LexFIRM A. T. B. MEHTAB MAJID AND CO. versus STATE OF MADRAS AND ANOTHER
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
2 S.C.R.
SUPREME COURT REPORTS
435
to Shri Ramchandra Swamy temple, set aside the
judgment and decree of the High Court and send
the case back to the High Court for disposal of the
appeal, after deciding the other issues in the suit
that require to be decided for its proper disposal.
Costs will abide the result.
Appeal allowed.
FIRM A. T. B. MEHTAB
MAJID AND CO.
"·
STATE OF MADRAS AND ANOTHER
(S. K. DAB, J. L. KAPUR, A. K. SARKAR,
M. HIDAYATULLAH and RAGHUBAB DAYAL, .U,)
8alM Tax-Tannw hidu and ski11 imporld from o!IUitk
and •old in.aide tht State-Hide8 and •l<i,.. la11n"1 and •old
in.aide tht State-Saka Tax higher "" tht WIUr-If diM:rimina-
tory-OIJ. nde Mll>Blituted by new rule-Old nde '°'8 not ,..,; ..
when new ruks declar"1 invalid-0""8titvtiol& of India, Arta.391,
304-Madras Genenil Salt.a Tax Aol (IX of 193"), ••· 3,5, 19-
Jladraa General Salu Tax Rulu, r. 16.
This is a petition under Art. 32 of the Constitution, the
petitioners are dealers in hides and skins in the State of
Madras. The impugned sales tax assessment relates to turn-
over of sales of tanned hides and skins which had been obtained
from outside the Su.te of Madra•. The main contention of
the petitioners is that the tanned hides and skins imported
from outside and sold inside the State arc, under r. 16 of the
Madras General Sales Tax Rules, subject to a higher rates of
tax than the tax imposed on hides and skins tanned and sold
within the State and this discriminatory taxation offended
Art. 304 (a) of the Constitution.
The respondents contentions were (a) sales tax doc. not
come within the purview of Art. 304 (a) as it is not a tax on
the import of gogd.1 at the point of entry, (b) the impugned
1961
Ro.Uishor1 lAl
v.
KonNl Jl•Niti
IJu C.,to, J.
1962
N.-.61r 21,
1962
Fi"" A.T.B. M<k·
tab Mo}id a.,,d Co.
v.
Stall of Madras
436 SUPREME COURT REPORTS [1963] SUPP.
rule is n<.t a law made by the State legislature,
(c) the
impugned mle by itself does not impose the tax but fixes the
single point at which the tax is imposed by ss. 3 and 5 of the
Act is to be levied. (d) The impugned rule was not made
with an eye on the place of origins of the goods.
Held, that it is now well settled that taxing laws can he
restrictions on trade, commerce and intercourse, if thev hamper
the flow of trade and if they are not what can be termed to be
compensatory taxes or regulating measures. Sales Tax, of the
kind under consideration, cannot be said to he a measure,
regulating any trade, or a compensatory tax levied for the
use of trading facilities, Sales Tax which has the effect of
discriminating between goods of one State and goods of
another, may affect the free flow of trade and it will then
offend against Art. 301 and will be valid only if it comes
within the terms of Art. 304 (a).
Atiabari Tea Co. Lf.d. v. State of Assam, [1961] I S. C. R.
809, A'lllomobile Tramport,Rajasthan Lul. v. S1<1te of Rajastlian,
[1963] IS. C.R. 491, followed.
Article 304 (a) allows the legislature of a State to impose
taxes on goods imported from other States and does not
support the contentions that the imposition must be at the
point of entry.
Stction 19 (5) of the Madras General Sales Tax Act
provides that the rules made thereunder shall have effect as
if enacted in the Act and r. 16 of the Madras General Sales
Tax Rules would fall within a law
made by the State
Legislature. What that rule provides is a step necessary for
the imposition of tax in view of ss. 3 and 5 and therefore the
impugned rule is a part of the enactment which imposes the
tax. The fact that the impugned rule was made in view of
ss. 385, in order to prescribe the single point in seri~.s of sales
does not justify its discriminatory character, Rule 16 (2) dis-
i:riminates •!("inst the imported hides or skins which had been
purchased or tanned ontside
and therefore it contravenes
Art. 304 (a) of the Constitution.
Once an old rule has heen substituted by a new rule, it
ceases to exist and it does not get revived when the ne\v rule is
held invalid.
The tax imposed in the present ca'° has not been im-
posed by misconstruing the provisions of a valid Act but it
has been imposed without jurisdiction by reason of the in-
validity of r. 16.
2 S.C.R.
SUPREME COURT REPORTS
437
Ujjam Bai v. SfJlte of U. P., [1963] I S. C.R. 778,
distinguished.
ORIGINAL JURISDICTION: Petition No. 147 of
1959.
(Under Article 32 of the Constitution of IndiaExcerpt shown. Read the full judgment & AI analysis in Lexace.