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1989 Supreme(Ori) 78
G.B. Pattanaik, J. Das, JJ.
PARIMALA AGENCIES
Versus
STATE OF ORISSA AND OTHERS
Original Jurisdiction Case No. 1271 of 1981
Decided On: Decided On : 11-05-1989
Y. Das, for the petitioner.
The Additional Standing Counsel, for the respondents.
The classification of zarda as a different class of goods from tobacco and all its products is reasonable and valid.
Headnote:
ORISSA SALES TAX ACT - TOBACCO AND ITS PRODUCTS - CLASSIFICATION - ZARDA - TAXABILITY - VALIDITY - REASONABLENESS - COURT ANALYSIS AND CONCLUSION - The classification of zarda as a different class of goods from tobacco and all its products is reasonable and valid. Zarda is meant for the affluent class of citizens who can afford to spend. A person who can purchase goods at such a high price can also easily spend a little more money on taxation. Tobacco is, however, meant for the poor and lower middle class citizens. Added to this, the manufacturing process of zarda is quite different and also complicated. Although tobacco is a constituent of zarda, still after manufacture "the zarda" is quite distinguishable and it has an identity of its own. In the above circumstances, there is no difficulty in treating zarda as being of a different class of goods from tobacco. It has also been stated earlier that any customer either literate or illiterate knows the difference between tobacco and zarda. Hence, this is also a circumstances which makes zarda a distinct goods from tobacco. In these circumstances, the classification is quite reasonable.
Fact of the Case:
The petitioner, a registered dealer under the Orissa Sales Tax Act, 1947, treated Amrit Surti zarda as tax-free, considering it to be chewing tobacco, which was tax-free. However, the sales tax authority assessed Amrit Surti zarda to sales tax for the assessment years 1974-75, 1975-76, 1976-77, and 1977-78. The Sales Tax Tribunal upheld the assessment, prompting the petitioner to file a writ petition challenging the taxability of Amrit Surti zarda.
Finding of the Court:
The court held that the classification of zarda as a different class of goods from tobacco and all its products is reasonable and valid. The court noted that zarda is meant for the affluent class of citizens who can afford to spend, while tobacco is meant for the poor and lower middle class citizens. The court also noted that the manufacturing process of zarda is quite different and complicated, and that zarda has an identity of its own. The court further noted that any customer, either literate or illiterate, knows the difference between tobacco and zarda.
Issues: 1. Whether Amrit Surti zarda is chewing tobacco and, therefore, exempt from sales tax. 2. Whether the taxability of Amrit Surti zarda in one entry of the schedule is legal when chewing tobacco has been made tax-free under a different entry.
Ratio Decidendi: 1. The court held that Amrit Surti zarda is not chewing tobacco. The court noted that the definition of "tobacco" in the Orissa Sales Tax Act includes all types of tobacco products, including chewing tobacco. However, the court also noted that the State Government has the discretion to exempt any goods or class of goods from payment of tax. In this case, the State Government has exempted chewing tobacco from payment of tax. Therefore, the court held that Amrit Surti zarda is not chewing tobacco and is not exempt from sales tax. 2. The court held that the taxability of Amrit Surti zarda in one entry of the schedule is legal, even though chewing tobacco has been made tax-free under a different entry. The court noted that the State Government has the power to levy tax on different goods from time to time by notification. The court also noted that the State Government has classified zarda as a different class of goods from tobacco and all its products. The court held that this classification is reasonable and valid. Therefore, the court held that the taxability of Amrit Surti zarda in one entry of the schedule is legal, even though chewing tobacco has been made tax-free under a different entry.
Final Decision: The court dismissed the writ petition, holding that the classification of zarda as a different class of goods from tobacco and all its products is reasonable and valid, and that the taxability of Amrit Surti zarda in one entry of the schedule is legal, even though chewing tobacco has been made tax-free under a different entry.
JUDGMENT
J. DAS, J. - This is an application under article 226 of the Constitution of India praying for issuing a writ of mandamus or any other suitable writ.
2. The facts in brief are that the petitioner is a registered dealer under the provisions of the Orissa Sales Tax Act, 1947, and amongst other articles it deals in Amrit Surti zarda. The petitioner treated Amrit Surti zarda as tax-free taking the view that the said zarda is nothing but chewing tobacco which is tax-free. The sales tax authority, however, did not accept the contention of the petitioner and assessed Amrit Surti zarda to sales tax for the assessment years 1974-75, 1975-76, 1976-77, and 1977-78. Ultimately the Sales Tax Tribunal held that the assessment of Amrit Surti zarda to sales tax, is correct. In these circumstances the petitioner has filed the writ application contending that Amrit Surti zarda is nothing but chewing tobacco and hence the said zarda should be exempted from the sales tax. The petitioner has further contended that treating zarda as a different commodity from chewing tobacco, is illegal and hence the Notification dated 5th February, 1968 and the notification of 1976 are illegal and ought to be quashed.
3. Vide Notification No. 33925-CTA-130/57-F dated 30th December, 1957, tobacco and all its products were exempted from tax.
Vide Notification No. 3604-CTA-38/67-F dated 5th February, 1968, a new serial No. 5-A was inserted and as per that serial number chewing tobacco, gudakhu, pan masala, gundi, zarda and snuff were assessed to sales tax at the rate of 3 per cent. Thus, all these commodities were made taxable.
4. Vide Notification No. 3609-CTA-38/67-F dated 5th February, 1968, there was a further amendment in serial No. 35(2) as follows :
"Tobacco and all its products other than chewing tobacco, gudakhu, pan masala, gundi, zarda and snuff."
Thus, tobacco and all its products were made tax-free and other commodities including chewing tobacco and zarda were made taxable.
Again vide Notification No. 16925-CTA-46/68(Pt.)-F dated 14th May, 1968, the words "chewing tobacco" were deleted from serial No. 35(2) and as a result of that chewing tobacco was made tax-free. This position continued till 1976.
5. Vide Notification No. SRO 1206/76 dated 3rd December, 1976, entry No. 40-A was inserted and gudakhu, gundi, zarda, snuff and pan masala with mixtures of tobacco were made taxable at the rate of 4 per cent and as per entry No. 40-A tobacco and all its products other than gudakhu pan masala, gundi, zarda and snuff were made tax-free.
6. The short point which arises for consideration is whether Amrit Surti zarda is chewing tobacco and whether the taxability of Amrit Surti zarda in one entry of the schedule is legal when the chewing tobacco has been made tax-free under a different entry.
7. The learned Advocate for the petitioner, Mr. Y. Das, strenuously argued that Amrit Surti zarda is nothing but chewing tobacco and hence the taxability of Amrit Surti zarda, is not legal when chewing tobacco has been made tax-free. He has cited the decisions reported in [1975] 35 STC 179 (Orissa) (State of Orissa v. Samsuddin Akbar Khan & Co.), [1988] 68 STC 92 (SC) (State of Orissa v. Radheshyam Gudakhu Factory), [1989] 73 STC 346 (SC); (1989) 1 SVLR (T) 158 (SC) (Arya Vaidya Pharmacy v. State of Tamil Nadu) and [1967] 19 STC 412 (AP) (Shamdas v. State of Andhra Pradesh).
8. [1975] 35 STC 179 (State of Orissa v. Samsuddin Akbar Khan & Co.) is a decision of the Orissa High Court. In this decision it has been held that "gudakhu" is "tobacco".
In this case a reference was made by the Tribunal on the following question :
"Whether gudakhu is covered by the expression 'tobacco' as defined in section 2(c) of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, which was substituted with effect from 1st July, 1967, by Notification No. 21278-CTA-38/67-F dated 6th June, 1967, and is exempted from tax under the Orissa Sales Tax Act, 1947 ?"
A reference is
