Karnataka HC Upholds Amendment Made To KTEG Act, Which Allows Levy Of 5 Percent On Unmanufactured Tobbaco [Read Order]

Justice S Sujatha dismissed the petition filed by M/s Giriraj Enterprises and M/s Damodae Jagannath Malpani, engaged in the business of unmanufactured tobacco in the brand names Ghai Chhap Zarda, Thambaku, Badshaw, Singam.

Petitoners argued

The Notification issued by the State Government dated October 1, 2013, amending the Notification dated March 30, 2002 30.3.2002,insofar as levying tax at 5% on sub-item (ii) of item No.5 namely "unmanufactured tobacco in sealed container" is

against the First schedule to the Karnataka Tax on Entry of Goods Act,(KTEG) Act. The State Government has no power to levy entry tax on the unmanufactured tobacco in sealed container contrary to Articles 301 and 304 (b) of the Constitution of India.

Further it was said that "Sub item(i) in item No.5 of the Notification dated 30.3.2002 if to be construed as including all tobacco products of all description, no sub-item(ii) would have been specified by the State Government in terms of the notification dated 01.10.2013. The action of the State in classifying sub item(ii) separately would indicate that the said goods are not part of sub-item (i) of item No.5 described. First schedule to the KTEG Act has received the assent of the President. No sanction of the President is accorded to fix the tax liability on the unmanufactured tobacco in a sealed container.

State Opposed the plea by saying:

The First schedule is exhaustive and includes tobacco products of all descriptions both manufactured and unmanufactured. There is no cause of action for the petitioners to approach this court challenging the Notifications impugned.

The court said:

The First schedule prescribes tobacco products of all descriptions and enlarges the scope of the entry by employing the phrase 'including' and 'etc.,' The said entry is ex-facie exhaustive. Hence, the amendment to the Notification impugned is clarificatory in nature.

It added "For better clarity, understanding or specification, if the Entries are expressly made, it cannot be held to be beyond the power contemplated under Section 3[1] of the Act otherwise."

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