HAROON M ADAM Vs. STATE OF WEST BENGAL

JUDGEMENT

(1.) IN this application under Section 8 of the West Bengal Taxation Tribunal Act, 1987, which is in the nature of a writ application under Article 226 of the Constitution of India, the point at issue is whether sales of sugar imported from foreign countries is exigible to sales tax under the West Bengal Sales Tax Act, 1994.

(2.) THE applicant's case in the main application may be summarised thus. He is the sole proprietor of Adam and Company which carries on business in sale of imported sugar in Calcutta, Bombay and other places in India. The Calcutta business was commenced on September 6, 1998, and dealer's registration numbers were obtained under the 1994 Act and the Central Sales Tax Act, 1956 (in short, "Central Act"). Sugar is one of the goods of special importance under Section 14 of the Central Act. Sugar was not taxable under the Bengal Finance (Sales Tax) Act, 1941 (in short, "the 1941 Act") and the West Bengal Sales Tax Act, 1954 (in short "the 1954 Act") and also under the West Bengal Sales Tax Act, 1994 (hereinafter referred to as "the 1994 Act"). The 1994 Act has replaced 1941 Act and 1954 Act with effect from May 1, 1995. According to an amendment to Schedule I to the 1994 Act, effective from May 1, 1995, sugar manufactured or made in India is tax -free under entry 79 of Schedule I read with Section 24 of the 1994 Act. By a circular dated October 27, 1997, annexure B, the respondent No. 2 stated that sale of imported sugar is taxable at the rate of 4 per cent and at only one stage in view of Section 15 of the Central Act. Schedule VII to 1994 Act enumerates the goods sales of which are taxable at the rate of 4 per cent. Entry 1 of Schedule VII mentions goods referred to in Section 14 of the Central Act excluding those specified in any other Schedule. According to the applicant, imported sugar is not covered by Section 14(viii) of the Central Act, and hence it is not covered by entry 1 of Schedule VII. Therefore, sales tax cannot be imposed on imported sugar, i.e., sugar imported from outside India, according, to the said circular issued by respondent No. 2. The applicant states that, misled by that circular, he deposited sales tax amounting to Rs. 7,00,000 and Rs. 4,12,000 by two challans dated September 11, 1998 on sales of imported sugar, and filed returns for the month of September, 1998 with respondent No. 3, Commercial Tax Officer, Park Street Charge. He prays for refund of those amounts.

(3.) ONE of the contentions of applicant (in paragraphs 9 to 19 of the application) is that States' power to levy tax under entry 54 of List II of the Seventh Schedule was curtailed by insertion of entry 92A in List I. While the States lost that power, they were sought to be compensated by distribution of duties levied by the Union through legislations under Article 272, such as Act of 1957. According to applicant, another curb on States' power to levy tax under entry 54 of List II is to be found in Article 286(3), in relation to goods of special importance in inter -State trade or commerce. Act of 1957 gives effect to Sections 14 and 15 of Central Act. In view of Act of 1957, State Legislatures "are enjoined to give complete exemption (from tax) to the articles enumerated" therein. The State also allegedly entered into an agreement to exempt sugar from tax on the assurance of sharing additional excise duty, and since 1957 the State has been exempting sugar irrespective of its origin. By amendment of Schedule I to 1994 Act, the respondent No. 1 has attempted to levy tax on sugar imported from abroad. Importation of sugar has commenced, according to applicant, in order to overcome shortfall of country -made sugar. It is said that while the aggregate of basic excise duty, additional duty of excise and cess per tonne of country -made sugar comes to Rs. 850, the Union of India (respondent No. 5) levied by notification dated April 28, 1998 an equal amount, Rs. 850 on imported sugar per tonne as additional duty of customs, the basic customs duty on C.I.F. value being 5 per cent in addition. Thus, by means of Section 3 of the Customs Tariff Act, 1975 the burden on imported sugar has been equalised with that on country -made sugar. Hence, applicant contends that levy of sales tax at 4 per cent on sales of imported sugar is ultra vires, illegal, without jurisdiction, unjust, unreasonable and discriminatory. Such levy is said to be colourable, because it is levied on the ground that : (i) the Union does not give a share of additional customs duty to the State and, (ii) the State wants to give protection to sugar industry of the country.