Facts

Various States had enacted statutes levying tax on supply of “luxury goods”. These  tax laws were justified as falling within Entry 62 List II which reads as “taxes on luxuries, including taxes on entertainments, amusements, betting and gambling” and therefore immune from the various Constitutional restrictions which are otherwise applicable to a tax enacted under Entry 54 List II (“tax on sale or purchase of goods”), namely Article 286 read with Sections 14 and 15 of Central Sales Tax  Act, 1956 as well as statutory restrictions under ADE Act 1957 where   the States have opted to take benefit under that Act.

Issue

Whether Entry 62 List II can cover “goods”, even if they are luxurious in nature, when the same items are also covered under Entry 54 List II?.

View

The principle of noscitur a soiicis was applied and it was held that “luxuries” would only mean those luxuries which areanalogous to entertainments, amusements, betting and gambling and which are intangible in nature. Based on historical convention, it was held that luxury goods were always treated as falling within the power relating to levying of sales tax and not the  tax  on luxuries. The Court further held that there should be no overlapping in the taxable events specified in taxing entries in the Constitution,and the Court should adopt an interpretation which does not allow any kind of overlapping.

Held

The tax on luxury goods was held to be outside Entry 62 List II and other issues were left open. (WP. No. 567 and 568/094 & Ors dt. 20-1-2005)

Editorial : After the enactment of the Constitution 101st Amendment Act, 2016, the tax on luxuries has been deleted from Entry 62 List II. However, the principles expressed in this judgment on the rule against overlapping of taxing entries remains applicable even today.

“Strength does not come from physical capacity.

It comes from an indomitable will.”

– Mahatma Gandhi