B.C.CHAKRABARTI - (1.) RN -261 (T) of 1989 and RN-204 (T) of 1989 arise out of the same writ application - one in regard to the main petition and the other relating to a prayer for extension of the interim order originally granted by the High Court. This case and RN-260 (T) of 1989 are both at the instance of the same party, namely, Milk Food Limited. RN-246 of 1990 is an application by Himachal Milk Products Private Limited. All these cases relate to a point of law common to all of them. These have been heard together and this judgment shall govern all of them.
(2.) THE case of the applicants in RN-260 (T) of 1989 and RN-261 (T) of 1989 may be briefly put as follows : The applicant carries on dairy business having its dairy firm at Bhadurgarh, Patiala, in the State of Punjab with branches in different parts of India. The Calcutta branch was opened in April, 1975. The applicant No. 2 is a shareholder of the applicant No. 1. The applicants procured cow and buffalo milk for its said dairy at Bhadurgarh from in and around Bhadurgarh. The milk so produced is thereafter converted into skimmed milk powder (hereinafter referred to as "milk powder" ). The milk powder is prepared by removing its fat contents and evaporating water contents of the milk. This milk powder serves every purpose for which liquid milk is used and dehydration is made only for the purpose of preservation and convenience of transportation and storage without damaging or depreciating the food value. The applicants import milk powder from its dairy at Bhadurgarh into West Bengal for the purpose of sale in West Bengal. The applicant No. 1 is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941 and also under the Central Sates Tax Act, 1956. Under an erroneous impression and a mistake of law the applicant No. 1 also got itself registered as a dealer under the West Bengal Sales Tax Act, 1954, in respect of the sale of milk powder. No tax is leviable under the 1941 Act or the 1954 Act on the sale of milk powder. The applicant No. 1 under a mistake of law paid taxes in respect of sales of milk powder within the State of West Bengal. Milk is an item which is exempt from tax under section 6 of the Bengal Finance (Sales Tax) Act, 1941. It is entered in item No. 11 of Schedule I of the Act. By a notification bearing No. 886-F. T. dated May 1, 1955, in purported exercise of the powers conferred by section 25 of the 1954 Act, it was specified that powdered or condensed milk whether skimmed or not, or whether mixed with any substance or not, should be taxed under the Act of 1954. Section 25 of the 1954 Act empowers the State Government, if it is of opinion that it would be in the public interest that a commodity which is liable to taxation under the Bengal Finance (Sales Tax) Act, 1941, should be taxed under the Act of 1954 to specifiy such commodity by notification and direct that with effect from such date as may be fixed in the notification, the Act of 1941 shall cease of apply to such commodity and the Act of 1954 shall apply to it. The Notification dated May 1, 1955, is without jurisdiction and/or in excess of jurisdiction, illegal, void and of no effect. None of the conditions precedent for exercise of power under section 25 of the 1954 Act, existed when the notification was made. Under the Act of 1954 commodities liable to tax cannot be imported into the State of West Bengal without obtaining necessary permits from the sales tax authorities. Under an erroneous impression and mistake of law the applicant No. 1 applied for and obtained such permits for importing milk powder into the State. The applicant filed monthly returns up to the end of August, 1979 and paid tax in respect of sale of milk powder. By an order dated July 26, 1977, the respondent No. 1, illegally assessed the sales of the said milk powder for the period from April 2, 1975 to March 31, 1976. The respondent No. 1 also made assessments for the period from April 1, 1976 to March 31, 1977, in respect of the sale of milk powder within the State. No order of assessment has been made or passed in respect of any period subsequent to March 31, 1977. The applicant was not aware that no tax was payable on the sale of milk powder within the State of West Bengal until August, 1979, when in course of consultation with the applicant's Advocates the applicant came to know that they were not liable to pay any tax in respect of the said commodity. The payments made earlier were on an erroneous impression that tax was payable. Item No. 11 of Schedule I of the Bengal Finance (Sales Tax) Act, 1941, was amended with retrospective effect by the West Bengal Taxation Laws (Amendment) and Repealing Act (8 of 1983) whereby after the word "milk" the following words were added, namely, "other than powdered or condensed milk". By the said amendment the exemption from payment of sales tax in respect of powdered or condensed milk was withdrawn retrospectively. The amendment is arbitrary and discriminatory and is also unreasonable. The sale of milk of all types were exempt from payment of tax under the 1941 Act. The effect of the amendment is that powdered or condensed milk would no longer be treated as tax-free goods. There is practically no qualitative difference between milk in liquid form or powdered form. The purported classification sought to be made between milk powder and milk by the said amendment is without jurisdiction and is violative of article 14 of the Constitution of India. Commercially, milk powder and liquid milk are treated in all essential respects as one and the same commodity. The Legislative is not competent to tax a part of the same or similar goods and exempt the other part. Principally, on these allegations the applicants have prayed for a declaration that no tax is payable in respect of the sale of milk powder under the 1954 Act and the Amendment Act in so far as it excludes powdered or condensed milk from item No. 11 is ultra vires and unconstitutional. They have prayed for a writ in the nature of mandamus commanding the respondents not to levy any tax under the 1954 Act in respect of sales of powdered milk and not to take any steps or give any effect to the Amendment Act in so far as the same relates to exclusion of powdered or condensed milk retrospectively from item No. 11 of Schedule I of the Act of 1941. They have also prayed for refund of the amounts paid by the applicants in respect of sale of milk powder under a mistaken impression of law. The case of the applicants in RN-260 (T) of 1989 is exactly the same as stated above. The prayers are also identical.
(3.) IN RN-246 of 1990, the same points have been agitated and similar prayers have been made. It is not, however, the case of the applicants in this case that they had paid any tax on the sale of powdered milk or condensed milk. They have merely challenged the vires of the notification dated May 1, 1955 and subsequent notifications relating thereto.;