Decided on November 30,1970

M/S. Satyanarayan Mahabir Appellant
The State Of Assam And Ors. Respondents


Goswami, C.J. - (1.) THIS application under Article 226 of the Constitution is directed against notice of demand dated 11th October, 1969 issued by the Superintendent of Taxes, Gauhati, directing the Petitioner to pay a sum of Rs. 15.989 as tax under the Assam Finance (Sales Tax) Act. 1956, hereinafter called the Act, for the period ending 31st March. 1969 and another notice dated 2nd December, 1969 issued by the same officer for submission of the return under the said Act for the period ending 30th September, 1969.
(2.) THE Petitioner is a partnership firm, of which all the partners are Indian citizens. The firm carries on the business of selling and supplying of various goods including vegetable oils, milk powder, dry fruits, sugar, caustic soda and soda ash etc. The Petitioner, imports such goods from outside the State of Assam for the purpose of sale in Assam. The firm is a registered dealer within the meaning of Sub -section (2J of Section 2 of the Act. It does not itself manufacture, make or process any of the articles for the purpose of sale in Assam. The Assam Finance (Sales Tax) Act, 1956 was passed in the year 1956 by the Assam Legislature. The Act purported to impose tax on sales of certain goods specified in the schedule attached to it The Act was amended by adding new items to the schedule. Vegetable oils, both edible and non -edible, including ghee but excluding mustard oil. Rape oil and admixture of mustard and rape oil were made taxable under the Act by inclusion of entry 23 in the schedule. The Petitioner paid taxes under the said Act since the commencement of its business till the period ending 30th September. 1968. The rate of tax as specified in Column III of the schedule against the items; specified in entry Nos. 23, 50 and 56 has been enhanced from time to time by the Assam Finance (Sales Tax) Amendment Acts from five paise to six paise in a rupee and again from six paise to seven paise in a rupee. The Petitioner is required under Section 8 of the Act to submit returns and the Superintendent of Taxes has issued notice dated 2nd December, 1969 directing it to submit returns for the period ending 30th September, 1969. The Superintendent also issued notice of demand dated 11th October, 1969 asking the Petitioner to pay a sum of Rs. 15.989 as tax for the period ending 31st March, 1969. The Petitioner avers that ever since the enforcement of the Act and the inclusion of goods specified in items 23, 50 and 56 in the Schedule, there has been no manufacture or production in the State of Assam of any of the goods as described in the said entries, nor Is there any such manufacture or production of such taxable goods at present in the State of Assam. The Petitioner; therefore submits that there is no possibility of levying any sales tax at present or in the near future on the sale of such goods or similar goods manufactured or produced in Assam. The Petitioner submits that the Act as amended providing for imposition of sales tax on goods described under entries 23, 50 and 56 of the schedule to the Act. produced, in other parts of India and brought for sale in the State of Assam, offends the rights guaranteed under Article 301 of the Constitution and as such the Act is ultra vires, unconstitutional and void. The Petitioner further submits that the said Act is not saved under the provisions of Article 304 of the Constitution,
(3.) MR . Lahiri. the learned Counsel for the Petitioner, makes the following submissions: (i) A sales tax, whether discriminatory or non -discriminatory which directly impedes the freedom of trade and commerce, is in contravention of Article 301 and is invalid unless saved by Article 304 (a) and (b) or Article 305. (ii) The levy of tax on a dealer, who imports the commodity and then sells it, directly impedes the freedom of trade and commerce and is not protected by Article 304 (a) and (b). (iii) The impugned tax is not saved by Article 304(a) inasmuch as it provides for imposition of tax on vegetable oils, both edible and non -edible, manufactured outside the State and brought for sale within the State and not on locally produced vegetable oil, being no production and/or manufacture of the said products within the State, or there being no imposition of any tax on mustard oil and rape oil. (iv) The impugned tax is repugnant to Article 14 of the Constitution as, while excluding mustard oil and rape oil, the other vegetable oils both edible and non -edible have been arbitrarily taxed, there being no basis for differentiation. (v) Lastly, it is submitted that the impugned provision is violative of Article 19(1)(g) of the Constitution.;

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