SUMA DEVI Vs. STATE OF KERALA

JUDGEMENT

(1.) Constitutional validity of the amendments effected to Section 7(1)(b) of the Kerala General Sales Tax Act, 1963 by Sections 1 and 6(c) of the Kerala Finance Act, 2001 (Act 7 of 2001) is under challenge in these cases. Writ petitioners are aggrieved by the introduction of Section 7(1)(c) explanation reckoning primary crushers also for the purpose of computation of quantifying the compounded tax. Petitioners submit that Sections 1 and 6(c) of the Kerala Finance Act, 2001 (Act 7 of 2001) is unconstitutional and violative of Article 265 of the Constitution of India and the unreasonable levy of compound tax on the persons engaging in metal crusher operations is contrary to Articles 14 and 19(1)(g) of the Constitution of India. Further they contend that the retrospective operation of the amended provisions effective from 23.7.2001 as per Section 1 of the Finance Act, 2001 is a colourable exercise of power. They also contend that the enhancement of compounded rate of tax to 300% is disproportionate to the production in the crusher unit and that since rate of sales tax is not enhanced compounded tax should not have been increased. In the Writ Petition W.P.C.No. 18121 of 2004 against which W.A. No. 1825 of 2004 was filed, petitioner has sought for a declaration that Section 7(1)(c) of the Kerala Finance Bill 2004 is illegal and unconstitutional. Learned Single Judge did not accept the contention of the petitioner and dismissed the Writ Petitions against which the Writ Appeals have been preferred. We heard all the cases together and hence we are disposing of the appeals and the Writ Petition by a common judgment.

(2.) Granite metal is a taxable item under Section 5 of the Kerala General Sales Tax Act, 1963 which is included in serial No. 70 of the first Schedule to the Kerala General Sales Tax Act for which tax is leviable at the point of first sale in the State by a dealer. Petitioners and others are therefore liable to pay tax at the rate of 8% for the granite metals produced in their crusher units.

(3.) State Government felt that an option be given for payment of tax at the compounded rates to persons who run modernised crusher units producing granite metals. Consequently as per the Kerala Finance Act, (Act 7 of 2001) Section 7(1)(b) was introduced which reads as follows: