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Constitution of India : Schedule VII list II Entry 62-Scope of-Levy of luxury tax on goods or articles under-Held, not contemplated- "'Luxuries "-Meaning of Discussed-None of the impugned statutes seek to tax any activity but seek to tax goods described as luxury goods-Hence the statutes legislatively incompetent-U.P. Tax on Luxuries Act, 1995-A.P. Tax on Luxuries Act,1987- West Bengal Tax on Luxuries Act,1994. Schedule VII List I Entries 83 & 84, List II Entries 54 & 62 and Arts. 286 & 366(29-A)-Luxury goods/articles-Taxation of-Permissible modes-Held, method of taxing luxury goods has invariably been subjecting them to the extent fiscal regimes of excise duties, sales tax, customs duties at heavier rates and not under List II Entry 62-No distinction made in Art. 366(29-A) or Art. 286 or entries 83 and 84 of List I as to the nature of the goods which may be subject matter of sale, excise or import, be they articles of necessity or articles of luxury. Art. 265 and Schedule VII-Taxation entries-Subject of tax-Attributes of an object/article, without mentioning the object/article, held not contemplated as the subject matter of tax-Taxation. ~ Schedule VII list II Entries 62,54 & List I Entry 92-A and Arts. 286, 366(29-A)-Power and Relative scope of List II entries 62 and 54- Imposition of luxury tax on transfer, supply or delivery of article/goods, de hors constitutional limits on power of States to levy sales tax-Held, all the constitutional restrictions on power of States to levy sales tax under Art. 286(3)(a) r/w Ss. 14,15 CST Act,1956 and S. 3 and Sch. 2 proviso Additional .' Duties of Excise (Goods of Special Importance) Act, 1957 can not be bypassed, allowing States to levy tax on supply of goods by describing them as luxury goods-Supply of luxury is nothing but supply of goods, since the goods themselves constitute luxury-Even if tobacco is an article of luxury, a tax on its supply is within the exclusive competence of the Stales under List II Entry 54 r/w Art. 366(29-A)(a), but subject to the constitutional Courts-Impugned UP and AP Acts held ultra vires the power of States to levy sales tax-U.P. Tax on Luxuries Act,1995-A.P. Tax on Luxuries Act,1987. Schedule VII List II Entry 62 and List I Entries 83 and 84 r/w. S. 3 ADE Act, 1957-Relative scope of-Imposition of luxury tax by Stales on items covered by S.3 ADE Act, 1957-Held, impermissible-West Bengal Tax on Luxuries Act,1994 held invalid. Arts. 265, 246 and Schedule VII-Division of powers between Centre and States-Nature of-Principles for interpretation of taxing entries in Schedule VII-Held, mutual exclusivity is reflected in Art. 246-Thus, taxing entries must be construed with clarity and precision-A taxing entry which may lead to overlapping must be eschewed-Elements of a tax-Subject of tax and incidence of tax-Constitutional significance of such distinction-Discussed- Arts. 265, 246, 248(2) & Taxation Entries in Schedule VII and Schedule VII List I Entry 97-Power of taxation under entries in lists in Schedule VII-Discussed Interpretation of the Constitution-Noscitur a sociis-Application of the principle-Caution to be exercised-Discussed Luxuries Tax : U.P. Tax on Luxuries Act 1995-A.P. Tax on Luxuries Act,1987-West Bengal Tax on Luxuries Act, l 994-Constitutional validity of Words & Phrases : "Luxuries "-Meaning of Entry 62 of List II of the Seventh Schedule to the Constitution relates to the exclusive power of State Legislatures to make laws with respect to "Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling". Several States have enacted legislation which they claim are referable to the right to tax luxuries under this Entry. These appeals and writ petition relate to the Uttar Pradesh Tax on Luxuries Act, 1955, the Andhra Pradesh Tax on Luxuries Act, 1987 and the West Bengal Tax on Luxuries Act, 1994. The legislative competence of these statutes was challenged by the assessees before different fora - in some cases partially successfully, and in others without success. To the extent the assessees were unsuccessful, they have challenged the decisions ; in those cases in which the assessees were successful the concerned State has filed the appeals. The States have differed in their interpretation of the word "luxuries" of Entry 62 List II since they have argued in the context and from the point of view of the particular statute sought to be defended as legislatively competent. In these matters although the principal question to be resolved is the ambit of Entry 62 of List-II, the nature of the tax sought to be levied by the three statutes on Luxuries Tax enacted by Uttar Pradesh, Andhra Pradesh and West Bengal required determination. |
