textiles Etc.. (ii) Tobacco and all the products" and (iii) Sugar, other than sugar-candy, confectionary and the like. State Government, in exercise of powers under S. 3 of the Principal Act. issued a Notification bearing No. FD 66 ESL 79 dt. 31-5-1979 specifying the 'local areas', the 'goods' and the 'Rates of Tax". A flood of writ petitions challenging the constitutional validity of that enactment followed. Writ Petition No. 7039 of 1979 preferred b; M/s. Hansa Corporation I.L.R. (1980) 1 Kar. 165, was one amongst that batch of 1590 cases. The validity of the entry tax was challenged on as many as 24 grounds. A Division-Bench of this Court, by its order dt. 24-8-1979, negatived all but two grounds. The two contentions accepted by the Court were that S. 3 of the Act does not empower the State Government to apply the provisions of the Act to certain local areas only and to exclude other local areas and that the Act in not exempting petty dealers, imposes unreasonable restriction on their trade. The division-bench, accordingly declared the Principal Act as unconstitutional and also quashed the Notification dt. 31st May 1979.