K P GOVINDAN Vs. STATE OF KERALA

JUDGEMENT

(1.) THE removal of "tapioca" from item 10 of the III Schedule of the Kerala general Sales Tax Act, 1963, by Act 22 of 1974 (with effect from 1-7-1974) and its insertion as a specific item in entry No. 72 of Schedule I by the same Act have been challenged in these cases as violative of Articles 301 and 14 of the constitution. Section 5 of the Act is the charging section, which imposes the tax at the rates and only at the points specified, against the goods enumerated in the First or the Second Schedules and in the case of other goods, at the rate of 4% at all points of sale. (We leave out as unnecessary the minimum limits of turnover subject to which the tax has been imposed ). Section 9 of the Act grants exemption to a dealer who deals in the goods specified in the III Sch, to the Act, from payment of tax in respect of the sale and purchase of such goods. Till 1974, item 10 of the III Schedule read:

(2.) THERE is in force the Kerala Tapioca (Manufacture and Export Control) Order, 1966, on and from 1-7-1966 in the State. From 1-5-1966 an administrative surcharge was levied on Tapioca by Notification G. O. Ms. No. 18/66/food dated 15-4-1966. The said notification was struck down by this Court as violative of article 301 of the Constitution -- vide K. P. Govindan v. State of Kerala (1971 ker LT 910): (1972 Tax LR 2606 ). The decision was affirmed on appeal by the supreme Court -- vide State of Kerala v. K. P. Govindan (1974 Ker LT 876): (1975 Tax LR 107 ). It is thereafter that the Kerala General Sales Tax Act was amended in the fashion noticed. Our attention was called to the allegations made in paras. 2 to 14 of O. P. No. 4597 of 1976 regarding the conditions of the tapioca trade and industry. Attention was drawn to the large scale production in the State of tapioca of both the edible and the non-edible varieties, the importance of tapioca as a staple food crop and an important raw material in the starch industry, and the traditional trading centres for tapioca in the Tamil Nadu State for the starch industry in Salem and Dharmapuri. We have given these our careful attention. But we have found them far short of the averments needed to establish a contravention of Article 301 of the constitution. We should regard it as firmly and sufficiently well established that in order to violate Article 301 of the Constitution the offending provision of law must directly and- immediately affect the movement part of the trade, This, we think, has been well established by the Atiabari Tea Co. Ltd. 's case (AIR 1961 sc 232), Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (AIR 1962 SC 1406), and the Khyerbari Tea Co. Ltd. 's case (AIR 1964 SC 925) -- not to refer to the numerous decisions that have followed in their wake. For the sake of convenience, we might reproduce Article 301 of the Constitution, and also Article 304: "301. Freedom of trade, commerce and intercourse -- Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. " 304. Restrictions on trade, commerce and intercourse among States--Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law-- (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: provided that no Bill or amendment for the purposes of Clause (b)shall be introduced or moved in the Legislature of a State without the previous sanction of the President. " It is not contended that the consent of the President has been obtained for the Legislative amendments in question either previous to the amendments or subsequent thereto. The contention of the learned Advocate-General has been plainly and simply that there is no contravention of Article 301 and therefore no case for any Presidential assent.

(3.) COUNSEL for the appellants invited our attention to Firm A. T. B. Mehtab Majid and Co. v. State of Madras (AIR 1963 SC 928) where Rule 16 (2) of the Madras general Sales Tax Rules was struck down as invalid as contravening Article 301 of the Constitution. Observed the Court (At p. 931):--