KATHIRA MATCH FACTORY Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THESE appeals have been filed by the defendants in O. S. Nos. 28, 29, 31, 39, 37, 34, 30, 27, 32, 33, 35 and 41 of 1976 on the file of the Sub Court, Tuticorin, against the judgments and decrees passed in those suits, decreeing the suits as prayed for with costs. The State of Tamil Nadu, represented by the Commercial Tax Officer, tuticorin, filed the above suits for recovery of sales tax amounts refunded to the defendants as per the orders of the High Court. The defendants are the manufacturers of and dealers in safety matches. They sold matches during the years 1957-58 to 1965-66 in the course of inter-State trade and commerce. Sales tax under the Central Sales Tax Act (74 of 1956) was levied on those inter state sales. The defendants filed writ petitions in the High Court, as detailed below, questioning the levy.

(2.) DEFENDANTS in Writ Petitions Nos. Years for which tax was levied O. S. No. 28 of 1976 2602 to 2610 of 1967 1957-58 to 1965-66 O. S. No. 29 of 1976 2798 to 2801 of 1967 1962-63 to 1965-66 O. S. No. 31 of 1976 2641 to 2649 of 1967 1957-58 to 1965-66 O. S. No. 39 of 1976 2712 to 2716 of 1967 1961-62 to 1965-66 O. S. No. 37 of 1976 2707 to 2711 of 1967 1961-62 to 1965-66 O. S. No. 34 of 1976 2736 to 2739 of 1967 1962-63 to 1965-66 o. S. No. 30 of 1976 2621 to 2624 of 1967 1962-63 to 1965-66 O. S. No. 27 of 1976 2626 to 2628 of 1967 1962-63 to 1965-66 O. S. No. 32 of 1976 2612 to 2630 of 1967 1957-58 to 1965-66 O. S. No. 33 of 1976 2637 to 2640 of 1967 1961-62 to 1965-66 O. S. No. 35 of 1976 2765 to 2768 of 1967 1962-63 to 1965-66 O. S. No. 41 of 1976 2769 to 2775 of 1967 1958-59 to 1965-66.

(3.) IN the appeal by the State against the decision of the said Bench in so far as it related to Nataraja Mudaliar the Supreme Court has held in State of Madras v. Nataraja Mudaliar that sub-sections (2), (2a) and (5) of section 8 of the Central Sales Tax Act, 1956, do not infringe article 301 and article 303 (1) of the Constitution of INdia and are, therefore, not ultra vires the Parliament, and that in the matter of determining the taxable turnover the same rules would apply by virtue of section 9 (1) of the Central sales Tax Act, whether the tax is to be levied under the Central Sales Tax Act or the Tamil Nadu General Sales Tax Act and that, if, under the Tamil Nadu general Sales Tax Act, in computing the turnover, excise duty is not liable to be included and by virtue of section 9 (1) of the Central Sales Tax Act, Central sales tax has to be levied in the same manner as under the Tamil Nadu Act, the excise duty will not be liable to be included in the turnover for the purposes of Central sales their Lordships of the Supreme Court have observed : "prevalence of differential rates of tax on sales of the same commodity cannot be regarded in isolation as determinative of the object to discriminate between one State and another. . . . . . . The Central Sales tax Act is enacted under the authority of the Union Parliament, but the tax is collected through the agency of the States and is levied ultimately for the benefit of the States and is statutorily assigned to the States. . . . . . . . . The central sales tax though levied for and collected in the name of the Central government is a part of the sales tax levy imposed for the benefit of the states. By leaving it to the States to levy sales tax in respect of a commodity on intra-State transactions no discrimination is practised : and by authorising the State from which the movement of goods commences to levy on transactions of sale Central sales tax, at rates prevailing in the State, subject to the limitation already set out, in our judgment, no discrimination can be deemed to be practised. . . . . . . . The view expressed by the High Court that sections 8 (2), 8 (2a) and 8 (5) infringe article 301 and article 303 (1) cannot be sustained."