State of Karnataka & ANR Vs. M/S.
Hansa Corporation [1980] INSC 189 (25 September 1980)
DESAI, D.A.
DESAI, D.A.
CHANDRACHUD, Y.V. ((CJ)
CITATION: 1981 AIR 463 1981 SCR (1) 823 1980
SCC (4) 697
CITATOR INFO :
E&R 1985 SC 621
(3,5,6,8,9,11,14,17,18,21) R 1987 SC 558 (15) F 1988 SC1353 (17)
ACT:
Karnataka Tax on Entry of Goods into Local
Areas for Consumption. Use or Sale therein Act, 1979-Section 3- Validity
of-Power of State Government to levy tax on select goods entering some local
areas-state if bound to impose tax on all goods entering any local area.
HEADNOTE:
The Karnataka Tax on Entry of Goods Into
Local Areas for Consumption, Use or Sale therein Act 1979 was enacted by the
State Legislature to levy tax on certain select goods at the time of their
entry into a local area. This tax was devised to offset the short fall in the
funds of municipal and other local bodies by reason of the abolition of octroi
which by experience was found to impede the development of trade and commerce.
Section 3 of the impugned Act provides that
the tax shall be levied on entry of the scheduled goods into a local area for
consumption, use or sale therein at such rate as may be specified by the State
Government and different rates may be specified for different local areas.
By a notification issued under section 3 of
the Act the State Government specified 27 local areas in the State which could
levy the tax on scheduled goods and specified the rate of tax for each such
local area therein. The Scheduled goods are all varieties of textile; tobacco,
sugar and the like.
Upholding the two principal contentions,
among others, raised by the appellants in their writ petitions before the High
Court that (i) section 3 does not empower the State Government to apply the
provisions of the Act to such local areas only and to exclude other local areas
and (ii) the levy of tax on all dealers irrespective of the value of scheduled
goods brought by them into a local area without exempting petty dealers imposes
an unreasonable restriction on the right to carry articles, the High Court
struck down the Act as invalid.
Allowing the appeal
HELD: The express power of choosing and
specifying different rates subject to maximum for different local areas is
conferred on the State Government not by the expression 'such rate' but by the
expression 'rates' with the adjectival clause 'different rates may be specified
for different local areas'. It was, therefore, not necessary to qualify the
expression 'such rate' again by the expression 'as may be specified by the
State Government' because that 824 is covered by the express power conferred by
the expression 'different rates may be specified for different local areas'.
The use of article 'a' before 'local area' signifies not every local area but
any local area. [831C-D] In re. Sanders; ex parte Serqueant, Law Journal (1885)
54 Q.B. 331, The Queen v. Justices of Durham, [1895] 1 Q.B.
801, Coast Brick & Tile Works Ltd. &
Ors. v. Prem Chand Raichand & Anr. [1967] 1 Appeal Cases 192 referred to.
Although, the taxing event is entry of
scheduled goods in a local area, section 3 empowers the State Government to
specify different rates of tax in respect of different scheduled goods for
different local areas. A local area means an area in a city governed by the
Karnataka Municipalities Act or a municipal corporation governed by the
Karnataka Municipal Corporation Act. The local areas vary immensely both in
dimension, population, industrial growth, and the scale and kind of municipal
services rendered by them. If the argument that 'a local area' should be
interpreted to mean 'every local area' is accepted it would be obligatory on
the State Government to levy tax on entry of scheduled goods in every local
area. It would be unjust and inequitable to levy tax on entry of goods at the
same rates for a big municipal corporation and a small municipal area, each of
which does not stand comparison with the other. The choice to select local
areas is a necessary concomitant of a choice to select the rates which is a power
conferred on the State Government. The purpose underlying the statute, namely,
to provide financial assistance to the municipalities would be better
effectuated if the tax realised considerably outweighs the administrative cost
in collection. The High Court fell into an error because it adopted a literal,
grammatical construction and overlooked the underlying object of the Act and
the historical background in levying the tax. [831C-G; 832C-E] There is no
force in the contention that if the State Government is granted a choice in the
matter of selection of local areas ipso facto the statute would be
unconstitutional as being violative of Article 14. It is a well accepted
principle of constitutional law that there is always a presumption of
constitutionality of a statute. In the matter of taxing statutes the
legislature which is competent to levy a tax, has full freedom to determine the
articles, the manner and the rate of tax. [832G-H; 834E] Khyerbari Tea Co. Ltd.
& Anr. v. The State of Assam [1964] 5 S.C.R. 975 and East India Tobacco Co.
v. State of Andhra Pradesh [1963] 1 S.C.R. 404, 409 referred to.
The High Court was wrong in its view that
section 3 did not permit the State Government to pick and choose the local
areas for the levy of tax. In selecting the local areas and the rates of tax to
be levied on different scheduled goods the State has adopted the criterion of
population of a local area which undeniably is a reasonable criterion because
the yield of the tax would be directly proportionate to the consumption of the
goods in the local areas and the consumption of goods is directly related to
the population within the local area. [835F-G] Non-exemption of petty dealers
from the operation of the Act does not lead to the conclusion that the impugned
legislation constituted an unreasonable restriction on the fundamental right of
the petty dealers to carry on their trade or business. If petty dealers were to
be exempt, the criterion of turnover in the scheduled goods for classifying the
petty dealers will have to be kept high in which event the big registered
dealers could conveniently bring the scheduled goods into local areas in the
name of petty dealers. The taxing 825 event being entry of scheduled goods in a
local area at the instance of a dealer, the volume or quantum of business of
the dealer is not at all relevant. Unlike under the old system of octroi where
every importer was taxed, under the Act only a dealer, dealing in scheduled
goods is required to pay the tax. [838B-C] If a State tax law accords identical
treatment in the matter of levy and collection of taxes on the goods
manufactured within the State and identical goods imported from outside the
State, Art. 304(a) would be complied with.
There is an underlying assumption in Article
304(a) that such a tax when levied within the constraints of Article 304(a)
would not be violative of Article 301 and the State Legislature has the power
to levy such tax. [841E] In the instant case the tax is non-discriminatory in
that it does not discriminate between scheduled goods manufactured within the
State and those imported from outside the State. A minor discrimination between
two types of goods if any is hardly relevant for the purposes of Article
304(a). Therefore, the impugned tax satisfies the requirements of Article
304(a). [841F-G] There is no evidence to show that the burden of tax would be
so heavy as to constitute an unreasonable restriction on the freedom of trade
and commerce. Although, in theory the tax leviable is not a single point tax
and becomes leviable at every point whenever the goods are taken from one local
area to another and then on to yet another no attempt was made to substantiate
how the goods are so successively moved because if they are taken for
consumption or use in one place, there is no question of taking them from that
local area to another local area and so on. [842D- G] Even if the tax, to some
extent, imposes an economic impediment to the activity taxed that by itself is
not sufficient to stigmatise the levy as unreasonable or not in public
interest. What is sought to be done is to impose a modest levy on certain goods
at the time of their entry into a local area by removing the obnoxious features
of octroi.
The tax is not intended to augment the
finance of the local bodies but to compensate them for loss suffered by the
abolition of the octroi. [844A-B] The requirements of the proviso to Article
304(b) are satisfied because the President accorded sanction to the impugned
Act. [844F]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 3094 of 1979.
Appeal by Special Leave from the Judgment and
Order dated 24-8-1979 of the Karnataka High Court in W.P. No. 7039/79.
L. N. Sinha, Attorney General of India and N.
Nettar for the Appellant.
S. T. Desai, N. Srinivasan, M. Mudgal and Vineet
Kumar for the Respondent.
The Judgment of the Court was delivered by
Desai, J.-Constitutional validity of Karnataka Tax on Entry of Goods Into Local
Areas for Consumption, Use or Sale Therein Act, 1979 ('Act' for short), and the
Notification No. FD 66 826 CSL 79 dated May 31, 1979, issued by the State
Government in exercise of the powers conferred by section 3 of the Act is
involved in this appeal by special leave at the instance of the State of
Karnataka and one other.
Karnataka State enacted the Act to provide
for the levy of tax on entry of goods into local areas for consumption, use or
sale therein, being Karnataka Act No. 27 of 1979.
Section 3 empowers the State Government to
levy and collect tax on entry of scheduled goods into a local area for
consumption, use or sale therein at such rate not exceeding 2% ad valorem, as
may be specified by the State Government.
Armed with the power conferred by s. 3, the
State Government issued notification-1 No. FD 66 CSL 79 dated May 31, 1979,
specifying the local areas and the rates of tax at which the tax shall be
levied and collected under the Act on the entry of scheduled goods mentioned in
col. 2 of the table appended to the notification into local areas specified in
the corresponding entries. Goods liable to levy of tax under the Act on entry
in the specified local areas at the specified rates are those set out in the
schedule annexed to the Act.
They are (i) all varieties of textiles, viz.,
cotton, woollen, silk or artificial silk including rayon or nylon whether
manufactured in mills, powerlooms or handlooms and hosiery cloth in lengths;
(ii) tobacco and all its products;
(iii) sugar other than sugar candy
confectionery and the like. In all 27 local areas were specified for the
purpose of levy of tax on entry of scheduled goods in the respective local
areas at varying rates specified in the notification.
The Act received the assent of the President
on May 17, 1979, and it was published in the State Government Gazette on June
1, 1979, and came into force from that very day.
Numerous petitions were filed under Article
226 of the Constitution in the High Court of Karnataka contending that the Act
and the Notification issued there under were unconstitutional on diverse
grounds. As many as 24 different contentions were canvassed before the High
Court. Of them two, viz., contention nos. 13 and 19 found favour with the High
Court with the result that the Act and the Notification issued there under were
declared unconstitutional and a mandamus was issued directing the State
Government and its officers to forebear from enforcing the provisions of the
Act against the petitioners before the High Court.
The contentions which found favour with the
High Court, are: (i) section 3 of the Act does not empower the State Government
to apply the provisions of the Act to certain local areas only and to exclude
other local areas; (ii) as the Act imposes the tax on dealers 827 irrespective
of the value of scheduled goods brought by them into a local area and does not
exempt petty dealers, the Act imposes unreasonable restrictions on petty
dealers. The remaining 22 contentions were rejected some of which were
canvassed before us on behalf of the respondents to sustain the decision of the
High Court.
It is necessary at this stage to notice the
broad features of the Act. The long title and the preamble of the Act
demonstrate the purpose for which the Act was enacted, it being to empower the
State Government to levy tax on entry of goods specified in the schedule
('scheduled goods' for short) in local areas to be specified by the State
Government in this behalf. Section 2, the dictionary clause of the Act, defines
'dealer' in the Act to have the same meaning assigned to it in clause (k) of s.
2 of the Karnataka Sales Tax Act, 1957. Section 2, sub-section (5) defines
'local area' as under:
"2(5). 'Local area' means the area
within the limits of a City under the Karnataka Municipal Corporations Act,
1976 (Karnataka Act 14 of 1977), or a municipality under the Karnataka
Municipalities Act, 1964 (Karnataka Act 22 of 1964)".
Section 2, sub-s. (7) defines 'scheduled
goods' to mean goods specified in the schedule to the Act. Section 3 is the
charging section. It reads as under:
"3. Levy of tax-There shall be levied
and collected a tax on entry of the scheduled goods into a local area for
consumption, use or sale therein at such rate not exceeding two percent ad
valorem as may be specified by the State Government and different rates may be
specified for different local areas".
Section 4 provides for registration of
dealers and makes it obligatory upon every dealer in scheduled goods to get
himself registered under the Act in the prescribed manner. Rule 4, sub-rule (3)
of the Karnataka Tax on Entry of Goods into Local Areas for consumption, Use or
Sale therein Rules, 1979 ('Rules' for short), enacted under the Act has
prescribed a fee of Rs. 25/- for registration as a dealer. Chapter III of the
Act contains provisions for return, assessment, payment, recovery and
collection of tax.
Chapter IV prescribes taxing authorities.
Chapter V deals with appeals and revisions and Chapter VI contains
miscellaneous provisions. Schedule annexed to the Act sets out the goods on the
entry of which in the specified local areas tax can be levied.
Entry 52 in State List read with Article 246
of the Constitution confers power on the State legislature to enact a law to
levy tax 828 on the entry of goods into a local area for consumption, use or
sale therein. This tax in common parlance is known as 'octroi'. Octroi was
leviable by the municipality under the power delegated to it under various laws
providing for setting up of and administration of municipal corporations and
municipalities. Octroi thus understood was being levied by various
municipalities and municipal corporations in Karnataka State. Since some time a
feeling had grown that octroi was obnoxious in character and impeded the
development of trade and commerce and there was a clamour for its abolition.
Taking note of the resentment of the business community, Karnataka State
abolished octroi with effect from April 1, 1979. However, no one was in doubt
that octroi was a major source of revenue to municipalities and its abolition
would cause such a dent on municipal finances that compensation for the loss would
be inevitable.
Accordingly, the State Government undertook a
policy of compensating the municipalities year by year. For generating funds
for this compensation, rates of sales tax were raised and in some cases a
surcharge was levied. The amount so collected was not sufficient to bridge the
gap in municipal budget. To further augment the finances for compensating the
municipalities, additional fund was sought to be generated by levy of tax under
the impugned legislation. No doubt, the tax levied was one on entry of
scheduled goods in local areas meaning thereby it had all the broad features of
octroi, yet the manner of levy, the method of collection and the persons liable
to pay the same were so devised by the impugned Act as to remove the obnoxious
features of octroi.
As the charging section shows, the tax was to
be levied on entry of scheduled goods in a local area at a rate to be specified
by the Government not exceeding 2% ad valorem. The taxing event would be the
entry of scheduled goods in a local area. In fact, octroi was being levied on
almost all conceivable goods entering into a local area for consumption, use or
sale therein. There appears to be a discernible policy in selecting the goods
set out in the schedule, the entry of which in a local area would provide the
taxing event. The goods selected for levy are textiles, tobacco and sugar. Way
back in 1957 there was a demand for abolition of sales tax on the scheduled
goods and at the instance of the Union Government the State Governments agreed
to forego their right to levy sales tax on the aforementioned scheduled goods
on the condition that the Union Government would levy additional excise duty on
them and distribute the net proceeds of such duty amongst the consenting
States. Parliament accordingly has enacted the Additional Duties on Goods
(Goods of Special Importance) Act, 1957. Therefore, while raising rates of
sales tax 829 and levying surcharge in respect of some other items the State
Government could not have levied sales tax on the scheduled goods. They were,
therefore, selected for the levy of the tax under the impugned Act on their
entry into a local area.
Having noticed the historical background
leading to the enactment of the impugned legislation we may now examine the two
contentions which found favour with the High Court and as a result of which the
Act and the notification issued thereunder were struck down by the High Court.
The respondents contend that upon a true
construction s. 3 permits the State Government only to specify different rates
of tax not exceeding the maximum prescribed in the section to be levied on
entry of scheduled goods into a local area but the State Government has no
power to pick and choose local area. In other words, the respondents say that
the tax has to be levied on entry of scheduled goods in each and every local
area as the word is understood in the Act.
The submission is that the expression 'as may
be specified by the State Government' qualifies the expression 'such rates' and
not "local area" and this was sought to be reinforced by saying that
Article 'a' precedes local area which would mean every local area and not any
local area. It was further stated that if what is contended on behalf of the
State is correct, one will have to read the word 'and' between the words
'therein' and 'at such rate' which might imply on a grammatical construction
that discretion was conferred upon the State Government not only to specify
rate but also the local area.
Legislative drafting will reach its peak of
glory when perfection is attained in demonstrably manifesting the legislative
intent by unequivocal language. But it is equally undeniable that language at
its best is a very imperfect vehicle of conveying the intent of the speaker.
Legislature speaks through legislation and
tries its utmost to convey what it intends to do by the legislation but even
best of draftsmen cannot claim to attain perfection. On a very superficial view
one may be tempted to accept the construction canvassed for on behalf of the
respondents but when the section is read more minutely with necessary pause and
emphasis and the policy enacting the legislation is kept in view and also the
inconceivable situation that may arise if the construction canvassed for or
behalf of the respondents is kept in focus, the contention will have to be
repelled.
There is a two-fold answer to the contention
that upon a literal grammatical construction of s. 3 the State has no choice in
the matter of selecting local areas and that choice is limited to specifying rates
830 but after choosing rates all local areas will have to be covered for the
levy of tax. It is easy to read the section with a pause and punctuation after
the word 'ad valorem' so that the expression 'as may be specified by the State
Government' would qualify both the expressions 'local area' and 'such rate'.
This would be clear from the fact that the last expression in the section
'different rates may be specified for different local areas' would be an
adjectival clause to the word 'rate' so that the power to choose and specify
different rates is not implicit in the words 'such rate' but in the expression
'different rates may be specified for different local areas'. Thus an express
power of choosing and specifying different rates subject to maximum for
different local areas is conferred on the State Government not by the
expression 'such rate' but by the expression 'rates' with the adjectival clause
'different rates may be specified for different local areas'. It was,
therefore, not necessary to qualify the expression 'such rate' again by the
expression 'as may be specified by the State Government' because that is
covered by the express power conferred by the expression 'different rates may
be specified for different local areas'. In approaching the matter from this
angle the expression 'as may be specified by the State Government' would
qualify the expression 'local area' and this construction would be further
reinforced by use of Article 'a' prefixing 'local area' meaning thereby not
every local area but any local area. In this connection reference may be made
with advantage to In re. Sankers; ex parte Sergeant, wherein the expression
'under the hand of the Judge of a county court' came up for construction. The
construction canvassed for was that a county court would not mean any county
court but the country court having jurisdiction in the matter. Repelling this
construction the Court, after ascertaining the object of the legislation, held
that a county court would mean any county court, an approach dictated by strict
grammatical construction.
Similarly, in The Queen v. Justices of
Durham, the expression 'a Court' was interpreted to mean any court and in
accepting this construction the Court was guided by the bare letter of the
statute which would be a proper guide unless there would be something in it to
modify the ordinary meaning of the words used. The Privy Council in Coast Brick
& Tile Works Ltd. & Ors. v. Premchand Raichand & Anr., observed
that the expression 'the security' should be read as 'a security', a variation
which in a poorly drawn section does not do great violence to the language
used. Even if, therefore, a literal grammatical 831 construction were to be
adopted, on a proper reading of the section power is conferred on the State
Government by s. 3 not only to specify different rates for different areas but
also to specify local areas entry into which of scheduled goods would provide
the taxing event. There is thus a power to choose and specify local areas as
well as choose and specify rate of taxation subject to maximum prescribed in
the section.
Assuming our reading of the section is not
correct, there is another way of approaching the matter. It cannot be gainsaid
that the State Government is empowered to specify the different rates of tax
not exceeding the maximum in respect of different scheduled goods for different
local areas. This implies that even though the taking event is entry of
scheduled goods in a local area, nonetheless different rates may be prescribed
for different local areas and express power in that behalf is conferred on the
Government by providing in section 3 that different rates may be specified for
different local areas. If at this stage the definition of local area is
recalled which means an area in a city governed by the Karnataka Municipalities
Act or a municipal corporation governed by the Karnataka Municipal Corporations
Act it would immediately appear that local areas vary immensely both in
dimension, population, industrial growth, economic development and scale and
kind of municipal service rendered. One has to keep in view a local area like
Bangalore City, a highly industrially advanced capital city of Karnataka and a
small municipality having a population of 10,000. Now, if the expression 'a
local area' in s. 3 is interpreted to mean 'every local area' as contended on
behalf of the respondents, before any tax can be levied under s. 3 it would be
obligatory on State Government to levy tax on entry of scheduled goods in every
local area in Karnataka State for consumption, use or sale therein. The
contention thus is that coverage of all local areas for levy of tax would
provide outside maximum limit of power under s. 3. The question is: Is it a
minimum condition for exercise of power ? If it is, the rates of tax will have
to vary considerably in direct relation to the local area for which the rate is
being prescribed. It would be unjust and inequitable to levy tax on entry of
goods at the same rate for such local area as Bangalore Municipal Corporation
and a small municipal area, the two local areas being uncomparable with regard
to area, population, industrial growth and consumption of such scheduled goods
in the area.
Now, if the impact of the tax is to be
equitable keeping in view cost of its collection, a tax levied at such a small
rate as one paise for goods worth Rs. 100 ad valorem for a small local area and
2% ad valorem for such industrially developed local area like Bangalore
Corporation, 832 it would make nonsense of the levy apart from the uneconomic
outcome keeping in view the administrative cost of collection. If the
Government is obliged on the construction canvassed on behalf of the
respondents to encompass all local areas for the purpose of levying tax under
the statute, the rates would have to be varied so much to avoid the evil of
making the impost unjust and if the rates have to be varied from area to area
the administrative cost in smaller areas with lower rates and negligible entry
of scheduled goods in such area would make the tax wholly uneconomic. It must,
therefore, logically follow that choice to select local area is a necessary
concomitant of a choice to select rates, which power is admittedly conferred on
the State Government. Purpose underlying the statute, namely, to provide
financial assistance to the municipalities would be better effectuated if the
tax realised considerably outweighs the administrative cost involved in
collecting the tax. And it is a well known canon of construction that the
purpose underlying the statute would provide a reliable external aid for proper
construction because the Court would adopt that construction which would
effectuate the purpose.
The High Court unfortunately approached the
matter from the standpoint of literal grammatical construction of the section
overlooking the object underlying the Act, the historical background which the
High Court itself had noticed, and holding that unless the section is
re-written as understood by the High Court, the State Government had no power
to pick and choose local areas. Mr. S. T. Desai, learned counsel for the
respondents, after drawing our attention to the reasoning that appealed to the
High Court for holding that s. 3 does not permit choice of local areas, urged
that if the section is so read as to enable the State Government to pick and
choose or select local areas the section would be violative of Art. 14 of the
Constitution because while all municipalities need additional finances to
recoup the loss suffered by them on abolition of octroi, only some local areas
are selected for the purpose of levy of tax leaving others out and there being
no reasonable basis to sustain the classification, s. 3 would be
unconstitutional.
There is always a presumption of
constitutionality of a statute. If the language is rather not clear and precise
as it ought to be, attempt of the Court is to ascertain the intention of the
legislature and put that construction which would lean in favour of the
constitutionality unless such construction is wholly untenable. However, where
one has to look at a section not very well drafted but the object behind the
legislation and the purpose of enacting the same is clearly discernible, the
Court cannot hold its hand and blame the draftsman 833 and chart an easy course
of striking down the statute. In such a situation the Court should be guided by
a creative approach to ascertain what was intended to be done by the
legislature in enacting the legislation and so construe it as to give force and
life to the intention of the legislature. This is not charting any hazardous
course but is amply borne out by an observation worth reproducing in extenso in
Seaford Court Estates Ltd. v. Asher. It reads as under:
"Whenever a statute comes up for
consideration it must be remembered that it is not within human powers to
foresee the manifold sets of facts which may arise, and, even if it were, it is
not possible to provide for them in terms free from all ambiguity. The English
language is not an instrument of mathematical precision. Our literature would
be much the poorer if it were. This is where the draftsmen of Acts of
Parliament have often been unfairly criticised. A judge, believing himself to
be fettered by the supposed rule that he must look to the language and nothing
else, laments that the draftsmen have not provided for this or that, or have
been guilty of some or other ambiguity. It would certainly save the judges
trouble if Acts of Parliament were drafted with divine prescience and perfect
clarity. In the absence of it, when a defect appears a judge cannot simply fold
his hands and blame the draftsman. He must set to work on the constructive task
of finding the intention of Parliament, and he must do this not only from the
language of the statute, but also from a consideration of the social conditions
which gave rise to it and of the mischief which it was passed to remedy, and
then he must supplement the written word so as to give "force and
life" to the intention of the legislature. That was clearly laid down (3
Co. Rep. 7b) by the resolution of the judges (SIR ROGER MANWOOD, C.B., and the
other barons of the Exchequer) in Heydon's case (1584) 3 Co.
Rep. 7a, and it is the safest guide today.
Good practical advice on the subject was given about the same time by PLOWDEN
in his note (2 Plowd. 465) to Eyston v. Studd (1574), 2 Plowd. 463. Put into
homely metaphor it is this: A judge should ask himself the question how, if the
makers of the Act had themselves come across this ruck in the texture of it,
they would have straightened it out ? He must then do as they would have done.
A judge must not alter the material of which the Act is woven, but he can and
should iron out the creases".
834 This view was re-affirmed in Norman v.
Norman.
Let it be remembered that the impugned
measure is a taxing statute and in the matter of taxing statute the legislature
enjoys a larger discretion in the matter of classification so long as it
adheres to the fundamental principle underlying the doctrine of classification.
The power of the legislature to classify is of wide range and flexibility so
that it can adjust its taxation in all proper and reasonable ways. In Khyerbari
Tea Co. Ltd., & Anr. v. The State of Assam this Court observed as under:
"It is, of course, true that the
validity of tax laws can be questioned in the light of the provisions of Arts.
14, 19; and Art. 301 if the said tax directly and immediately imposes a
restriction on the freedom of trade; but the power conferred on this Court to
strike down a taxing statute if it contravenes the provisions of Arts. 14, 19
or 301 have to be exercised with circumspection, bearing in mind that the power
of the State to levy taxes for the purpose of governance and for carrying out
its welfare activities is a necessary attribute of sovereignty and in that
sense it is a power of paramount character".
It was also observed that legislature which
is competent to levy a tax must inevitably be given full freedom to determine
which articles should be taxed, in what manner and at what rate. It would,
therefore, be idle to contend that a State must tax everything in order to tax
something. In tax matters, "the State is allowed to pick and choose
districts, objects, persons, methods and even rates for taxation if it does so
reasonably" (see Willis on 'Constitutional Law', p. 587). This statement
of law has been approved by this Court in the case of East India Tobacco Co. v.
State of Andhra Pradesh. The question, therefore, is, whether a tax of a
certain kind can be levied on entry of goods in certain local areas, the
classification of local areas, if found to be reasonable, the levy of tax would
not be invalid on the ground that choosing certain areas only excluding some
others would violate Article 14. Whether in this case the classification is
reasonable would be presently examined but the contention that if the State
Government is granted a choice in the matter of selection of local area, ipso
facto, the statute would be unconstitutional as being violative of Art. 14,
must be negatived.
835 In order to ascertain whether the
classification of local areas for the purposes of levy of tax is reasonable or
not, a reference may be made to the impugned notification.
Table annexed to the notification shows in
all 27 local areas selected for levy of tax. They are again divided into three
groups, A, B and C for selecting rates to be levied on different scheduled
goods. A mere glance at the local areas selected and those according to the
petitioner excluded, viz., areas within the jurisdiction of various Gram
Panchayats would bring in bold relief that population criterion appears to have
been adopted in selecting local areas for levy of tax. Does population
criterion provide a reasonable basis for classification vis-a-vis a tax levied
on entry of goods in the area ? It would be undeniable that population basis
would provide a reasonable criterion for selecting local areas for the purpose
of levy tax simultaneously excluding those which do not answer the population
criterion. One unquestionable element scientifically established about a taxing
statute is that the yield from the tax must be sufficiently in excess of cost
of collection so that the tax which is levied for augmenting public finances to
be utilised for public good would be productive. Where the cost of
administrative machinery required to be set up for collecting tax is either
marginally lower or equal or marginally higher than the yield from the tax, the
measure would be uneconomic if not counterproductive. Now, if the tax in this
case is levied on the entry of scheduled goods in local areas, the yield would
be directly proportionate to the consumption of the goods in local areas and
the consumption of goods is directly related to the population within the local
area. Viewed from this angle, population criterion would provide a reasonable
basis for classification for selectively levying the tax by choosing local area
and by specifying different rates so as to make the tax productive. Therefore,
there is no substance in the contention that the classification in this case
was unreasonable. The High Court was accordingly in error in holding that s. 3
did not permit the State Government to pick and choose local areas for the levy
of tax and that levy of tax under s. 3 in all local areas within Karnataka
State was a minimum condition for exercise of the power under s. 3. The
contention must, accordingly be negatived.
Another contention that found favour with the
High Court was contention No. 13 before the High Court which in the opinion of
the High Court was a formidable one. The contention was that the Act in its
application has not excluded petty dealers from its purview. Developing the
contention it was said that the abolished octroi would have been less
oppressive in its application than the tax under the impugned legislation
falling on petty dealers. What appealed to the 836 High Court was that if a
petty dealer brought within the local area scheduled goods of the value of Rs.
5 for consumption, use or sale therein, he is to get himself registered after
paying the registration fee, maintain accounts for his dealings in such goods
and submit monthly and annual returns and to appear before the assessing
authority when called upon to do so. The High Court thereafter contrasted the
position of a dealer under the Karnataka Sales Tax Act, 1957, and observed that
a dealer whose total turnover is less than Rs. 25,000 was not liable to pay
sales tax and one whose turnover was less than Rs.
10,000 was not required to get registered, to
maintain accounts or to submit returns. The High Court also found the registration
fee of Rs. 25 prescribed under the rules, the liability to maintain accounts in
the manner prescribed and to submit monthly and yearly returns as constituting
unreasonable restrictions on the fundamental right of the petty dealers to
carry on their trade or business.
Learned Attorney-General urged that this
contention was nowhere to be found in the petition filed by the petitioners in
the High Court and, therefore, the High Court was in error in entertaining the
contention. Unfortunately, the judgment does not show that learned
Advocate-General who appeared for the State raised such an objection to the
entertaining of the contention on behalf of the petitioners by the High Court.
Not only has the High Court permitted the contention to be raised but accepted
the same. In fairness to the petitioners it would be unjust to shut out the
contention on this technical ground, though we must note that Mr. S. T. Desai
learned counsel who appeared for the respondents found it difficult to pursue
the contention. We, however, propose to deal with the contention on merits.
The taxing event under the statute is entry
of scheduled goods in a local area for consumption, use or sale therein at the
instance of a dealer. The expression 'dealer' has the same meaning as assigned
to it in clause (k) of s. 2 of Karnataka Sales Tax Act, 1957, which defines
dealer to mean any person who carries on the business of buying, selling,
supplying or distributing goods, directly or otherwise, whether for cash or for
deferred payment, or for commission, remuneration or other valuable
consideration and includes amongst others, a casual trader. Section 10(1) makes
it obligatory upon every dealer whose total turnover in any year is not less
than the specified sum to get himself registered under the Act. Sub-s. (2)
carves out an exception to sub-s. (1) that notwithstanding anything contained
in sub-s. (1) every casual trader dealing in goods mentioned in the 837 Third
Schedule or the Fourth Schedule irrespective of the quantum of his total turnover
in such goods shall get himself registered. And in passing it may be mentioned
that Schedule Three includes 12 items and Schedule Four includes seven items.
In other words, casual trader who is included in the expression 'dealer' in
respect of the goods mentioned in the Third or Fourth Schedule, irrespective of
his turnover, has to get himself registered. Therefore, it cannot be said that
all petty dealers are excluded from the application of Karnataka Sales Tax Act.
That apart, the taxing event under the impugned Act being entry of scheduled
goods in a local area at the instance of a dealer, the volume or quantum of
business of the dealer is not at all relevant. The situation now obtaining may
be contrasted with the situation when octroi was levied. Octroi was payable by
anyone irrespective of the fact whether he was a dealer in the goods or not, on
goods which were liable to octroi when they were brought within the octroi
limits. It was payable at the octroi limits where there used to be an office called
'octroi naka'. This was found to be cumbersome and the present Act seeks to
replace to some extent that infamous octroi. The noteworthy departure made by
the Act is that now unlike every importer only a dealer dealing in the
scheduled goods will have to pay the tax and that too not at the octroi limit
but afterwards while submitting returns. It would be a case of wild imagination
that a dealer in scheduled goods would bring within the local area scheduled
goods in such a small quantity as to make maintenance of accounts a very
difficult task as also a registration fee of Rs. 25 so heavy as to dub it an
unreasonable restriction on his right to carry on trade or commerce. Only three
items are included in scheduled goods and it is legitimate to believe that a
dealer not dealing in either of the scheduled goods would not be required to
get himself registered. And if he is going to deal in the goods his turnover
would not be so small in scheduled goods as to make maintenance of accounts and
payment of registration fee of Rs. 25 so disproportionately heavy as to render
it as an unreasonable restriction on his right to carry on trade.
Looking at the matter from a slightly
different angle it must be confessed that if the contention of the respondents
were to be upheld it would provide a fruitful source for evasion of tax. If
petty dealers are to be excluded some criterion will have to be provided
relatable to his turnover in scheduled goods for classifying who are petty
dealers. That turnover will have to be kept reasonably high to make it rational
but in that event the big registered dealer can always conveniently defeat the
tax by bringing into the local area scheduled goods in the name of such petty
dealer. It would be an incentive to 838 a big registered dealer to set up a
number of petty dealers and import scheduled goods into local area in the name
of those petty dealers. To avoid any such contingency, if the tax is levied on
the entry of scheduled goods in the local area at the hands of a dealer
irrespective of his turnover a potential source of evasion can be checkmated.
Viewed from either angle, non-exemption of petty dealers from the operation of
the Act does not lead to the conclusion that the impugned legislation
constitutes unreasonable restrictions on the fundamental right of the petty
dealers to carry on their trade or business. The High Court was, therefore, in
our opinion, in error in striking down the impugned legislation on the ground
that the Act imposes unreasonable restrictions on the fundamental right of the
petty dealers to carry on their trade.
The two contentions which found favour with
the High Court for striking down the impugned Act and the notification issued
thereunder, in our opinion, are not sustainable and, therefore, the Act and the
notification issued thereunder would have to be upheld.
Mr. S. T. Desai, learned counsel for the
respondents, however, wanted us to affirm the judgment of the High Court on
some of the contentions which the High Court negatived.
It would, therefore, be necessary to examine
some of those contentions which were repeated before us.
The contention which was put into forefront
was that the impugned Act violates the constitutional guarantee of freedom of
trade, commerce and intercourse throughout India as enshrined in Part XIII of
the Constitution and is not saved by Art. 304. At one stage there was some
controversy whether a tax law was within the inhibition of Part XIII of the
Constitution, but this controversy is no more res integra and it has been set
at rest by the majority view in Atiabari Tea Co. Ltd. v. The State of Assam
& Ors., Gajendragadkar, J. speaking for the majority, observed that the
intrinsic evidence furnished by some of the Articles of Part XIII shows that
taxing laws are not excluded from the operation of Art. 301 which means that
tax laws can and do amount to restrictions freedom from which is guaranteed to
trade under the said Part. He then posed a question whether all tax laws
attract the provisions of Part XIII irrespective of the fact whether their
impact on trade or its movement is direct and immediate or indirect and remote,
and proceeded to answer it observing that if any Act imposes any direct
restrictions on the very movement of such goods it attracts the provisions of
Art. 301 and 839 its validity can be sustained only if it satisfies the
requirements of Art. 302 or Art. 304 of Part XIII.
Accordingly, the contention that all taxes
should be governed by Art. 301 whether or not their impact on trade is
immediate or mediate, direct or remote, was negatived. The majority view in
Atiabari Tea Co. Ltd. case (Supra) was re- examined and affirmed in The
Automobile Transport (Rajasthan) Ltd. v. The State of Rajasthan & Ors. Das,
J.
speaking for the majority in this context
observed as under:
"After carefully considering the
arguments advanced before us we have come to the conclusion that the narrow
interpretation canvassed for on behalf of the majority of the State cannot be
accepted, namely, that the relevant articles in Part XIII apply only to
legislation in respect of the entries relating to trade and commerce in any of
the lists of the Seventh Schedule. But we must advert here to one exception
which we have already indicated in an earlier part of this judgment. Such
regulatory measures as do not impede the freedom of trade, commerce and
intercourse and compensatory taxes for the use of trading facilities are not
hit by the freedom declared by Art.
301. They are excluded from the purview of
the provisions of Part XIII of the Constitution for the simple reason that they
do not hamper trade, commerce and intercourse but rather facilitate them".
The law was thus further clarified by
pointing out that all taxes should and could not be prohibited by Art. 301 and
must of necessity for their sustenance seek the coverage of Art. 304. If a
measure is shown to be regulatory or the tax imposed is compensatory in
character meaning the tax instead of hampering trade or commerce would
facilitate the same, it would be immune from a challenge under Art, 301. In
other words, if the tax is shown to be compensatory in character irrespective
of the fact whether it is saved by Art. 304 or not it does not come within the
inhibition of Art. 301.
Accordingly, if validity of a tax law is
challenged on the ground that it violates freedom of inter-State commerce,
trade and intercourse, guaranteed by Art. 301, the contention may be repelled
by showing (i) that the tax is compensatory in character as explained in The
Automobile Transport (Rajasthan) Ltd. case (Supra); or (ii) that it satisfies
the requirements of Art. 304.
This very question came up for further
examination in Khyerbari Tea Co. Ltd. case (Supra) wherein constitutional
validity 840 of Assam Taxation (On Goods carried by Road or on Inland
Water-ways) Act, 1961, was challenged on the ground that it was violative of
Art. 301 and was not saved by Art. 304.
This Court analysed the majority view in
Atiabari Tea Co. Ltd. case (Supra) and The Automobile Transport (Rajasthan)
Ltd., case (Supra) and observed as under:
"It would immediately be noticed that
though the majority view in the Automobile Transport (Rajasthan) case
substantially agreed with the majority decision in the case of Atiabari Tea
Co., there would be a clear difference between the said two views in relation
to the scope and effect of the provisions of Art. 304(b).
According to the majority view in the case of
Atiabari Tea Co., if an Act is passed under Art. 304(b) and its validity is
impeached, then the State may seek to justify the Act on the ground that the
restrictions imposed by it are reasonable and in the public interest, and in
doing so, it may, for instance, rely on the fact that the taxes levied by the
impugned Act are compensatory in character. On the other hand, according to the
majority decision in the Automobile Transport Rajasthan case, compensatory
taxation would be outside Art. 301 and cannot, therefore, fall under Art.
304(b)" On a conspectus of these decisions it appears well settled that if
a tax is compensatory in character it would be immune from the challenge under
Art. 301. If on the other hand the tax is not shown to be compensatory in
character it would be necessary for the party seeking to sustain the validity
of the tax law to show that the requirements of Art. 304 have been satisfied.
The State did not attempt in the High Court
to sustain the validity of the impugned tax law on the submission that it was
compensatory in character. No attempt was made to establish that the dealers in
scheduled goods in a local area would be availing of municipal services and
municipal services can be efficiently rendered if the municipality charged with
a duty to render services has enough and adequate funds and that the impugned
tax was a measure for compensating the municipalities for the loss of revenue
or for augmenting its finances. As such a stand was not taken, it is not
necessary for us to examine whether the tax is compensatory in character.
It was, however, strenuously contended that
the tax was not discriminatory in character inasmuch as the impugned tax was
levied both on scheduled goods manufactured within the State of Karnataka and
similar goods brought into Karnataka State from outside and accordingly Art.
304(a) has been complied with. It was further urged 841 that the requirements
of Art. 304(b) are fully satisfied.
The High Court was of the opinion that the
impugned tax was non-discriminatory in character inasmuch as scheduled goods
imported from other States and scheduled goods produced or manufactured within
the State but outside the local area were treated alike by the impugned Act. In
the opinion of the High Court the discrimination, if at all, was between goods
produced or manufactured within a local area and those brought from outside the
local area into it, but Art. 304(a) has no relevance to such differential
treatment.
Article 304 lifts the embargo placed on the
legislative power of State to enact law which may infringe the freedom of
inter-State trade and commerce if its requirements are fulfilled. Article
304(a) imposes a restriction on the power of legislature of a State to levy tax
which may be discriminatory in character by according discriminatory treatment
to goods manufactured in the State and identical goods imported from outside
the State. The effect of Art.
304(a) is to treat imported goods on the same
basis as goods manufactured or produced in a State. This article further
enables the State to levy tax on such imported goods in the same manner and to
the same extent as may be levied on the goods manufactured or produced inside
the State. If a State tax law accords identical treatment in the matter of levy
and collection of tax on the goods manufactured within the State and identical
goods imported from outside the State, Art. 304(a) would be complied with. There
is an underlying assumption in Art. 304(a) that such a tax when levied within
the constraints of Art. 304(a) would not be violative of Art. 301 and State
legislature has the power to levy such tax.
Tax under the impugned legislation would be
levied on scheduled goods either manufactured or produced within Karnataka
State or imported from outside on their entry in a local area. Thus, this tax
is non-discriminatory in that it does not discriminate between scheduled goods
manufactured or produced within Karnataka State or those imported from outside.
And the microscopic discrimination relied upon by the respondents that there is
differential treatment accorded to goods produced within a local area and those
imported from outside the local area is hardly relevant for the purpose of Art.
304(a). The High Court was accordingly right in concluding that the impugned
tax satisfies the requirements of Art. 304(a).
The next limb of the contention is that the
impugned tax being leviable on the entry of goods into a local area will have a
direct and immediate impact on the movement of goods and consequently would
infringe freedom of inter-State trade guaranteed by Art. 301. It must for its
validity also satisfy the requirements of Art. 304(b). In order 842 to satisfy
the requirements of Art. 304(b) it must be shown that the restrictions imposed
by the tax law on inter-State freedom of trade and commerce are reasonable and
are in public interest as also the bill for the purpose of levy of such tax has
been introduced or moved in the State legislature with the previous sanction of
the President. To the extent the impugned tax is levied on the entry of goods
in a local area it cannot be gainsaid that its immediate impact would be on
movement of goods and the measure would fall within the inhibition of Art. 301.
Can it, however, be said that this tax imposes restrictions which in the facts
and circumstances of the case could not be said to be reasonable? It was
contended on behalf of the respondents that the tax not being single point tax
it would impose a heavy burden and a very burden of tax would certainly
constitute unreasonable restriction on the freedom of trade and commerce.
To substantiate the contention that the Act
places unreasonable restrictions on the freedom of trade it was submitted that
it is a multi-point tax and in final analysis the burden would be
disproportionately heavy. It was said that whenever goods are taken from one
local area to another local area to third local area at every point of entry the
tax would be levied and, therefore, in ultimate result the burden would be very
heavy so as to make it thoroughly unreasonable. Undoubtedly, the tax would have
to be paid every time when scheduled goods enter a local area. In other words,
it is not a single point tax and, therefore, if some scheduled goods
successively enter different local areas for consumption, use or sale therein,
there would be multiple levy. But no attempt was made to substantiate this
charge by showing as to how goods are taken from one local area to another
local area to third local area for successive sales because if they are taken
for consumption or use, there is no question of taking the scheduled goods from
one local area to another local area. It is, therefore, difficult to conceive a
situation realistically that the impost would be very heavy so as to make it
unreasonable. The High Court negatived the contention and in our opinion
rightly observing that the petitioners have not been able to show that the
burden of the tax was so heavy as to constitute unreasonable restriction on the
freedom of trade and commerce. In this connection, however, reliance was placed
on the decision of this Court in Kalyani Stores v. State of Orissa & Ors.
In that case the State enhanced the duty in respect of foreign liquors from Rs.
40 to Rs. 70 per L.P.
gallon and this levy was challenged on the
ground that it infringed the guarantee of Art. 301. The State attempted to save
the levy by contending that it was saved by Art. 304(b).
843 The Court struck down the levy as being
violative of Art.
301 observing as under:
"Article 301 has declared freedom of
trade, commerce and intercourse throughout the territory of India, and
restriction on that freedom may only be justified if it falls within Art. 304.
Reasonableness of the restriction would have to be adjudged in the light of the
purpose for which the restriction is imposed, that is "as may be required
in the public interest". Without entering upon an exhaustive
categorization of what may be deemed "required in the public
interest" it may be said that restrictions which may validly be imposed
under Art. 304(b) are those which seek to protect public health, safety, morals
and property within the territory".
The later decision has shown that the observation
in Kalyani Stores case is confined to the facts of that case.
This would be evident from the decision of
this Court in State of Kerala v. A.B. Abdul Khadir & Ors. wherein it is
observed that in Kalyani Stores case (Supra) the Court did not intend to lay
down a proposition of universal applicability that the imposition of a duty or
tax in every case would tantamount per se to an infringement of Art. 301 and
that only such restrictions or impediments which directly or immediately impede
free flow of trade, commerce and intercourse would fall within the prohibition
contained in Art. 301. Even apart from this, a levy which appears to be quite
reasonable in its impact on the movement of goods and is imposed for the
purpose of augmenting municipal finances which suffered a dent on account of
abolition of octroi cannot be said to impose an unreasonable restriction on the
freedom of inter-State trade, commerce and intercourse. In this connection it
would be useful to recall the observations of this Court in Khyerbari Tea Co.
Ltd.
case that the power conferred on this Court
to strike down a taxing statute if it contravenes the provisions of Arts. 14,
19 or 301 has to be exercised with circumspection, bearing in mind that the
power of the State to levy taxes for the purpose of governance and for carrying
out its welfare activities is a necessary attribute of sovereignty and in that
sense it is a power of paramount character. It is, therefore, idle to contend
that the levy imposed an unreasonable restriction on the freedom of trade and
commerce.
The next question is whether this levy is in
public interest. As has been pointed out earlier, the levy was to compensate
the loss suffered by abolition of octroi.
844 without a demur. After removing the
obnoxious features of octroi a very modest impost is levied on entry of goods
in a local area and that too not for further augmenting finances of the
municipalities but for compensating the loss suffered by the abolition of
octroi is certainly a levy in public interest. As has been repeatedly observed
by this Court, the taxes generally are imposed for raising public revenue for
better governance of the country and for carrying out welfare activities of our
welfare State envisaged in the constitution and, therefore, even if a tax to
some extent imposes an economic impediment to the activity taxed, that by
itself is not sufficient either to stigmatise the levy as unreasonable or not
in public interest.
The last limb of the argument is whether the
proviso to Art. 304(b) is satisfied or not. The proviso imposes an obligation
to obtain the Presidential sanction before introducing the bill or amendment
for the purpose of clause (b) of Art. 304 in the legislature of a State. It
cannot be gainsaid that Presidential sanction was not obtained before
introducing the bill which was ultimately enacted into the impugned Act but
after the bill was enacted into an Act the same was submitted to the President
for his assent and it is common ground that the President has accorded his
assent. If prior presidential sanction is a sine qua non, the requirement of
the proviso is not satisfied but in this context it would be advantageous to
refer to Art. 255 which provides that no Act of Parliament or of the
Legislature of a State and no provision in any such Act shall be invalid by
reason only that some recommendation or previous sanction required by the
Constitution was not given if assent to that Act was given by the President.
Now, in this case it is common ground that the President did accord his sanction
to the impugned Act. Therefore, the requirement of the proviso is satisfied.
To sum up, the impugned tax is not
discriminatory in character as envisaged by Art. 304(a) and it does impose
restrictions but the restrictions imposed are reasonable and in public interest
and the Act subsequently having received the assent of the President, the
proviso to Art. 304(b) is complied with and, therefore, the impugned Act is
saved by Art. 304 and could not be struck down on the ground that it was
violative of Art. 301. The contention must accordingly be negatived.
Two minor subsidiary points were sought to be
made en passant by Mr. S. T. Desai and a brief mention of them would be in
order. It was urged that there is a certain amount of vagueness in s. 3 inasmuch
as no light is thrown by the words of the section or the other provisions of
the Act on the question as to computation of tax to be 845 made at specified
percentage ad valorem without specifying which price is to be taken into
consideration for levy of tax, namely, the sale price or the purchase price of
the concerned scheduled goods. It was said that sale price and purchase price
of a dealer would be different and in the absence of any guideline in the
charging section or any other provision in the Act it would lead to arbitrary
determination or computation of tax by taking "in one case sale price of
the scheduled goods and in another case purchase price". The contention
overlooks the specific guideline to be found in the charging section itself.
The taxing event is the entry of scheduled goods into a local area. The tax
becomes payable on the entry of scheduled goods in a local area. Therefore, the
price of the scheduled goods at the time of entry paid by the dealer who is the
importer of goods within the scheduled area would be the ad valorem price on
the basis of which tax would be computed.
No subsequent rise or fall in price has any
relevance to the computation of the tax. The charging section says that the tax
shall be levied and collected on the entry of scheduled goods in a local area
at specified percentage not exceeding two per cent ad valorem. Therefore, the
price of the scheduled goods at the time when the tax becomes chargeable
irrespective of the fact that it would be computed at a later date when the
dealer submits his return as required by the other provisions of the Act, would
be the price for computation of tax. And there is no ambiguity or any vagueness
in this behalf. There is thus specific guideline in the charging section itself
for taking into account the price according to which tax would be computed. The
Hight Court negatived this contention by observing that it would be open to the
dealer to choose either the sale price or the purchase price whichever is
favourable to him for computation of his liability to tax. This approach
overlooks the specific language of s. 3 which clearly indicates what price is
to be taken into account for computing the tax.
When the goods are brought within the local
area they have a certain price. The price may be the price which the importer
of goods has paid before bringing the goods within the local area. Even if the
dealer is the manufacturer of goods at a place outside the local area and
brings the goods within the local area he must have determined the price of the
goods.
Therefore, the dealer has some specific price
of the scheduled goods which are being brought within the local area at the
time of entry in the local area and the entry being the taxing event that would
be the price which alone can be taken into account for computing the tax ad
valorem.
Therefore, we find it difficult to agree with
the reasoning adopted by the High Court in rejecting the contention but for the
reasons hereinabove mentioned the contention is devoid of merits and accordingly
it must be negatived.
846 As we are not able to uphold the
contentions which found favour with the High Court in striking down the
impugned Act and the notification issued there under and as we find no merit in
other contentions canvassed on behalf of the respondents for sustaining the
judgment of the High Court, this appeal must succeed. Accordingly this appeal
is allowed and the judgment of the High Court is quashed and set aside and the
petition filed by the Respondent in the High Court is dismissed with costs
throughout.
P.B.R. Appeal allowed.
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