V.C. DAGA, J.:---These petitions seek to challenge the constitutional validity of Maharashtra Tax on Luxuries Act, 1987 as amended by Maharashtra Tax Laws (Levy and Amendment) Act, 2001, being Maharashtra Act No. XXII of 2001.

The petitioners are carrying on business of manufacture and sale of pan masala containing tobacco (gutkha) and pan masala without tobacco. All the petitioners are registered under the Bombay Sales Tax Act, 1959 ("BST Act" for short); Central Sales Tax Act, 1956 ("CST Act" for short); Central Excise Act, 1944 ("Excise Act" for short) and have also applied for registration under Maharashtra Tax on Luxuries Act, 1987 ("Luxury Tax Act" for short).

2. The petitioners, being aggrieved by levy of luxuries tax at the rate of 25% are challenging the validity of the amended provision of the Luxury Tax Act on the ground that the purported levy of tax is in effect and substance a tax on sales and not on luxuries and, therefore, it is a colourable legislation beyond the legislative competence of the State legislature, liable to be struck down for being violative of Articles 14, 19(1)(g), 245, 246, 301 and 304 of the Constitution of India.

3. Though these petitions are filed by different manufacturers of gutka, the facts involved, questions of law sought to be raised and the challenges sought to be set up therein are common. So they were heard together and are being disposed of together by this common judgment.

The main challenge relates to validity of section 38 of the Luxury Tax Act but, before we set out those grounds, it would be convenient to refer briefly the historical background and the structure of the impugned legislations.

THE BACKGROUND AND STRUCTURE OF LEGISLATION

4. The pan masala containing tobacco (Gutkha) is exigible for tax under the Excise Act. The said product was also exigible to sales under the provisions of the BST Act and the petitioners have been paying the same in the sense that it being covered under package scheme of incentives, they were entitled to collect and defer the same. At this stage, it would be necessary to set out different provision of different legislations to which the pan masala containing tobacco (gutkha) is and was subjected to.

Central Excise Tariff Act, 1985:

5. Prior to 1st March, 2001, "gutka" was classified under Chapter 21 of the Central Excise Tariff Act, 1985 ("Tariff Act" for short); excise duty was charged at 40% on ad valorem basis; sales tax at 22% totalling to 62% excise duty plus sales tax incidence, paid on tariff value as per section 3(2) of the Tariff Act. With effect from 1st March, 2001, gutka was reclassified under Chapter 24 of the Tariff Act which consists of goods of special importance as per Additional Duties of Excise (Goods of Special Importance) Act, 1957 ("ADE Act, 1957" for short). Therefore, the structure of duty payable has been changed, namely, basic duty 16%, specific excise duty 16%, additional excise duty 18% (in lieu on of Entry in the first schedule to the Additional Duties of Excise Act) the total incidence of duty, therefore, has become 60% towards excise payable on product. However, for assessment of duty, the tariff value was withdrawn and maximum retail price based on valuation was reverted to. In addition to the above, luxuries tax at the rate of 25% has been imposed on the said product.

Section 2 of the Tariff Act reads as under:

"Section 2: Duties specified in (the First Schedule and the Second Schedule) to be levied - the rate at which duties of excise shall be levied under the (Central Excise Act, 1944) are specified in (the First Schedule and Second Schedule)."

Pan masala was also exigible to special duty of excise under the second schedule. The same reads as under:

Heading Sub-Heading Description of Rate of Sp. Duty

No. No. Goods of Excise

21.06 2106.00 pan masala 24%

Chapter 21 of the first schedule of the Tariff Act deals with miscellaneous edible preparations. Chapter note 3 reads as under:

"Note 3: