P. A. MOHAMMED, J. –

The main question involved in these writ petitions relates to the constitutional validity of section 4A of the Kerala Tax on Luxuries Act, 1976 as amended by the Kerala Finance Bill, 1994. This Act was called the "Kerala Tax on Luxuries in Hotels and Lodging Houses Act, 1976" as originally introduced and published in the Kerala Gazette Extraordinary No. 647 dated November 13, 1976. By the Finance Bill, 1994 the name of the Act was substituted as "the Kerala Tax on Luxuries Act, 1976" (hereinafter referred to as "the impugned Act"). The provisions contained in section 4A of the Act as amended authorising levy and collection of luxury tax have been challenged by the petitioners as violative of articles 301 and 304(b), 286(3), 265, 245 and 246 and 14 and 19(1)(g) of the Constitution of India, section 15 of the Central Sales Tax Act, 1956 and section 9 of the Kerala General Sales Tax Act, 1963. There are two alternative prayers; the first being that in the event of its being held by this Court that the first respondent, Government of Kerala, is entitled to levy and collect luxury tax on cigarettes, the second respondent, Union of India, is not entitled to levy and collect additional excise duty on cigarettes and the second being that the first respondent in the event of its being held by this Court is entitled to levy and collect luxury tax on tobacco at 5 per cent, then the first respondent is not entitled to its proportionate share of additional excise duty collected by the second respondent under the provisions of the additional Duties of Excise (Goods of Special Importance) Act, 1957 (for short, "the 1957 Act").

2. The petitioners are M/s. I.T.C. Limited, M/s. Hallmark Tobacco Co. Ltd. and M/s. Shyam Agencies owned by Krishna Consumer Products Pvt. Ltd. They are dealers carrying on business and trade in manufacture, production, distribution and sale of cigarettes. They are aggrieved by the levy of luxury tax on cigarettes at 5 per cent on manufacturers and importers of cigarettes. The said tax has been imposed for the first time by the Kerala Finance Bill, 1994 and by virtue of the declaration under section 3 of the Kerala Provisional Collection of Revenue Act, 1985 the provisions of the Bill and the levy of luxury tax on cigarettes shall have effect from 1st April, 1994.

3. The impugned Act is intended to provide for the levy and collection of tax in respect of luxuries. Section 4A of the impugned Act authorising the levy and collection of luxury tax which is mainly challenged in these writ petitions is reproduced below :

"4A. Collection of luxury tax on certain commodities. - (1) The luxury tax in respect of a commodity included in the Schedule shall be at the rate specified against it calculated on the basis of the value of the commodity, under whatever head it is charged, received or receivable at the point of supply and be payable by the person who uses or consumes the same.

(2) The luxury tax shall be collected by the stockist and paid, within such period and in such manner as may be prescribed, into the Government treasury.

(3) Where a luxury tax is collected by a stockist at the point of first supply in the State, whether by way of sale or otherwise, no luxury tax under this Act shall be collected at any successive point of supply.

(4) The provisions of this Act shall, in so far as they relate to the assessment, levy and collection of tax in respect of a commodity included in the Schedule, including inspection, search and inspection apply with the substitution of the word 'stockist', for the word 'proprietor' wherever it occurs."

What is levied under sub-section (1) of section 4A is "luxury tax" in respect of a commodity included in the Schedule. The Schedule referred to in sub-section (1) is as follows :

THE SCHEDULE

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Serial Description of commodity Rate of luxury tax

number