JAIN JARI STORES Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE Order of the Court was made by JAGADISAN, J. THE petitioner is a firm of textile merchants carrying on business in Godown Street, Madras. THE Deputy Commercial Tax Officer, Godown division, assessed their sales turnover for the year 1956-57 at Rs. 11, 33, 355-12-6. This turnover included the sale value of goods purchased by the petitioner from non-resident dealers and the petitioner objected to the levy of tax at the rate of Re. 0-1-6 in respect of these sales. THE additional levy at the rate of Re. 0-1-3 per rupee was made under the proviso to section 3(2) of the Madras General Sales Tax Act. This objection on the part of the dealer was overruled by the assessing authority. THE petitioner preferred an appeal to the Commercial Tax Officer and reiterated the contention that the sale of goods purchased from non-resident dealers should not be dealt with as the first sale under the proviso to section 3(2) of the Act. THE appellate authority confirmed the decision of the first assessing authority. THE petitioner thereupon preferred a further appeal before the Sales Tax Appellate Tribunal, Madras, and confined their claim for relief against the enhanced levy under the proviso to section 3(2) of the Act only to the extent of the value of sales turnover of Rs. 7, 88, 352-0-9. THE Tribunal overruled the contentions urged by the petitioner and dismissed the appeal. This revision petition is by the dealer, whose main contention is that the sales turnover of the value of Rs. 7, 88, 352-0-9 should not suffer any additional levy than what is properly chargeable under the main charging section of the Act.

(2.) LEARNED counsel for the petitioner urged the following three grounds in this revision petition : (1) The first proviso to section 3(2) of the Act cannot apply to the sales turnover of Rs. 7, 88, 352-0-9 as the sales covered by that amount were not "the first sales" in the Madras State. (2) The goods sold by the petitioner for the value of Rs. 7, 88, 352-0-9 were purchased from non-resident sellers at Bombay through their resident agent at Madras, who must be deemed to be "dealers" under the provisions of section 14-A of the Act, and that, therefore, the sales effected by the petitioner were only second sales and not "the first sales". (3) The first proviso to section 3(2) of the Act is unconstitutional as it is discriminatory in character, and therefore violative of the equality clause of the Constitution, Article 14. According to the petitioner the amount of Rs. 7, 88, 352-0-9 relates to sales effected by Bombay merchants having either branches or agents in the State of Madras. The course of business in respect of these transactions as set out in the affidavit of S. Roopchand, a partner of the petitioner-firm, is that the agent of the non-resident seller would offer goods for sale to the petitioner and fix the price. Thereafter the agent of the seller would communicate to the principal at Bombay who would send the goods through the railway taking out the railway receipts in his own name, as consignor and consignee. The railway receipts would be handed over to the petitioner by the agent or would be cleared by the petitioner from the seller's bank at Madras. On these averments the contention of the petitioner is that the first sale was in their favour by the non-resident seller. Section 3(2) of the Act, as amended by Madras Act XXIII of 1957 dated 18th December, 1957, giving retrospective effect from 23rd August, 1954, is in these terms :

(3.) THE attack on the first proviso to section 3(2) of the Act that it offends Article 14 of the Constitution is flimsy and unsubstantial. THEre is nothing in that proviso discriminating residents in the State as against non-residents. THE non-resident is prima facie a person who is outside the Act except in cases provided for under section 14-A of the Act, and no discrimination can arise on the ground that the residents in the State carrying on business of buying and selling in the State become subject to taxation at a particular rate. THE equal protection clause does not prevent a State :-"from adjusting its system of taxation in all proper and reasonable ways. It may, if it chooses, exempt certain classes of property from any taxation at all, such as churches, libraries and the property of charitable institutions. It may impose different specific taxes upon different trades and professions, and may vary the rates of excise upon various products it may tax real estate and personal property in a different manner it may tax visible property only, and not tax securities, for payment of money it may allow deductions for indebtedness, or not allow them.