Judgment

SARKARIA, J.:- Whether the sale of cigarettes after the enactment of West Bengal Sales Tax (Amendment) Act, 1958 (for short, the 1958 Act) is governed by the Bengal Finance (Sales Tax) Act, 1941 (for short, the 1941 Act) and, as such a dealer in the State of West Bengal is entitled to the benefits under Section 5 (2) (a) (ii) of the 1941 Act in making purchases free of sales-tax of raw material and other goods required for use in the manufacture of cigarettes on the strength of such exemption entered in his registration certificate, is the only question that falls for determination in this appeal by certificate granted by the High Court of Calcutta under Article 133 (1) (a) and (b) of the Constitution.

2. The appellant, India Tobacco Co. Ltd. (hereinafter called the Company was a dealer within the meaning of 1941 Act carrying on the business of manufacture and sale of cigarettes and smoking tobacco. It obtained the registration certificate No. BH/67B under that Act, and on its basis became entitled to exemption under Section 5 (2) (a) (ii) from payment of sales tax on goods purchased by it for use in the manufacture of cigarettes.

3. In 1954, the Legislature of West Bengal enacted the West Bengal Sales Tax Act, 1954 (for short, the 1954 Act) "to impose a tax on the sale of cigarettes and other commodities in West Bengal". The 1954 Act took out cigarettes and a dealer in cigarettes from the purview of the 1941 Act.

4. The Company got itself registered under the 1954 Act and its registration certificate which it had obtained under the 1941 Act was amended and cigarettes were excluded therefrom. By virtue of the provisions of Section 23 of 1954 Act, however, the Company continued to avail of the benefit under Section 5 (2) (a) (ii) of the 1941 Act with regard to purchases of goods required for use in the manufacture of cigarettes.

5. In 1957, the Government of India in consultation with the State Governments decided that an additional duty of excise should be levied on mill-made textiles, sugar and tobacco including manufactured tobacco in replacement of the sales tax then levied by the State Governments, the net proceeds being distributed among the States subject to the then income derived by each of the States being assured to it. Before undertaking the necessary legislation for the levy, the President of India made a reference to the Second Finance Commission requesting it to make recommendations as to the principles which should govern the distribution of the net proceeds of this additional duty among the States. Broadly, the recommendation of the Finance Commission was that the States levying a tax under their State Laws on the sale or purchase of sugar, tobacco and mill-made textile after April 1, 1958 would not be entitled to participate in the distribution of the net proceeds of this additional duty. In accordance with the recommendation of the Finance Commission, Parliament enacted the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957). This Act came into force on December 24, 1957. It declared the aforesaid three classes of goods "to be of special importance in inter-State trade or commerce". Further, the proviso to Para 1 (b) (iii) of the Second Schedule appended to the said Act, gave effect to the recommendation of the Finance Commission with regard to the distribution of additional duties among the States. Manufactured Tobacco is mentioned under Item 9 (II) of the First Schedule of the 1957 Act. It further indicates that cigarettes, cigars, cheroots and bidies all fall under the description of manufactured tobacco . They have been subjected to this additional duty of excise at different rates. Part I of the Second Schedule relates to distribution of these additional duties.

6. In view of the Central Act 56 of 1957, the State Legislature passed the 1958 Act. It received the assent of the President and was thereafter published in Calcutta Government Gazette on March 30,