SURESH KUMAR Vs. STATE OF KERALA

JUDGEMENT

(1.) THE challenge in these Writ petitions is to the amendment to sub -sections(14)and(17)of S.7 of the Kerala General Sales Tax Act,1963(the Act)by the Kerala Finance Act 13 of 1993,as also to S.5(1 )(v)read with item 1 of the Fifth Schedule to the said Act as arbitrary,oppressive,confiscatory and unreasonable.All the cases are similar,raising the same points,and have been filed by abkari contractors who have obtained the licence for the privilege of vending arrack in retail in the Abkari Year 1993 -94,corresponding to the financial year 1993 -94.

(2.) I shall state the facts in O.P.No.15953 of 1993 which was argued as the main,case by Sri G.Ramaswamy,Senior Advocate,with Sri E.R.Venkiteswaran,Sri M.Pathrose Mathai,Sri T.G.Rajendran and Sri Rajan Babu,appearing in some of the other writ petitions,contributing their own points, while adopting the arguments of Sri G.Ramaswamy.

(3.) ARRACK is taxable under the Act at two points,under clause(v)of S.5(1)read with item 1 of the Fifth Schedule,the two points being the point of first sale by a deader who is liable to tax under S.5,to a registered dealer,and the second point being the point of last sale in the 'State by a dealer who is liable to tax under S.5.The rate payable at the first point of levy is 50 per cent,while the rate at the second point of levy is 12.5 per cent.But in cases where there are no two points of sale within the State,tax is payable at 62.5 per cent at the point of first sale by a dealer who is liable to tax under S.5,to a person other than a registered dealer. This is the ordinary and normal mode of levy of tax on arrack.But sub -section(14)of S.7 was introduced in the Act with effect from April 1,1992,enabling dealers in arrack to pay the tax due from them at a compounded rate.It provided that a dealer having licence for retail sales in arrack may,notwithstanding the general provisions,at his option,instead of paying tax in accordance with clause(v)of S.5(1)pay tax at 20 per cent of the rental amount payable by him under the Abkari Act 1 of 1977(ME)for the licence,less the amount of tax paid by him for the purchase of arrack on the first sale point. As per the abkari policy prevalent in 1992 -93,the contractors were not permitted to import any arrack,or rectified spirit from which arrack is made by adding water,and they had to obtain the entire stock of arrack for sale from the distilleries within the State,owned or controlled by the Government.There was a State monopoly in regard to the supply of arrack during this period.The retail dealers therefore paid tax at 50 per cent on their purchases from these distilleries,and another 12.5 per cent on the sale price to the consumer.At the time the auctions were held between 15th and 17th March 1993,at which the petitioners participated,the levy of tax was on this basis,namely the two point levy as under item 1 of the Fifth Schedule,with an option to the dealers to compound the tax payable at 20 per cent of the rental for the abkari shop.