RAHUL ENTERPRISES Vs. STATE OF JAMMU AND KASHMIR

JUDGEMENT

(1.) THESE two batches of writ petitions involve two important but different questions of law but, since the facts are almost identical and the questions of law are interlinked, both are being disposed of together by this common judgment. What are the two questions involved in the two batches of the petitions ? The first question is : Whether the State does not have the power to impose tax on certain goods, like edible oils, dry fruits, etc. , etc. , or to impose tax at a particular rate which may be higher than the rate of tax either hitherto prevalent or different than in the neighbouring States. The second question is whether the State does not have the power to grant exemption to a class of local units so that the goods imported from outside the State become liable to the payment of sales tax, as against the goods manufactured within the State by such exempted local units.

(2.) THE facts are very short, simple and undisputed. The petitioners in both the batches of the petitions are either dealers in dry fruits and some other items locally based within the Jammu and Kashmir State, or are importers from outside the State and import mostly edible oils. The Government of Jammu and Kashmir issued a notification vide S. R. O. No. 124 dated June 27, 1994 whereby, in exercise of powers conferred upon it under section 4 (1) of the Jammu and Kashmir General Sales Tax Act, 1962 ("the Act" for short) it incorporated certain amendments in the notification issued vide S. R. O. No. 135 dated March 29, 1989. Section 4 (1) of the Act is a charging section under which the State has the power to impose tax on goods. Sub-section (1) of section 4 reads as under :

(3.) THE first and foremost ground urged by the petitioners is that the State Government has unnecessarily and without any rational or reason taxed these two items at 8 per cent, even though these items are being taxed at lower rates in the neighbouring States, thus belying the State's self-proclaimed policy of bringing about rationalisation in the tax structure of Jammu and Kashmir State along with neighbouring States as also creating parity of taxes in the entire area. It is also urged by the petitioners that weaker sections of the society will be hit hard by these taxes and that the State has gone back on its promise and assurance given sometime earlier that it cannot impose these taxes in the wake of some agitations launched by the local consumers and dealers when the tax had earlier been imposed by the Government. This ground therefore, primarily relates to the power of the State Government to levy the taxes. The second ground of attack, is restricted to the question of discrimination practised by the State Government in taxing edible oil at 8 per cent, but not taxing the edible oil manufactured by the units located in Jammu and Kashmir State which have been granted exemption from payment of sales tax for varying periods. It has been contended by the petitioners that the State has discriminated against the importers by granting the aforesaid exemption which in effect and substance therefore, has resulted not only in violation of article 14 of the Constitution denying the equality of opportunity, but also has infringed articles 301 and 304 of the Constitution restricting the free-flow of trade and commerce between Jammu and Kashmir State and other States. It is on these two sets of contentions that the two questions of law formulated in the opening part of this judgment are based and shall, therefore, be dealt with in the following parts of this judgment.