STATE OF KERALA Vs. I T C LIMITED

JUDGEMENT

(1.) THESE appeals arise out of a common judgment in O.P. Nos. 5278 and 5716 of 1994 (Hallmark Tobacco Co. Ltd. v. State of Kerala [1998] 108 STC 539).

(2.) THE challenge in the original petitions was against the provisions of the Kerala Finance Act, 1994 to the extent it had amended Kerala Tax on Luxuries in Hotels and Lodging Houses Act, 1976. A new definition clause, namely, section 2(ee) for the term "luxury" was introduced and section 4A was added as an additional charging provision. Other consequential amendments were made in the Act as well as in the Rules. THE amended provisions made cigarettes liable to luxury tax at the rate of 5 per cent on the value of the commodity charged, received or receivable at the point of supply. Section 4A further postulates that though the tax was payable by the person who uses or consumes the same it has to be collected by the stockists.

(3.) THE petitioners in the original petitions are dealers carrying on business and trade in manufacture, production, distribution and sale of cigarettes. THEy challenged the levy of luxury tax on cigarettes at 5 per cent on manufacturers and importers of cigarettes, which was imposed for the first time under the Kerala Finance Bill, 1994 introduced on March 28, 1994. Section 4A of the impugned Act authorising the levy and collection of luxury tax which was under challenge in the original petitions, reads as follows : "4A. Collection of luxury tax on certain commodities. - (1) THE luxury tax in respect of a commodity included in the Schedule shall be at the rate specified against it calculated on the basis of the value of the commodity, under whatever head it is charged, received or receivable at the point of supply and be payable by the person who uses or consumes the same. (2) THE luxury tax shall be collected by the stockist and paid, within such period and in such manner as may be prescribed, into the Government treasury. (3) Where a luxury tax is collected by a stockist at the point of first supply in the State, whether by way of sale or otherwise, no luxury tax under this Act shall be collected at any successive point of supply. (4) THE provisions of this Act shall, in so far as they relate to the assessment, levy and collection of tax in respect of a commodity included in the Schedule, including inspection, search and inspection apply with the substitution of the word 'stockist', for the word 'proprietor' wherever it occurs."