S. KODAR versus STATE OF KERALA

Citation: [1975] 1 S.C.R. 121 · Decided: 17-04-1974 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 3 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

• 
A 
B 
S. KODAR 
v . 
STATE OF KERALA 
April 17, 1974 
121 
[A. N. RAY, C. J., K. K. MATHEW, A. ALAGIRISWAMi, P. K. GOSWAMI 
AND R. S. SARKARIA, JJ.] 
Tamil Nadu Additional 
Sales Tax Act. 1970-Constitutional 
validity-
Wh-!ther outside the ·.:.:op~ of entry 54, List II-Whether viol&tes fundamental 
right under Art. J9(1)(f) and (g). 
Constitution of India, 1950-Art. 19(1)(f) and (g) Entry 54. 
List Il, 
Schedule Vil. 
C 
The Tamil Nadu Additional Sales-tax Act 1970 imposed additional sales-tax 
ot 5% on a dealer whose annual total turnover exceeded Rs. 
ten lacs. Writ 
petitions questioning the constitutional validity _of the Act were dismissed by the 
High Court. 
In appeal it was contended that (i) the State legislature had no 
power to enact the Act as the tax was outside the scope of entry 54 of List II; (ii) 
that the provisions of the Act violated the fundamental rights of the appellant 
under 1\rl. 19(1)(f) anct (g) of the Constitution and (iii) that the provisions of 
the Act imnosed different rates of tax upon different dealers depending on their 
0 
turnover and were. therefore! violative of Art. 14 of the Constitution. 
E 
F 
G 
H 
Disini.;;sing the appeal. 
HELD: (1) The contention of the appellants that the additional sales-tax is 
not a tax on sales but on the income of the dealers is without any basis. 
The 
additional tax is really a tax on the sale of goods. 
The object of the Act is to 
increase the tax on the sale or purchase of goods imposed by the Tamil Nadu 
General Sales-tax Act. 1959 and the fact that quantum of the additional tax is 
determined with reference to the sales-tax imposed would not alter its character. 
Th¢ additional sales-tax is to be imposed only if the turnover of a dealer exceeds 
&. 10 lacs. It is in reality a tax un the aggregate of sales effected by a dealer 
during a year. 
[1230-E) 
Kil1kar v. Sales Tax Officer, 21 S.T.C. 253, and A. S. Ra111achandra Rao v. 
State of Andhra Pradesh, 25 S.T.C. 133, approved. 
(2) (a) It cannot be said that the provisions ot the Act imposed any unrea· 
son.able restrictions upon the appellants' right to carry on trade. It is no doubt 
true that every tax imposes some restrictions upon the right to Carry on business 
but it would not follow that the imposition of ta·x in question was an unreasonable 
restric:-tion upon the appellants' fundamental right to carry on trade. · GeneraUy 
speaking, the amount or rate of a tax is a matter exclusively within legislative 
judgment and as long as a tax retains its avowed character and does not confiscate. 
the property to the State under the guise of a tax, its reasonableness is outside the 
judicial ken. 
[123F-124A] 
. . (b) It is not necessary that the dealer should be enabled to pass on the 
incidence of the tax on sale to the purchaser in order that it might be a tax 
on the sale of goods. 
Although the legal incidence of a tax on sale of goods 
under the. Act falls squarely on the dealer, it may be that he can add the tax 
to the Pnce .of the goods sold and thus pass it on to the purchaser. It is not 
Possible to say tha.t_ because a dealer is disabled from passing on the incidence 
of tax to the purchaser to provisions of the Act imnose unreasonable restriction 
upon the fundamental rights of the appellants under Art. 19 (I) (f) or 19(1) (g). 
[124B-C, C-] 
!. K. lute Mills Co. v. State of U.P., [1962] 2 S.C.R. 1 at 13, and Konduri 
Buchiraialigam v. State of Hyderabad, [1958] 9 S.T.C. 397, referred to. 
(3) It can be said that a legislative classification making the burden of the 
tax heavier in proportion to the increase in turnover would be reasonable. 
A 
122 
SUPREME COURT REPORTS 
(1975] 1 s.c.R. 
flat. rat_e i~ thought to be less efficient than the graded one as an instrument of 
A 
social Justice.. The economic wisdom of a tax is within the exclusive province 
~f Ie~1slat_ure: 
The only question for the Court to consider it whether there 
is rattonahty 1n the bdief of the legislature that capacity to pay the tax increases, 
by and large with an incr~ase of receipts. 
An attempt to proportion the paYment 
to capacity to pay and thus bring about a real and factual equality cannot be 
rul.ed out as irrelevant in levy of tax on the sale of purchase of goods. 
The 
obJect of a tax is not only to raise revenue bot also to regulate the economic 
life of the 'ociety. 
rI24H-!25D; 126A-B] 
B 
ORIGINAL JURISDICTION : Writ Petition No. 363 of 1969. 
Petition Under Article 32 of the Constitutio

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