The court determined that taxation under the General Sales Tax Act does not directly impede trade as it levies tax on sales, not movement, affirming that indirect effects on trade do not violate constitutional rights under Articles 301 and 304(b).

1 The respective petitioners, in these writ petitions, challenge the orders of assessment passed by the concerned Sales Tax Officers, making them liable for payment of sales tax under the General Sales Tax Act, 1125, as the last purchaser of the commodity, in question, in the State. Their contention is that the imposition of a levy, in the circumstances, on the last purchase in the State, offends Art.301 of the Constitution and is not saved by Art.304(b) of the Constitution. There are no doubt certain other questions arising for decision in these writ petitions. But the common question that arises is regarding the attack on these assessments, based upon Art.301 and 304(b) of the Constitution; and I have heard arguments only on that aspect at present.

2 As Mr. K. V. Surianarayana Iyer, learned counsel appearing for the petitioners, who are the same in both O. P. Nos. 3210/61 and 261/62 has advanced the leading arguments on this aspect, I will refer in the first instance, to the averments made in the affidavit filed in support of O. P. No. 3210 of 1961, in so far as they are relevant to this aspect.

3 The petitioner therein, which is a partnership, having its Head Office in Bombay and branches at Cochin, Kozhikode and Alleppey, within the Kerala State, claims to be dealers in pepper, ginger, betelnuts, cardamom, tea etc. According to them, the bulk of their business consists in export of goods to the United States of America, United kingdom and Soviet Russia and other foreign countries. According to the petitioners, the head office at Bombay carries on negotiations with foreign, as well as inland buyers, and after securing orders and entering into contracts ask the branches concerned to purchase the necessary commodities and forward them to their destinations.

4 The Sales Tax Officer concerned called upon the petitioners' branches at Alleppey and Cochin to submit returns for the months of April 1959 to March 1960. Though the 'petitioners claim that they are not liable to be assessed to sales tax, inasmuch as the transactions, according to them, are covered by the exemption under Art.286(1)(b) of the Constitution and S.26 of the General Sales Tax Act, nevertheless ultimately an order of assessment for the year 1-4-1959 to 31-3-1960 has been passed fixing the tax liability as against the petitioners in the sums mentioned therein.

5 The petitioners also state that they have challenged the order of the Sales Tax Officer, before the appellate authority, and prayed for stay of collection of tax pending the appeal. But no orders have been passed. The petitioners, in short, claim that the bulk of the transactions, in respect of which they have been assessed to sales tax, have taken place in the course of export out of India and the rest in the course of inter State trade and commerce and claim that no part of the said turnover is liable for taxation. The petitioners again set out the manner in which they are carrying on their trade and commerce as and by way of export. The petitioners claim that the assessment to tax of these transactions is violative of Art.286 of the Constitution and S.26 of the General Sales Tax Act.

6 Alternatively, the petitioners have also taken up the contention that the assessment and levy of tax on the last purchase, under S.5(vii) of the General Sales Tax Act, read with the notification issued thereunder, is violative of Art.301 and 304(b) of the Constitution inasmuch as by such a levy, the movement and transport of goods, across the State and beyond the borders, are impeded and hampered. They also state that the last purchase in the State of any goods necessarily involves and requires the transport thereof across the State and beyond its limits except when the commodity is purchased for consumption within the State. Therefore, according to the petitioners, the imposition of tax under these circumstances is really a tax on the very movement of goods in the course of trade and commerce.

7 There is no counter affidavi