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1970 Supreme(Ker) 231
High Court of Kerala
P.T. Raman Nayar, K.K. Mathew, JJ.
Abdul Kadir - Appellant
Versus
State of Kerala - Respondent
O.P. No. 934 of 1964
Decided On : 15-10-1970
Headnote:
Luxury Tax on Tobacco (Validation) Act, 1964 (Act 9 of 1964) - VALIDITY - Levy of luxury tax on tobacco for the period from 17-8-1950 to 31-12-1957 and for validation of the levy and collection of fees for licences for the vend and stocking of tobacco for the aforesaid period - Held, the tax is not excise duty and the State legislature was competent to impose it - The tax is a non-discriminatory tax and does not offend Art.301 of the Constitution - The tax is saved by Art.304(b) - The geographical classification is warranted and does not infringe Art.14 of the Constitution - The provisions of S.5 and 6 of the Act are not bad as they do not envisage a direct usurpation of judicial function by the State legislature.
Fact of the Case:
The petitioners are dealers in tobacco and tobacco preparations doing business at Mattancherry in the name and style of "A.S. Bava, Tobacconists, Mattancherry." They challenge the validity of the Luxury Tax on Tobacco (Validation) Act, 1964 (Act 9 of 1964, hereinafter called the Act) and pray for a declaration that the Act is ultra vires the powers of the Kerala Legislature, and for issuing appropriate directions prohibiting the respondent from enforcing the provisions of the Act against them.
Finding of the Court:
The court held that the tax is not excise duty and the State legislature was competent to impose it - The tax is a non-discriminatory tax and does not offend Art.301 of the Constitution - The tax is saved by Art.304(b) - The geographical classification is warranted and does not infringe Art.14 of the Constitution - The provisions of S.5 and 6 of the Act are not bad as they do not envisage a direct usurpation of judicial function by the State legislature.
Issues: 1. Whether the levy of luxury tax on tobacco for the period from 17-8-1950 to 31-12-1957 and for validation of the levy and collection of fees for licences for the vend and stocking of tobacco for the aforesaid period is valid? 2. Whether the tax is excise duty and the State legislature was competent to impose it? 3. Whether the tax is a non-discriminatory tax and does not offend Art.301 of the Constitution? 4. Whether the tax is saved by Art.304(b)? 5. Whether the geographical classification is warranted and does not infringe Art.14 of the Constitution? 6. Whether the provisions of S.5 and 6 of the Act are bad as they envisage a direct usurpation of judicial function by the State legislature?
Ratio Decidendi: 1. The tax is not excise duty and the State legislature was competent to impose it. 2. The tax is a non-discriminatory tax and does not offend Art.301 of the Constitution. 3. The tax is saved by Art.304(b). 4. The geographical classification is warranted and does not infringe Art.14 of the Constitution. 5. The provisions of S.5 and 6 of the Act are not bad as they do not envisage a direct usurpation of judicial function by the State legislature.
Final Decision: The writ petition is dismissed, but in the circumstances, without any order as to costs.
K.K. Mathew, J.
1. The petitioners are dealers in tobacco and tobacco preparations doing business at Mattancherry in the name and style of "A.S. Bava, Tobacconists, Mattancherry." They challenge the validity of the Luxury Tax on Tobacco (Validation) Act, 1964 (Act 9 of 1964, hereinafter called the Act) and pray for a declaration that the Act is ultra vires the powers of the Kerala Legislature, and for issuing appropriate directions prohibiting the respondent from enforcing the provisions of the Act against them.
2. The system of collecting tobacco revenue under the Cochin Tobacco Act Act 7 of 1084 and the Travancore Tobacco Act, Act 1 of 1087 and the rules thereunder, upto August 1950 was to auction what are called 'A' class and 'B' class shops. In addition to these there were also 'C' class shops for retail sale of tobacco. By the Finance Act 25 of 1950 the Central Excises and Salt Act, 1 of 1944, was extended to Travancore - Cochin State. S.13(2) of the Finance Act of 1950 provided that if immediately before the 1st day of April 1950, there was in force any law in any State other than Jammu and Kashmir corresponding to, but other than, an Act referred to in sub-s.(1) or (2) of S.11, such law was thereby repealed with effect from the said date. In consequence of this provision, the rules which were in force on 1-4-1950 were changed in Cochin and by a notification dated 3-8-1950 the system of auction sale of 'A' and 'B' class shops was abolished, and in its stead graded licence fees were introduced for various classes of licences including 'C' class licence. Similar change was also made in the Travancore area by notification dated January 25, 1951. 'A' class licensees were to pay a specified minimum fee for a specified maximum quantity of tobacco goods possessed by them and an additional fee for any additional quantity. The fee was to be levied only in respect of tobacco imported into the State, namely, the Cochin or the Travancore State, as the case may be. From 17-8-1950 to 31-12-1957 the State of Travancore - Cochin and its successor State, the State of Kerala, were collecting these licence fees from the petitioners.
3. The petitioners filed O.P. No. 70/1956 in the High Court of Kerala for refund of the licence fees collected from them for the reason that the Cochin Tobacco Act stood repealed by the Finance Act of 1950, which extended the Central Excises and Salt Act 1 of 1944 to the Part B State of Travancore - Cochin, and, in consequence, the notifications issued in August 1950 and January 1951 framing new rules for the issue of licences and prescribing fees therefor, under the powers conferred by the Travancore and Cochin Acts were ab initio void. The High Court held that the tax levied under the rules framed under the respective Acts was a luxury tax coming within Entry 62 of List II of the Seventh Schedule to the Constitution, and that theState was competent to levy it. The writ petition was accordingly dismissed. From this decision the petitioners took the matter in appeal to the Supreme Court. The Supreme Court held that the Travancore and Cochin Tobacco Acts and the rules framed thereunder stood repealed by the passing of the Finance Act 25 of 1950 and the extension of the Central Excises and Salt Act 1 of 1964 to the Part B State of Travancore - Cochin. (See Abdulkhadir v. State of Kerala) (AIR 1962 SC 922). According to the Supreme Court as the two Acts stood repealed on 1-4-1950 the framing of the new rules in August 1950 and ia January 1951 was without authority, and there could be no question of their being sustained under Entry 62 of List II of the 7th Schedule, for that would only arise if the Acts were not repealed as corresponding law by the S.13(2) of the Finance Act of 1950. The court did not pronounce upon the nature of the levy and left the question of legislative competence expressly open. And that being so, we are unable to accept the contention of counsel for the petitioners that by necessary im
