LexA. B. ABDUL KADIR & ORS. ETC. versus STATE OF KERALA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
690
A
A. B. ABDUL KADIR & ORS. ETC.
·v.
STATE OF KERALA
November 12, 1975 ·
B
(H. R. KHANNA, P. N. BHAGWATI AND S. MURTAZA FAZAL ALI, JJ.]
c
D
iF
G
II
Keralc• Luxury Tax on Tobacco (Validation) Act, 1964 (9 of 1964) Stare
Legisla/llre-if competent to enact-if could enact a taxation law relrospectirel)'.
Co11stitution of India-Art. 304(b )-reasonable restricti01z-puhlic interest-
coloural>le legislation-tests to decide. E1lt!y 84 of List l and Entry 62 of List
lI Luxury-meaning of-
The Finance Act 1950 extended the Central Excise and Salt Act, 1944 lo the
Part B State of Travancore Cochin and repealed the Cochin Tobacco Act, 1909
and the Tobacco Act (Travancore Act I of 1087). Thereafter a system of
licensing wa~ introduced by which the licensees were required to pay a specified
fee in respect of tobacco imported into the State. The appellants challenged
unsuccessfully in the High Court the collection of the licence fee for the period
between August 1950 a!ld December 1957. The Act and rules having been
declared by this Court.as invalid ab initio, the State refunded a portion of the
licence fee collected; but the appellants• filed writ petitions claiming refund ol'
the remainder of the licence fee paid by them. During the pendency of the
writ petitions the Kerala Luxury Tax on Tobacco (Vartdation) Act of 1964
(Act 9 of 1964) was passed by the State legislature to provide for the levy of
a luxury tax on tobacco and validate the levy and collection of fees for licences
for
the
vend
and
stocking
of
tobacco
for
the
period
between
August 17, 1950 and December 31, 1957 and it received the assent of the Presi-
dent. The appellants then challenged the validity of the 1964 Act, but the
State on the other hand demanded payment of the pait of the fee earlier refund.
ed to the parties. The validity of the demand notice was questioned by the
appellants. On the question of validity of the 1964 Act, the High Court held
that ( 1) the levy being in respect of goods produced outside the State, was not
an excise duty falling within Entry 84 of the Union List; (2) the tax clearly
answers the description of luxury tax falling within entry 62 of State List; (3)
however, the payment of the tax being a condition precedent to the bringing
of the goods into the taxing terri'tory, it was a direct impediment on the free
flow of goods, and (4) even so, it is saved by Article 304(b). being a reason-
able ta.ii: levied in. public interest.
Dismissing the appeals,
HELD: (1) The;_ judgment of this Court in A. B. Abdulkadir & Ors. v.
The State of Kerala & Anr. (1962] Supp. 2 S.C.R. 741 docs not operate as
res. judicata regarding the points in controversy in these appeals. What was
held in that case was that the Cochin Tobacco Act and the similar Tranvancore
Act taken along with the rules framed under those Acts were in substance law
corresponding to the Central Excise and Salt Act. The Cochin Tobacco Act
and the similar Travancore Act stood repealed· on April 1, 1950 and there
would be no power in the State Government thereafter to frame new rules in
August 1950 and January 1951 for there would be no law to support the new
rules. In the instant case what is questioned is the constitutional validity of
Act 9 of 1964 which was enacted subsequent lo the above decision of this
Court. [698 C-G]
(2){a) The argument that the provisions of the Act fell 1mder Entry 84
of List I of the Seventh Schedule is bereft of force.
The liability to pay the
tax is on stocking and vending of tobacco. There is no provision in the Act
which is concerned with production or manufacture ot tobacco or which Jinks
the tax under its provisions with the manufacture or production of tobacco.
[699-D-E]
. J.
..
A. l!. ABDUL KADIR v. KEllALA
691
(b) Excise duty is a tax on articles produced or manufactured in the taxing·
country. Generally speaking, . the tax is on the manufacturer or producer, yet
laws are to be found which impose a duty of excise at stages subsequent to the
manufacture or production. [69.SH, 699A]
A. B. Abdu/kadir & Ors. v. The Stare of Kera/a & Anr. [1962] Supp. 2 S.C.R.
7 41 refened to .
(c) Where, however, the levy imposed or tax has no nexus with the manu-
fature or production of an article, the impo·st or tax cannot be regarded to ·be
one in the nature of excise duty.
[699-B·C]
(3) The word •J.uxurv' has not been used in the sense of something pertain-
inir to the exclusive preserExcerpt shown. Read the full judgment & AI analysis in Lexace.