SHABIB JAN Vs. COMMISSIONER OF COMMERCIAL TAXES

JUDGEMENT

(1.) In this batch of Writ Petitions the petitioners questioned the Constitutional validity of Section 6 of the Karnataka Sales Tax Act, 1957, ('the State Act' for short) Under this provision purchase tax is levied on the purchases made by the petitioners under circumstances in which no tax was levied on the sales resulting in the purchases by the petitioners. According to the petitioners the State Legislature has no competence to enact Section 6 of the State Act for the reasons stated by the Supreme Court in GOOD-YEAR INDIA LTD. vs STATE OF HARYANA AND ANOTHER, ETC. ETC. According to the petitioners the charge under Section 6 is attracted when the purchased goods are either consumed in the manufacture of other goods for sale or otherwise or the purchased goods are disposed of in any manner other than by way of sale in the state or the said goods are despatched to a place outside the State except as a direct result of inter-state sale. Some of the petitioners purchased goods like jaggery from unregistered dealers These goods were despatched by the petitioners to their branch or to their head office in another State; in otherwords the petitioners despatched the goods by way of consignments. The substance of the petitioners' case is that, the taxable event is not the sale of goods by the petitioners but the circumstances arising subsequent to their respective purchases: the so called purchase tax is levied not at the point of purchase by the petitioners but because of certain subsequent events referred in clauses (i) and (ii) of Section 6. The relevant part of Section 6 reads thus:

(2.) It is unnecessary for us to consider the contention in detail in view of the Decision of the Supreme Court reported in HOTEL BALAJI AND OTHERS ETC. ETC vs STATE OF ANDHRA PRADESH AND OTHERS ETC. ETC. Identical questions have been considered by the Supreme Court. The Supreme Court pointed out that the concept taxable event referred in the earlier Decision in Goodyear's case was not correctly applied to the fact situation involved. The Supreme Court also pointed out that purpose of a provision like Section 6 is to enable the State to levy atleast one tax on the sale or purchase transaction involving the goods. The charge under the charging Section is attracted because of the purchase made by the dealer though the sale under which the dealer purchases is not subjected to tax. The charge on the purchase is attracted on satisfaction of certain conditions and those conditions are not the "taxable events" at all. His Lordship Justice Ranganathan was a party to both the Decisions of the Supreme Court. The Decision in Goodyear s case was rendered by a Bench of two Judges including Justice Ranganathan. His Lordship, while rendering a concurring judgment in Hotel Balaji's case, pointed out that the ambit of power to levy a tax in respect of sale of goods is very wide and will cover any tax which has a nexus with the sale or purchase of goods including a last purchase in the State. At page 195, his Lordship observed thus:

(3.) Section 6A of the Andhra Pradesh Act is quoted at page 216 (para 66) of the above Decision. The purport of the levy was held, to be, at page 218 (para 70) :