Judgement

MATHEW, J :- The questions raised in the Civil Appeals are substantially the same as those raised in the writ petition. We will deal with the Civil Appeals and our decision there will govern and dispose of the writ petition.

2. The appellants filed writ petitions before the High Court of Madras challenging the validity of the Tamil Nadu Additional Sales Tax Act (Act No. 14 of 1970), 1970 (hereinafter referred to as the Act.) on the ground that the State Legislature has no competence to enact it, that its provisions violated their fundamental rights under Articles 19 (1) (f), 19 (1) (g) and Article 14 of the Constitution. The High Court dismissed the writ petitions by a common judgment. These appeals are filed on the basis of a certificate from the High Court.

3. The material provisions of the Act are as follows. Section 2 (1) provides that the tax payable under the Tamil Nadu General Sales Tax Act, 1959, shall, in the case of a dealer whose total turnover for a year exceeds 10 lakhs of rupees, be increased by additional tax at the rate of 5 percent of the tax payable by that dealer for that year provisions of the Tamil Nadu General Sales Tax Act.1959, shall apply in relation to the additional tax payable under the said Act.

4. Sub-section (2) of Section 2 says that notwithstanding anything contained in the Tamil Nadu General Sales Tax Act, 1959, no dealer referred to in sub-sec. (1) shall be entitled to collect the additional tax payable under the said sub-section.

5. Sub-section (3) of Section 2 states that any dealer who collects the additional tax payable under sub-section (1) in contravention of the provisions of subsection (2) shall be punishable with fine which may extend to one thousand rupees.

6. Sub-section (1) of Section 3 says that the tax payable by any importer or wholesale dealer under the Tamil Nadu Sales of Motor Spirit Taxation Act, 1939, shall be increased by an additional tax at the rate of five per cent of the tax payable under the said Act and the provisions of the said Act shall apply in relation to the said additional tax as they apply in relation to the tax payable under the said Act. Sub-sections (2) and (3) of Section 3 are to the same effect as sub-section (2) and (3) of Section 3.

7. Section 4 relates to the rule making power. In the exercise of this power, rules have been framed which are called the Tamil Nadu Additional Sales Tax Rules, 1970.

8. The appellants contend firstly that the legislature of Tamil Nadu has no power to enact the Act as the tax imposed by the Act is a tax on the income of the dealer, and that the imposition of such a tax is outside the scope of Entry 54 of List II. Secondly, they contend that the provision of the Act in so far as it prohibits a dealer from collecting the tax from purchaser is an unreasonable restriction upon their fundamental right to carry on trade under Article 19 (1) (g) and of their right to hold property under Article 19 (1) (f). Thirdly, they submit that the provisions of the Act are violative of their fundamental right under Article 14 in that they impose different rates of tax on the sale of same goods according to the turnover of the dealer.

9. As regards the contention that the State Legislature has no power to pass the measure, we are of the view that additional tax is really a tax on the sale of goods. The object of the Act, as is clear from its provisions, is to increase the tax on the sale or purchase of goods imposed by Tamil Nadu General Sales Tax Act, 1959 and the fact that quantum of the additional tax is determined with reference to the sales tax imposed would not alter its character. It may be noted that additional tax is to be imposed only if the turnover of a dealer exceeds Rs. 10 lakhs. It is in reality a tax on the aggregate of sales effected by a dealer during a year. The additional tax, therefore, is an enhancement in the rate of the sales tax when the turnover of a dealer exceeds Rs. 10 lakhs a year and it is a tax on the aggregat