CONSUMER GUILD OF INDIA Vs. STATE OF KERALA

JUDGEMENT

(1.) All these Original Petitions challenged provisions of Kerala Tax on Entry of Goods into Local Areas Act, 1994, in specific reference to S.3 of the said Act The issue raised by the petitioners are already covered by Division Bench Judgment by this Court in Rajan v. State of Kerala (1995) (2) KLT 369) and the judgment in OP Nos. 221 of 1996 and connected cases dated 28-2-1997.

(2.) The main objection of the learned counsel is that the inclusion of sales tax on the purchase value is unconstitutional as it would amount to a taxation on tax. Such imposition of a tax cannot be authorised by law and therefore it violates Art.265 of the Constitution of India. The State of Kerala has enacted this law by virtue of their power under Entry.52 List.2 of Schedule.7 of the Constitution of India. The legislative competence of the State cannot be doubted in this regard. The charging Section namely S.3 has fixed the tax on the basis of the purchase value and the purchase value is defined to include the accessories fitted to the vehicle, insurance, excise and other duties, sales tax etc. The purchase value of the vehicle have to be necessarily to include these items. The payment of insurance, excise and other duties, tax and fees and other charges are paid under the respective enactments and consequently the value of the vehicle has to be fixed including these payments. In Shaktikumar M. Sancheti v. State of Maharashtra (1955 KLJ (Tax Cases) 293) the Supreme Court held that tax levied under different legislation in exercise of constitutional power cannot be held bad on assumption that it amounts to double taxation. The taxable event for entry tax is not the same as for octroi.

(3.) In Ram Krishna Ramnath Agarwal of Kamptee v. Secretary, Municipal Committee, Kamptee ( 1950 SCR 15 ) a Constitution Bench of the Supreme Court held that excise duty and octroi were taxes essentially different in their nature and the power of the Province to levy octroi was not inconsistent with the power of the Centre to levy excise duty on the same goods. Supreme Court followed the observation of the Federal Court in Province of Madras v. Boddu Paidanna and sons to the effect "in the case of a sales tax, the liability to tax arises in the occasion of a sale and a sale has no necessary connection with manufacture or production." The Court ultimately found that Excise Duty is a tax on manufactured goods. Octroi duty is a tax levied on the entry of goods within a particular area. The levy of such duty is therefore not in conflict with the levy of an impost on the entry of the goods within a certain area.