EAST INDIA TOBACCO CO versus STATE OF ANDHRA PRADESH

Citation: [1963] 1 S.C.R. 404 · Decided: 06-04-1962 · Supreme Court of India · Bench: T.L. VENKATARAMA AIYYAR · Disposal: Appeal(s) allowed

Cited by 13 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

1962 
R. K. Dalmia 
•• 
Delhi Administration 
Ra:liubar Dayal J. 
J96B 
A;ril 6. 
404 
SUPREME COURT REPORTS (1963) 
he ·was the chief person to oa.rry out the ma.in work 
of the conspiracy. 
We also do not consider Dalmia.'s sentence, in 
the circumstances of the case, to be severe. 
We therefore dismiss these appeals. 
Appeals Dismissed. 
EAST INDIA TOBACCO CO. 
v. 
STATE OF ANDHRA PRADESH 
(B. P. SINHA, c. J., P. B. 
GAJENDRAGADKAR, 
K. N. WANCHOO, N. RAJAGOPALA AYYANGAR 
and T. L. VENKATARAVA ArYAR, JJ.) 
Sales 'I'ax-Tobacca-Imposition of Tax on sale of Virginia 
Tobacco and exemption of country tobacco-Provision if discrimi· 
natory-Purchase which procedes sale for export if could be oxem• 
pted from tax-Madras General Salts Tax Act. 1939 (Mad. 9 of 
J939), as amended by the Madras General Sales Tax and the 
Madras Tobacco (Taxation of Sales and Registration) (Andhra 
Amendment) Act(Andhra XIV of 1956), ss. 5, 6-0onstitution of 
India, Arl.9. 14, 286 (I) (b). 
The appellants firms were doing business in the export of 
Virginia tobacco. The usual course of that business was 
stated to be that appellants first entered into contracts with 
their customers abroad for the sale of tobacco and there· 
after they purchased the requisite quantities of goods locally 
and then exported them to foreign purchasers in performance 
of their contracts. Section 5 of the Madras General Sales Tax 
Act 1939, was amended by the Andhra State Legislature 
wh:n the Andhra State came into existence by the Amending 
Act XIV of 1955. As a result of this enactment to sales of 
countr)' tobacco were exempted ; while sale of Virginia tobacco 
were liable to be taxed. The appellants were called upon to 
produce their account books relating to their business in 
tobacco for the purpose of assessing salos tax. The appellants 
ftled petitions undrr Art. 226 of the Constitution challenging 
the constitutionality of the Amending- Act. XIV of 1955, on 
• 
I S.C.R. 
SUPREME COURT REPORTS 405" 
the grounds inter alia that in taxing sales of Virginia tobacco 
and exempting from tax sales of other: tobacco, the Act was 
discriminatory, as obnoxious to Art. 14, and besides that 
having regaid to their course of busine~s, any tax levied on 
their sales was in contravention of Art. 286 (l) (b) as amount· 
ing to a tax on sales 
'~in the course of export" of tobacco. 
'the High Court dismissed the petition holding that the 
impugned Act did not infringe any constitutional provision, 
but granted certificate under Art. 133 of the Constitution to 
appeal to the Supreme Court. 
Held, that it is for the person who assails a legislation 
as discriminatory to establish that it is not based on a valid 
classification and this burden is all the heavier when the 
legislation under attack is a taxing statute. 
Though taxation laws must pas~ the test of Art. 14 of 
the Constitution, in deciding whether such a law is discrimi-
natory 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 the statute is not open to attack on the mere· 
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 this catinot be justifieJ on the basis 
of a valid classification, that there would be a violation of 
Arts. 14. 
The Madras General Sales Tax '(Andhra Amendment) 
Act, 1955, which taxed sales of Virginia Tobacco but exempted 
sales of 'Nattu' or country tobacco could not be said to be 
discriminatory and was not obnoxious to Art 14. 
Virginia tobacco has features which distinguishes it from 
country tobacco and can be treated as a class in itself. It was 
therefore ~it~ii:1 the power of ~he State to impose tax on the 
sales of Vug101a tobacco while exempting sales of country 
tobacco. 
. . 
It is only the sale undl r which the export is made that 
is protected by Art. 286 (I) (b) ; a purchase which prcedes 
such a sale doe~ not faU within its purview though made for 
the purpose of or with a view to effect an export. 
K. T. Moopil Nair v. State of K erala, [1961J 2 S.C.R. 77, 
Budhan Ohoudhry v. State of Bihar. [1955J I S. C. R. 1045 
Sri Ram Krishna Dalmia v. Shri Justice SR. Tendolkar [1959j 
S. C.R. 270, Mad_dan v. Kantucky, [1940J 309 U. s.'83: 34 
L. Ed. 590, 0. lleisfer v. Thomas Oolliary Oo. 250 U. S. 345 : 
67 L. Ed. 237, State of Travancore Cochin v. Bomba11 Oo. Ltd.· 
1962 
East India Tobacco 
Co. 
v. 

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