Semantic Analysis by spaCy
East India Tobacco Co. Vs. State of Andhra Pradesh
Decided On : Apr-06-1962
Court : Supreme Court of India
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Vs. State of Andhra Pradesh', 'casenote' => 'The case questioned whether the provision of imposition of tax on sale of Virginia tobacco and exemption of country tobacco was discriminatory- It also questioned if the purchase which preceded sale for export could be exempted from tax- It was held that the Madras General Sales Tax (Andhra Amendment) Act, 1955 which taxed sales of Virginia tobacco but exempted sales of 'Nattu' or country tobacco could not be said to be discriminatory and was not obnoxious to Article 14 of the Constitution of India- It was further held that the sale under which the export was made that was protected by Article 286(1) (b) of the Constitution and a purchase which preceded such a sale did not fall within its purview, though made for the purpose of or with a view to effect an export.<br> - [] The two questions for determination in this appeal were, (1) whether a settlement under s. 8A of the Taxation of Income (Investigation Commission) Act, 1947 (30 Of 1947) made after the commencement of the Constitution was constitutionally valid and (2) whether the waiver of a fundamental right was permissible under the Constitution. The appellant's case was on July 22, 1948, referred by the Central Government under S. 5(1) of the Act to the Investigation Commission. for investigation and report. The Commission directed the authorised official under s. 6 of the Act to examine the appellant's accounts. He submitted his final report by the end of 1953. The Commission considered the report heard the assessee and came to the conclusion that Rs. 4,47,915 had escaped assessment. Thereupon the appellant on May 20, 1954, applied to the Commission for a settlement of his case under s. 8A of the Act, agreeing to pay Rs. 3,50,000 by way of tax and penalty at the concessional rate. The Commission reported to the Central Government approving of the settlement, the Central Government accepted it and it was recorded by the Commission. The Central Government directed the recovery of the said amount under s. 8A(2) of the Act. The appellant was permitted to make payments by monthly instalments of Rs. 5,000 and the total amount thus paid up to September 8, 1957, aggregated to Rs. 1,28,000. In the meantime the Income Tax Officer issued a certificate and certain properties of the appellant were attached. Relying on the decisions of this Court in Suraj Mall Mohta and Co. v. A. V. Visvanatha Sastri, [1955] 1 S.C.R. 448 and M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247, the appellant applied to the Commissioner of Income-tax challenging the validity of the settlement made under s. 8A of the Act on the ground that S. 5(1) Of the Act on which it was founded had been declared void by this Court, and claimed that his properties might be released from attachment and the amount paid under the settlement might be refunded to him., On January 29, 1958, the Commissioner of Income Tax sent a reply to the appellant maintaining that the settlement was valid and that the appellant was bound thereunder to pay up the arrears of instalments and requesting him to continue to pay in future. Against this decision of the Commissioner of Income Tax the. appellant came up to the Supreme Court by special leave. It was contended on behalf of the respondent that the Act laid down two distinct and separate procedures, one for investigation and the other for settlement and it was the former alone and not the D, latter that was affected by the decisions of this Court. and that the appellant by voluntarily entering into the settlement had waived his fundamental right founded on Art. 14 of the Constitution. Held (Per Curiam), that both the contentions must fail. It was not correct to say that the Taxation of Income (In- vestigation Commission) Act, 1947, laid down two different procedures, one for investigation and assessment under s. 8(2) of the Act and another for settlement under s. 8A of the Act and assessment in terms of such settlement and that while the decision of this Court in M. Ct. Muthiah v. The Commissioner of Incometax, Madras, declaring s. 5(1) of the Act to be discriminatory and therefore void, affected only the former procedure and not the latter. The Act laid down but one procedure and in entertaining a proposal for settlement as in the investigation itself the Commission exercised the same jurisdiction, and powers and followed the one and the same procedure as laid down by ss. 5, 6 and 7 Of the Act. Since the settlement in the instant case was no exception to that rule, it was covered by the decision and must be held to be violative of Art. 14 Of the Constitution. M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247, applied. The observations made in the majority judgment of this Court in Syed Qasim Razvi v. The State of Hyderabad, [1953] S.C.R. 589, must be kept strictly confined to the special facts of that case and had no application to the facts of the present case. Syed Qasim Razvi v. The State of Hyderabad, [1953] S.C.R. 589, held inapplicable. Per Das, C. J., and Kapur J.-There could be no waiver of the fundamental right founded on Art. 14 Of the Constitution and it was not correct to contend that the appellant had by entering into the settlement under s. 8A of the Act, waived his fundamental right under that Article. Article 14 was founded on a sound public policy recognised and valued all over the civilised world, its language was the language of command and it imposed an obligation on the State of which no person could, by his act or conduct, relieve it. As it was not strictly necessary for the disposal of this case, the question whether any other fundamental right could be waived need not be considered in this connection. Laxamanappa Hanumantappa jamkhandi v. The Union of India, [1955] 1 S.C.R. 769; Dewan-Bahadur Seth Gopal Das Moht v. The Union of India, [1955] 1 S.C.R.773; Baburao Narayanrao Sanas v. The Union Of India, [1954] 26 I.T.R. 725; Subedar v. State, A.I.R. 1957 All. 396 and Pakhar Singh v. The State, A.I.R. 1958 Punj. 294, distinguished and held inapplicable. Per Bhagwati and gubba Rao, jj.-There could be no waiver '.,not only of the fundamental right enshrined in Art. 14 but also of any other fundamental right guaranteed by Part III of the Constitution. The Constitution made no distinction between fundamental rights enacted for the benefit of the individual and those enacted in the public interest or on grounds of the public policy. There could, therefore, be no justification for importing American notions or authority of decided cases to whittle down the transcendental character of those rights, conceived in public interest and subject only to such limitations as the Constitution had itself thought fit to impose. Article 13(2) was in terms a constitutional mandate to the State in respect of all the fundamental rights enacted in Part III of the Constitution and no citizen could by waiver of any one of them relieve the State of the solemn obligation that lay on it. The view expressed by Mahajan, C. J., in Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613, correctly laid down the law on the point. Since the arguments in the instant case had covered the entire field of fundamental rights, there was no reason why the answer should be confined to Art. 14 alone. Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613; State of Travancore-Cochin v. The Bombay Co., Ltd., [1954] S.C.R. 1112 and The State of Bombay v. R. M. D. Chamarbaugwala, [1957] S.C.R. 874, referred to. Per S. K. Das, J.-It seems clear that Art. 13 itself re- cognises the distinction between absence of legislative power which will make the law made by an incompetent legislature wholly void, and exercise of legislative power in contravention of a restriction or check on such power, which will make the law void to the extent of the inconsistency or contravention; therefore the mere use of the word " void " in Art. 13 does not necessarily militate against the application of the doctrine of waiver in respect of the provisions contained in Part III of the Constitution. Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613, considered. Bhikaji Narain Dhakyas v. The State of Madhya Pradesh, [1955] 2 S.C.R. 589; M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247 and The State of Bombay v. R.M.D. Chamarbaugwala, [1957] S.C.R. 874, referred to. There was nothing in the two preambles to the Indian and the American Constitutions that could make the doctrine of waiver applicable to the one and not to the other; since the doctrine applied to the constitutional rights under the American Constitution, there is no reason why it should not apply to the fundamental rights under the Indian Constitution. Case-law considered. But it must be made clear that there is no absolute rule, or one formulated in the abstract, as to the applicability of that doctrine to fundamental rights and such applicability must depend on (1) the nature of fundamental right to which it is sought to be applied and (2) the foundation on the basis of which the plea is raised. The true test must be whether the fundamental right is one primarily meant for the benefit of individuals or for the benefit of the general public. Where, therefore, the Constitution vested the right in the individual, primarily intending to benefit him and such right did not impinge on the rights of others, there could be a waiver of such right provided it was not forbidden by law or did not contravene public policy or public morals. As in the instant case the respondents who had raised the plea, had failed to prove the necessary facts on which it could be sustained, the plea of waiver must fail. Per Subba Rao, J.-Apart from the question as to whether there could be a waiver in respect of a fundamental right, s. 5(1) of the Taxation of Income (Investigation Commission) Act, 1947, having been declared void by this Court in M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, as being violative of the fundamental right founded on Art' 14 Of the Constitution and such decision being binding on all courts in India, the Commissioner of Income-tax had no jurisdiction to continue the proceedings against the appellant under that Act and the appellant could not by a waiver of his right confer jurisdiction on him. No distinction could be made under Art. 13(1) of the Con- stitution between the constitutional incompetency of a legislature and constitutional limitation placed on its power of legislation, for a statute declared void on either ground would continue to be so, so long as the inconsistency continued. As the inconsistency of S. 5(1) of the Act with Art. 14 continued, it must continue to be void. Keshavan Madhava Menon v. The State of Bombay, [1951] S.C.R. 228; Behram Khurshed Pesihaka v. State of Bombay, [1955] 1 S.C.R. 613 and Bhikaji Narain Dhakras v. State of Madhya Pradesh, [1955] 2 S.C.R. 589, referred to. - 9. It should, in this connection, be remembered that under the law it is for the person who assail a legislation a discriminatory to established that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing status. They are therefore incentives to industries that the State in natural policy might well hesitate to obstruct or burden and to yield to the policy or consider it is well within the concession or the power of the State expressed in the cases we have cited. Of these two integrated activities, which together constitute on export sale, whichever first occurs can well be regarded as taking place in the course of the other'.12. Now the contention is that the agreement entered into with the foreign purchasers for sale of the Virginia tobacco, the purchase of the same locally by the appellants for performing the contract and their subsequent export to the foreign purchasers must all be held to form one integrated transaction of sale in the course of export. 13. Now the observations quoted above were made in refutation of the contention that the expression 'sale in the course of export or import' meant only a sale which takes place while the goods are actually in movement, in the course of export or import, as for example, when shipping documents are endorsed and delivered when the goods are in transit. A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done 'in the course of the export of the goods out of the territory of India',and more than the other two activities can be so regarded. 16. On these authorities the law must be taken to be well settled that it is only the sale under which the export is made that is protected by Article 286(12)(b), and that a purchase which precedes such a sale does not fall within its purview though it is made for the purse of, or with a view to export. The impugned legislation must accordingly be held not to contravene Article 286(1)(b). 17. In the result both the contentions urged by the appellants fail and the appeals must be dismissed with costs, one hearing fee.', 'caseanalysis' => null, 'casesref' => 'The State of Mysore v. Mysore Spinning;', 'citingcases' => '', 'counselplain' => '', 'counseldef' => '', 'court' => 'Supreme Court of India', 'court_type' => 'SC', 'decidedon' => '1962-04-06', 'deposition' => '', 'favorof' => null, 'findings' => null, 'judge' => ' B.P. Sinha, C.J.,; K.N. Wanchoo,; N. Rajagopala Ayyangar,; P.B. Gajendragadkar and; ', 'judgement' => '<p style="text-align: justify;">Venkatarama Aiyar, J.</p><p style="text-align: justify;">1. These are appeals against the judgment of the High Court of Andhra Pradesh in Petitions Nos. 1172 of 1956 and 56 of 1957 filed under Article 226 of the Constitution questioning the validity of the Andhra Act XIV of 1955 insofar as it imposes a tax on the sale of Virginia tobacco. The appellants are firms doing business in the exports of tobacco. The usual course of that business is stated to be that they first enter into contracts with their customer abroad for the sale of tobacco, that thereafter they purchase the requisite quantities of goods locally and then export them to the foreign purchases in performance of their contracts. Prior to October 1, 1953, the area wherein the appellants carried on business formed part of the State of Madras, and on that date the State of Andhra was constituted, and the area in question fell within that State. The law relating to sales tax in force in that areas is the Madras General Sales Tax Act, IX of 1939. Section 5 of this Act provides for exemption of tax on sales of goods specified therein and section 6 confers on the State Government power to exempt the tax payable on the sale of any specified class of goods or by any specified class of persons. In exercise of the powers conferred by section 6 the Government of Madras issued on March 31, 1953 a notification No. 144 exempting the sales of unmanufactured tobacco form sales tax. After the Andhra State came into existence, the Legislature of that State enacted Act XIV of 1955 hereinafter referred to as 'the Amendment Act' whereby it amended section 5 of the Madras General Sales Tax Act by adding as item (viii) the following :- </p><p style="text-align: justify;">'(viii) raw tobacco (except country variety thereof) whether cured or uncured, shall be liable to tax under Section 3, Sub Section 1 only at the point of the first purchase effected in the State of Andhra by a dealer who is not exempt from taxation under Section 3, Sub Section 3 but at the rate of seven and half pied for every rupee on his turnover. </p><p style="text-align: justify;"> Explanation :- For the purpose of this item, country variety of tobacco means variety of tobacco other than Virginia and other similar varieties of tobacco'. </p><p style="text-align: justify;">2. As a result of this enactment exemption from tax was limited to sales of what is known as country tobacco (Nattu tobacco) and so far as sales of Virginia tobacco are concerned, they became liable to be taxed. Pursuant to the Amendment Act, the Andhra, Government issued on November 4, 1955, a notification No. 711 cancelling the earlier notification No. 144 dated March 31, 1953. </p><p style="text-align: justify;">3. Acting under the provisions of the Amendment Act, the Additional Commercial Tax Officer, Guntur issued notices to the appellants to produce the account books relating to their business in tobacco for the purpose of assessing sales tax. To this the appellants replied by filing petitions under Article 226 of the Constitution in the High Court of Andhra Pradesh challenging the constitutionality of the Amendment Act on the grounds inter alia that in taxing sales of Virginia tobacco and exempting from tax seals of other tobacco, the Act was discriminatory, and that in consequence it was obnoxious to Article 14 of the Constitution and that further it was in contravention of Article 286(1)(b) as it was really a tax on sales in the course of export of tobacco. They accordingly prayed that a mandamus might be issued directing the respondents to forbear from making an assessment on the sales of tobacco. The learned Judges disagreed with these contentions and dismissed the petitions, holding that the impugned Act did not infringe any constitutional provisions, but granted certificate under Art 133 of the constitution. That is how these appeals come before us. </p><p style="text-align: justify;">4. On the arguments addressed to us, two questions arises for our determination : </p><p style="text-align: justify;">(1) Is the impugned Act repugnant Article 14 for the reason that it singles out Virginia tobacco for taxation </p><p style="text-align: justify;"> (2) Is the impugned legislation in contravention of Article 286(1)(b) as imposing a tax on sales in the course of export? </p><p style="text-align: justify;"> (1) On the first question the contention of the appellants may be thus stated. All laws must satisfy the requirements of Article 14. Taxation laws are no exception to it. In imposing a tax on the sales of Virginia tobacco and not on other kinds of tobacco the impugned Act is on the face of discriminatory. It is therefore obnoxious to Article 14 and is void. </p><p style="text-align: justify;">5. It is not in dispute that taxation laws must also pass the test of Article 14. That has been laid down recently by this Court in Moopil Nair v. The State of Kerala : [1961]3SCR77 . But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Article 14. The following statement of the law in Willis on 'Constitutional Law' page 587, would correctly represent the position with reference to taxing statutes under our Constitution :- </p><p style="text-align: justify;">'A state does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably................. The Supreme Court has been practical and has permitted a very wide latitude in classification for taxation'. </p><p style="text-align: justify;">6. In the light of these principles, we may now proceed to discuss whether the impugned Act is repugnant to Article 14 of the Constitution. The point for consideration is whether there is in fact a real distinction between Virginia tobacco and other tobacco called country tobacco. 'Nattu tobacco'. If there is, then the Act is valid, if not it must be held of the be unconstitutional. The finding of learned Judges on this point is as follows :- </p><p style="text-align: justify;">'Broadly, there are two types, Virginia and Nattu, differing in taste, light, colour and texture.............. There are obvious differences between the two categories of tobacco, in the nomenclature used, in the process of growing, curing and grading, in the market facilities foreign and inland, in the price and in the variety of uses to which they are put and also the class of customers that take to them.' </p><p style="text-align: justify;">7. Thus it will be seen that Virginia tobacco has features which distinguish it form country tobacco, and can be treated as a class in itself. It will therefore be within the power of the State to impose a tax on the sales of Virginia tobacco while exempting the country tobacco. </p><p style="text-align: justify;">8. It is argued for the appellants that to repel the charge of discrimination in taxing only Virginia tobacco, and not the country tobacco, it is not sufficient merely to show that there are differences between the two varieties, but that it must further be shown as held in Budhan Choudhry v. The State of Bihar : 1955CriLJ374 and Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar : [1959]1SCR279 , that the differentia has reasonable relation to the object of the legislation. The difference between the Virginia tobacco and the country tobacco, as found be the learned Judged, are not, it is argued, germane to the levy of sale tax, and so there is no valid classification. We are unable to agree with this contention. If a State can validly pick and chose one commodity for taxation and that is not open to attack under Article 14, the same result must follow when the State picks out one category of goods and subject it to taxation. </p><p style="text-align: justify;">9. It should, in this connection, be remembered that under the law it is for the person who assail a legislation a discriminatory to established that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing status. 'In taxation even more than in other fields' it was observed by the Supreme Court of United States in Madden v. Kentucky (1940) 309 US 83; 84 L.Ed. 590 'Legislatures possess the greatest freedom in classification. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it'. How wide the powers of the Legislature are in classifying objects for purposes of taxation will be seen from the following resume of the law given by Rottschaefer, in his 'Constitutional Law' p. 668 :- </p><p style="text-align: justify;">'The Federal Supreme Court has seldom any classification made in connection with the levying of property taxes. It has sustained the levy of a heavier burden of taxation upon motor vehicles using the public high ways than that levied upon other forms of property, and the imposition of a heavier tax upon oil than upon other property. The equal protection clause does not prohibit the levy of a tax on ores which is not imposed upon similar interests in quarries, forests and other forms of wasting asset, nor even the imposition of a tax upon anthracite that is not levied upon bituminous coal. A statute providing for the assessment of one type of intangible at its actual value while other intangibles are assessed at their face value does not deny equal protection even when both are subject to the same rate of tax. The decision of the Supreme Court in this field have permitted a State legislature to exercise an extremely wide discretion in classifying property for tax purposes so long as it refrained from clear and hostile discrimination against a particular persons or classes'. </p><p style="text-align: justify;">10. A decision near to the present case on the facts is C. Heisler v. Thomas Colliery Company 260 US 245; 6 L.Ed. 237. There the question was whether a law imposing a tax on Anthracite coal and not upon bituminous coal was unconstitutional as violating the equal protection of laws guaranteed by the 14th Amendment to the Federal Constitution. In upholding the validity of the law, Justice Mckenna observed as follows :- </p><p style="text-align: justify;">'The fact of competition may be accepted. Both coals, being compositions of carbon are of course capable of combustion and may be used as fuels but under different conditions and manifestations and the difference determines a choice between them as fuels. By disregarding that difference and the greater ones which exists and by dwelling on competition alone, it is easy to erect an argument of strength against the taxation of one and not of the other. But this may not be done. The differences between them are a just basis for their different classification; and the differences are great and important. They differ even as fuels, they differ fundamentally in other particulars. Anthracite coal has no substantial use beyond a fuel; bituminous coal has other uses. Products of utility are obtained from it. The fact is not denied and the products are enumerated that the extent of their use. They are therefore incentives to industries that the State in natural policy might well hesitate to obstruct or burden and to yield to the policy or consider it is well within the concession or the power of the State expressed in the cases we have cited. The distinction in the treatment of the respective coals being within the power conceded by the cases to the State it has logical and legal justification and is necessarily, not unreasonable or arbitrary'. </p><p style="text-align: justify;">11. In our Judgment the differences which exist between the Virginia and 'Nattu' country tobacco, as found by the learned Judges, are materials on which the State could treat Virginia tobacco as forming a class by itself for purpose of taxation, and the impugned legislation must be held to be not obnoxious to Art. 14 of the Constitution. </p><p style="text-align: justify;">(2) It is next argued that the Amendment Act is ultra vires because in reality it imposes a tax on sales in the course of export and that is hit by Article 286(1)(b). The course of business followed by the appellants has already been set out. It may be assumed for the purpose of the present discussion that the purchases made by the appellants on which the tax is sought to be imposed were made for the purpose of executing specifies orders which they had received from their foreign customers. The question is whether even so the sales in question took place in the course of export for the purpose of Article 286(1)(b). In support of their contention that they did, the appellants rely on the following observations in State of Travancore-Cochin v. The Bombay Co. Ltd. : [1952]1SCR1112 :- </p><p style="text-align: justify;">'A sale by export thus involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country bay land or sea. Such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export forms parts of a single transaction. Of these two integrated activities, which together constitute on export sale, whichever first occurs can well be regarded as taking place in the course of the other'. </p><p style="text-align: justify;">12. Now the contention is that the agreement entered into with the foreign purchasers for sale of the Virginia tobacco, the purchase of the same locally by the appellants for performing the contract and their subsequent export to the foreign purchasers must all be held to form one integrated transaction of sale in the course of export. </p><p style="text-align: justify;">13. Now the observations quoted above were made in refutation of the contention that the expression 'sale in the course of export or import' meant only a sale which takes place while the goods are actually in movement, in the course of export or import, as for example, when shipping documents are endorsed and delivered when the goods are in transit. This Court held that this was too narrow an interpretation to put on the words in question and that a sale which actually occasions the export or import would fall within Article 286(1)(b). The question whether sales which precede export are sales in the course of export within Article 286(1)(b) arose directly for decision in State of Travancore-Cochin v. Shanmuga Vilas Cashew Nut Factory : [1954]1SCR53 and it was held that they were not. Explaining, in the course of the judgment, the true scope of the observations in State of Travancore-Cochin's case : [1952]1SCR1112 quoted above, Patanjali Sastri, C.J. observed :- </p><p style="text-align: justify;">'The phrase 'integrated activities' was used in the previous decision to denote that 'such a sale' (i.e., a sale which occasions the export) 'cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export from parts of a single transaction'. It is in that sense that the two activities - the sale and the export - were said to be integrated. A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done 'in the course of the export of the goods out of the territory of India', and more than the other two activities can be so regarded.' </p><p style="text-align: justify;">14. We may refer to two other decisions of this Court where this question has been considered. In The State of Madras v. Guriviah Naidue & Co. Ltd. : 1956CriLJ331 , the facts were that an assessee secured orders for the supply of untanned hides and skins from London purchasers and then, he purchased them locally in order to implement those orders and exported them, and the question was whether a tax on those purchases was hit by Article 286(1)(b). In holding that it was not, this Court observed :- </p><p style="text-align: justify;">'Such purchases were, it is true, for the purpose of export but such purchases did not themselves occasion the export and consequently did not fall within he exemption of Article 286(1)(b) of the Constitution as held by this court in The State of Travancore-Cochin v. The Bombay Company Ltd. : [1952]1SCR1112 . Nor did such purchases in the State by the exporter for the purpose of export come within the ambit of Article 286(1)(b), as held by the decision of the majority in The State of Travancore Cochin v. Shanmuga Vilas Cashew Nut Factory : [1954]1SCR53 .' </p><p style="text-align: justify;">15. The point came up again for consideration before this Court in The State of Mysore v. Mysore Spinning & Manufacturing Co. : AIR1958SC1002 and it was held following the decision cited above that Article 286(1)(b) could be invoked only in respect of the sale which occasions the export, and not of any sales precedent to it. </p><p style="text-align: justify;">16. On these authorities the law must be taken to be well settled that it is only the sale under which the export is made that is protected by Article 286(12)(b), and that a purchase which precedes such a sale does not fall within its purview though it is made for the purse of, or with a view to export. The impugned legislation must accordingly be held not to contravene Article 286(1)(b). </p><p style="text-align: justify;">17. In the result both the contentions urged by the appellants fail and the appeals must be dismissed with costs, one hearing fee. </p><p style="text-align: justify;">18. Appeals dismissed. </p>', 'observations' => null, 'overruledby' => null, 'prhistory' => '', 'pubs' => 'AIR1962SC1733; [1963]1SCR404; [1962]13STC529(SC)', 'ratiodecidendi' => '', 'respondent' => 'State of Andhra Pradesh', 'sub' => 'Constitution', 'link' => null, 'circuit' => null ) ), 'args' => array( (int) 0 => '641794' ) ) $title_for_layout = 'East India Tobacco Co. Vs. State of Andhra Pradesh Semantic Analysis' $shops = array( 'LAW' => array( (int) 0 => 'Article 226 of the Constitution', (int) 1 => 'the Andhra Act XIV', (int) 2 => 'Section 5 of this Act', (int) 3 => 'section 6', (int) 4 => 'section 6', (int) 5 => 'the Amendment Act'', (int) 6 => 'section 5', (int) 7 => 'Section 3, Sub Section 1', (int) 8 => 'Section 3, Sub Section 3', (int) 9 => 'the Amendment Act', (int) 10 => 'the Amendment Act', (int) 11 => 'Article 226 of the Constitution in the High Court of Andhra Pradesh', (int) 12 => 'the Amendment Act', (int) 13 => 'Article 14 of the Constitution', (int) 14 => 'Article 286(1)(b', (int) 15 => 'Article 14', (int) 16 => 'Article 286(1)(b', (int) 17 => 'Article 14', (int) 18 => 'Article 14', (int) 19 => 'Article 14', (int) 20 => 'Article 14', (int) 21 => 'Constitution', (int) 22 => 'Article 14 of the Constitution', (int) 23 => 'Article 14', (int) 24 => 'the 14th Amendment', (int) 25 => 'the Federal Constitution', (int) 26 => 'Constitution', (int) 27 => 'the Amendment Act', (int) 28 => 'Article 286(1)(b', (int) 29 => 'Article 286(1)(b', (int) 30 => 'Article 286(1)(b', (int) 31 => 'Article 286(1)(b', (int) 32 => 'Article 286(1)(b', (int) 33 => 'Article 286(1)(b', (int) 34 => 'Constitution', (int) 35 => 'Article 286(1)(b', (int) 36 => 'Article 286(1)(b', (int) 37 => 'Article 286(12)(b', (int) 38 => 'Article 286(1)(b' ), 'PERSON' => array( (int) 0 => 'Venkatarama Aiyar', (int) 1 => 'J.1', (int) 2 => 'Andhra State', (int) 3 => 'Nattu', (int) 4 => 'Budhan Choudhry v. The State of Bihar', (int) 5 => 'Shri Ram', (int) 6 => 'Krishna Dalmia', (int) 7 => 'S. R. Tendolkar', (int) 8 => 'Rottschaefer', (int) 9 => 'C. Heisler v. Thomas Colliery Company', (int) 10 => 'Mckenna', (int) 11 => 'Nattu', (int) 12 => 'Patanjali Sastri' ), 'ORG' => array( (int) 0 => 'the High Court of Andhra Pradesh', (int) 1 => 'the State of Andhra', (int) 2 => 'State', (int) 3 => 'the Madras General Sales Tax Act', (int) 4 => 'the State Government', (int) 5 => 'State', (int) 6 => 'the State of Andhra', (int) 7 => 'Nattu', (int) 8 => 'the Andhra, Government', (int) 9 => 'the Additional Commercial Tax Officer', (int) 10 => 'Court', (int) 11 => 'State', (int) 12 => 'The Supreme Court', (int) 13 => 'State', (int) 14 => 'State', (int) 15 => 'State', (int) 16 => 'the Supreme Court', (int) 17 => 'Legislature', (int) 18 => 'The Federal Supreme Court', (int) 19 => 'the Supreme Court', (int) 20 => 'State', (int) 21 => 'State', (int) 22 => 'State', (int) 23 => 'State', (int) 24 => 'State', (int) 25 => 'State of Travancore-Cochin v. The Bombay Co. Ltd.', (int) 26 => 'State of Travancore-Cochin v.', (int) 27 => 'Shanmuga Vilas Cashew Nut Factory', (int) 28 => 'State of Travancore-Cochin's', (int) 29 => 'Court', (int) 30 => 'Guriviah Naidue & Co. Ltd.', (int) 31 => 'Court', (int) 32 => 'The State of Travancore-Cochin v.', (int) 33 => 'The Bombay Company Ltd.', (int) 34 => 'State', (int) 35 => 'The State of Travancore Cochin', (int) 36 => 'Shanmuga Vilas', (int) 37 => 'Court', (int) 38 => 'The State of Mysore v. Mysore Spinning & Manufacturing Co.' ), 'DATE' => array( (int) 0 => '1172 of 1956', (int) 1 => '1957', (int) 2 => '1955', (int) 3 => 'October 1, 1953', (int) 4 => '1939', (int) 5 => 'March 31, 1953', (int) 6 => '1955', (int) 7 => 'November 4, 1955', (int) 8 => 'March 31, 1953', (int) 9 => '1940' ), 'CARDINAL' => array( (int) 0 => '56', (int) 1 => '144', (int) 2 => 'seven', (int) 3 => 'half', (int) 4 => '2.', (int) 5 => '711', (int) 6 => '144', (int) 7 => '3', (int) 8 => 'two', (int) 9 => '1', (int) 10 => '2', (int) 11 => '1', (int) 12 => '5.', (int) 13 => '1961]3SCR77', (int) 14 => '587', (int) 15 => '6', (int) 16 => 'two', (int) 17 => 'two', (int) 18 => '8.', (int) 19 => 'two', (int) 20 => '1955CriLJ374', (int) 21 => '1959]1SCR279', (int) 22 => 'one', (int) 23 => 'one', (int) 24 => '9', (int) 25 => '309', (int) 26 => '84', (int) 27 => '590', (int) 28 => '668', (int) 29 => 'one', (int) 30 => '10', (int) 31 => '260', (int) 32 => '6', (int) 33 => '237', (int) 34 => '11', (int) 35 => '14', (int) 36 => '2', (int) 37 => '1952]1SCR1112', (int) 38 => 'two', (int) 39 => '12', (int) 40 => '13', (int) 41 => '1954]1SCR53', (int) 42 => '1952]1SCR1112', (int) 43 => 'two', (int) 44 => 'two', (int) 45 => 'two', (int) 46 => '1956CriLJ331', (int) 47 => '1952]1SCR1112', (int) 48 => '1954]1SCR53', (int) 49 => '15', (int) 50 => '16', (int) 51 => '17', (int) 52 => 'one', (int) 53 => '18' ), 'GPE' => array( (int) 0 => 'Virginia', (int) 1 => 'Virginia', (int) 2 => 'Virginia', (int) 3 => 'Guntur', (int) 4 => 'Virginia', (int) 5 => 'Virginia', (int) 6 => 'Virginia', (int) 7 => 'Kerala', (int) 8 => 'Virginia', (int) 9 => 'Virginia', (int) 10 => 'Nattu', (int) 11 => 'Virginia', (int) 12 => 'Virginia', (int) 13 => 'Virginia', (int) 14 => 'Virginia', (int) 15 => 'United States', (int) 16 => 'Madden', (int) 17 => 'Kentucky', (int) 18 => 'US', (int) 19 => 'Virginia', (int) 20 => 'Virginia', (int) 21 => 'Art', (int) 22 => 'Virginia', (int) 23 => 'India', (int) 24 => 'London' ), 'ORDINAL' => array( (int) 0 => 'first', (int) 1 => 'first', (int) 2 => 'first', (int) 3 => 'first' ), 'TIME' => array( (int) 0 => 'the impugned Act' ), 'FAC' => array( (int) 0 => 'Moopil Nair v.' ), 'LOC' => array( (int) 0 => 'Willis' ), 'WORK_OF_ART' => array( (int) 0 => ''Constitutional Law'' ) ) $desc = array( 'Judgement' => array( 'id' => '641794', 'acts' => '<a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Articles 14, 226, 133 and 286(I); Madras General Sales Tax Act, 1939 - Sections 5', 'appealno' => '', 'appellant' => 'East India Tobacco Co.', 'authreffered' => '', 'casename' => 'East India Tobacco Co. Vs. State of Andhra Pradesh', 'casenote' => 'The case questioned whether the provision of imposition of tax on sale of Virginia tobacco and exemption of country tobacco was discriminatory- It also questioned if the purchase which preceded sale for export could be exempted from tax- It was held that the Madras General Sales Tax (Andhra Amendment) Act, 1955 which taxed sales of Virginia tobacco but exempted sales of 'Nattu' or country tobacco could not be said to be discriminatory and was not obnoxious to Article 14 of the Constitution of India- It was further held that the sale under which the export was made that was protected by Article 286(1) (b) of the Constitution and a purchase which preceded such a sale did not fall within its purview, though made for the purpose of or with a view to effect an export.<br> - [] The two questions for determination in this appeal were, (1) whether a settlement under s. 8A of the Taxation of Income (Investigation Commission) Act, 1947 (30 Of 1947) made after the commencement of the Constitution was constitutionally valid and (2) whether the waiver of a fundamental right was permissible under the Constitution. The appellant's case was on July 22, 1948, referred by the Central Government under S. 5(1) of the Act to the Investigation Commission. for investigation and report. The Commission directed the authorised official under s. 6 of the Act to examine the appellant's accounts. He submitted his final report by the end of 1953. The Commission considered the report heard the assessee and came to the conclusion that Rs. 4,47,915 had escaped assessment. Thereupon the appellant on May 20, 1954, applied to the Commission for a settlement of his case under s. 8A of the Act, agreeing to pay Rs. 3,50,000 by way of tax and penalty at the concessional rate. The Commission reported to the Central Government approving of the settlement, the Central Government accepted it and it was recorded by the Commission. The Central Government directed the recovery of the said amount under s. 8A(2) of the Act. The appellant was permitted to make payments by monthly instalments of Rs. 5,000 and the total amount thus paid up to September 8, 1957, aggregated to Rs. 1,28,000. In the meantime the Income Tax Officer issued a certificate and certain properties of the appellant were attached. Relying on the decisions of this Court in Suraj Mall Mohta and Co. v. A. V. Visvanatha Sastri, [1955] 1 S.C.R. 448 and M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247, the appellant applied to the Commissioner of Income-tax challenging the validity of the settlement made under s. 8A of the Act on the ground that S. 5(1) Of the Act on which it was founded had been declared void by this Court, and claimed that his properties might be released from attachment and the amount paid under the settlement might be refunded to him., On January 29, 1958, the Commissioner of Income Tax sent a reply to the appellant maintaining that the settlement was valid and that the appellant was bound thereunder to pay up the arrears of instalments and requesting him to continue to pay in future. Against this decision of the Commissioner of Income Tax the. appellant came up to the Supreme Court by special leave. It was contended on behalf of the respondent that the Act laid down two distinct and separate procedures, one for investigation and the other for settlement and it was the former alone and not the D, latter that was affected by the decisions of this Court. and that the appellant by voluntarily entering into the settlement had waived his fundamental right founded on Art. 14 of the Constitution. Held (Per Curiam), that both the contentions must fail. It was not correct to say that the Taxation of Income (In- vestigation Commission) Act, 1947, laid down two different procedures, one for investigation and assessment under s. 8(2) of the Act and another for settlement under s. 8A of the Act and assessment in terms of such settlement and that while the decision of this Court in M. Ct. Muthiah v. The Commissioner of Incometax, Madras, declaring s. 5(1) of the Act to be discriminatory and therefore void, affected only the former procedure and not the latter. The Act laid down but one procedure and in entertaining a proposal for settlement as in the investigation itself the Commission exercised the same jurisdiction, and powers and followed the one and the same procedure as laid down by ss. 5, 6 and 7 Of the Act. Since the settlement in the instant case was no exception to that rule, it was covered by the decision and must be held to be violative of Art. 14 Of the Constitution. M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247, applied. The observations made in the majority judgment of this Court in Syed Qasim Razvi v. The State of Hyderabad, [1953] S.C.R. 589, must be kept strictly confined to the special facts of that case and had no application to the facts of the present case. Syed Qasim Razvi v. The State of Hyderabad, [1953] S.C.R. 589, held inapplicable. Per Das, C. J., and Kapur J.-There could be no waiver of the fundamental right founded on Art. 14 Of the Constitution and it was not correct to contend that the appellant had by entering into the settlement under s. 8A of the Act, waived his fundamental right under that Article. Article 14 was founded on a sound public policy recognised and valued all over the civilised world, its language was the language of command and it imposed an obligation on the State of which no person could, by his act or conduct, relieve it. As it was not strictly necessary for the disposal of this case, the question whether any other fundamental right could be waived need not be considered in this connection. Laxamanappa Hanumantappa jamkhandi v. The Union of India, [1955] 1 S.C.R. 769; Dewan-Bahadur Seth Gopal Das Moht v. The Union of India, [1955] 1 S.C.R.773; Baburao Narayanrao Sanas v. The Union Of India, [1954] 26 I.T.R. 725; Subedar v. State, A.I.R. 1957 All. 396 and Pakhar Singh v. The State, A.I.R. 1958 Punj. 294, distinguished and held inapplicable. Per Bhagwati and gubba Rao, jj.-There could be no waiver '.,not only of the fundamental right enshrined in Art. 14 but also of any other fundamental right guaranteed by Part III of the Constitution. The Constitution made no distinction between fundamental rights enacted for the benefit of the individual and those enacted in the public interest or on grounds of the public policy. There could, therefore, be no justification for importing American notions or authority of decided cases to whittle down the transcendental character of those rights, conceived in public interest and subject only to such limitations as the Constitution had itself thought fit to impose. Article 13(2) was in terms a constitutional mandate to the State in respect of all the fundamental rights enacted in Part III of the Constitution and no citizen could by waiver of any one of them relieve the State of the solemn obligation that lay on it. The view expressed by Mahajan, C. J., in Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613, correctly laid down the law on the point. Since the arguments in the instant case had covered the entire field of fundamental rights, there was no reason why the answer should be confined to Art. 14 alone. Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613; State of Travancore-Cochin v. The Bombay Co., Ltd., [1954] S.C.R. 1112 and The State of Bombay v. R. M. D. Chamarbaugwala, [1957] S.C.R. 874, referred to. Per S. K. Das, J.-It seems clear that Art. 13 itself re- cognises the distinction between absence of legislative power which will make the law made by an incompetent legislature wholly void, and exercise of legislative power in contravention of a restriction or check on such power, which will make the law void to the extent of the inconsistency or contravention; therefore the mere use of the word " void " in Art. 13 does not necessarily militate against the application of the doctrine of waiver in respect of the provisions contained in Part III of the Constitution. Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613, considered. Bhikaji Narain Dhakyas v. The State of Madhya Pradesh, [1955] 2 S.C.R. 589; M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247 and The State of Bombay v. R.M.D. Chamarbaugwala, [1957] S.C.R. 874, referred to. There was nothing in the two preambles to the Indian and the American Constitutions that could make the doctrine of waiver applicable to the one and not to the other; since the doctrine applied to the constitutional rights under the American Constitution, there is no reason why it should not apply to the fundamental rights under the Indian Constitution. Case-law considered. But it must be made clear that there is no absolute rule, or one formulated in the abstract, as to the applicability of that doctrine to fundamental rights and such applicability must depend on (1) the nature of fundamental right to which it is sought to be applied and (2) the foundation on the basis of which the plea is raised. The true test must be whether the fundamental right is one primarily meant for the benefit of individuals or for the benefit of the general public. Where, therefore, the Constitution vested the right in the individual, primarily intending to benefit him and such right did not impinge on the rights of others, there could be a waiver of such right provided it was not forbidden by law or did not contravene public policy or public morals. As in the instant case the respondents who had raised the plea, had failed to prove the necessary facts on which it could be sustained, the plea of waiver must fail. Per Subba Rao, J.-Apart from the question as to whether there could be a waiver in respect of a fundamental right, s. 5(1) of the Taxation of Income (Investigation Commission) Act, 1947, having been declared void by this Court in M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, as being violative of the fundamental right founded on Art' 14 Of the Constitution and such decision being binding on all courts in India, the Commissioner of Income-tax had no jurisdiction to continue the proceedings against the appellant under that Act and the appellant could not by a waiver of his right confer jurisdiction on him. No distinction could be made under Art. 13(1) of the Con- stitution between the constitutional incompetency of a legislature and constitutional limitation placed on its power of legislation, for a statute declared void on either ground would continue to be so, so long as the inconsistency continued. As the inconsistency of S. 5(1) of the Act with Art. 14 continued, it must continue to be void. Keshavan Madhava Menon v. The State of Bombay, [1951] S.C.R. 228; Behram Khurshed Pesihaka v. State of Bombay, [1955] 1 S.C.R. 613 and Bhikaji Narain Dhakras v. State of Madhya Pradesh, [1955] 2 S.C.R. 589, referred to. - 9. It should, in this connection, be remembered that under the law it is for the person who assail a legislation a discriminatory to established that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing status. They are therefore incentives to industries that the State in natural policy might well hesitate to obstruct or burden and to yield to the policy or consider it is well within the concession or the power of the State expressed in the cases we have cited. Of these two integrated activities, which together constitute on export sale, whichever first occurs can well be regarded as taking place in the course of the other'.12. Now the contention is that the agreement entered into with the foreign purchasers for sale of the Virginia tobacco, the purchase of the same locally by the appellants for performing the contract and their subsequent export to the foreign purchasers must all be held to form one integrated transaction of sale in the course of export. 13. Now the observations quoted above were made in refutation of the contention that the expression 'sale in the course of export or import' meant only a sale which takes place while the goods are actually in movement, in the course of export or import, as for example, when shipping documents are endorsed and delivered when the goods are in transit. A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done 'in the course of the export of the goods out of the territory of India',and more than the other two activities can be so regarded. 16. On these authorities the law must be taken to be well settled that it is only the sale under which the export is made that is protected by Article 286(12)(b), and that a purchase which precedes such a sale does not fall within its purview though it is made for the purse of, or with a view to export. The impugned legislation must accordingly be held not to contravene Article 286(1)(b). 17. In the result both the contentions urged by the appellants fail and the appeals must be dismissed with costs, one hearing fee.', 'caseanalysis' => null, 'casesref' => 'The State of Mysore v. Mysore Spinning;', 'citingcases' => '', 'counselplain' => '', 'counseldef' => '', 'court' => 'Supreme Court of India', 'court_type' => 'SC', 'decidedon' => '1962-04-06', 'deposition' => '', 'favorof' => null, 'findings' => null, 'judge' => ' B.P. Sinha, C.J.,; K.N. Wanchoo,; N. Rajagopala Ayyangar,; P.B. Gajendragadkar and; ', 'judgement' => '<p style="text-align: justify;">Venkatarama Aiyar, J.</p><p style="text-align: justify;">1. These are appeals against the judgment of the High Court of Andhra Pradesh in Petitions Nos. 1172 of 1956 and 56 of 1957 filed under Article 226 of the Constitution questioning the validity of the Andhra Act XIV of 1955 insofar as it imposes a tax on the sale of Virginia tobacco. The appellants are firms doing business in the exports of tobacco. The usual course of that business is stated to be that they first enter into contracts with their customer abroad for the sale of tobacco, that thereafter they purchase the requisite quantities of goods locally and then export them to the foreign purchases in performance of their contracts. Prior to October 1, 1953, the area wherein the appellants carried on business formed part of the State of Madras, and on that date the State of Andhra was constituted, and the area in question fell within that State. The law relating to sales tax in force in that areas is the Madras General Sales Tax Act, IX of 1939. Section 5 of this Act provides for exemption of tax on sales of goods specified therein and section 6 confers on the State Government power to exempt the tax payable on the sale of any specified class of goods or by any specified class of persons. In exercise of the powers conferred by section 6 the Government of Madras issued on March 31, 1953 a notification No. 144 exempting the sales of unmanufactured tobacco form sales tax. After the Andhra State came into existence, the Legislature of that State enacted Act XIV of 1955 hereinafter referred to as 'the Amendment Act' whereby it amended section 5 of the Madras General Sales Tax Act by adding as item (viii) the following :- </p><p style="text-align: justify;">'(viii) raw tobacco (except country variety thereof) whether cured or uncured, shall be liable to tax under Section 3, Sub Section 1 only at the point of the first purchase effected in the State of Andhra by a dealer who is not exempt from taxation under Section 3, Sub Section 3 but at the rate of seven and half pied for every rupee on his turnover. </p><p style="text-align: justify;"> Explanation :- For the purpose of this item, country variety of tobacco means variety of tobacco other than Virginia and other similar varieties of tobacco'. </p><p style="text-align: justify;">2. As a result of this enactment exemption from tax was limited to sales of what is known as country tobacco (Nattu tobacco) and so far as sales of Virginia tobacco are concerned, they became liable to be taxed. Pursuant to the Amendment Act, the Andhra, Government issued on November 4, 1955, a notification No. 711 cancelling the earlier notification No. 144 dated March 31, 1953. </p><p style="text-align: justify;">3. Acting under the provisions of the Amendment Act, the Additional Commercial Tax Officer, Guntur issued notices to the appellants to produce the account books relating to their business in tobacco for the purpose of assessing sales tax. To this the appellants replied by filing petitions under Article 226 of the Constitution in the High Court of Andhra Pradesh challenging the constitutionality of the Amendment Act on the grounds inter alia that in taxing sales of Virginia tobacco and exempting from tax seals of other tobacco, the Act was discriminatory, and that in consequence it was obnoxious to Article 14 of the Constitution and that further it was in contravention of Article 286(1)(b) as it was really a tax on sales in the course of export of tobacco. They accordingly prayed that a mandamus might be issued directing the respondents to forbear from making an assessment on the sales of tobacco. The learned Judges disagreed with these contentions and dismissed the petitions, holding that the impugned Act did not infringe any constitutional provisions, but granted certificate under Art 133 of the constitution. That is how these appeals come before us. </p><p style="text-align: justify;">4. On the arguments addressed to us, two questions arises for our determination : </p><p style="text-align: justify;">(1) Is the impugned Act repugnant Article 14 for the reason that it singles out Virginia tobacco for taxation </p><p style="text-align: justify;"> (2) Is the impugned legislation in contravention of Article 286(1)(b) as imposing a tax on sales in the course of export? </p><p style="text-align: justify;"> (1) On the first question the contention of the appellants may be thus stated. All laws must satisfy the requirements of Article 14. Taxation laws are no exception to it. In imposing a tax on the sales of Virginia tobacco and not on other kinds of tobacco the impugned Act is on the face of discriminatory. It is therefore obnoxious to Article 14 and is void. </p><p style="text-align: justify;">5. It is not in dispute that taxation laws must also pass the test of Article 14. That has been laid down recently by this Court in Moopil Nair v. The State of Kerala : [1961]3SCR77 . But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Article 14. The following statement of the law in Willis on 'Constitutional Law' page 587, would correctly represent the position with reference to taxing statutes under our Constitution :- </p><p style="text-align: justify;">'A state does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably................. The Supreme Court has been practical and has permitted a very wide latitude in classification for taxation'. </p><p style="text-align: justify;">6. In the light of these principles, we may now proceed to discuss whether the impugned Act is repugnant to Article 14 of the Constitution. The point for consideration is whether there is in fact a real distinction between Virginia tobacco and other tobacco called country tobacco. 'Nattu tobacco'. If there is, then the Act is valid, if not it must be held of the be unconstitutional. The finding of learned Judges on this point is as follows :- </p><p style="text-align: justify;">'Broadly, there are two types, Virginia and Nattu, differing in taste, light, colour and texture.............. There are obvious differences between the two categories of tobacco, in the nomenclature used, in the process of growing, curing and grading, in the market facilities foreign and inland, in the price and in the variety of uses to which they are put and also the class of customers that take to them.' </p><p style="text-align: justify;">7. Thus it will be seen that Virginia tobacco has features which distinguish it form country tobacco, and can be treated as a class in itself. It will therefore be within the power of the State to impose a tax on the sales of Virginia tobacco while exempting the country tobacco. </p><p style="text-align: justify;">8. It is argued for the appellants that to repel the charge of discrimination in taxing only Virginia tobacco, and not the country tobacco, it is not sufficient merely to show that there are differences between the two varieties, but that it must further be shown as held in Budhan Choudhry v. The State of Bihar : 1955CriLJ374 and Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar : [1959]1SCR279 , that the differentia has reasonable relation to the object of the legislation. The difference between the Virginia tobacco and the country tobacco, as found be the learned Judged, are not, it is argued, germane to the levy of sale tax, and so there is no valid classification. We are unable to agree with this contention. If a State can validly pick and chose one commodity for taxation and that is not open to attack under Article 14, the same result must follow when the State picks out one category of goods and subject it to taxation. </p><p style="text-align: justify;">9. It should, in this connection, be remembered that under the law it is for the person who assail a legislation a discriminatory to established that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing status. 'In taxation even more than in other fields' it was observed by the Supreme Court of United States in Madden v. Kentucky (1940) 309 US 83; 84 L.Ed. 590 'Legislatures possess the greatest freedom in classification. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it'. How wide the powers of the Legislature are in classifying objects for purposes of taxation will be seen from the following resume of the law given by Rottschaefer, in his 'Constitutional Law' p. 668 :- </p><p style="text-align: justify;">'The Federal Supreme Court has seldom any classification made in connection with the levying of property taxes. It has sustained the levy of a heavier burden of taxation upon motor vehicles using the public high ways than that levied upon other forms of property, and the imposition of a heavier tax upon oil than upon other property. The equal protection clause does not prohibit the levy of a tax on ores which is not imposed upon similar interests in quarries, forests and other forms of wasting asset, nor even the imposition of a tax upon anthracite that is not levied upon bituminous coal. A statute providing for the assessment of one type of intangible at its actual value while other intangibles are assessed at their face value does not deny equal protection even when both are subject to the same rate of tax. The decision of the Supreme Court in this field have permitted a State legislature to exercise an extremely wide discretion in classifying property for tax purposes so long as it refrained from clear and hostile discrimination against a particular persons or classes'. </p><p style="text-align: justify;">10. A decision near to the present case on the facts is C. Heisler v. Thomas Colliery Company 260 US 245; 6 L.Ed. 237. There the question was whether a law imposing a tax on Anthracite coal and not upon bituminous coal was unconstitutional as violating the equal protection of laws guaranteed by the 14th Amendment to the Federal Constitution. In upholding the validity of the law, Justice Mckenna observed as follows :- </p><p style="text-align: justify;">'The fact of competition may be accepted. Both coals, being compositions of carbon are of course capable of combustion and may be used as fuels but under different conditions and manifestations and the difference determines a choice between them as fuels. By disregarding that difference and the greater ones which exists and by dwelling on competition alone, it is easy to erect an argument of strength against the taxation of one and not of the other. But this may not be done. The differences between them are a just basis for their different classification; and the differences are great and important. They differ even as fuels, they differ fundamentally in other particulars. Anthracite coal has no substantial use beyond a fuel; bituminous coal has other uses. Products of utility are obtained from it. The fact is not denied and the products are enumerated that the extent of their use. They are therefore incentives to industries that the State in natural policy might well hesitate to obstruct or burden and to yield to the policy or consider it is well within the concession or the power of the State expressed in the cases we have cited. The distinction in the treatment of the respective coals being within the power conceded by the cases to the State it has logical and legal justification and is necessarily, not unreasonable or arbitrary'. </p><p style="text-align: justify;">11. In our Judgment the differences which exist between the Virginia and 'Nattu' country tobacco, as found by the learned Judges, are materials on which the State could treat Virginia tobacco as forming a class by itself for purpose of taxation, and the impugned legislation must be held to be not obnoxious to Art. 14 of the Constitution. </p><p style="text-align: justify;">(2) It is next argued that the Amendment Act is ultra vires because in reality it imposes a tax on sales in the course of export and that is hit by Article 286(1)(b). The course of business followed by the appellants has already been set out. It may be assumed for the purpose of the present discussion that the purchases made by the appellants on which the tax is sought to be imposed were made for the purpose of executing specifies orders which they had received from their foreign customers. The question is whether even so the sales in question took place in the course of export for the purpose of Article 286(1)(b). In support of their contention that they did, the appellants rely on the following observations in State of Travancore-Cochin v. The Bombay Co. Ltd. : [1952]1SCR1112 :- </p><p style="text-align: justify;">'A sale by export thus involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country bay land or sea. Such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export forms parts of a single transaction. Of these two integrated activities, which together constitute on export sale, whichever first occurs can well be regarded as taking place in the course of the other'. </p><p style="text-align: justify;">12. Now the contention is that the agreement entered into with the foreign purchasers for sale of the Virginia tobacco, the purchase of the same locally by the appellants for performing the contract and their subsequent export to the foreign purchasers must all be held to form one integrated transaction of sale in the course of export. </p><p style="text-align: justify;">13. Now the observations quoted above were made in refutation of the contention that the expression 'sale in the course of export or import' meant only a sale which takes place while the goods are actually in movement, in the course of export or import, as for example, when shipping documents are endorsed and delivered when the goods are in transit. This Court held that this was too narrow an interpretation to put on the words in question and that a sale which actually occasions the export or import would fall within Article 286(1)(b). The question whether sales which precede export are sales in the course of export within Article 286(1)(b) arose directly for decision in State of Travancore-Cochin v. Shanmuga Vilas Cashew Nut Factory : [1954]1SCR53 and it was held that they were not. Explaining, in the course of the judgment, the true scope of the observations in State of Travancore-Cochin's case : [1952]1SCR1112 quoted above, Patanjali Sastri, C.J. observed :- </p><p style="text-align: justify;">'The phrase 'integrated activities' was used in the previous decision to denote that 'such a sale' (i.e., a sale which occasions the export) 'cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export from parts of a single transaction'. It is in that sense that the two activities - the sale and the export - were said to be integrated. A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done 'in the course of the export of the goods out of the territory of India', and more than the other two activities can be so regarded.' </p><p style="text-align: justify;">14. We may refer to two other decisions of this Court where this question has been considered. In The State of Madras v. Guriviah Naidue & Co. Ltd. : 1956CriLJ331 , the facts were that an assessee secured orders for the supply of untanned hides and skins from London purchasers and then, he purchased them locally in order to implement those orders and exported them, and the question was whether a tax on those purchases was hit by Article 286(1)(b). In holding that it was not, this Court observed :- </p><p style="text-align: justify;">'Such purchases were, it is true, for the purpose of export but such purchases did not themselves occasion the export and consequently did not fall within he exemption of Article 286(1)(b) of the Constitution as held by this court in The State of Travancore-Cochin v. The Bombay Company Ltd. : [1952]1SCR1112 . Nor did such purchases in the State by the exporter for the purpose of export come within the ambit of Article 286(1)(b), as held by the decision of the majority in The State of Travancore Cochin v. Shanmuga Vilas Cashew Nut Factory : [1954]1SCR53 .' </p><p style="text-align: justify;">15. The point came up again for consideration before this Court in The State of Mysore v. Mysore Spinning & Manufacturing Co. : AIR1958SC1002 and it was held following the decision cited above that Article 286(1)(b) could be invoked only in respect of the sale which occasions the export, and not of any sales precedent to it. </p><p style="text-align: justify;">16. On these authorities the law must be taken to be well settled that it is only the sale under which the export is made that is protected by Article 286(12)(b), and that a purchase which precedes such a sale does not fall within its purview though it is made for the purse of, or with a view to export. The impugned legislation must accordingly be held not to contravene Article 286(1)(b). </p><p style="text-align: justify;">17. In the result both the contentions urged by the appellants fail and the appeals must be dismissed with costs, one hearing fee. </p><p style="text-align: justify;">18. Appeals dismissed. </p>', 'observations' => null, 'overruledby' => null, 'prhistory' => '', 'pubs' => 'AIR1962SC1733; [1963]1SCR404; [1962]13STC529(SC)', 'ratiodecidendi' => '', 'respondent' => 'State of Andhra Pradesh', 'sub' => 'Constitution', 'link' => null, 'circuit' => null ) ) $args = array( (int) 0 => '641794' ) $pattern = '/\(((0[1-9]|[12][0-9]|3[01])[.](0[1-9]|1[012])[.](17|18|19|20)[0-9]{2}).*\)/'include - APP/View/Case/meta.ctp, line 36 View::_evaluate() - CORE/Cake/View/View.php, line 971 View::_render() - CORE/Cake/View/View.php, line 933 View::render() - CORE/Cake/View/View.php, line 473 Controller::render() - CORE/Cake/Controller/Controller.php, line 963 Dispatcher::_invoke() - CORE/Cake/Routing/Dispatcher.php, line 200 Dispatcher::dispatch() - CORE/Cake/Routing/Dispatcher.php, line 167 [main] - APP/webroot/index.php, line 109
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State of Andhra Pradesh Semantic Analysis', 'shops' => array( 'LAW' => array( (int) 0 => 'Article 226 of the Constitution', (int) 1 => 'the Andhra Act XIV', (int) 2 => 'Section 5 of this Act', (int) 3 => 'section 6', (int) 4 => 'section 6', (int) 5 => 'the Amendment Act'', (int) 6 => 'section 5', (int) 7 => 'Section 3, Sub Section 1', (int) 8 => 'Section 3, Sub Section 3', (int) 9 => 'the Amendment Act', (int) 10 => 'the Amendment Act', (int) 11 => 'Article 226 of the Constitution in the High Court of Andhra Pradesh', (int) 12 => 'the Amendment Act', (int) 13 => 'Article 14 of the Constitution', (int) 14 => 'Article 286(1)(b', (int) 15 => 'Article 14', (int) 16 => 'Article 286(1)(b', (int) 17 => 'Article 14', (int) 18 => 'Article 14', (int) 19 => 'Article 14', (int) 20 => 'Article 14', (int) 21 => 'Constitution', (int) 22 => 'Article 14 of the Constitution', (int) 23 => 'Article 14', (int) 24 => 'the 14th Amendment', (int) 25 => 'the Federal Constitution', (int) 26 => 'Constitution', (int) 27 => 'the Amendment Act', (int) 28 => 'Article 286(1)(b', (int) 29 => 'Article 286(1)(b', (int) 30 => 'Article 286(1)(b', (int) 31 => 'Article 286(1)(b', (int) 32 => 'Article 286(1)(b', (int) 33 => 'Article 286(1)(b', (int) 34 => 'Constitution', (int) 35 => 'Article 286(1)(b', (int) 36 => 'Article 286(1)(b', (int) 37 => 'Article 286(12)(b', (int) 38 => 'Article 286(1)(b' ), 'PERSON' => array( (int) 0 => 'Venkatarama Aiyar', (int) 1 => 'J.1', (int) 2 => 'Andhra State', (int) 3 => 'Nattu', (int) 4 => 'Budhan Choudhry v. 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Vs. State of Andhra Pradesh', 'casenote' => 'The case questioned whether the provision of imposition of tax on sale of Virginia tobacco and exemption of country tobacco was discriminatory- It also questioned if the purchase which preceded sale for export could be exempted from tax- It was held that the Madras General Sales Tax (Andhra Amendment) Act, 1955 which taxed sales of Virginia tobacco but exempted sales of 'Nattu' or country tobacco could not be said to be discriminatory and was not obnoxious to Article 14 of the Constitution of India- It was further held that the sale under which the export was made that was protected by Article 286(1) (b) of the Constitution and a purchase which preceded such a sale did not fall within its purview, though made for the purpose of or with a view to effect an export.<br> - [] The two questions for determination in this appeal were, (1) whether a settlement under s. 8A of the Taxation of Income (Investigation Commission) Act, 1947 (30 Of 1947) made after the commencement of the Constitution was constitutionally valid and (2) whether the waiver of a fundamental right was permissible under the Constitution. The appellant's case was on July 22, 1948, referred by the Central Government under S. 5(1) of the Act to the Investigation Commission. for investigation and report. The Commission directed the authorised official under s. 6 of the Act to examine the appellant's accounts. He submitted his final report by the end of 1953. The Commission considered the report heard the assessee and came to the conclusion that Rs. 4,47,915 had escaped assessment. Thereupon the appellant on May 20, 1954, applied to the Commission for a settlement of his case under s. 8A of the Act, agreeing to pay Rs. 3,50,000 by way of tax and penalty at the concessional rate. The Commission reported to the Central Government approving of the settlement, the Central Government accepted it and it was recorded by the Commission. The Central Government directed the recovery of the said amount under s. 8A(2) of the Act. The appellant was permitted to make payments by monthly instalments of Rs. 5,000 and the total amount thus paid up to September 8, 1957, aggregated to Rs. 1,28,000. In the meantime the Income Tax Officer issued a certificate and certain properties of the appellant were attached. Relying on the decisions of this Court in Suraj Mall Mohta and Co. v. A. V. Visvanatha Sastri, [1955] 1 S.C.R. 448 and M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247, the appellant applied to the Commissioner of Income-tax challenging the validity of the settlement made under s. 8A of the Act on the ground that S. 5(1) Of the Act on which it was founded had been declared void by this Court, and claimed that his properties might be released from attachment and the amount paid under the settlement might be refunded to him., On January 29, 1958, the Commissioner of Income Tax sent a reply to the appellant maintaining that the settlement was valid and that the appellant was bound thereunder to pay up the arrears of instalments and requesting him to continue to pay in future. Against this decision of the Commissioner of Income Tax the. appellant came up to the Supreme Court by special leave. It was contended on behalf of the respondent that the Act laid down two distinct and separate procedures, one for investigation and the other for settlement and it was the former alone and not the D, latter that was affected by the decisions of this Court. and that the appellant by voluntarily entering into the settlement had waived his fundamental right founded on Art. 14 of the Constitution. Held (Per Curiam), that both the contentions must fail. It was not correct to say that the Taxation of Income (In- vestigation Commission) Act, 1947, laid down two different procedures, one for investigation and assessment under s. 8(2) of the Act and another for settlement under s. 8A of the Act and assessment in terms of such settlement and that while the decision of this Court in M. Ct. Muthiah v. The Commissioner of Incometax, Madras, declaring s. 5(1) of the Act to be discriminatory and therefore void, affected only the former procedure and not the latter. The Act laid down but one procedure and in entertaining a proposal for settlement as in the investigation itself the Commission exercised the same jurisdiction, and powers and followed the one and the same procedure as laid down by ss. 5, 6 and 7 Of the Act. Since the settlement in the instant case was no exception to that rule, it was covered by the decision and must be held to be violative of Art. 14 Of the Constitution. M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247, applied. The observations made in the majority judgment of this Court in Syed Qasim Razvi v. The State of Hyderabad, [1953] S.C.R. 589, must be kept strictly confined to the special facts of that case and had no application to the facts of the present case. Syed Qasim Razvi v. The State of Hyderabad, [1953] S.C.R. 589, held inapplicable. Per Das, C. J., and Kapur J.-There could be no waiver of the fundamental right founded on Art. 14 Of the Constitution and it was not correct to contend that the appellant had by entering into the settlement under s. 8A of the Act, waived his fundamental right under that Article. Article 14 was founded on a sound public policy recognised and valued all over the civilised world, its language was the language of command and it imposed an obligation on the State of which no person could, by his act or conduct, relieve it. As it was not strictly necessary for the disposal of this case, the question whether any other fundamental right could be waived need not be considered in this connection. Laxamanappa Hanumantappa jamkhandi v. The Union of India, [1955] 1 S.C.R. 769; Dewan-Bahadur Seth Gopal Das Moht v. The Union of India, [1955] 1 S.C.R.773; Baburao Narayanrao Sanas v. The Union Of India, [1954] 26 I.T.R. 725; Subedar v. State, A.I.R. 1957 All. 396 and Pakhar Singh v. The State, A.I.R. 1958 Punj. 294, distinguished and held inapplicable. Per Bhagwati and gubba Rao, jj.-There could be no waiver '.,not only of the fundamental right enshrined in Art. 14 but also of any other fundamental right guaranteed by Part III of the Constitution. The Constitution made no distinction between fundamental rights enacted for the benefit of the individual and those enacted in the public interest or on grounds of the public policy. There could, therefore, be no justification for importing American notions or authority of decided cases to whittle down the transcendental character of those rights, conceived in public interest and subject only to such limitations as the Constitution had itself thought fit to impose. Article 13(2) was in terms a constitutional mandate to the State in respect of all the fundamental rights enacted in Part III of the Constitution and no citizen could by waiver of any one of them relieve the State of the solemn obligation that lay on it. The view expressed by Mahajan, C. J., in Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613, correctly laid down the law on the point. Since the arguments in the instant case had covered the entire field of fundamental rights, there was no reason why the answer should be confined to Art. 14 alone. Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613; State of Travancore-Cochin v. The Bombay Co., Ltd., [1954] S.C.R. 1112 and The State of Bombay v. R. M. D. Chamarbaugwala, [1957] S.C.R. 874, referred to. Per S. K. Das, J.-It seems clear that Art. 13 itself re- cognises the distinction between absence of legislative power which will make the law made by an incompetent legislature wholly void, and exercise of legislative power in contravention of a restriction or check on such power, which will make the law void to the extent of the inconsistency or contravention; therefore the mere use of the word " void " in Art. 13 does not necessarily militate against the application of the doctrine of waiver in respect of the provisions contained in Part III of the Constitution. Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613, considered. Bhikaji Narain Dhakyas v. The State of Madhya Pradesh, [1955] 2 S.C.R. 589; M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247 and The State of Bombay v. R.M.D. Chamarbaugwala, [1957] S.C.R. 874, referred to. There was nothing in the two preambles to the Indian and the American Constitutions that could make the doctrine of waiver applicable to the one and not to the other; since the doctrine applied to the constitutional rights under the American Constitution, there is no reason why it should not apply to the fundamental rights under the Indian Constitution. Case-law considered. But it must be made clear that there is no absolute rule, or one formulated in the abstract, as to the applicability of that doctrine to fundamental rights and such applicability must depend on (1) the nature of fundamental right to which it is sought to be applied and (2) the foundation on the basis of which the plea is raised. The true test must be whether the fundamental right is one primarily meant for the benefit of individuals or for the benefit of the general public. Where, therefore, the Constitution vested the right in the individual, primarily intending to benefit him and such right did not impinge on the rights of others, there could be a waiver of such right provided it was not forbidden by law or did not contravene public policy or public morals. As in the instant case the respondents who had raised the plea, had failed to prove the necessary facts on which it could be sustained, the plea of waiver must fail. Per Subba Rao, J.-Apart from the question as to whether there could be a waiver in respect of a fundamental right, s. 5(1) of the Taxation of Income (Investigation Commission) Act, 1947, having been declared void by this Court in M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, as being violative of the fundamental right founded on Art' 14 Of the Constitution and such decision being binding on all courts in India, the Commissioner of Income-tax had no jurisdiction to continue the proceedings against the appellant under that Act and the appellant could not by a waiver of his right confer jurisdiction on him. No distinction could be made under Art. 13(1) of the Con- stitution between the constitutional incompetency of a legislature and constitutional limitation placed on its power of legislation, for a statute declared void on either ground would continue to be so, so long as the inconsistency continued. As the inconsistency of S. 5(1) of the Act with Art. 14 continued, it must continue to be void. Keshavan Madhava Menon v. The State of Bombay, [1951] S.C.R. 228; Behram Khurshed Pesihaka v. State of Bombay, [1955] 1 S.C.R. 613 and Bhikaji Narain Dhakras v. State of Madhya Pradesh, [1955] 2 S.C.R. 589, referred to. - 9. It should, in this connection, be remembered that under the law it is for the person who assail a legislation a discriminatory to established that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing status. They are therefore incentives to industries that the State in natural policy might well hesitate to obstruct or burden and to yield to the policy or consider it is well within the concession or the power of the State expressed in the cases we have cited. Of these two integrated activities, which together constitute on export sale, whichever first occurs can well be regarded as taking place in the course of the other'.12. Now the contention is that the agreement entered into with the foreign purchasers for sale of the Virginia tobacco, the purchase of the same locally by the appellants for performing the contract and their subsequent export to the foreign purchasers must all be held to form one integrated transaction of sale in the course of export. 13. Now the observations quoted above were made in refutation of the contention that the expression 'sale in the course of export or import' meant only a sale which takes place while the goods are actually in movement, in the course of export or import, as for example, when shipping documents are endorsed and delivered when the goods are in transit. A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done 'in the course of the export of the goods out of the territory of India',and more than the other two activities can be so regarded. 16. On these authorities the law must be taken to be well settled that it is only the sale under which the export is made that is protected by Article 286(12)(b), and that a purchase which precedes such a sale does not fall within its purview though it is made for the purse of, or with a view to export. The impugned legislation must accordingly be held not to contravene Article 286(1)(b). 17. In the result both the contentions urged by the appellants fail and the appeals must be dismissed with costs, one hearing fee.', 'caseanalysis' => null, 'casesref' => 'The State of Mysore v. Mysore Spinning;', 'citingcases' => '', 'counselplain' => '', 'counseldef' => '', 'court' => 'Supreme Court of India', 'court_type' => 'SC', 'decidedon' => '1962-04-06', 'deposition' => '', 'favorof' => null, 'findings' => null, 'judge' => ' B.P. Sinha, C.J.,; K.N. Wanchoo,; N. Rajagopala Ayyangar,; P.B. Gajendragadkar and; ', 'judgement' => '<p style="text-align: justify;">Venkatarama Aiyar, J.</p><p style="text-align: justify;">1. These are appeals against the judgment of the High Court of Andhra Pradesh in Petitions Nos. 1172 of 1956 and 56 of 1957 filed under Article 226 of the Constitution questioning the validity of the Andhra Act XIV of 1955 insofar as it imposes a tax on the sale of Virginia tobacco. The appellants are firms doing business in the exports of tobacco. The usual course of that business is stated to be that they first enter into contracts with their customer abroad for the sale of tobacco, that thereafter they purchase the requisite quantities of goods locally and then export them to the foreign purchases in performance of their contracts. Prior to October 1, 1953, the area wherein the appellants carried on business formed part of the State of Madras, and on that date the State of Andhra was constituted, and the area in question fell within that State. The law relating to sales tax in force in that areas is the Madras General Sales Tax Act, IX of 1939. Section 5 of this Act provides for exemption of tax on sales of goods specified therein and section 6 confers on the State Government power to exempt the tax payable on the sale of any specified class of goods or by any specified class of persons. In exercise of the powers conferred by section 6 the Government of Madras issued on March 31, 1953 a notification No. 144 exempting the sales of unmanufactured tobacco form sales tax. After the Andhra State came into existence, the Legislature of that State enacted Act XIV of 1955 hereinafter referred to as 'the Amendment Act' whereby it amended section 5 of the Madras General Sales Tax Act by adding as item (viii) the following :- </p><p style="text-align: justify;">'(viii) raw tobacco (except country variety thereof) whether cured or uncured, shall be liable to tax under Section 3, Sub Section 1 only at the point of the first purchase effected in the State of Andhra by a dealer who is not exempt from taxation under Section 3, Sub Section 3 but at the rate of seven and half pied for every rupee on his turnover. </p><p style="text-align: justify;"> Explanation :- For the purpose of this item, country variety of tobacco means variety of tobacco other than Virginia and other similar varieties of tobacco'. </p><p style="text-align: justify;">2. As a result of this enactment exemption from tax was limited to sales of what is known as country tobacco (Nattu tobacco) and so far as sales of Virginia tobacco are concerned, they became liable to be taxed. Pursuant to the Amendment Act, the Andhra, Government issued on November 4, 1955, a notification No. 711 cancelling the earlier notification No. 144 dated March 31, 1953. </p><p style="text-align: justify;">3. Acting under the provisions of the Amendment Act, the Additional Commercial Tax Officer, Guntur issued notices to the appellants to produce the account books relating to their business in tobacco for the purpose of assessing sales tax. To this the appellants replied by filing petitions under Article 226 of the Constitution in the High Court of Andhra Pradesh challenging the constitutionality of the Amendment Act on the grounds inter alia that in taxing sales of Virginia tobacco and exempting from tax seals of other tobacco, the Act was discriminatory, and that in consequence it was obnoxious to Article 14 of the Constitution and that further it was in contravention of Article 286(1)(b) as it was really a tax on sales in the course of export of tobacco. They accordingly prayed that a mandamus might be issued directing the respondents to forbear from making an assessment on the sales of tobacco. The learned Judges disagreed with these contentions and dismissed the petitions, holding that the impugned Act did not infringe any constitutional provisions, but granted certificate under Art 133 of the constitution. That is how these appeals come before us. </p><p style="text-align: justify;">4. On the arguments addressed to us, two questions arises for our determination : </p><p style="text-align: justify;">(1) Is the impugned Act repugnant Article 14 for the reason that it singles out Virginia tobacco for taxation </p><p style="text-align: justify;"> (2) Is the impugned legislation in contravention of Article 286(1)(b) as imposing a tax on sales in the course of export? </p><p style="text-align: justify;"> (1) On the first question the contention of the appellants may be thus stated. All laws must satisfy the requirements of Article 14. Taxation laws are no exception to it. In imposing a tax on the sales of Virginia tobacco and not on other kinds of tobacco the impugned Act is on the face of discriminatory. It is therefore obnoxious to Article 14 and is void. </p><p style="text-align: justify;">5. It is not in dispute that taxation laws must also pass the test of Article 14. That has been laid down recently by this Court in Moopil Nair v. The State of Kerala : [1961]3SCR77 . But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Article 14. The following statement of the law in Willis on 'Constitutional Law' page 587, would correctly represent the position with reference to taxing statutes under our Constitution :- </p><p style="text-align: justify;">'A state does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably................. The Supreme Court has been practical and has permitted a very wide latitude in classification for taxation'. </p><p style="text-align: justify;">6. In the light of these principles, we may now proceed to discuss whether the impugned Act is repugnant to Article 14 of the Constitution. The point for consideration is whether there is in fact a real distinction between Virginia tobacco and other tobacco called country tobacco. 'Nattu tobacco'. If there is, then the Act is valid, if not it must be held of the be unconstitutional. The finding of learned Judges on this point is as follows :- </p><p style="text-align: justify;">'Broadly, there are two types, Virginia and Nattu, differing in taste, light, colour and texture.............. There are obvious differences between the two categories of tobacco, in the nomenclature used, in the process of growing, curing and grading, in the market facilities foreign and inland, in the price and in the variety of uses to which they are put and also the class of customers that take to them.' </p><p style="text-align: justify;">7. Thus it will be seen that Virginia tobacco has features which distinguish it form country tobacco, and can be treated as a class in itself. It will therefore be within the power of the State to impose a tax on the sales of Virginia tobacco while exempting the country tobacco. </p><p style="text-align: justify;">8. It is argued for the appellants that to repel the charge of discrimination in taxing only Virginia tobacco, and not the country tobacco, it is not sufficient merely to show that there are differences between the two varieties, but that it must further be shown as held in Budhan Choudhry v. The State of Bihar : 1955CriLJ374 and Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar : [1959]1SCR279 , that the differentia has reasonable relation to the object of the legislation. The difference between the Virginia tobacco and the country tobacco, as found be the learned Judged, are not, it is argued, germane to the levy of sale tax, and so there is no valid classification. We are unable to agree with this contention. If a State can validly pick and chose one commodity for taxation and that is not open to attack under Article 14, the same result must follow when the State picks out one category of goods and subject it to taxation. </p><p style="text-align: justify;">9. It should, in this connection, be remembered that under the law it is for the person who assail a legislation a discriminatory to established that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing status. 'In taxation even more than in other fields' it was observed by the Supreme Court of United States in Madden v. Kentucky (1940) 309 US 83; 84 L.Ed. 590 'Legislatures possess the greatest freedom in classification. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it'. How wide the powers of the Legislature are in classifying objects for purposes of taxation will be seen from the following resume of the law given by Rottschaefer, in his 'Constitutional Law' p. 668 :- </p><p style="text-align: justify;">'The Federal Supreme Court has seldom any classification made in connection with the levying of property taxes. It has sustained the levy of a heavier burden of taxation upon motor vehicles using the public high ways than that levied upon other forms of property, and the imposition of a heavier tax upon oil than upon other property. The equal protection clause does not prohibit the levy of a tax on ores which is not imposed upon similar interests in quarries, forests and other forms of wasting asset, nor even the imposition of a tax upon anthracite that is not levied upon bituminous coal. A statute providing for the assessment of one type of intangible at its actual value while other intangibles are assessed at their face value does not deny equal protection even when both are subject to the same rate of tax. The decision of the Supreme Court in this field have permitted a State legislature to exercise an extremely wide discretion in classifying property for tax purposes so long as it refrained from clear and hostile discrimination against a particular persons or classes'. </p><p style="text-align: justify;">10. A decision near to the present case on the facts is C. Heisler v. Thomas Colliery Company 260 US 245; 6 L.Ed. 237. There the question was whether a law imposing a tax on Anthracite coal and not upon bituminous coal was unconstitutional as violating the equal protection of laws guaranteed by the 14th Amendment to the Federal Constitution. In upholding the validity of the law, Justice Mckenna observed as follows :- </p><p style="text-align: justify;">'The fact of competition may be accepted. Both coals, being compositions of carbon are of course capable of combustion and may be used as fuels but under different conditions and manifestations and the difference determines a choice between them as fuels. By disregarding that difference and the greater ones which exists and by dwelling on competition alone, it is easy to erect an argument of strength against the taxation of one and not of the other. But this may not be done. The differences between them are a just basis for their different classification; and the differences are great and important. They differ even as fuels, they differ fundamentally in other particulars. Anthracite coal has no substantial use beyond a fuel; bituminous coal has other uses. Products of utility are obtained from it. The fact is not denied and the products are enumerated that the extent of their use. They are therefore incentives to industries that the State in natural policy might well hesitate to obstruct or burden and to yield to the policy or consider it is well within the concession or the power of the State expressed in the cases we have cited. The distinction in the treatment of the respective coals being within the power conceded by the cases to the State it has logical and legal justification and is necessarily, not unreasonable or arbitrary'. </p><p style="text-align: justify;">11. In our Judgment the differences which exist between the Virginia and 'Nattu' country tobacco, as found by the learned Judges, are materials on which the State could treat Virginia tobacco as forming a class by itself for purpose of taxation, and the impugned legislation must be held to be not obnoxious to Art. 14 of the Constitution. </p><p style="text-align: justify;">(2) It is next argued that the Amendment Act is ultra vires because in reality it imposes a tax on sales in the course of export and that is hit by Article 286(1)(b). The course of business followed by the appellants has already been set out. It may be assumed for the purpose of the present discussion that the purchases made by the appellants on which the tax is sought to be imposed were made for the purpose of executing specifies orders which they had received from their foreign customers. The question is whether even so the sales in question took place in the course of export for the purpose of Article 286(1)(b). In support of their contention that they did, the appellants rely on the following observations in State of Travancore-Cochin v. The Bombay Co. Ltd. : [1952]1SCR1112 :- </p><p style="text-align: justify;">'A sale by export thus involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country bay land or sea. Such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export forms parts of a single transaction. Of these two integrated activities, which together constitute on export sale, whichever first occurs can well be regarded as taking place in the course of the other'. </p><p style="text-align: justify;">12. Now the contention is that the agreement entered into with the foreign purchasers for sale of the Virginia tobacco, the purchase of the same locally by the appellants for performing the contract and their subsequent export to the foreign purchasers must all be held to form one integrated transaction of sale in the course of export. </p><p style="text-align: justify;">13. Now the observations quoted above were made in refutation of the contention that the expression 'sale in the course of export or import' meant only a sale which takes place while the goods are actually in movement, in the course of export or import, as for example, when shipping documents are endorsed and delivered when the goods are in transit. This Court held that this was too narrow an interpretation to put on the words in question and that a sale which actually occasions the export or import would fall within Article 286(1)(b). The question whether sales which precede export are sales in the course of export within Article 286(1)(b) arose directly for decision in State of Travancore-Cochin v. Shanmuga Vilas Cashew Nut Factory : [1954]1SCR53 and it was held that they were not. Explaining, in the course of the judgment, the true scope of the observations in State of Travancore-Cochin's case : [1952]1SCR1112 quoted above, Patanjali Sastri, C.J. observed :- </p><p style="text-align: justify;">'The phrase 'integrated activities' was used in the previous decision to denote that 'such a sale' (i.e., a sale which occasions the export) 'cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export from parts of a single transaction'. It is in that sense that the two activities - the sale and the export - were said to be integrated. A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done 'in the course of the export of the goods out of the territory of India', and more than the other two activities can be so regarded.' </p><p style="text-align: justify;">14. We may refer to two other decisions of this Court where this question has been considered. In The State of Madras v. Guriviah Naidue & Co. Ltd. : 1956CriLJ331 , the facts were that an assessee secured orders for the supply of untanned hides and skins from London purchasers and then, he purchased them locally in order to implement those orders and exported them, and the question was whether a tax on those purchases was hit by Article 286(1)(b). In holding that it was not, this Court observed :- </p><p style="text-align: justify;">'Such purchases were, it is true, for the purpose of export but such purchases did not themselves occasion the export and consequently did not fall within he exemption of Article 286(1)(b) of the Constitution as held by this court in The State of Travancore-Cochin v. The Bombay Company Ltd. : [1952]1SCR1112 . Nor did such purchases in the State by the exporter for the purpose of export come within the ambit of Article 286(1)(b), as held by the decision of the majority in The State of Travancore Cochin v. Shanmuga Vilas Cashew Nut Factory : [1954]1SCR53 .' </p><p style="text-align: justify;">15. The point came up again for consideration before this Court in The State of Mysore v. Mysore Spinning & Manufacturing Co. : AIR1958SC1002 and it was held following the decision cited above that Article 286(1)(b) could be invoked only in respect of the sale which occasions the export, and not of any sales precedent to it. </p><p style="text-align: justify;">16. On these authorities the law must be taken to be well settled that it is only the sale under which the export is made that is protected by Article 286(12)(b), and that a purchase which precedes such a sale does not fall within its purview though it is made for the purse of, or with a view to export. The impugned legislation must accordingly be held not to contravene Article 286(1)(b). </p><p style="text-align: justify;">17. In the result both the contentions urged by the appellants fail and the appeals must be dismissed with costs, one hearing fee. </p><p style="text-align: justify;">18. Appeals dismissed. </p>', 'observations' => null, 'overruledby' => null, 'prhistory' => '', 'pubs' => 'AIR1962SC1733; [1963]1SCR404; [1962]13STC529(SC)', 'ratiodecidendi' => '', 'respondent' => 'State of Andhra Pradesh', 'sub' => 'Constitution', 'link' => null, 'circuit' => null ) ), 'args' => array( (int) 0 => '641794' ) ) $title_for_layout = 'East India Tobacco Co. Vs. State of Andhra Pradesh Semantic Analysis' $shops = array( 'LAW' => array( (int) 0 => 'Article 226 of the Constitution', (int) 1 => 'the Andhra Act XIV', (int) 2 => 'Section 5 of this Act', (int) 3 => 'section 6', (int) 4 => 'section 6', (int) 5 => 'the Amendment Act'', (int) 6 => 'section 5', (int) 7 => 'Section 3, Sub Section 1', (int) 8 => 'Section 3, Sub Section 3', (int) 9 => 'the Amendment Act', (int) 10 => 'the Amendment Act', (int) 11 => 'Article 226 of the Constitution in the High Court of Andhra Pradesh', (int) 12 => 'the Amendment Act', (int) 13 => 'Article 14 of the Constitution', (int) 14 => 'Article 286(1)(b', (int) 15 => 'Article 14', (int) 16 => 'Article 286(1)(b', (int) 17 => 'Article 14', (int) 18 => 'Article 14', (int) 19 => 'Article 14', (int) 20 => 'Article 14', (int) 21 => 'Constitution', (int) 22 => 'Article 14 of the Constitution', (int) 23 => 'Article 14', (int) 24 => 'the 14th Amendment', (int) 25 => 'the Federal Constitution', (int) 26 => 'Constitution', (int) 27 => 'the Amendment Act', (int) 28 => 'Article 286(1)(b', (int) 29 => 'Article 286(1)(b', (int) 30 => 'Article 286(1)(b', (int) 31 => 'Article 286(1)(b', (int) 32 => 'Article 286(1)(b', (int) 33 => 'Article 286(1)(b', (int) 34 => 'Constitution', (int) 35 => 'Article 286(1)(b', (int) 36 => 'Article 286(1)(b', (int) 37 => 'Article 286(12)(b', (int) 38 => 'Article 286(1)(b' ), 'PERSON' => array( (int) 0 => 'Venkatarama Aiyar', (int) 1 => 'J.1', (int) 2 => 'Andhra State', (int) 3 => 'Nattu', (int) 4 => 'Budhan Choudhry v. 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Ltd.', (int) 26 => 'State of Travancore-Cochin v.', (int) 27 => 'Shanmuga Vilas Cashew Nut Factory', (int) 28 => 'State of Travancore-Cochin's', (int) 29 => 'Court', (int) 30 => 'Guriviah Naidue & Co. Ltd.', (int) 31 => 'Court', (int) 32 => 'The State of Travancore-Cochin v.', (int) 33 => 'The Bombay Company Ltd.', (int) 34 => 'State', (int) 35 => 'The State of Travancore Cochin', (int) 36 => 'Shanmuga Vilas', (int) 37 => 'Court', (int) 38 => 'The State of Mysore v. Mysore Spinning & Manufacturing Co.' ), 'DATE' => array( (int) 0 => '1172 of 1956', (int) 1 => '1957', (int) 2 => '1955', (int) 3 => 'October 1, 1953', (int) 4 => '1939', (int) 5 => 'March 31, 1953', (int) 6 => '1955', (int) 7 => 'November 4, 1955', (int) 8 => 'March 31, 1953', (int) 9 => '1940' ), 'CARDINAL' => array( (int) 0 => '56', (int) 1 => '144', (int) 2 => 'seven', (int) 3 => 'half', (int) 4 => '2.', (int) 5 => '711', (int) 6 => '144', (int) 7 => '3', (int) 8 => 'two', (int) 9 => '1', (int) 10 => '2', (int) 11 => '1', (int) 12 => '5.', (int) 13 => '1961]3SCR77', (int) 14 => '587', (int) 15 => '6', (int) 16 => 'two', (int) 17 => 'two', (int) 18 => '8.', (int) 19 => 'two', (int) 20 => '1955CriLJ374', (int) 21 => '1959]1SCR279', (int) 22 => 'one', (int) 23 => 'one', (int) 24 => '9', (int) 25 => '309', (int) 26 => '84', (int) 27 => '590', (int) 28 => '668', (int) 29 => 'one', (int) 30 => '10', (int) 31 => '260', (int) 32 => '6', (int) 33 => '237', (int) 34 => '11', (int) 35 => '14', (int) 36 => '2', (int) 37 => '1952]1SCR1112', (int) 38 => 'two', (int) 39 => '12', (int) 40 => '13', (int) 41 => '1954]1SCR53', (int) 42 => '1952]1SCR1112', (int) 43 => 'two', (int) 44 => 'two', (int) 45 => 'two', (int) 46 => '1956CriLJ331', (int) 47 => '1952]1SCR1112', (int) 48 => '1954]1SCR53', (int) 49 => '15', (int) 50 => '16', (int) 51 => '17', (int) 52 => 'one', (int) 53 => '18' ), 'GPE' => array( (int) 0 => 'Virginia', (int) 1 => 'Virginia', (int) 2 => 'Virginia', (int) 3 => 'Guntur', (int) 4 => 'Virginia', (int) 5 => 'Virginia', (int) 6 => 'Virginia', (int) 7 => 'Kerala', (int) 8 => 'Virginia', (int) 9 => 'Virginia', (int) 10 => 'Nattu', (int) 11 => 'Virginia', (int) 12 => 'Virginia', (int) 13 => 'Virginia', (int) 14 => 'Virginia', (int) 15 => 'United States', (int) 16 => 'Madden', (int) 17 => 'Kentucky', (int) 18 => 'US', (int) 19 => 'Virginia', (int) 20 => 'Virginia', (int) 21 => 'Art', (int) 22 => 'Virginia', (int) 23 => 'India', (int) 24 => 'London' ), 'ORDINAL' => array( (int) 0 => 'first', (int) 1 => 'first', (int) 2 => 'first', (int) 3 => 'first' ), 'TIME' => array( (int) 0 => 'the impugned Act' ), 'FAC' => array( (int) 0 => 'Moopil Nair v.' ), 'LOC' => array( (int) 0 => 'Willis' ), 'WORK_OF_ART' => array( (int) 0 => ''Constitutional Law'' ) ) $desc = array( 'Judgement' => array( 'id' => '641794', 'acts' => '<a href="/act/51737/constitution-of-india-complete-act">Constitution of India</a> - Articles 14, 226, 133 and 286(I); Madras General Sales Tax Act, 1939 - Sections 5', 'appealno' => '', 'appellant' => 'East India Tobacco Co.', 'authreffered' => '', 'casename' => 'East India Tobacco Co. Vs. State of Andhra Pradesh', 'casenote' => 'The case questioned whether the provision of imposition of tax on sale of Virginia tobacco and exemption of country tobacco was discriminatory- It also questioned if the purchase which preceded sale for export could be exempted from tax- It was held that the Madras General Sales Tax (Andhra Amendment) Act, 1955 which taxed sales of Virginia tobacco but exempted sales of 'Nattu' or country tobacco could not be said to be discriminatory and was not obnoxious to Article 14 of the Constitution of India- It was further held that the sale under which the export was made that was protected by Article 286(1) (b) of the Constitution and a purchase which preceded such a sale did not fall within its purview, though made for the purpose of or with a view to effect an export.<br> - [] The two questions for determination in this appeal were, (1) whether a settlement under s. 8A of the Taxation of Income (Investigation Commission) Act, 1947 (30 Of 1947) made after the commencement of the Constitution was constitutionally valid and (2) whether the waiver of a fundamental right was permissible under the Constitution. The appellant's case was on July 22, 1948, referred by the Central Government under S. 5(1) of the Act to the Investigation Commission. for investigation and report. The Commission directed the authorised official under s. 6 of the Act to examine the appellant's accounts. He submitted his final report by the end of 1953. The Commission considered the report heard the assessee and came to the conclusion that Rs. 4,47,915 had escaped assessment. Thereupon the appellant on May 20, 1954, applied to the Commission for a settlement of his case under s. 8A of the Act, agreeing to pay Rs. 3,50,000 by way of tax and penalty at the concessional rate. The Commission reported to the Central Government approving of the settlement, the Central Government accepted it and it was recorded by the Commission. The Central Government directed the recovery of the said amount under s. 8A(2) of the Act. The appellant was permitted to make payments by monthly instalments of Rs. 5,000 and the total amount thus paid up to September 8, 1957, aggregated to Rs. 1,28,000. In the meantime the Income Tax Officer issued a certificate and certain properties of the appellant were attached. Relying on the decisions of this Court in Suraj Mall Mohta and Co. v. A. V. Visvanatha Sastri, [1955] 1 S.C.R. 448 and M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247, the appellant applied to the Commissioner of Income-tax challenging the validity of the settlement made under s. 8A of the Act on the ground that S. 5(1) Of the Act on which it was founded had been declared void by this Court, and claimed that his properties might be released from attachment and the amount paid under the settlement might be refunded to him., On January 29, 1958, the Commissioner of Income Tax sent a reply to the appellant maintaining that the settlement was valid and that the appellant was bound thereunder to pay up the arrears of instalments and requesting him to continue to pay in future. Against this decision of the Commissioner of Income Tax the. appellant came up to the Supreme Court by special leave. It was contended on behalf of the respondent that the Act laid down two distinct and separate procedures, one for investigation and the other for settlement and it was the former alone and not the D, latter that was affected by the decisions of this Court. and that the appellant by voluntarily entering into the settlement had waived his fundamental right founded on Art. 14 of the Constitution. Held (Per Curiam), that both the contentions must fail. It was not correct to say that the Taxation of Income (In- vestigation Commission) Act, 1947, laid down two different procedures, one for investigation and assessment under s. 8(2) of the Act and another for settlement under s. 8A of the Act and assessment in terms of such settlement and that while the decision of this Court in M. Ct. Muthiah v. The Commissioner of Incometax, Madras, declaring s. 5(1) of the Act to be discriminatory and therefore void, affected only the former procedure and not the latter. The Act laid down but one procedure and in entertaining a proposal for settlement as in the investigation itself the Commission exercised the same jurisdiction, and powers and followed the one and the same procedure as laid down by ss. 5, 6 and 7 Of the Act. Since the settlement in the instant case was no exception to that rule, it was covered by the decision and must be held to be violative of Art. 14 Of the Constitution. M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247, applied. The observations made in the majority judgment of this Court in Syed Qasim Razvi v. The State of Hyderabad, [1953] S.C.R. 589, must be kept strictly confined to the special facts of that case and had no application to the facts of the present case. Syed Qasim Razvi v. The State of Hyderabad, [1953] S.C.R. 589, held inapplicable. Per Das, C. J., and Kapur J.-There could be no waiver of the fundamental right founded on Art. 14 Of the Constitution and it was not correct to contend that the appellant had by entering into the settlement under s. 8A of the Act, waived his fundamental right under that Article. Article 14 was founded on a sound public policy recognised and valued all over the civilised world, its language was the language of command and it imposed an obligation on the State of which no person could, by his act or conduct, relieve it. As it was not strictly necessary for the disposal of this case, the question whether any other fundamental right could be waived need not be considered in this connection. Laxamanappa Hanumantappa jamkhandi v. The Union of India, [1955] 1 S.C.R. 769; Dewan-Bahadur Seth Gopal Das Moht v. The Union of India, [1955] 1 S.C.R.773; Baburao Narayanrao Sanas v. The Union Of India, [1954] 26 I.T.R. 725; Subedar v. State, A.I.R. 1957 All. 396 and Pakhar Singh v. The State, A.I.R. 1958 Punj. 294, distinguished and held inapplicable. Per Bhagwati and gubba Rao, jj.-There could be no waiver '.,not only of the fundamental right enshrined in Art. 14 but also of any other fundamental right guaranteed by Part III of the Constitution. The Constitution made no distinction between fundamental rights enacted for the benefit of the individual and those enacted in the public interest or on grounds of the public policy. There could, therefore, be no justification for importing American notions or authority of decided cases to whittle down the transcendental character of those rights, conceived in public interest and subject only to such limitations as the Constitution had itself thought fit to impose. Article 13(2) was in terms a constitutional mandate to the State in respect of all the fundamental rights enacted in Part III of the Constitution and no citizen could by waiver of any one of them relieve the State of the solemn obligation that lay on it. The view expressed by Mahajan, C. J., in Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613, correctly laid down the law on the point. Since the arguments in the instant case had covered the entire field of fundamental rights, there was no reason why the answer should be confined to Art. 14 alone. Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613; State of Travancore-Cochin v. The Bombay Co., Ltd., [1954] S.C.R. 1112 and The State of Bombay v. R. M. D. Chamarbaugwala, [1957] S.C.R. 874, referred to. Per S. K. Das, J.-It seems clear that Art. 13 itself re- cognises the distinction between absence of legislative power which will make the law made by an incompetent legislature wholly void, and exercise of legislative power in contravention of a restriction or check on such power, which will make the law void to the extent of the inconsistency or contravention; therefore the mere use of the word " void " in Art. 13 does not necessarily militate against the application of the doctrine of waiver in respect of the provisions contained in Part III of the Constitution. Behram Khurshed Pesikaka v. The State of Bombay, [1955] 1 S.C.R. 613, considered. Bhikaji Narain Dhakyas v. The State of Madhya Pradesh, [1955] 2 S.C.R. 589; M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, [1955] 2 S.C.R. 1247 and The State of Bombay v. R.M.D. Chamarbaugwala, [1957] S.C.R. 874, referred to. There was nothing in the two preambles to the Indian and the American Constitutions that could make the doctrine of waiver applicable to the one and not to the other; since the doctrine applied to the constitutional rights under the American Constitution, there is no reason why it should not apply to the fundamental rights under the Indian Constitution. Case-law considered. But it must be made clear that there is no absolute rule, or one formulated in the abstract, as to the applicability of that doctrine to fundamental rights and such applicability must depend on (1) the nature of fundamental right to which it is sought to be applied and (2) the foundation on the basis of which the plea is raised. The true test must be whether the fundamental right is one primarily meant for the benefit of individuals or for the benefit of the general public. Where, therefore, the Constitution vested the right in the individual, primarily intending to benefit him and such right did not impinge on the rights of others, there could be a waiver of such right provided it was not forbidden by law or did not contravene public policy or public morals. As in the instant case the respondents who had raised the plea, had failed to prove the necessary facts on which it could be sustained, the plea of waiver must fail. Per Subba Rao, J.-Apart from the question as to whether there could be a waiver in respect of a fundamental right, s. 5(1) of the Taxation of Income (Investigation Commission) Act, 1947, having been declared void by this Court in M. Ct. Muthiah v. The Commissioner of Income-tax, Madras, as being violative of the fundamental right founded on Art' 14 Of the Constitution and such decision being binding on all courts in India, the Commissioner of Income-tax had no jurisdiction to continue the proceedings against the appellant under that Act and the appellant could not by a waiver of his right confer jurisdiction on him. No distinction could be made under Art. 13(1) of the Con- stitution between the constitutional incompetency of a legislature and constitutional limitation placed on its power of legislation, for a statute declared void on either ground would continue to be so, so long as the inconsistency continued. As the inconsistency of S. 5(1) of the Act with Art. 14 continued, it must continue to be void. Keshavan Madhava Menon v. The State of Bombay, [1951] S.C.R. 228; Behram Khurshed Pesihaka v. State of Bombay, [1955] 1 S.C.R. 613 and Bhikaji Narain Dhakras v. State of Madhya Pradesh, [1955] 2 S.C.R. 589, referred to. - 9. It should, in this connection, be remembered that under the law it is for the person who assail a legislation a discriminatory to established that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing status. They are therefore incentives to industries that the State in natural policy might well hesitate to obstruct or burden and to yield to the policy or consider it is well within the concession or the power of the State expressed in the cases we have cited. Of these two integrated activities, which together constitute on export sale, whichever first occurs can well be regarded as taking place in the course of the other'.12. Now the contention is that the agreement entered into with the foreign purchasers for sale of the Virginia tobacco, the purchase of the same locally by the appellants for performing the contract and their subsequent export to the foreign purchasers must all be held to form one integrated transaction of sale in the course of export. 13. Now the observations quoted above were made in refutation of the contention that the expression 'sale in the course of export or import' meant only a sale which takes place while the goods are actually in movement, in the course of export or import, as for example, when shipping documents are endorsed and delivered when the goods are in transit. A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done 'in the course of the export of the goods out of the territory of India',and more than the other two activities can be so regarded. 16. On these authorities the law must be taken to be well settled that it is only the sale under which the export is made that is protected by Article 286(12)(b), and that a purchase which precedes such a sale does not fall within its purview though it is made for the purse of, or with a view to export. The impugned legislation must accordingly be held not to contravene Article 286(1)(b). 17. In the result both the contentions urged by the appellants fail and the appeals must be dismissed with costs, one hearing fee.', 'caseanalysis' => null, 'casesref' => 'The State of Mysore v. Mysore Spinning;', 'citingcases' => '', 'counselplain' => '', 'counseldef' => '', 'court' => 'Supreme Court of India', 'court_type' => 'SC', 'decidedon' => '1962-04-06', 'deposition' => '', 'favorof' => null, 'findings' => null, 'judge' => ' B.P. Sinha, C.J.,; K.N. Wanchoo,; N. Rajagopala Ayyangar,; P.B. Gajendragadkar and; ', 'judgement' => '<p style="text-align: justify;">Venkatarama Aiyar, J.</p><p style="text-align: justify;">1. These are appeals against the judgment of the High Court of Andhra Pradesh in Petitions Nos. 1172 of 1956 and 56 of 1957 filed under Article 226 of the Constitution questioning the validity of the Andhra Act XIV of 1955 insofar as it imposes a tax on the sale of Virginia tobacco. The appellants are firms doing business in the exports of tobacco. The usual course of that business is stated to be that they first enter into contracts with their customer abroad for the sale of tobacco, that thereafter they purchase the requisite quantities of goods locally and then export them to the foreign purchases in performance of their contracts. Prior to October 1, 1953, the area wherein the appellants carried on business formed part of the State of Madras, and on that date the State of Andhra was constituted, and the area in question fell within that State. The law relating to sales tax in force in that areas is the Madras General Sales Tax Act, IX of 1939. Section 5 of this Act provides for exemption of tax on sales of goods specified therein and section 6 confers on the State Government power to exempt the tax payable on the sale of any specified class of goods or by any specified class of persons. In exercise of the powers conferred by section 6 the Government of Madras issued on March 31, 1953 a notification No. 144 exempting the sales of unmanufactured tobacco form sales tax. After the Andhra State came into existence, the Legislature of that State enacted Act XIV of 1955 hereinafter referred to as 'the Amendment Act' whereby it amended section 5 of the Madras General Sales Tax Act by adding as item (viii) the following :- </p><p style="text-align: justify;">'(viii) raw tobacco (except country variety thereof) whether cured or uncured, shall be liable to tax under Section 3, Sub Section 1 only at the point of the first purchase effected in the State of Andhra by a dealer who is not exempt from taxation under Section 3, Sub Section 3 but at the rate of seven and half pied for every rupee on his turnover. </p><p style="text-align: justify;"> Explanation :- For the purpose of this item, country variety of tobacco means variety of tobacco other than Virginia and other similar varieties of tobacco'. </p><p style="text-align: justify;">2. As a result of this enactment exemption from tax was limited to sales of what is known as country tobacco (Nattu tobacco) and so far as sales of Virginia tobacco are concerned, they became liable to be taxed. Pursuant to the Amendment Act, the Andhra, Government issued on November 4, 1955, a notification No. 711 cancelling the earlier notification No. 144 dated March 31, 1953. </p><p style="text-align: justify;">3. Acting under the provisions of the Amendment Act, the Additional Commercial Tax Officer, Guntur issued notices to the appellants to produce the account books relating to their business in tobacco for the purpose of assessing sales tax. To this the appellants replied by filing petitions under Article 226 of the Constitution in the High Court of Andhra Pradesh challenging the constitutionality of the Amendment Act on the grounds inter alia that in taxing sales of Virginia tobacco and exempting from tax seals of other tobacco, the Act was discriminatory, and that in consequence it was obnoxious to Article 14 of the Constitution and that further it was in contravention of Article 286(1)(b) as it was really a tax on sales in the course of export of tobacco. They accordingly prayed that a mandamus might be issued directing the respondents to forbear from making an assessment on the sales of tobacco. The learned Judges disagreed with these contentions and dismissed the petitions, holding that the impugned Act did not infringe any constitutional provisions, but granted certificate under Art 133 of the constitution. That is how these appeals come before us. </p><p style="text-align: justify;">4. On the arguments addressed to us, two questions arises for our determination : </p><p style="text-align: justify;">(1) Is the impugned Act repugnant Article 14 for the reason that it singles out Virginia tobacco for taxation </p><p style="text-align: justify;"> (2) Is the impugned legislation in contravention of Article 286(1)(b) as imposing a tax on sales in the course of export? </p><p style="text-align: justify;"> (1) On the first question the contention of the appellants may be thus stated. All laws must satisfy the requirements of Article 14. Taxation laws are no exception to it. In imposing a tax on the sales of Virginia tobacco and not on other kinds of tobacco the impugned Act is on the face of discriminatory. It is therefore obnoxious to Article 14 and is void. </p><p style="text-align: justify;">5. It is not in dispute that taxation laws must also pass the test of Article 14. That has been laid down recently by this Court in Moopil Nair v. The State of Kerala : [1961]3SCR77 . But in deciding whether a taxation law is discriminatory or not it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Article 14. The following statement of the law in Willis on 'Constitutional Law' page 587, would correctly represent the position with reference to taxing statutes under our Constitution :- </p><p style="text-align: justify;">'A state does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably................. The Supreme Court has been practical and has permitted a very wide latitude in classification for taxation'. </p><p style="text-align: justify;">6. In the light of these principles, we may now proceed to discuss whether the impugned Act is repugnant to Article 14 of the Constitution. The point for consideration is whether there is in fact a real distinction between Virginia tobacco and other tobacco called country tobacco. 'Nattu tobacco'. If there is, then the Act is valid, if not it must be held of the be unconstitutional. The finding of learned Judges on this point is as follows :- </p><p style="text-align: justify;">'Broadly, there are two types, Virginia and Nattu, differing in taste, light, colour and texture.............. There are obvious differences between the two categories of tobacco, in the nomenclature used, in the process of growing, curing and grading, in the market facilities foreign and inland, in the price and in the variety of uses to which they are put and also the class of customers that take to them.' </p><p style="text-align: justify;">7. Thus it will be seen that Virginia tobacco has features which distinguish it form country tobacco, and can be treated as a class in itself. It will therefore be within the power of the State to impose a tax on the sales of Virginia tobacco while exempting the country tobacco. </p><p style="text-align: justify;">8. It is argued for the appellants that to repel the charge of discrimination in taxing only Virginia tobacco, and not the country tobacco, it is not sufficient merely to show that there are differences between the two varieties, but that it must further be shown as held in Budhan Choudhry v. The State of Bihar : 1955CriLJ374 and Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar : [1959]1SCR279 , that the differentia has reasonable relation to the object of the legislation. The difference between the Virginia tobacco and the country tobacco, as found be the learned Judged, are not, it is argued, germane to the levy of sale tax, and so there is no valid classification. We are unable to agree with this contention. If a State can validly pick and chose one commodity for taxation and that is not open to attack under Article 14, the same result must follow when the State picks out one category of goods and subject it to taxation. </p><p style="text-align: justify;">9. It should, in this connection, be remembered that under the law it is for the person who assail a legislation a discriminatory to established that it is not based on a valid classification and it is well settled that this burden is all the heavier when the legislation under attack is a taxing status. 'In taxation even more than in other fields' it was observed by the Supreme Court of United States in Madden v. Kentucky (1940) 309 US 83; 84 L.Ed. 590 'Legislatures possess the greatest freedom in classification. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it'. How wide the powers of the Legislature are in classifying objects for purposes of taxation will be seen from the following resume of the law given by Rottschaefer, in his 'Constitutional Law' p. 668 :- </p><p style="text-align: justify;">'The Federal Supreme Court has seldom any classification made in connection with the levying of property taxes. It has sustained the levy of a heavier burden of taxation upon motor vehicles using the public high ways than that levied upon other forms of property, and the imposition of a heavier tax upon oil than upon other property. The equal protection clause does not prohibit the levy of a tax on ores which is not imposed upon similar interests in quarries, forests and other forms of wasting asset, nor even the imposition of a tax upon anthracite that is not levied upon bituminous coal. A statute providing for the assessment of one type of intangible at its actual value while other intangibles are assessed at their face value does not deny equal protection even when both are subject to the same rate of tax. The decision of the Supreme Court in this field have permitted a State legislature to exercise an extremely wide discretion in classifying property for tax purposes so long as it refrained from clear and hostile discrimination against a particular persons or classes'. </p><p style="text-align: justify;">10. A decision near to the present case on the facts is C. Heisler v. Thomas Colliery Company 260 US 245; 6 L.Ed. 237. There the question was whether a law imposing a tax on Anthracite coal and not upon bituminous coal was unconstitutional as violating the equal protection of laws guaranteed by the 14th Amendment to the Federal Constitution. In upholding the validity of the law, Justice Mckenna observed as follows :- </p><p style="text-align: justify;">'The fact of competition may be accepted. Both coals, being compositions of carbon are of course capable of combustion and may be used as fuels but under different conditions and manifestations and the difference determines a choice between them as fuels. By disregarding that difference and the greater ones which exists and by dwelling on competition alone, it is easy to erect an argument of strength against the taxation of one and not of the other. But this may not be done. The differences between them are a just basis for their different classification; and the differences are great and important. They differ even as fuels, they differ fundamentally in other particulars. Anthracite coal has no substantial use beyond a fuel; bituminous coal has other uses. Products of utility are obtained from it. The fact is not denied and the products are enumerated that the extent of their use. They are therefore incentives to industries that the State in natural policy might well hesitate to obstruct or burden and to yield to the policy or consider it is well within the concession or the power of the State expressed in the cases we have cited. The distinction in the treatment of the respective coals being within the power conceded by the cases to the State it has logical and legal justification and is necessarily, not unreasonable or arbitrary'. </p><p style="text-align: justify;">11. In our Judgment the differences which exist between the Virginia and 'Nattu' country tobacco, as found by the learned Judges, are materials on which the State could treat Virginia tobacco as forming a class by itself for purpose of taxation, and the impugned legislation must be held to be not obnoxious to Art. 14 of the Constitution. </p><p style="text-align: justify;">(2) It is next argued that the Amendment Act is ultra vires because in reality it imposes a tax on sales in the course of export and that is hit by Article 286(1)(b). The course of business followed by the appellants has already been set out. It may be assumed for the purpose of the present discussion that the purchases made by the appellants on which the tax is sought to be imposed were made for the purpose of executing specifies orders which they had received from their foreign customers. The question is whether even so the sales in question took place in the course of export for the purpose of Article 286(1)(b). In support of their contention that they did, the appellants rely on the following observations in State of Travancore-Cochin v. The Bombay Co. Ltd. : [1952]1SCR1112 :- </p><p style="text-align: justify;">'A sale by export thus involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country bay land or sea. Such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export forms parts of a single transaction. Of these two integrated activities, which together constitute on export sale, whichever first occurs can well be regarded as taking place in the course of the other'. </p><p style="text-align: justify;">12. Now the contention is that the agreement entered into with the foreign purchasers for sale of the Virginia tobacco, the purchase of the same locally by the appellants for performing the contract and their subsequent export to the foreign purchasers must all be held to form one integrated transaction of sale in the course of export. </p><p style="text-align: justify;">13. Now the observations quoted above were made in refutation of the contention that the expression 'sale in the course of export or import' meant only a sale which takes place while the goods are actually in movement, in the course of export or import, as for example, when shipping documents are endorsed and delivered when the goods are in transit. This Court held that this was too narrow an interpretation to put on the words in question and that a sale which actually occasions the export or import would fall within Article 286(1)(b). The question whether sales which precede export are sales in the course of export within Article 286(1)(b) arose directly for decision in State of Travancore-Cochin v. Shanmuga Vilas Cashew Nut Factory : [1954]1SCR53 and it was held that they were not. Explaining, in the course of the judgment, the true scope of the observations in State of Travancore-Cochin's case : [1952]1SCR1112 quoted above, Patanjali Sastri, C.J. observed :- </p><p style="text-align: justify;">'The phrase 'integrated activities' was used in the previous decision to denote that 'such a sale' (i.e., a sale which occasions the export) 'cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export from parts of a single transaction'. It is in that sense that the two activities - the sale and the export - were said to be integrated. A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done 'in the course of the export of the goods out of the territory of India', and more than the other two activities can be so regarded.' </p><p style="text-align: justify;">14. We may refer to two other decisions of this Court where this question has been considered. In The State of Madras v. Guriviah Naidue & Co. Ltd. : 1956CriLJ331 , the facts were that an assessee secured orders for the supply of untanned hides and skins from London purchasers and then, he purchased them locally in order to implement those orders and exported them, and the question was whether a tax on those purchases was hit by Article 286(1)(b). In holding that it was not, this Court observed :- </p><p style="text-align: justify;">'Such purchases were, it is true, for the purpose of export but such purchases did not themselves occasion the export and consequently did not fall within he exemption of Article 286(1)(b) of the Constitution as held by this court in The State of Travancore-Cochin v. The Bombay Company Ltd. : [1952]1SCR1112 . Nor did such purchases in the State by the exporter for the purpose of export come within the ambit of Article 286(1)(b), as held by the decision of the majority in The State of Travancore Cochin v. Shanmuga Vilas Cashew Nut Factory : [1954]1SCR53 .' </p><p style="text-align: justify;">15. The point came up again for consideration before this Court in The State of Mysore v. Mysore Spinning & Manufacturing Co. : AIR1958SC1002 and it was held following the decision cited above that Article 286(1)(b) could be invoked only in respect of the sale which occasions the export, and not of any sales precedent to it. </p><p style="text-align: justify;">16. On these authorities the law must be taken to be well settled that it is only the sale under which the export is made that is protected by Article 286(12)(b), and that a purchase which precedes such a sale does not fall within its purview though it is made for the purse of, or with a view to export. The impugned legislation must accordingly be held not to contravene Article 286(1)(b). </p><p style="text-align: justify;">17. In the result both the contentions urged by the appellants fail and the appeals must be dismissed with costs, one hearing fee. </p><p style="text-align: justify;">18. 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LAW: Article 226 of the Constitution, the Andhra Act XIV, Section 5 of this Act, section 6, section 6, the Amendment Act', section 5, Section 3, Sub Section 1, Section 3, Sub Section 3, the Amendment Act, the Amendment Act, Article 226 of the Constitution in the High Court of Andhra Pradesh, the Amendment Act, Article 14 of the Constitution, Article 286(1)(b, Article 14, Article 286(1)(b, Article 14, Article 14, Article 14, Article 14, Constitution, Article 14 of the Constitution, Article 14, the 14th Amendment, the Federal Constitution, Constitution, the Amendment Act, Article 286(1)(b, Article 286(1)(b, Article 286(1)(b, Article 286(1)(b, Article 286(1)(b, Article 286(1)(b, Constitution, Article 286(1)(b, Article 286(1)(b, Article 286(12)(b, Article 286(1)(b
PERSON: Venkatarama Aiyar, J.1, Andhra State, Nattu, Budhan Choudhry v. The State of Bihar, Shri Ram, Krishna Dalmia, S. R. Tendolkar, Rottschaefer, C. Heisler v. Thomas Colliery Company, Mckenna, Nattu, Patanjali Sastri
ORG: the High Court of Andhra Pradesh, the State of Andhra, State, the Madras General Sales Tax Act, the State Government, State, the State of Andhra, Nattu, the Andhra, Government, the Additional Commercial Tax Officer, Court, State, The Supreme Court, State, State, State, the Supreme Court, Legislature, The Federal Supreme Court, the Supreme Court, State, State, State, State, State, State of Travancore-Cochin v. The Bombay Co. Ltd., State of Travancore-Cochin v., Shanmuga Vilas Cashew Nut Factory, State of Travancore-Cochin's, Court, Guriviah Naidue & Co. Ltd., Court, The State of Travancore-Cochin v., The Bombay Company Ltd., State, The State of Travancore Cochin, Shanmuga Vilas, Court, The State of Mysore v. Mysore Spinning & Manufacturing Co.
DATE: 1172 of 1956, 1957, 1955, October 1, 1953, 1939, March 31, 1953, 1955, November 4, 1955, March 31, 1953, 1940
CARDINAL: 56, 144, seven, half, 2., 711, 144, 3, two, 1, 2, 1, 5., 1961]3SCR77, 587, 6, two, two, 8., two, 1955CriLJ374, 1959]1SCR279, one, one, 9, 309, 84, 590, 668, one, 10, 260, 6, 237, 11, 14, 2, 1952]1SCR1112, two, 12, 13, 1954]1SCR53, 1952]1SCR1112, two, two, two, 1956CriLJ331, 1952]1SCR1112, 1954]1SCR53, 15, 16, 17, one, 18
GPE: Virginia, Virginia, Virginia, Guntur, Virginia, Virginia, Virginia, Kerala, Virginia, Virginia, Nattu, Virginia, Virginia, Virginia, Virginia, United States, Madden, Kentucky, US, Virginia, Virginia, Art, Virginia, India, London
ORDINAL: first, first, first, first
TIME: the impugned Act
FAC: Moopil Nair v.
LOC: Willis
WORK_OF_ART: 'Constitutional Law'