Holding

The Tamil Nadu Additional Sales Tax Act, 1976 is constitutionally valid; it does not exceed legislative competence and does not violate Articles 14, 19, 30 or 301.

Summary

The petitioners challenged the constitutional validity of the Tamil Nadu Additional Sales Tax Act, 1976 (Act II of 1976) which amended the 1970 Act by introducing graded tax rates based on taxable turnover and prohibiting the passing on of the tax to consumers. They argued that the amendment exceeded the State’s legislative competence, amounted to a tax on income, violated Article 14’s equality clause, infringed Articles 19(1)(f) and 19(1)(g) by restricting trade, was confiscatory, and contravened Article 301. The Supreme Court held that the 1976 amendment merely altered the method of computing the existing additional sales tax and did not create a new tax, thus falling within the State’s competence under List II. The Court affirmed that classification based on turnover is a reasonable legislative classification aimed at proportionality to capacity to pay and does not breach Article 14 or the fundamental right to trade. Consequently, the petitioners’ contentions were dismissed and the writ petitions were rejected.

Issues considered

The amendment of the Tamil Nadu Additional Sales Tax Act, 1976, exceeds legislative competence by imposing a tax on income rather than sales.
The graded tax rates based on turnover violate Article 14 of the Constitution.
The prohibition on passing the additional tax to consumers infringes Articles 19(1)(f) and 19(1)(g).
The levy is confiscatory and violates fundamental rights.
The provision contravenes Article 301 relating to inter‑state trade.
The amendment introduces a new tax beyond the 1970 Act, rendering it ultra vires.

Legislation cited

Constitution of Indias. Article 14, s. Article 19(1)(f), s. Article 19(1)(g), s. Article 30, s. Article 301
Seventh Schedule of the Constitution – List II
Tamil Nadu Additional Sales Tax Act, 1970 (Act XIV of 1970)
Tamil Nadu Additional Sales Tax Act, 1976s. 2, s. 2(1), s. 2(2), s. 2(3)
Tamil Nadu General Sales Tax Act, 1959
Tamil Nadu Sales Tax (Surcharge) Act, 1971

Subjects

Additional Sales Taxgraded tax rateslegislative competenceArticle 14Article 19sales taxconstitutional validityTamil Nadutax on turnoverprohibition on passing taxclassificationequalityfundamental rights

Judgment

980

A

K.M. MOHAMAD ABDUL KHADER FIRM
B v.
STATE OF TAMIL NADU & ORS.
October 16, 1984
[V.D. TULZAPURKAR, V. BALAkRISllNA ERADI AND
c D.P.MADON JJ.]

Tamil Nadu Additional Sales Tax Act, (Act II of 1976)-Legls/Qtive com-
petence to levy Additional Tax in addition to the collecti~n of surcharge under the
Tamil Nadu Sales Tax (Surch11rge) Act, 1971-Whether the levy of graded rates
violate1Article14 of the Constitution-Whether the levy of Additional Tax itself
is violative of Articles 19 and 3~.I of the Constitution since it prohibits passing of
D the incidence of taxation to the consumer of goods-Constilution of India 1950
Articles 14, 19 and 30/.

In Tamil Nadu the levy of the Sales Tax is regulated by the Tamil Nadu
General Sales Tax Act, 1959. In the year 1970 the S~te Legislature enacted
the Tamil Nadu Additional Sales Tax Act, (Act XIV of 1970) with effect from
May 28, 1970. The scheme of section 2 of the Act was to levy the Additional
Tax by the process of increasing the tax payable under the Act of 1959 by 10 ·
E
percent the said increase repre~enting the quantum of the Additional Tax. The
proviso to Section stipulates for a concessional treatment in respect of the
declared goods. In September, 1971 the State Legislature enacted the Tamil
Nadu Sales Tax (Surcharge) Act, 1971. with retrospective effect from. June, 1971.
Under Section 3 of that Act every dealer liable to pay tax under the Act of
1959 was subjected to a further liability to pay surcharge at the rate of S per cent
F of such tax. In 1976 the Tamil Nadu Additional Sales Tax (Act II) of 1976
was passed amending and substituting Section 2 of the earlier Act providing
for graded rates with a super added condition that the Additiona I Tax payable
cannot be collected from the consumers, a contravention of which would attract
penal action. On receipt of notices of demand issued consequent upon the assess·
ment to Additional Sales Tax under the provisions of the Section as amended
by the 1976 Act the petitioners have come up to the Court challenging the
constitutional validity of the Act, 1976 and seeking to quash the assessment
G
orders and tho Dotices of den1arid issued to them.

Dismissing the Writ Petitions, the Court

HELD : t, The contentions that the amended Section 2 of the Tamil Nadu
Additional Sales Tax Act 2 of 1976 is devoid of legislative con1petence in as
H much as it in1poses not a tax on sales but a tax on income, that the adoption
• j i • '

k.M M.A. KHADER v. TAMIL NADU (Balkrishna Eradi, J.) 981

of slab system for determinin& taxr liability is alien to the concept of Sales Tax A
_ that the levy or"Additionat Tax under the irnpun&cd enactment violates Articles
· J4 and 19 ·of the Constitution and that the provision~ of the Act arc violative
of Article 301 of the Constitution are all totally devoid of merit. [99JC.D]

Mis Pha,ma Associates and others v. Stale of Bihar, [f983] 4 S.C.C. 45 :
's. Kodar v. State of Kera/a [!975] I S.C.R. 121 followed.
2. The constitutional validity .of the levy of AdditionaJ·Tait is not in any
B
,manner affected by the changes brought about in tbe_modc of levy and as a
,re_sult of the amendments effected by the impugned Act. The impugned enact-
ment has merely amended the 197 '.) Act. It has not introduced a new tax ;
what it has done is only tO amend the 1970 Act by providing for a different
method of computation of the Additional Tax leviable under that Act by link-
ing the rate of levy to the.taxable turnover instead of to the amoun~ of tax c
assessed under.the Act of 1959. The nature and identity of the Additional Sales
Tax imposed by the 1970 Act have not been in any way altered bY the imprigned
Act. (985F;C;E;D] .
S. Kodar v. State of Kera/a, [1975] I S.C.R. 121 referred to.
' . -
· " :ORIGINAL JuRISDICTION : Writ Petition (Civil) Nos:
4358 of 1978, 212-213, 760 of 1979 and 6449 of 1980. D
Under article 32 of the eon~titution of India

S.N. Kacker and A. T.M. Sampath for the Petitioner in W.P.
Nos. 212-213 of 1980.

A.K. Sen, A.T.M. Sampath and P.N. Rama/ingam for the E
Petitioner in W.P. No. 760 of 1979.

A. T.M. Sampat~ and P.N. Rama/ingam for the Petitioner in
W.P. Nos. 4358 of 1978 and 6449 of 1980.

S.T. Desai and A .V. Rangam for the Respondent. F

The Judgment of the Court was delivered by

BALAKRISHNA BRAD!, J. in these Writ Petitions, the petitioners

- have challenged the constitutional validity of the provisions of
Tamil Nadu Additional Sales Tax Act 1976 (Act 2 of 1976). By the
said Act section 2 of the Tamil Nadu Additional Sales Tax Act,
1970 was amended by substituting a new provision in the place of
G

what existed before, section 3 was omitted and section 3A was
newly introduced to the Act As the points raised in all these Writ
Petitions are identical, they were heard together and are disposed
of by this common judgment. · H
982 SUPREME COURT REPORTS (1985) 1 S.C·R.

A Before we proceed to set out the provisions of the impugned
Act, it is necessary to narrate in brief the legislative history that
preceded its· enactment. The basic statute providing for the levy of
Sales tax in the State of Tamil Nadu is the Tamil Nadu General
Sales Tax Act, 1959 (hereinafter referred to as "the Act of 1959")
In the year 1970, the State Legislature enacted the Tamil Nadu
B Additional Sales Tax Act-Act 14 of 1970 (hereinafter called the
1970 Act)-which was brought into force with effect from May 28,
1970. The said Act provides for the levy of an additional tax on
the sale or purchase of goods. Section 2 of the Act which is the
charging section was in the following terms :-
c
"2. Levy of additional tax in the case of certain
dealers :-(!) The tax payable under the Tamil Nadu
General Sales Tax Act, 1959 (Tamil Nadu Act of 1959)
(thereafter in this section referred to as the said Act), shall
in the case of a dealer whose total turnover fctr a year ex-
D ceeds ten lakhs of rupees, be increased by an additional tax
at the rate of (ten per cent) of the tax payable by that
dealer for that year and the provision of the said Act shall
apply in relation to the said additional tax as they apply
in relation to the said tax payable under the said Act.

E Provided that where in respect of declared goods as
defined in clause (h) of section of the said Act, the tax
payable by such dealer under the said Act together with the
additional tax payable under this sub-section, exceeds ·-
(four percent) of the sale or purchase price thereof, the
rate of additional tax in respect of such goods shall be
F
reduced to such an extent that the tax and the additional
tax together shall not exceed (four per cent) of the sale or
purchase price of such goods."

It will be noticed that the scheme of this section was to levy
G the additional tax by the process of increasing the tax payable under
the Act of 1959 by ten per cent the said increase representing the
quantum of the additional tax. The proviso to the section stipu-
lates for a concessional treatment in respect of the declared goods.
-
It is unnecessary for us to deal with the said proviso or with section
3 of the said Act as these provisions have no relevance to the deter-
ll mination of the points raised in the cases now l;>efore us.
l:.M.M.A. KHADER v. TAMIL NADU (Ba/krishna Eradi, J.) 983

In September, 1971, the State Legislature enacted the Tamil
Nadu Sales Tax (Surcharge) Act, 1971 with retrospective effect
from June, 1971. Under section 3 of that Act, every dealer liable
to pay tax under the Act of 1959 was subjected to a further liability
to pay a surcharge at the rate of five per cent of such tax. The
first proviso to the said section states that in the city of Madras the
rate of surcharge shall be ten per cent for the period commencing B
on the June 19, 1971 and ending with the June 28, 1971. The second
proviso extended certain concessions in the rate of surcharge in
respect of declared goods.
Thereafter followed the impugned statute namely, the Tamil
Nadu Additional Sales Tax (Act 2) of 1976, which was brought into c
force with effect from 1. 4. 1976. Section 2 of the said Act
amended section 2 of the Tamil Nadu Additional Sales Tax Act,
1970 by substituting the following provision in replacement of the
original section :

,"2. Levy of additional tax in the case of certain dealers- D
!. (a) The tax payable under the Tamil Nadu General
Sales Tax Act, 1959 (Tamil Nadu Act I of 1959) (here-
inafter in this section referred to as the said Act),
shall, in the case of a dealer whose taxable turnover
for a year exceeds three lakhs of rupees, be increased
by an additional tax calculated at the following rates, E
namely:-
- •. Rate of tax

(i) Where the taxable turnover exceeds 0.4 per cent of
three lakhs of rupees bu!' does not the taxable F
exceed five lakhs of rupees. turnover.
(ii) Where the taxable turnover exceeds 0.5 per cent
five lakhs of rupees but does not of the tax-
exceed seven lakhs of rupees. able turnover.
(iii) Where the taxable turnover exceeds 0.6 per cent G
seven lakhs of rupees but does not of the taxable
exceed ten lakhs of rupees. turnover.

(iv) Where the taxable turnover exceeds 0.7 per cent
ten lakhs of rupees. of the taxable
turnover. If
!

984 ~UPREME COURT REPORTS (1985) 1 S.C.R,
Provided that where in respect of declared goods as
A defined in clause (h) of section 2 of the said Act, the
tax payable by such dealer under this said Act, to-
gether with the additional tax payable under this sub-
section, exceeds four per cent of the sale or purchase
price thereof, the rate of additional tax in respect of
B such goods shall be reduced to such an extent that the
tax and the additional tax together shall not exceed
four per cent of the sale or purchase price of such
goods.
(b) The provisions of the said Act shall apply in rela-
C tion to the additional tax payable under clause (a) as
they apply in relation to the tax payable under the
said Act.
(2) Notwithstanding anything contained in the said Act no
dealer referred to in sub-section (I) shall be entitled to
D collect the additional tax payable under the said sub-
i>ection.
(3) Any dealer who collects tbe additional tax payable
under sub-section (1) in contravention of the provisions
of sub-section (2) shall be punishable with fine which
may extend to one thousand rupees, and no Court
E
below the rank of a Presidency Magistrate or a
Magistrate of the First Class shall try any such
offence."
-. -

While under the provisions of section 2 as they stood prior
F to ibe amendment, tbe additional sales tax was to be calculated
and levied at a certain percentage of the tax assessed on the
dealer under the Act of 1959, the scheme of the amended section
is to adopt the taxable turnover of the dealer as the base for the
levy of the additional tax, the rate or percentage to be applied for
calculation of the additional tax depending upon the quantum of
G the taxable turnover and the slab into which the case of a parti-
cular dealer will fall on the basis of the specification of the slab
limits indicated in the section.
On receipt of notices of demand issued consequent upon
assessments to additional sales tax under the provisions of the sec-
tion as amended by the impugned Act the petitiopers have
K.M.M.A. KHADER v. TAMIL NADU (Balkrishna Eradi, J.) 985

come up to this Court challenging the constitutional validity of the
impugned Act of 1976 and seeking to quash the assessment orders A
and the notices of demand issued to them.
The . first contention urged on behalf of the petitioners is
that since the State Legislature had already provided for the levy
of a tax on sales by the Act of 1959 and had also enacted a further
statute authorising the levy and colletion of a surcharge which is
B
in truth and substance the imposition of an additional sales tax, it
could not legally go on legislating further enactments providing
again for levy of additional sales tax. On this basis it is conten-
ded that the provisions of the impugned Act, 1976 are ultra vires
and devoid of legislative competence. We see no substance in
this contention. The impugned enactment has merely amended c
the 1970 Act. It has not introduced a new tax ; what it has done
is only to amel!d the 1970 Act by providing for a different method
of computation of the additional tax leviable under that Act. The
validity of the 1970 Act has been upheld by a Constitution Bench
of this Court in the case of S. Kadar v. State of Kera/a(1). Hence
there is no longer any scope for the petitioners to contend that
D
the State Legislature had no competence to provide for the levy of
additional sales tax. The nature and identity of the additional
sales tax imposed by the 1970 Act have not been in any way altered
by the impugned Act. As already pointed out what lias been done
by the impugned Act is only to provide for a different mode of
computation of the additional sales tax by linking the rate of levy E
to the taxable turnover instead of to the amount of tax assessed
under the Act of 1959. The constitutional validity of the levy of
additional tax is not:in any manner affected by the said change
brought about in the mode of levy and computation as a result of
the amendments affected by the impugned Act.
It was strongly contended on behalf of the petitioners that F
the prescription of different rates of additional sales tax depending
upon the quantum of turnover of the different assessees is totally
repugnant to the concept of levy of tax on sales. Another argu.
ment advanced by Counsel for the petitioners was that since under
the amended provisions of section 2, two dealers selling the same
G
commodity will be liable to pay additional tax at different rates
depending upon their respective annual turnovers, there is a clear
violation of Article 14 of the Constitution as dissimilar treatment
is meted out to persons similarly situated. A further contention
(I) (1975) 1 S.C.R,. Ill
H
986 SUPREME COURT REPORTS [1985] 1 s.c.R.

urged on behalf of the petitioners was that the levy in its present
A
from is really a tax on 'gross income' and not a tax on 'sales' and
hence it is ultra vires the State Legislature as it has no compe-
tence to levy a tax on income other than agriculture income. Ano-
ther ground of attcak pressed by Counsel was that the levy of
additional sales tax under the impugned Act is confiscatory in
B nature, that it impose unreasonable restrictions on the petitioners
right to carry on business and offends Article 19 of the Constitu-
tion, particularly in view of the prohibition contained in sub-sec-
tion (2) of section 2 against collection of additional tax from the
consumers. Yet another point taken in the Writ Petitions but
not very seriously urged at the time of hearing is that the levy of
c additional tax under the impugned Act offends Article 301 of the
Constitution since the imposition of the additional liabillty would
seriously affect the business of the petitioners and on account of
their inability to bear the heavy burden their right to carry on
freely trade, commerce aad intercourse within the territory of
D India will be adversely affected.

We are spared the necessity of dealing with any of the afore-
said points in depth because everyone of them is fully covered by
pronouncement of a Constitution Bench of this Court in S. Kodar
v. State of Kera/a afore-cited.
E
The contention that the additional sales tax levied under the
Tamil Nadu Additional Sales Tax Act, 1970 was not a tax on sales
but was in reality a tax on the income of the dealers was rejected
by the Constitution Bench which observed thus :
F
" As regards the contention that the State Legislature
has no power to pass the measures, we are of the view
that additional tax is really a tax on the sale of goods.
The object of the Act, as is clear from its provisions, is
to increase the tax on the sale or purchase of goods impo-
G sed by Tamil Nadu General Sales Tax Act, 1959 and the
fact that quantum of the additional tax is determined with
reference to the sales tax imposed would not alter its
character. It may be noted that additional tax is to be
imposed only if the turnover of a dealer exceeds Rs. 10
lakhs. It is in reality a tax on the aggregate of sales effec-
H ted by a dealer during a year. The additional tax, there-
K.M.M.A, KHADER v. TAMIL N.\DU (Balkrishna Eradi, J.) 987

- fore, is an enhancement in the rate of the sales tax when
the turnover of a dealer exceeds Rs. 10 lakhs a year and
it is a tax on the aggregate of the sales affected by the
dealer during the year. The decision in Ernakulam Radio
A

Company v. Stare of Kera/a(1) which was affirmed by a
Division Bench of the Kerala High Court in Ki/iker v.
Safe.< Tnx OfjicerC'l took that view. The same view was B
taken by the Andhra Pradesh High Court in A.S.
Ramachandra Rao v. State of Andra Pradesh(8 ). This is

-
the correct view. Entry 54 in List II authorises the state
legislature to impose a tax on the sale or purchase of
goods. So, the contention of the appellants that the
additional sales tax is not a tax on sales but on the income c
of the dealer is without any basis.

The further plea that the levy of additional tax also ,was con-
fiscatory in nature and the prohibition against passing on the bur-
den to the consumers was an unreasonable restriction was also
negatived by this Court by stating :- D

"As regards the second contention that the provi·
sions of the Act are violative of the fundamental rights
of the appellants under article 19 (1) (f) and 19 (I) (g), as
the tax is upon the sale of goods and is not shown to be con-
fiscatory, it cannot be said that the provisions of the Act E
impose any unreasonable restrictions upon the appellants'
right to carry on trade. It is, no doubt, true that every
tax imposes some restriction upon the right to carry on
a business ; but it would not follow that the imposition
of the tax in question is an unreasonable restriction upon
F
the appellants fundamental right to carrry on trade.
Generally speaking, the amount or rate of a tax is a
matter exclusively within the legislative judgment and as
long as a tax retains its avowed character and does not con-
fiscate property to the State under the guise of a tax, its
reasonableness is outside the judicial ken. G

But it was contended that as the dealer is prohibited
from passing on the incidence of tax to the purchaser,

(I) 1s s. r.c. 445, 449
(2) 21 S.T.C. 253
(J) 2s s.r.c. 133 ff
988 SUPREME COURT PEPORTS [1985] I S.C.R.

A the additional tax, unlike sales tax, is a tax on income of
the dealer which he must pay whether he makes any pro-
fit or not and is, therefore, an unreasonable restriction on
his fundamental rights under article 19 (1) (g).
The legal incidence of tax on sale of goods under the
8 Tamil Nadu General Sales Tax, 1959 falls squarely on the
dealer. It may be that he can add· the tax to the price of
the goods sold and thus pass it on to the purchaser. But
it is not necessary that the dealer should be enabled to
pass on the incidence of the tax on sale to the purchaser
in order that it might be a tax on sales of goods.
c
In J. K. Jute Mills Co. v. State of U.P.(1) this Court
said, although it is true that sales tax is, according to
accepted notions, intended to be passed on to the buyer,
and provisions authorising and regulating the collection
of sales tax by the seller from the purchaser are a usual
D feature of sales tax legislation, it is not an essential cha-
racteristic of a sales tax that the seller must have the
right to pass it on to the consumer, not is the power of
the legislature to impose a tax on sales conditional on its
making a provision for sellers to collect the tax from th:
purchasers.
E
In Kondurl Buchiraja/ingam v. State of Hyderabad(•)
· this Court said :
·-
"It.is then said that the sales tax is essentially an
F · indirect tax and therefore it cannot be demanded of the
appellant without allowing him to recoup himself by
collecting the amount of the tax from the persons with
whom he deals. This Court has already decided in the
case of Tata Iron and Steel Co. Limited v. State of
Bihar (1958) 9 S.T.C. 267 that in law a sales tax need not
G be an indirect tax and that a tax can be a sales tax though
the primary liability for it is .Put upon a person without
giving him any power to recoup the amount of the tax pay-
able, from any other party."

(I) [1962] 2 S.C.R. I at 13
H (2) (1958] 9 S.T.C. 397
K.M.M.A. KHADER v. TAMIL NADU (iJa/krishna)fradi, J.) 989 •
As we said, the additional tax is a tax upon sales of
A
goods and not upon the income of a dealer and so long as
it is not maie out that the tax is confiscatory, it is not
possible to accept the contention that because the dealer
is disabled from passing on the incidence of tax to the
purchaser, the provisions of the Act impose an unreason-
able restriction upon the fundamental rights of the appel- B
lants under article 19 (I) (g) or 19 (1) (f).

Dealing with the contention that since the provisions of the
Act imposed different rates of tax on different dealers depending
upon their turnover there was a violation of Article 14 of the
Constitution, Mathew J. who spoke for the Court observed: c
"The last contention namely that the provisions of th.e
Act impose different rates of tax upon different dealers
depending npon their turnover which in effect means that
the rate of tax on the sale of goods would vary with the
volume of the turnover of a dealer and are, therefore, D
violative of article 14 is also without any basis. Classiftc-
tion of dealers on the basis of their respective turnover for
the purpose of graded imposition so long as it is based on
differential criteria relevant to the legislative object to be
achieved is not unconstitutional. A classification, depen-
E
ding upon the quantum of turnover for the purpose of
exemption from tax has been upheld in several decided
cases. By parity of reasoning, it.can be said that a legisla-
tive classification making the burden of the tax heavier in
proportion to the increase in turnover would be reasonable.
The basis is that just as in taxes upon income or upon
F •
transfers at death, so also in imposts upon business, the
little man, by reason of inferior capacity to pay, should
bear a lighter load of taxes, relatively as well as absolutely,
than is borne by the big one. The flat rate is thought to
be less efficient than the graded one as an instrument of
social justice. The large dealer occupies a position of
economic superiority by reason of his greater volume of his
business. And to make his tax heavier, both absolutely
and relatively, is not arbitrary discrimination, bnt an atte-
mpt to proportion the payment to capacity to pay and thus
to arrive in the end at a more genuine equality. The
economic wisdom of a tox is within the exclusive province . H
I
990 SUPRllME COURT R~PORTS (1985] I s.c R·

of legislature. The only question for the court to consider
A is whether there is rationality in the belief on the legisla-
ture that capacity to pay the tax increases, by and large,
with an increase of receipts.

"Certain it is that merchants have faith in such a
correspondence and act upon that faith ...... If experience
B
did not teach that economic advantage goes along with
larger sales, there would be an end to the hot pursuit for
wide and wider markets ......... In brief, there is a relation
of correspondence between capacity to pay and the amount
of business done. Exceptions, of course, there are. The
c law builds upon the probables, and shapes the measure of
the tax accordingly ......... At the very least, an increase~of
gross sales carries with it an increase of opportunity for
profit, which supplies a rational basis for division into class-
es, at all events when coupled with evidence of a high
degree of probability that the opportunity will be
D frnitful". (I)
(See the dissenting judgment of Justice Cardozo.
Justice Brandeis and Justice Stone)

The reasoning of the minority in that case appeals to us as
E more in consonance with social justice in an egalitarian state than
that of the majority.

As we said, large dealer occupies a position of econo-
mic superiority by reason of bis volume of business and to
make the tax heavier on him both absolutely and realtively
is not arbitrary discrimination but an attempt to propor-
tion the payment to capacity to pay and thus arrive in the
end at a more genuine equality. The capacity of a dealer,
in particular circumstances, to pay tax is not an irrelevant
factor in fixing the rate of tax and one index of capaoity is
the quantum of turnover. The argument that while a
G
dealer beyond certain limit is obliged to pay higher tax,
when others bear a less tax, and it is consequently discri-
minatory, really misses the point namely that the former
·kind of dealers are in a position of economic superio~ity by
reason of their volume of business and form a class by

H (I) Stewart Dry Goods Company. Lewis 294 U.S. 550
K.M.M.A. KlfADER 'v. TAMIL NADU (Balkrishna Eradi, J.) 991

themselves. They cannot be treated as on a par with
A
comparatively small dealers. An attempt to proportion
the payment to capacity to pay. and thus bring about a
real and factual equality cannot be ruled out as irrelevant
in levy of tax on the sale or purchase of goods. The object
of a tax is not only to raise revenue but also to regulate
the economic life of the society''. B

The same principles have been recently reiterated by a Three
Judge Bench of this Court in the case of M/s Pharma Associates and
Others v. State of Bi!zar and Ors( 1). In the light of the aforesaid
pronouncements, it is manifest that the contention put forward by
the petitioners that the impugned enactment is devoid of legislative c
competence inasmuch as it imposes not a tax on sales but a tax on
income, that the adoption of a slab system for determining tax
liability is alien to the concept of sales tax and that the levy of
additional tax under the impugned enactment violates Articles 14
and 19 of the Constitution are all totally devoid of merit. We do
D
not also see any substance in the plea raised in the Writ Petitions
that the provisions of the impugned Act are violative of Article 30 l
of the Constitution.

In the result, all these Writ Petitions fail and are dismissed E
with costs.

S.R. Petition dismissed.

(I) [1983] 4 s.c.c. 45