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1978 Supreme(Ker) 71
Judges : V.P.GOPALAN NAMBIYAR,V.BALAKRISHNA ERADI,V.KHALID,K.K.NARENDRAN,G.BALAGANGADHARAN NAIR
GOVINDAN - Appellant
Versus
STATE OF KERALA - Respondent
Case No : W. A. No. 354 of 1976, 365 of 1976, 368 of 1976 etc.
Decided On : 03/30/1978
Advocates Appeared :
K. Sukvmaran, K. Dandapani & Sumathi Dandapani, T. L. Ananthasivan. K Prahhakaran, P. K.Jose, K. Mohammed Naha, For Appellants & P T. Augustine, A. K. Sreenivasan, N R K Nair. Petitioner T. K. M Unnithan, K P. Alikunju M.M. Abdul Khader (Advocate General)For Respondents
A violation of Art.301 is involved only if the impugned law directly and immediately affects the movement part of the trade.
Headnote:
The case challenged the removal of 'Tapioca' from item 10 of the III Schedule of the Kerala General Sales Tax Act, 1963, and its insertion as a specific item in entry No. 72 of Schedule I as violative of Art.301 and 14 of the Constitution. The court analyzed the provisions of the Act, the impact on the movement of trade, and the discriminatory nature of the amendments. The court found that the amendments did not directly and immediately affect the movement part of the trade, and the withdrawal of exemption for tapioca did not violate Art.14 of the Constitution.
Fact of the Case:
The case challenged the removal of 'Tapioca' from item 10 of the III Schedule of the Kerala General Sales Tax Act, 1963, and its insertion as a specific item in entry No. 72 of Schedule I as violative of Art.301 and 14 of the Constitution.
Finding of the Court:
The court found that the amendments did not directly and immediately affect the movement part of the trade, and the withdrawal of exemption for tapioca did not violate Art.14 of the Constitution.
Issues: Violation of Art.301 and 14 of the Constitution due to the amendments in the Kerala General Sales Tax Act.
Ratio Decidendi: The court held that a violation of Art.301 is involved only if the impugned law directly and immediately affects the movement part of the trade. The withdrawal of exemption for tapioca and its subjection to tax under Schedule I was not discriminatory.
Final Decision: The writ appeals and writ petitions were dismissed with no orders as to costs.
1. The removal of "Tapioca" from item 10 of the III Schedule of the Kerala General Sales Tax Act, 1963, by Act 22 of 1974 (with effect from 171974) and its insertion as a specific item in entry No. 72 of Schedule I by the same Act have been challenged in these cases as violative of Art.301 and 14 of the Constitution. S 5 of the Act is the charging Section, which imposes the tax at the rates and only at the points specified, against the goods enumerated in the First or the Second Schedules; and in the case of other goods, at the rate of 4% at all points of sale. (We leave out as unnecessary the minimum limits of turn-over subject to which the tax has been imposed). S.9 of the Act grants exemption to a dealer who deals with the goods specified in the III Schedule to the Act, from payment of tax in respect of the sale and purchase of such goods. Till 1974, item 10 of the III Schedule read:
10 Vegetables (other than green ginger), whether roots, green fruits or leaves, used for human consumption including tapioca, yam, potatoes, lime, sabola and tomatoes, except their manufactured products.
Explanation: The term "vegetables" shall not include any goods of the description specified in the First or Second Schedule."
By the Amending Act of 1974 referred to supra, the word 'Tapioca' was omitted from the inclusive part of the explanation to item 10 of the III Schedule; and instead of treating it as an item exempted from taxation under the III Schedule it was lifted into the First Schedule as one of those items to be taxed at the last purchase point in the State at the rate of 2%. The entry reads as follows.
2. There is in force the Kerala Tapioca (Manufacture and Export Control) Order, 1966, on and from 1-7-1966 in the State. From 1-5-1966 an administrative surcharge was levied on Tapioca by Notification G. O. MS. No. 18/66/ Food dated 15 41966. The said notification was struck down by this Court as violative of Art.01 of the Constitution vide K. P. Govindan v. State of Kerala and others (1971 KLT. 910). The decision was affirmed on appeal by the Supreme Court vide State of Kerala v. K. P. Govindan and others (1974 KLT 876). It is thereafter that the Kerala General Sales Tax Act was amended in the fashion noticed. Our attention was called to the allegations made in Para.2 to 14 of O. P. No 4597 of 1976 regarding the conditions of the tapioca trade and industry. Attention was drawn to the large scale production in the State of tapioca of both the edible and the non-edible varieties, the importance of tapioca as a staple food crop and an important raw material in the starch industry and the traditional trading centres for tapioca in the Tamil Nadu State for the starch industry in Salem and Dharmapuri. We have given these our careful attention. But we have found them far short of the averments needed to establish a contravention of Art.301 of the Constitution. We should regard it as firmly and sufficiently well-established that in order to violate Art.301 of the Constitution the offending provision of law must directly and immediately affect the movement part of the trade. This, we think, has been well-established by the Atiabari Tea Co. Ltd.'s case (AIR 1961 SC. 232), Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (AIR 1962 SC. 1406), and the Khyerbari Tea Co. Ltd'.s case (AIR 1964 SC. 925) not to refer to the numerous decisions that have followed in their wake. For the sake of convenience, we might reproduce Art.301 of the Constitution, and also Art.304:
"301. Freedom of trade, commerce and intercourse Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free."
304. Restrictions on trade, commerce and intercourse among States, Notwithstanding anything in Art.301 or Art.303, the Legislature of a State may by law
(a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State a
