JUDGMENT :

S. RAVINDRA BHAT, J.

1. This judgment will dispose of appeals arising from judgments of three High Courts, on the question of taxability of pan masala or gutka/gutkha¹ [Which is spelt differently in regional contexts as ‘gutka’ or ‘gutkha’ or ‘guhtka’ for convenience, this is hereafter referred to uniformly as ‘gutkha’] under state enactments. The appellants unsuccessfully argued that state legislatures were not empowered to levy sales tax on those articles, in view of the provision in the Constitution enabling the Union to levy additional duties of excise, and further that in any case, the rate of state tax cannot exceed the limit prescribed by the Central Sales Tax Act, 1956.

Brief Facts

2. The relevant central enactments are the Central Sales Tax Act, 1956 (hereafter “CST Act”) the Central Excise Tariff Act, 1985 (hereafter “CET Act”) and the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (hereafter “ADE Act”). The state enactments in question are the Delhi Sales Tax Act, 1975 (hereafter “DST Act”) Tamil Nadu General Sales Tax Act, 1959 (hereafter “TNGST Act”) and the Uttar Pradesh Trade Tax Act, 1948 (hereafter “UPTT Act”).

3. Section 14 of the CST Act declares certain goods to be of special importance and Section 15 restricts the power of taxation on the said goods. Originally Section 14(ix) of the CST Act read as follows:

“(ix) tobacco, as defined in Item No. 4 of the First Schedule to the Central Excises and Sale Act, 1944 (1 of 1944).”

Entry 4 of the CET Act, which defines ‘tobacco’ reads as follows:

“4. Tobacco

“Tobacco” means any form of Tobacco, whether cured or uncured and whether manufactured or not and includes the leaf, stalks and stems of the tobacco plant, but does not include any part of a tobacco plant while still attached to the earth......

(II) Manufactured Tobacco.

...........

(5) Chewing tobacco, including preparations commonly known as “Khara Masala, Kimam, Dokta, Zarda, Sukha and Surti.”

4. The Finance Act, 1988 (Central Act No. 26/1988) substituted the expressions in Section 14(ix) of the CST Act, with the following words, w.e.f. 13.05.1988:

“14(ix). Unmanufactured tobacco and tobacco refuse covered under sub-heading No. 2401.00, cigars and cheroots of tobacco covered under Heading No. 24.02, cigarettes and cigarillos of tobacco covered under the sub-Heading Nos. 2403.11 and 2403.21, and other manufactured tobacco covered under sub-heading Nos. 2404.41, 2404.50 and 2404.60 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986).”

5. The 1988 amendment to Section 14 of the CST Act was with a view to align the description of goods in that law, with the description in the CET Act, as is clear from the Finance Bill, 1988. Heading 24.04 of the CET Act originally read to include “Gudaku with brand name and without brand name” (Entries 2404.11 and 2404.12); cut tobacco (Entry 2404.13); hookah tobacco, chewing tobacco (including preparations known as khara masala, khiman, dokta, zarda and surti (Entry 2404.39); snuff (Entry 2404.49) and snuff of tobacco (Entry 2404.50). The entry in relation to chewing tobacco was amended w.e.f. 1993-94.

6. By Finance Act, 1995 ‘Pan Masala’ was brought under the Heading 21.06. In the year 1995, the Fourth Schedule was amended, and the relevant Clause (8) in Chapter 21 read as follows:

“(8) in Chapter 21:

(i) for NOTE 3, the following NOTE shall be substituted, namely:

“3. In this Chapter ‘Pan Masala’ means any preparation containing betel nuts and any one or more of the following ingredients, namely lime, katha (catechu) and tobacco, whether or not containing any other ingredients, such as cardamom, copra and menthol.”

Clause (10) in Chapter XXIV reads as follows:

(i) for NOTE 2, for the figures and word ‘24.02, 24.03 and 24.04’ the figures and word ‘24.01, 24.02, 24.03 and 24.04’ shall be substituted.”

Clause (9) in Chapter XXI reads as follows:

“(i) for Heading Nos. 21.06 and 21.07 and the entries relating thereto, the following shall be inserted, n