STATE OF WEST BENGAL Vs. JAGMOHAN LAL GUPTA

JUDGEMENT

(1.) The only question that is involved in all these appeals relates to the constitutional validity of the Bengal Finance (Sales Tax) (Amendment) Ordinance, 1980.

(2.) The respondents, except respondent No. 1 in F.M.A. No. 781 of 1974, carry on the business of retail vend of country liquor under excise licences. Section 6(1) of the Bengal Finance (Sales Tax) Act, 1941, xempts payment of tax on the sale of goods specified in the first column of Schedule I to the Act. Entry 25 of Schedule I specified certain intoxicants including country liquor. Section 3(5) of the West Bengal Taxation Laws (Amendment) Act, 1972, omitted entry 25 from Schedule I. The effect of such omission was that sale of country liquor became chargeable to sales tax. The respondents felt aggrieved by the imposition of tax on the sale of country liquor by the impugned provision of Section 3(5) of the West Bengal Taxation Laws (Amendment) Act, 1972. They filed writ petitions in this court and obtained rules nisi out of which these appeals arise. It was the common case of the respondents that gross profits earned by the licensees from the sale of the country liquor varied between 5.7 per cent and 7.8 per cent. The imposition of sales tax at 6 per cent would render their business so unprofitable that it would not be possible for them to carry on such business. It was contended by them that the imposition of sales tax impeded the free flow of trade contrary to the provision of Article 301 of the Constitution. Further, it was contended that Section 3(5) was ultra vires the provision of Article 304(b) of the Constitution inasmuch as the requirement of that provision was not complied with.

(3.) The contentions of the respondents were upheld by the learned Judge who heard C.R.No. 6862(W) of 1972 Calcutta Country Spirit Opium and Drug Association Ltd. v. State of West Bengal [1974J 34 S.T.C. 161 out of which the said F.M.A.No. 781 of 1974 arises. It was held by him that imposition of tax on the sale of country liquor by Section 3(5) of the West Bengal Taxation Laws (Amendment) Act, 1972, directly restricted the freedom of trade and, as the requirement of Article 304(b) of the Constitution was not admittedly complied with, Section 3(5) was ultra,vires Article 304(b). Accordingly, by his judgment, the learned Judge made the said rule absolute. In the other two Rules, namely, C.R. No. 7414(W) of 1972 and C.R. No. 7228(W) of 1972, out of which F.M.A. No. 876of 1977 and F.M.A. No. 877 of 1977 respectively arise, the said judgment was followed and relied on and these rules were also made absolute. Hence, these three appeals by the taxing authorities.