MILAP CHANDRA JAIN, J. - (1.) THESE writ petitions have been filed for declaring the Notification No. F. 4 (3) FD/gr. IV/89-12 dated March 23, 1989 issued under section 5, Rajasthan Sales Tax Act (hereinafter to be called "the RST Act") and Notification No. F. 4 (3)FD/gr. IV/79-2 dated March 5, 1979, as amended by Notification No. F. 4 (3)FD/gr. IV/79-34 dated February 26, 1980, issued under section 4 (2) of the RST Act as ultra vires of the Constitution, for quashing notices dated January 7, 1993 (annexure 3) issued under section 12 of the RST Act and for restraining the assessing authority (respondent No. 2) from reassessing the petitioners in pursuance of the notices, annexure 3. As the facts involved in these three writ petitions are similar and law involved is same, they are being disposed of by this common order.
(2.) THE case of the petitioners is that they carry on business of manufacture and sale of steel and wooden furniture, trunks and agricultural implements at Sri Ganganagar. THEy are registered dealers under the Central Sales Tax Act (in short, "the CST Act" and "the RST Act" ). THEy supply furniture and boxes to various departments of the Central Government located at Sri Ganganagar. Assessment orders were passed under section 10 of the RST Act in respect of the assessment year 1989-90. THEy have how received notices under section 12 of the RST Act for showing cause as to why reassessment be not made as in the earlier assessments sales tax had been calculated at lesser rate of 4 per cent than the prescribed rates of 10 per cent or 12 per cent. In the Writ Petitions Nos. 2334 of 1988 and 5591 of 1991, the respondents have filed replies to show cause notices stating that the said notices are valid, they do not offend articles 14, 301, 302, 303 or 304a of the Constitution and the notices under section 12 of the RST Act have rightly been issued as furniture was sold and tax at the rate of 4 per cent had been paid instead of 10 per cent or 12 per cent. It has been contended by the learned counsel for the petitioners that a dealer outside Rajasthan selling goods to Central Government departments situated in Rajasthan is required to pay sales tax at 4 per cent and, on the contrary, a dealer in Rajasthan selling similar goods to the same departments is required to pay tax at the higher rate of 10 per cent or 12 per cent and it is a hostile discrimination. He further contended that different tax structure impedes free trade, offending article 300. He also contended that notices under section 12 of the RST Act could not be issued as all necessary materials were placed before the assessing authority at the time of regular assessments under section 10 of the RST Act and exemption notification issued under section 4 of the RST Act included wooden boxes on which tax had rightly been paid at the rate of 4 per cent. In reply, the Standing Counsel for the department contended that a dealer residing outside Rajasthan supplying goods to any purchaser in Rajasthan is required to pay sales tax under the Central Sales Tax Act; he is not required to pay any sales tax under the RST Act as no sale takes place in such a case within the territory of Rajasthan; they are two different kinds of dealers and such a classification is not hit by article 14 of the Constitution. He also contended that exemption under section 4 (2) of the RST Act was not allowed to furniture and wooden boxes supplied by the petitioners to the Government departments and such as the petitioners were liable to pay tax at 10 per cent and 12 per cent and not at the concessional rate of 4 per cent. He lastly contended that the notices have rightly been issued under section 12 of the RST Act as tax on the sale of furniture and wooden boxes had wrongly been paid at the lesser rate of 4 per cent instead of 10 per cent and 12 per cent. The Rajasthan Sales Tax Act has been enacted by the Rajasthan Legislature under entry No. 54 of List II (State List) of the Seventh Schedule to the Constitution of India. The Central Sales Tax Act has been enacted by the Parliament under entry No. 92a of List I (Union List) of the Seventh Schedule to the Constitution. The Rajasthan Sales Tax Act imposes tax on sales which take place in Rajasthan. On the contrary, the CST Act deals with cases where sales take place in another State and goods are received in Rajasthan. Section 8 (1) (a) of the CST Act provides for levy of Central sales tax at the maximum rate of 4 per cent when the goods are sold to Government departments situated in other States. The same commodities supplied by a trader of Rajasthan to the same Government departments attract sales tax under the RST Act at the rate specified in the notification issued under section 5 of the RST Act. The traders of other States selling goods in Rajasthan from a different class of persons from the traders of Rajasthan selling goods in Rajasthan. This is a reasonable classification and is permissible under article 14 of the Constitution of India.
(3.) STATE has discretion to prescribe different rates of tax for different goods and may also exempt any commodity. Article 14 of the Constitution is not attracted. It has been observed in Sita Ram Bishambhar Dayal v. STATE of U. P. [1972] 29 STC 206 (SC) at pages 207-208; AIR 1972 SC 1168, para 5, as follows : " It is true that the power to fix a rate of tax is a legislative power but if the Legislature lays down the legislative policy and provides the necessary guidelines, that power can be delegated to the executive. Though a tax is levied primarily for the purpose of gathering revenue, in selecting the objects to be taxed and in determining the rate of tax, various economic and social aspects such as the availability of the goods, administrative convenience, the extent of evasion, the impact of tax levied on the various sections of the society, etc. , have to be considered. In a modern society taxation is an instrument of planning. It can be used to achieve the economic and social goals of the STATE. For the reason the power to tax must be a flexible power. " It has been observed in East India Tobacco Company v. State of Andhra Pradesh [1962] 13 STC 529 (SC) at page 533; AIR 1962 SC 1733 at page 1734, para 4, as follows : " It is not in dispute that taxation laws must also pass the test of article 14. That has been laid down recently by this Court in Kunnathat Thathunni Moopil Nair v. State of Kerala AIR 1961 SC 552. But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of article 14. The following statement of the law in Wills on 'constitutional Law', page 587, would correctly represent the position with reference to taxing statutes under our Constitution : 'a State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably. . . . . . . The Supreme Court has been practical and has permitted a very wide latitude in classification for. In the light of these principles, we may now proceed to discuss whether the impugned Act is repugnant to article 14 of the Constitution. The point for consideration is whether there is in fact a real distinction between Virginia tobacco and other tobacco called country tobacco (Nattu tobacco ). If there is, then the Act is valid, if not it must be held to unconstitutional. The finding of the learned Judges on this point is as follows : 'broadly, there are two types, Virginia and Nattu, differing in taste, light colour and texture. . . . . . . There are obvious differences between the two categories of tobacco, in the nomenclature used, in the process of growing, curing and grading, in the market facilities foreign and inland, in the price and in the variety of uses to which they are put and also the class of customers that take to them. ' Thus, it will be seen that Virginia tobacco has features which distinguish it from country tobacco, and can be treated as a class in itself. It will therefore be within the power of the State to impose a tax on the sales of Virginia tobacco while exempting the country tobacco. " It has been held in Pandit Banarsi Das Bhanot v. State of Madhya Pradesh [1958] 9 STC 388 (SC); [1959] SCR 427, as under : ". . . . . . . . . . . Now, the authorities are clear that it is not unconstitutional for the Legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like. " ;