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IN THE NAGPUR HIGH COURT
K.T. Mangalmurti, M. Hidayatullah, JJ.
MADHYA PRADESH PAN MERCHANTS ASSOCIATION, SANTRA MARKET, NAGPUR
Versus
STATE OF MADHYA PRADESH (SALES TAX DEPARTMENT) AND OTHERS
Miscellaneous Petition No. 320 of 1954
Decided On: Decided On : 26-07-1955
SALES TAX - EXEMPTION - BETEL LEAVES - WITHDRAWAL OF EXEMPTION - VALIDITY OF ACT - DISCRIMINATION - SALES TAX ACT, 1947 (M.P. ACT XXI OF 1947), SEC. 6 - M.P. ACT XVI OF 1949.
Fact of the Case:
The Madhya Pradesh Pan Merchants Association challenged the validity of Act XVI of 1949, which withdrew the exemption from sales tax on betel leaves granted under the Sales Tax Act, 1947. The petitioners argued that betel leaves were included in the term "vegetables" under Item No. 6 of the Second Schedule of the 1947 Act and that the deletion of Item No. 36, which specifically mentioned betel leaves, did not affect the exemption. They also contended that Act XVI of 1949 was ultra vires the Provincial Legislature and that it discriminated against pan dealers.
Finding of the Court:
The court held that the term "vegetables" in Item No. 6 of the Second Schedule did not include betel leaves and that the deletion of Item No. 36 effectively withdrew the exemption granted to betel leaves. The court also upheld the validity of Act XVI of 1949, finding that it did not require the assent of the Governor-General under section 100 of the Government of India Act, 1935, and that the amendment of the Schedule was not defective as the procedure under section 6 of the 1947 Act was not mandatory.
Issues: 1. Whether betel leaves were included in the term "vegetables" under Item No. 6 of the Second Schedule of the Sales Tax Act, 1947. 2. Whether the deletion of Item No. 36, which specifically mentioned betel leaves, affected the exemption granted to betel leaves. 3. Whether Act XVI of 1949 was ultra vires the Provincial Legislature. 4. Whether Act XVI of 1949 discriminated against pan dealers.
Ratio Decidendi: 1. The court interpreted the term "vegetables" in Item No. 6 of the Second Schedule in accordance with its common meaning, which does not include betel leaves. The court relied on case law holding that peanuts, cashew-nuts, and walnuts, though vegetables in the botanical sense, are not vegetables in the common acceptance of the term. 2. The court held that the deletion of Item No. 36 effectively withdrew the exemption granted to betel leaves, as the exemption was specifically granted under that item and not under Item No. 6. 3. The court held that Act XVI of 1949 did not require the assent of the Governor-General under section 100 of the Government of India Act, 1935, as it did not seek to alter the rules obtaining under the Sale of Goods Act and the Contract Act. The court distinguished the case of Shriram Gulabdas v. Board of Revenue, where Explanation II to section 2(g) of the Sales Tax Act was held to be ultra vires, on the ground that Explanation II sought to alter the rules obtaining under the Sale of Goods Act and the Contract Act. 4. The court held that Act XVI of 1949 did not discriminate against pan dealers, as the scheme of taxation in all countries shows that only certain commodities are selected for the imposition of sales tax.
Final Decision: The court dismissed the petition challenging the validity of Act XVI of 1949 and upheld the imposition of sales tax on betel leaves.
This petitions is by the Madhya Pradesh Pan Merchants Association, Nagpur, though its Secretary L. B. Borgaonkar. Respondents 2 and 3, who are the Sales Tax Officer and the Assistant Sales Tax Officer respectively in the Nagpur district, have issued notices to the dealers forming the Association to submit returns of their sales of betel leaves with a view to assessing them to sales tax. The petitioner claims exemption from the operation of the Sales Tax Act, 1947, and seeks a writ or writs to restrain the respondents from charging sales tax on the sale of betel leaves. In the alternative, it urges that Act XVI of 1949 by which the exemption is withdrawn is ultra vires and illegal.
2. To understand the contention it is necessary to give a short history of the legislation on the subject. In Act XXI of 1947 exemption from the tax is granted by section 6 of the Act. This section reads as follows :-
"(1) No tax shall be payable under this Act on the sale of goods specified in the second column of Schedule II, subject to the conditions and exceptions, if any, set out in the corresponding entry in the third column thereof.
(2) The State Government may, after giving by notification not less than one month's notice of their intention so to do, by a notification after the expiry of the period of notice mentioned in the first notification amend either schedule, and thereupon such schedule shall be deemed to be amended accordingly."
In the Second Schedule there were two items :- Item No. 6 "vegetables", and Item No. 36 "betel leaves". The Legislature, thereafter, passed Act XVI of 1949 and amended the Second Schedule by deleting from it Item No. 36. The petitioner contends that betel leaves were exempted under Item No. 6, though the Legislature ex majori cautela mentioned them once again in Item No. 36. The deletion of Item No. 36, it is submitted, makes no difference whatever to the exemption of betel leaves. The petitioner further contends that the Legislature having expressed its will in section 6 as to the manner in which the Schedule could be amended, no other mode for the amendment thereof was possible so long as section 6 remained intact, and that even if the Legislature wished to amend the Schedule, it had to give a month's notice to the persons affected thereby, before the change could be made. It also contends that Act XVI of 1949 is ultra vires the Provincial Legislature because the Bill needed the assent of the Governor-General under section 100 of the Government of India Act, 1935, and the assent was not obtained. The petitioner claims further that there is discrimination between pan dealers and other vegetable dealers, and Act XVI of 1949 cannot be enforced after the inauguration of the Constitution.
3. On behalf of the respondents a preliminary objection is taken that an indeterminate body like the Pan Dealers Association cannot seek a writ under Article 226 of the Constitution. It is contended that either all the persons affected thereby must join in this petition or all of them must file separate petitions. An application has now been filed by the secretary of the association to limit the petition to L. B. Borgaonkar who is himself a pan dealer, in case the objection is upheld.
4. We heard the preliminary objection as well as the petition, and in view of our decision that there is no room for interference, there is no need to decide the question whether an association can move this Court under Article 226 of the Constitution on behalf of its constituent members. In Halsbury's Laws of England there are cases in which associations moved for relief, but we do not consider it necessary to go into this question in this case.
5. Shri Bobde contends on the strength of certain passages in Craie's Statute Law, p. 98, that Item No. 36 was not outside Item No. 6 but was added ex abundanti cautela. According to him, the exemption from the operation of the Act was granted to betel leaves dealers by Item No. 6 because the term "v
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