SEN - (1.) THESE are appeals by special leave from a judgment and order of the High Court of Patna dated 30/04/1982 by which the High Court upheld the constitutional validity of sub-section (1) of S. 5 of the Bihar Finance Act, 1981 ("Act" short) which provides for the levy of a surcharge on every dealer whose gross turnover during a year exceeds Rs. 5 lakhs, in addition to the-tax payable by him, at such rate not exceeding 10 per centum of the total amount of the tax, and of sub-section (3) of S. 5 of the Act which prohibits such dealer from collecting the amount of surcharge payable by him from the purchasers.
(2.) THE Bihar Finance Act, 1981, is not only an Act for the levy of a tax on the sale or purchase of goods but also is an Act to consolidate and amend various other laws. We are here concerned with Section 5 of the Act which finds place in Part I of the Act which bears the heading "Levy" of tax on the sale and, purchase of goods in Bihar" and is relatable to Entry 54 of List II of the Seventh Schedule. By two separate notification Saw dated 15/01/1981 the State Government of Bihar in exercise of the Powers conferred by sub-section (1) of S. 5 Of the Act appointed Jam 15, 1981 to be the date from which surcharge under Sec. 5 shall be leviable and fixed the rate of surcharge at 10 per centum of the total amount of the tax payable by a dealer whose gross turnover during a year exceeds Rs. 5 lakhs, in addition to the tax payable by him. THE Act was reserved for the previous assent of the President and received his assent on 20/04/1981. THEre is no point raised as regards the validity of the notifications in question and therefore there is no need for us to deal with it. The principal contention advanced by he appellants in these appeals is that the field of price fixation of essential commodities in general, and drugs and formulations in particular is an occupied field by virtue of various control orders issued by the Central Government from time to time under sub-section (1) of Section 3 of the Essential Commodities Act, 1955 which allows the manufacture or producer of goods to pass on the tax liability to the consumer and therefore the State Legislature of Bihar had no legislative competence to enact sub-section. (3) of Section 5 of the Act which interdicts that no dealer liable to pay a surcharge, in addition to the tax payable by him, shall be entitled to collect the amount of surcharge, and thereby trenches upon a field occupied by a law made by Parliament. Alternatively, the submission is that it sub-section (3) of S. 5 of the Act were to cover all sales including sales of essential commodities whose prices are fixed by the Central Government by various control orders issued under the Essential Commodities Act, then there will be repugnancy between the State law and the various control orders which according to Section 6 of the Essential Commodities Act must prevail. There is also a subsidiary contention put forward on behalf of the appellants that sub-section (1) of Section 5 of the Act is ultra vires the State Legislature inasmuch as the liability to pay surcharge is on a dealer whose gross turnover during a year exceeds Rs. 5 lakhs or more i.e. inclusive of transactions relating to sale or purchase of goods which have taken place in the course of inter-State trade or commerce or outside the State or in the course of import into, or export of goods outside the territory of India. The submission is that such transactions are covered by Article 286 of the Constitution and therefore are outside the purview of the Act and thus they can not be taken into consideration for computation. of the gross turnover as defined in Section 2 (j) of the Act for the purpose of bearing the incidence of surcharge under sub-section (1) of Section 5 of the Act. It will be convenient, having regard to the course taken in the arguments, to briefly refer to the facts as are discernible from the records in Civil Appeal No. 2567 of 1982-Messrs Hoechst. Pharmaceuticals Limited v. The State of Bihar and Civil Appeal No. 3277 of 1982 - Messrs Glaxo Laboratories (India) Limited v. The State of Bihar. Messrs Hoechst Pharmaceuticals Limited and Messrs Glaxo Laboratories (India) Limited are companies incorporated under the Companies Act, 1956 engaged in the manufacture and sale of various medicines and life saving drugs throughout India including the State of Bihar. They have their branch or sales depot at Patna registered as a dealer under Section 14 of the Act and effect sales of their manufactured products through wholesale distributors or stockists appointed in almost all the districts of Bihar who, in their turn, sell them to retailers through whom the medicines and drugs reach the consumers. Almost 94% of the medicines and drugs sold by them are at the controlled price exclusive of local taxes under the Drugs (Price Control) Order, 1979 issued by the Central Government under Sub-section (1) of Section 3 of the Essential Commodities Act and they are expressly prohibited from selling these medicines and drugs in excess of the controlled price so fixed by the Central Government from time to time which allows the manufacturer or producer to pass on the tax liability to the consumer. The appellants have placed on record their printed price. lists of their well-known medicines and drugs manufactured by them showing the price at which they sell to the retailers as also the retail price, both inclusive of excise duty It appears therefrom that one of the terms of their contract is that sales tax and local taxes will be charged wherever applicable.
(3.) THESE appellants have also placed on record their orders of assessment together with notices of demand, for the assessment years 1980-81 and 1981-82. For the assessment year 1980-81, the Commercial Taxes Officer, Patna Circle, Patna determined the gross turnover of sales in the State of Bihar through their branch office at Patna of Messrs Hoechst Pharmaceuticals Limited on the basis of the return filed by them at Rs. 3,13,69,598.12 p. and the tax payable thereon at Rs. 19,65,137.52 p. The tax liability for the period from 15/01/199 1/03/1981 comes to Rs. 3,85,023.33 p. and the surcharge thereon at 10% amounts to Rs. 38,503.33 p. Thus the total tax assessed of Messrs Hoechst Pharmaceuticals Limited including surcharge for the assessment year 1980-81 amounts to Rupees 20,03,640.85 p. The figures for the assessment year 1981-82 are not available. For the assessment years 1980-81 and 1981-82 the annual returns filed by Messrs Glaxo Laboratories (India) Limited show the gross turnover of their sales in the State of Bihar through their branch at Patna at Rupees 5,17,83,985.76 p. and Rs. 5,89,22,346-64 p. respectively. They have paid tax along with the return amounting to Rs. 34,06,809.80 p. and Rs. 40,13,057.28. p. inclusive of surcharge at 10% of the tax for the period from 15/01/198 1/03/1981 and April 198 1/01/1982 amounting to Rs. 34,877.62 p. and Rs. 3,09,955.86 p. respectively. There is excess payment of Rs. 55,383.98 P. in the assessment year 1980-81 and Rs. 13,112.35 p. in the year 1981-92. THESE figures show the magnitude of the business carried on by theft appellants in the State of Bihar alone and their capacity to bear the additional burden of levied under sub-section (1) of Section 5 of the Act. The High Court referred to the decision in S. Kodar v. State of Kerala, (1973) 1 SCR 121 where this Court upheld the constitutional validity of sub-section (2) of Section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 which is in pari materia with sub-section (3) of Section 5 of the Act and which interdicts that no dealer referred to in sub-sec. (1) shall be entitled to collect the additional tax payable by him. It held that the surcharge levied under sub-section (1) of Section 5 is in reality an additional tax on the aggregate of sales effected by a dealer during a year and that it was not necessary that the dealer should be enabled to pass on the incidence of tax on sale to the purchaser in order that it might be a tax on the sale of goods. Merely because the dealer is prevented by sub-sec. (3) of Section 5 of the Act from collecting the surcharge, it does not cease to be a surcharge on sales tax. It held relying on Kodar's case, supra, that the charge under sub-section (1) of Section 5 of the Act falls at a uniform rate of 10 per centum of the tax on all dealers falling within the class specified therein i.e. whose gross turnover during a year exceeds Rs. 5 lakhs, and is therefore not discriminatory and violative of Art. 14 of the Constitution, nor is it possible to say that because a dealer is disabled from passing on the incidence of surcharge to the purchaser, sub-section (3) of Section 5 imposes an unreasonable restriction on the fundamental right guaranteed under Article 19 (1) (g). As regards the manufacturers and producers of medicines and drugs, the High Court held that there was no irreconcilable conflict between sub-section (3) of Section 5 of the Act and paragraph 21 of the Drugs (Price Control) Order, 1979 and both the laws are capable of being obeyed. Undeterred by the decision of this Court in Kodar's case the appellants have challenged the constitutional validity of sub-section (3) of Section 5 of the Act in these appeals on the ground that the Court in that case did not consider the effect of price fixation of essential commodities by the Central Government under sub-section (1) of Section 3 of the Essential Commodities Act which, by reason of Section 6 of that Act, has an overriding effect notwithstanding any other taw inconsistent therewith.;