ABDUL KADIR Vs. STATE OF KERALA

JUDGEMENT

(1.) THE petitioners are dealers in tobacco and tobacco preparations doing business at Mattancherry in the name and style of "a. S. Bava, Tobacconists, Mattancherry. " THEy challenge the validity of the luxury Tax on Tobacco (Validation) Act, 1964 (Act 9 of 1964, hereinafter called the Act) and pray for a declaration that the Act is ultra vires the powers of the Kerala Legislature, and for issuing appropriate directions prohibiting the respondent from enforcing the provisions of the Act against them.

(2.) THE system of collecting tobacco revenue under the cochin Tobacco Act Act 7 of 1084 and the Travancore Tobacco Act, Act 1 of 1087 and the rules thereunder, upto August 1950 was to auction what are called 'a' class and 'b' class shops. In addition to these there were also 'c' class shops for retail sale of tobacco. By the Finance Act 25 of 1950 the Central Excises and Salt Act, 1 of 1944, was extended to Travancore - Cochin State . S. 13 (2) of the Finance Act of 1950 provided that if immediately before the 1st day of April 1950, there was in force any law in any State other than Jammu and kashmir corresponding to, but other than, an Act referred to in sub-s. (1) or (2) of S. 11, such law was thereby repealed with effect from the said date. In consequence of this provision, the rules which were in force on 1-4-1950 were changed in Cochin and by a notification dated 3-8-1950 the system of auction sale of 'a' and 'b' class shops was abolished, and in its stead graded licence fees were introduced for various classes of licences including 'c' class licence. Similar change was also made in the Travancore area by notification dated January 25, 1951. 'a' class licensees were to pay a specified minimum fee for a specified maximum quantity of tobacco goods possessed by them and an additional fee for any additional quantity. THE fee was to be levied only in respect of tobacco imported into the State, namely, the Cochin or the Travancore State , as the case may be. From 17-8-1950 to 31-12-1957 the State of Travancore - Cochin and its successor State, the State of Kerala, were collecting these licence fees from the petitioners.

(3.) THE O. P. came up before a Division Bench of this court and the court allowed the petition on the short ground that there was no evidence of production of tobacco in the Travancore - Cochin State, & so the levy made on imported tobacco was an inroad into the freedom of trade, commerce and intercourse guaranteed by Art. 301 and was not saved by Art. 304 (a ). THE court followed the decision of the Supreme Court in Kalyani Stores versus State of Orissa (AIR 1966 SC 1686 ). THE respondent took up the matter in appeal to the Supreme Court. THE Supreme Court reversed the decision holding that the ruling in Kalyani Stores versus State of Orissa AIR 1966 SC 1686 has no application to the facts of the case and directed this court to consider in the first instance whether the tax would offend Art. 301, and if it is found that the tax would offend Art. 301 to see whether the tax can be saved under art. 304 (b) and also any other contentions raised by the Petitioners. This is how the matter has come before us.