LAWS(GAU)-2006-11-33

ITC LIMITED Vs. STATE OF ASSAM

Decided On November 17, 2006
ITC LIMITED Appellant
V/S
STATE OF ASSAM Respondents

JUDGEMENT

(1.) It was in an age of struggle that India's struggle for independence achieved success, for, with the end of the Second World War, countries were struggling to overcome the disastrous consequences, which the war had brought. It was an age, when the people, all over the world, were struggling for space and everyone wanted to have greater say in the governance of their respective countries. British empire had fragmented and struggle to occupy the void created by the fall of the British empire intestified. It was in such a period of transition from colonial rule to a rule of self-governance that the Constitution of India was prepared. What our Constitution-makers witnessed and experienced had its reflections in our Constitution. The concept of entry tax is a concept routed in history. Before the industrial revolution, the society, world over, was mainly agriculture based; there were small principalities and very little quantity of goods moved from one area to another, because goods were, ordinarily, produced for consumption by the producers themselves, such as, land-owners and their tenants. Petty artisans, normally, produced very little commodities for sale. With the industrial revolution, industries grew and this resulted into faster movement of goods to distant places. It, therefore, became necessary to minimize the trade barriers so as to avoid impediments to the free movement of goods, which forms an integral and inseparable part of commerce. The situation in India was no different. As the makers of our Constitution conceived India as a strong economic unit, it was but natural for them to knit into the scheme of our Constitution the concept of a meaningful growth of industries so as to strengthen economic base of India. This was not possible to achieve unless obstructions in the movement of the goods were, if not completely removed, be, at least, reduced as much as possible.

(2.) Before India became independent, the western world, particularly, Europe was fragmented into small principalities having toll-barriers imposing toll taxes and these toll-barriers caused obstructions to the movement of goods. Such obstructions to the free flow of goods from one principality to another caused hindrance to the growth of industries and commerce in those countries. Gradually, therefore, these trade barriers were started being removed. Having witnessed the history of development of industries all over the world, and in order to give India strong economic base, the makers of our Constitution incorporated, in Part-XIII, a specific Constitutional scheme for conduct of trade, commerce and intercourse. It is in the backdrop of these historical realities that the present writ petitions have to be considered.

(3.) By way of delegated legislation, whether the Legislature can leave the Executive with complete freedom to bring any kind of goods under a given taxing statute without prescribing any guidelines therefor or without clarifying the legislative policy as to how the Executive would choose a particular item of goods for the purpose of bringing the same within the ambit of such a taxing statute? Can the Legislature, with the help of delegated legislation, empower the Executive to fix any rate of tax on any goods without prescribing any guidelines or upper ceiling limits in this regard? Is the law of taxation immune from, or not subject to, the freedom of trade, commerce and intercourse as guaranteed under Article 301 of the Constitution of India? Is the State Government, while making legislation under Entry 52 of the State List, bound by Part XIII of the Constitution of India and, particularly, Article 301 read with Article 304 contained therein? Does an enactment imposing entry tax, legislated under Entry 52, necessarily have a direct and immediate impact on the movement of goods and, if so, how to decide whether such an enactment falls within the ambit of the freedom of trade, commerce and intercourse guaranteed under Article 301 or not ? Can an entry tax be sustained if the same is not compensatory in nature or are there any exceptions thereto ? When does such legislation require President's sanction in terms of the proviso to Article 304(b) ? Whether the Assam Entry Tax Act, 2001 (hereinafter referred to as "the AET Act, 2001"), notifications, issued under Section 3(4) thereof, imposing entry tax on goods, such as, biscuits, textiles and fabrics, crude oil, tobacco including cigarette, cheroots, cigar, biri, zarda khoini, sada and smoking mixture, the Assam Entry Tax (Amendment) Ordinance, 2005 (hereinafter referred to as "the AET (Amendment) Ordinance, 2005) or the Assam Entry Tax (Amendment) Act 2005 (hereinafter referred to as "the AET (Amendment) Act, 2005) are compensatory in nature? What is the difference between tax simplicitor, on the one hand, and tax imposed for regulatory or compensatory purposes, on the other? Are the AET Act, 2001, notifications, issued under Section 3(4) thereof imposing entry tax on goods, such as, biscuits, textiles and fabrics, crude oil, tobacco including cigarette, cheroots, cigar, biri, zarda, khoini, sada and smoking mixture, the AET (Amendment) Ordinance, 2005, the AET (Amendment) Act, 2005, sustainable in law and, if not, why? Whether the AET Act, 2001, the notifications issued thereunder bringing goods, such as, biscuits, textiles and fabrics, crude oil, tobacco, including cigarette, cheroots, cigar, biri, zarda, khoini, sada and smoking mixture within the ambit of the AET Act, 2001, or the AET(Amendment) Ordinance, 2005, or the AET (Amendment) Act, 2005, suffer from the vice of discrimination and are, therefore, in violation of Article 304(a) ? Is levy of entry tax, under the impugned enactment, violative of the provisions of the Central Sales Tax Act, 1956, and cannot, therefore, be enforced as against the goods, which have been declared as goods of special importance in the inter-State trade and commerce under Section 14 of the said Act ? Is the levy of entry tax under the impugned Act, in violation of the provisions of the Additional Duty of Excise (Goods of Special Importance) Act, 1957 ? These are some of the prominent issues, which have arisen for determination in the present set of writ petitions.