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Judgment
V. Kanagaraj, J.—Petitioner praying to issue a writ of declaration that the words ''who does not have any branch transfer or consignment
transfuser during a year'' in part 2 of notification G.O.Ms.No.273, dated 5.8.1996 published in the T.N. Govt. Gazette, dated 5.8.1996 as being
discriminatory, violative of the right to carry on business and trade and impossible of compliance of Articles 14, 19(1)(g) and 265 of the
Constitution of India in so far as the petitioners are concerned, has filed this writ petition.
In the affidavit filed in support of the writ petition, the writ petitioner would submit that it is an association of members who are assessed on the
files of the third and 4th respondents, that the members of the petitioner association numbering 1200 are dealing hosiery goods, that they
manufacture hosiery goods at Tiruppur and sell to registered dealers within and outside the state of Tamil Nadu, that the hosiery goods within the
State of Tamil Nadu are taxable as under:-
------------------------------------------------------------
Description Upto 16.7.96 Rate From 17.7.96 Rate
of goods Point Sch/Pt. Of Point Sch/Pt. of
of levy Item No. Tax% of levy Item No. Tax%
------------------------------------------------------------
Hosiery goods FS 1-D-14 8 FS 1-D-29 11
made wholly
or partly of
whool.
Hosiery goods FS 1-B-20 3 FS 1-B-35 4
(other than
those made
wholly or
partly or wool)
The petitioner would also submit that the hosiery goods in the course of inter-State trade or commerce are liable to sales tax at 1% as per
notification in G.O.Ms.No.273 dated 5th August 1996 which is extracted as under:-
Inter-State sales of ready-made garments and hosiery goods -Rate of tax (Tamil Nadu)
No.II(1)/CTRE/84(a-2_/96 - In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central
Act 74 of 1956), the Governor of Tamil Nadu, having been satisfied that it is necessary so to do in the public interest, hereby directs that the tax
(1)Payable by any dealer in respect of the sale effected by him of ready-made garments including undergarments and body supporting garments
(excluding hosiery goods) in the course of inter-State trade or commerce shall be calculated at the rate of 4%.
(2)Payable by any dealer, who does not have any branch transfer or consignment transfer during a year, shall be calculated at the reduced rate of
one per cent in respect of the sale effected by him of hosiery goods S(other than those made of wool) in the course of inter-States trade or
commerce.
Petitioner would further submit that the members of the association are dealing hosiery goods ''other than those made of wool or partly wool'';
that according to notification in G.O.Ms.No.273 dated 5.8.1996 rate of tax in respect of inter-State sales of hosiery goods is at the reduced rate
of 1% only, which does not apply to a dealer who has branch transfer or consignment transfer during the year, that the distinction between the
dealers selling locally or in the course of inter-State trade and others who have branch transfer or consignment transfer is discriminator; that the
disallowance of lower rate of tax is not restricted only to the turnover relating to branch transfer and consignment transfer and extents to the entire
turnover of the dealer; that the expression of branch transfer and consignment transfer is not clear and any dealer having branch transfer and
consignment transfer even within the State becomes dis-entitled to the lower rate of tax; that the benefit of lower rate of tax to 1% Central Sales
Tax is applicable to the petitioners for the entire assessment year from 1st April 1996 onwards, since the notification has not fixed the date on
which it comes into force; that the notification is not clear and is impossible of compliance and violative of the petitioners'' right and ability to carry
on business and trade guaranteed under Article 19(1)(g) of the Constitution of India. On such grounds the writ petitioner has come forward to file
the above writ petition.
During the arguments, the learned counsel for both besides submitting the written arguments would also advance their oral arguments to the
effect and in law on the pleadings and prayer and counter to the same.
On the part of the petitioners it would be submitted that their prayer is to declare void and struck down the words ''who does not have any
branch transfer or consignment transfer during a year'' in part 2 of the impugned notification in G.O.Ms.No.273, dated 5.8.1996 reported in
(1996) 102 STC 87 (Statutes.) siting the said notification. The learned counsel would further submit that the Government Order is discriminatory,
violative of right to carry on business and trade and impossible of compliance and therefore violative of Articles 14, 19(1)(g) and 265 of
Constitution of India and hence the words ''who does not have any branch transfer or consignment transfer during a year'' tobe struck down or
removed, which would result in removal of discrimination and inequality and the benefit of lower rate of tax as per the notification would be made
available to all dealers and consequently rendering the notification valid, that this writ petition does not challenge the validity of the said notification
issued u/s 8(5) of the Central Sales Tax Act 1956 and the challenge in the writ petition is restricted to the terms mentioned supra, only, and is not
directed against the entire notification and therefore, the decision of the Court cited by the Government wherein Courts have upheld the authority of
the State Government to issue notification u/s 8(5) of the Central Sales Tax Act 1956 made have no relevance and the particular challenge
restricted but removal of specific terms in the notification and regarding the issue of notification u/s 8(5) of the Act.
Petitioner''s counsel would further submit that the Tamil Nadu General Sales Tax Act, 1959 has provided for single point tax liability in respect
of all goods, that the goods which are taxable are enumerated in the first to the tenth schedules, that the tariff entry have provided for single point
tax liability only, namely, first sale, first purchase, last purchase etc., and the enumerated goods are not taxable at more than one stage, that
according to the tariff entries in each schedule, the particular goods will be taxable at only one point at the rate specified, regardless of who may be
the dealer dealing in goods, that during the year 1996 hosiery goods were liable to tax under TNGST Act, 1959 as per item 20 of Part ''B'' of the
first schedule at 3%, that the levy of Central Sales Tax respect of inter-State sales of hosiery goods would be in accordance with Section 8(2) of
the Central Sales Tax Act, 1956 extracted as under:-
(b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase
of such goods inside the appropriate State, whichever is higher; and for the purpose of making any such calculation any such dealer shall be
deemed tobe a dealer liable to pay tax under the sales tax law of the appropriate State notwithstanding that he, infact,maynot be soliable under that
law, that consequently, the rate of tax in respect of inter-State sales of hosiery goods would be10% without ''C'' form and 4% with ''C'' form, that
the benefit of G.O.Ms.No.273 dated 5.8.1996 was to reduce the rate of tax in respect of inter-State sales of hosiery goods to 1% in respect of
dealers who donot have any branch transfer or consignment transfer and 10% in respect of dealers who have consignment transfer or branch
transfer within or outside the State, that the result of the notification was to benefit the dealers who do not have any branch transfer or consignment
transfer and discriminate against the dealers who have consignment transfer or branch transfer, that consequently, different rates of sales tax namely
1% or 10% are charged in respect of the identical goods for different persons, that if the dealers who are dealing in hosiery goods are similarly
placed, no distinction can be made between big and small dealers and no such distinction is brought out in the notification,that there is no diction of
size or capacity indicated in the notification, therefore no nexus to reasonable classification is made out in the notification.
In the written arguments submitted on the part of the Government Advocate on the Taxation side and on further oral arguments advanced are
extracting Section 8(2-A) of the Central Sales Tax Act1956. The State Government can grant exemptions as it deems fit it necessary; that in the
case on hand the issue involved is whether the notification issued in G.O.Ms.No.273 dated 5.8.1996 to be taken for violation of Articles and
therefore, the prayer of removing the words in clause (ii) of the notification is tenable; extracting the notification, citing number of decisions
respectively reported in
(a) Shree Digvijay Cement Co. Ltd. and Others Vs. State of Rajasthan and Others, ,(g) Shri Bakul Oil Industries and Another Vs. State of
Gujarat and Another, the learned counsel would point out that it is held in 33 STC 277 (SC) which was followed in 63 STC 92 (SC) that it is
open to the Governments concerned to adopt a policy not to grant any exemption or concession or to grant only to a class or category; the
exercise of descreption in this matter cannot be held discriminatory so long as the decision is in public interest and is based on relevant
consideration; that if the prayer of the petitioner is to be considered favourably then notice itself becomes meaningless because clause (1) says
reduced rate of 4% tax granted generally. Clause No.(1) is for a general class of dealers who deal directly and through agents or branch and
clause (2) is for a class of people who directly alone deals, and hence the notification holds the ground of legality as the same is to different
transactions and class of dealers since there is no bar on flow of track or any infringement or restrainment of trade. On such arguments, the learned
counsel would ultimately pray to dismiss the writ petition with costs.
In consideration of the pleadings by parties, having regard to the materials placed on record and upon hearing the learned counsel for both, the
pertinent question that is to be decided in this writ petition is:-
Whether G.O.Ms.No.273 dated 5.8.1996 so far as it imposes tax payable by any dealer in respect of sale effected on ready-made garments
including under-garments and body supporting garments (excluding hosiery goods) in the course of inter-State trade or commerce shall be
calculated at the rate of 4%. Payable by any dealer, who does not have any branch transfer or consignment transfer during a year, shall be
calculated at the reduced rate of one per cent in respect of the sale effected by him of hosiery goods (other than those made of wool) in the course
of inter-State trade or commerce is discriminatory, violative of the right to carry on business and trade and impossible of compliance so as to term
the same as violative of Articles 14, 19(1)(g) and 265 of the Constitution of India?
The Government of Tamil Nadu in exercise of its powers conferred by sub section 5 of Section 8 of the Central Sales Tax Act 1956 having
been satisfied that it is necessary so to do in the public interest has introduced this Government Order as afore extracted and therefore, no doubt
need be entertained regarding the competence of the State Government in passing the above Government Order.
Therefore, the only question that is to be answered is, Whether, as termed by the petitioner''s association this order of the Government is either
discriminatory or violative of the right to carry on business or trade or is there impossibility in compliance of Articles 14, 19(1)(g) and 265 of the
Constitution of India. The petitioners have not at all broughtforth instances as to how it is either discriminatory or violative of the rights to carry on
business and trade or how it is impossible of compliance. The difficulty expressed in compliance of the G.O as mentioned in the petition and the
written arguments are mere illusions and non existent ones and they are not pointed to either discrimination or violation of rights to carry on
business and trade or proving impossibility of compliance so as to be termed violative of the Articles 14, 19(1)(g) and 265 of the Constitution of
India.
The Constitution forbids class legislation, but permits reasonable classification. How the G.O. in question would be termed as a class
legislation, the petitioner is not at all able to establish with instances but at the same time, it is not only the preamble of the Government Order
which is emphatic to the effect that it has become necessary so to do in the public interest, but also would prove to the effect that the classification
made thereunder is only a reasonable classification and within the permissible limits of the relevant provisions of the Constitution of India and
therefore, this Court is unable to say either any discrimination or violation of the right to carry on business and trade or any impossibility having
crept into the Government Order impugned herein as it is loitered by the petitioner and therefore, the interference of this Court sought to be made
into the said Government Order Impugned is neither necessary nor warranted in the circumstances of the case.
In result, the above writ petition does not merit acceptance and liable tobe dismissed and is dismissed accordingly.
The impugned G.O.Ms.No.273 dt.5.8.1996 is upheld.
There will be no order as to costs.