Judgment

B. P. JEEVAN REDDY, J. - A difference of opinion has arisen among the High Courts in the country over the question whether the expression wheat in S. 14(i)(iii) of Central Sales Tax Act (Act) includes flour, maida and suji. Karnataka and Patna High Courts have held that it does so include, while Andhra Pradesh, Rajasthan and - we are told - Madras High Courts have taken a contrary view.

2. S. 14 occurs in Chapter IV which carries the heading "Goods of special importance in Inter-State Trade or Commerce." S. 14 declares certain goods to be of special importance in inter-State trade and commerce, hereinafter referred to as "declared goods". The first clause, introduced in 1976** is cereals. As many as ten commodities are mentioned under Cl. (i) which reads as follows :

"Section 14. Certain goods to be of special importance in inter-State trade or commerce.- It is hereby declared that the following goods are of special importance in inter-State or commerce:-

[(i) Cereals, that is to say,-

(i) Paddy (Oryza Sativa L.);

(ii) Rice (Oryza Sativa L.):

(iii) Wheat (Triticum Vulgare, T. compactum, T. sphaerococcum, T. durum, T. aestivum L., T. dicoccum);

(iv) Jowar or milo (Sorghum vulgare Pers);

(v) Bajra (Pennisetum typhoideum L.);

(vi) Maize (Zea mys L.);

(vii) Ragi (Eleusine coracana Gaertn);

(viii) Kodon (Paspalum scrobiculatum;

(ix) Kutki (Panicum miliare L.);

(x) Barley (Hordeum vulgare L.):]"

(**the then existing Cl. (i) was renumbered as Cl. (ii).)

3. S. 15 imposes certain restrictions upon, and conditions in regard to the imposition of tax on sale or purchase of declared goods by a State Legislature. It says that "every Sales Tax Law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods be subject to the following restrictions and conditions......." S. 15 specifies four restrictions/ conditions. They are: (a) the tax on declared goods shall not exceed 4 per cent and the tax shall not be levied at more than one stage; (b) where a tax has been levied on an intra-State sale and such goods are later sold in the course of inter-State trade or commerce, the tax levied on intra-State sale shall be reimbursed to the person effecting the interState sale; (c) if a tax has been levied on the sale or purchase of paddy. and the rice derived from such paddy is sold later, the tax on sale of rice shall be reduced by the amount of tax paid on paddy; and (d) the pulses referred to in Cl. (vi)(a) of S. l4 shall mean and include pulses whole or separated, and pulses whether with or without husk.

4. Cl. (i) (cereals), Cl. (vi)(a) (oilseeds) in S. 14 and Cls. (c) and (d) in S. 15, it may be noted, were inserted by Central Sales Tax (Amendment) Act 103 of 1976, with effect from September 7, 1976.

5. Under the scheme of our Constitution the power to levy tax on the sale of goods is vested in the States by entry 54 in List II of the VII th Schedule but this power is subject to the limitations contained in Art. 286. Art. 286, before its amendment by the Constitution Sixth (Amendment) Act, 1956, declared that the State Legislature shall not be competent to levy tax on inter-State sales, sales in the course of import and export (into or from India) and on the sale of declared goods. After the said amendment, the prohibition with respect to inter-State sales and sales effected in the course of import/export remains though framed differently. However, so far as the declared goods are concerned, the absolute prohibition has given way to restrictions and conditions as may be imposed by Parliament by law. Cl. (3) of Art. 286, which is immediately relevant for our purpose, and reads as follows before and after the VIth Amendment Act :

Before the Sixth Amendment Act After the Sixth Amendment Act (w.e.f. 11-9-1956)

(3) No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essent