STATE OF KERALA AND ORS. versus M/S. TRANVANCORE CHEMICALS AND MANUFACTURING CO. AND ANR. ETC. ETC .

Citation: [1998] SUPP. 2 S.C.R. 651 · Decided: 11-11-1998 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Dismissed

Judgment (excerpt)

.. 
ST A TE OF KERALA AND ORS. 
v. 
MIS. TRANVANCORE CHEMICALS AND 
MANUFACTURING CO. AND ANR. ETC. ETC . 
NOVEMBER l l, 1998 
[S.P. BHARUCHA, G.T. NANA YA TI AND B.N. KIRPAL, JJ.] 
Sales Tax: 
A 
B 
Kera/a General Sales Tax Act, 1963-Section 59A-Determination of C 
rate of tax-By an amendment Section 59A was inserted-Power to determine 
rate of tax given to State Govt.-Challenged on the ground that it gives 
unguided power to determine rate of tax-No statutory right of appeal-
High Court holding that it is unconstitutional being violative of Article 14-
0n appeal. Held, Section 59A gives absolute and final power to Government D 
to determine rate of tax-No obligation to hear t/1e dealer before imposing 
the tax-No statutory provision of appeal, revision etc.-Violative of Article 
14 of the Constitution-Hence rightly struck down by High Court. 
Constitution of India, 1950-Article 14-Kerala General Sales Tax 
Act, 1963-Section 59A-Held, violative of Article 14 of the Constitution. 
E 
The respondents were manufacturers and sellers of various 
commodities. The assessing authorities as also the appellate authorities 
used to decide the question relating to the rate of tax leviable on the goods 
sold by various dealers or the entry under which a particular item would fall F 
By an amendment Section 59A was inserted in the Kerala General Sales Tax 
Act, 1963 and the powP.r to determine the rate of tax applicable was given 
to the Government. The State Government in exercise of its power under 
Section 59A of the Act issued an order stating that the items of tinned goods 
were covered by Entry 6 of the First Schedule of the Act. One of the 
respondents wrote a letter to the Secretary, Board of Revenue stating that G 
their product Horlicks has been classified in the past by all the successive 
officers as a milk product falling under Entry No. 3 of the First Schedule 
and, therefore, they were liable to pay tax at a lesser rati:.and not at the rate 
payable under Entry No. 6 of the First Schedule. The Secretary, Board of 
Revenue in his reply stated that the case at issue has already been examined H 
651 
652 
SUPREME COURT REPORTS (1998) SUPP. 2 S.C.R. 
A by the Government and have clarified that Horlicks would come under Entry 
6 of the First Schedule to the Act. The respondent dealers filed writ petition 
in the High Court challenging the constitutional validity of Section 59A of 
the Act. The High Court held that Section 59A of the Act had all the features 
of deleterious vagueness and it was unconstitutional being violative of Article 
B 14 of the Constitution. Hence the present appeal. 
The appellant State contended that Section 59A is a piece of delegated 
legislation conferring power on the Government to decide any question 
regarding rate of tax; that the Section provided the limitations subject to 
which the power could be exercised; and that this power was in respect of 
C classification under the Schedule and not for levying a tax. 
D 
The contention of the respondent dealers was that the effect of Section 
59 A is that whenever a direction is issued under the said provision the 
statutory right of appeal etc. is taken away and the section itself contains 
no guidelines and gives unbridled powers to the Government. 
Dismissing the appeals, the Court 
HELD: I.I. Section 59A ofthe Kerala General Sales Tax Act, 1963 
is violative of Article 14 of the Constitution and the High Court was, therefore, 
E right in striking down the said provision. [659-F-G) 
1.2. Section 59 A of the Act gives absolute power to the Government to 
decide any question regarding the rate of tax leviable on the sale or purchase 
of goods in any manner it deems proper and finality is given to such a 
F decision. Plain reading of Section 59A shows that if any question relating 
to the rate of tax leviable under the Act on any goods is referred to the 
Government then its decision thereon, "notwithstanding any other provision 
in this Act is final. " This section does not indicate as to who can make a 
reference to the Government. There is no obligation on the Government to 
hear any dealer before it decides as to the rate of tax leviable on the sales 
G or purchase of any type of goods. In fact, by an omnibus order the Government 
decided rates of tax payable in respect of various items without any opportunity 
of being heard having been granted to any of the dealers. Lastly Section 59A 
clearly states that the decision so given by the Govern

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