ORDER [ENTITY], J.
1. This order shall also govern the disposal of [PRECEDENT], [CASE NUMBER].
2-3. The petitioner No. 1 is a Company registered under the [ACT], having its registered office at Ahmedabad (Gujarat) and Branch at Damoh (M.P.). It is engaged in manufacture of Bidis and has a factory' at Hindoria in Damoh district. Similarly, petitioner No. 2, a partnership firm, is also a manufacturer of Bidi with head office at Ahmedabad and Branch at Damoh and factory at Hindoria.
4. The respondent No. 2 is Notified Area Committee constituted under [SECTION] of the [ACT]. The State of Madhya Pradesh issued a notification imposing Terminal Tax under the authority conferred under [SECTION] of the [ACT], dated 2nd May, 1991, which is reproduced below :
"Bhopal, the 2nd May, 1991.
No. P.6-51-XV III-II-90. - In exercise of the powers conferred by clause (a) of sub-section (1) of [SECTION] of the [ACT], the State Government hereby impose the Terminal Tax in the Notified Area Committee, Hindoria in Damoh District, the Terminal Tax (Assessment and Collection) of the house situated within its limits and further directs that the imposition of the said Tax shall come into force of the rates specified in the schedule below from the day which may be after thirty days from the date of publication of this notification in the "Madhya Pradesh Gazette" :-
SCHEDULE There shall be imposed and paid to the Notified Area Committee, Hindoria a Terminal Tax on articles annexed exported from the limits of Notified Area Committee, Hindoria at the rate specified in Schedule below :-
S.No. Name of Goods Rate of Tax in Rs. (1) (2) (3) 1. All types of grain 1.00 per Quintal 2. All types of Pulse 2.00 per Quintal 3. All types of oil seeds or All oil product seeds. 3.00 per Quintal 4. All types of vegetables 1.00 per Quintal 5. Bidi 0.50 per Thousand 6. Betel leaf 0.50 per Thousand 7. [ENTITY]) 0.50 per Ten Kg. 1.00 per Cart 8. Husk (Bhoosa) All types 5.00 per Trolley 15.00 per Truck By order and in the name of the Governor of Madhya Pradesh. [ENTITY], Addl. Secy."
5. Objections were filed alleging that the tax could be levied by the Director, Local Bodies and not by the State Government. It is further stated that has not been imposed validly after following the procedure. It is also stated that no time or dale has been fixed for enforcement of the tax, except stating that it will come into force after 30 days from the date of publication.
6. The substantial challenge made is to the legislative competence of the Stale Legislature to impose such a tax in relation to tobacco industry, i.e. Bidi which is regulated by [ACT] and [ACT], and [ACT]. It was also contended that the subject being covered by the Central Law under [SECTION] of the [ACT] the field is covered and no law could be made to regulate manufacture of Bidis, which is nothing but an industry relating to manufacture of tobacco, the State Legislature was thus incompetent to levy any cess, fee or tax. Reliance was placed on the decision of the Supreme Court in [ACT] Ltd. and Ors. v. Stale of Karnataka, (1985) (Supp.) SCC 476 and the decision of this Court in [PRECEDENT], [CASE NUMBER] decided on 23-11-1987.
7. At the outset it may be stated that the counsel for the petitioners did not press the grounds relating to competence of the State Government under [SECTION] of the [ACT], but, restricted his submissions to the competence of the State Legislature to impose such a tax.
8. We may refer to the respective entries in the [SECTION] in [SECTION] having a bearing to the controversy. Learned counsel for the respondent No. 2 submitted that the right to tax is an independent field marked to the Parliament (Union) and the State Legislature i.e. States under the two lists and the taxing power of one cannot be denuded by interpreting any of the taxing entries in a restricted manner. Shri [ENTITY] relied on decisions of the Supreme Court reference to which will be made at proper place.
9. Relevant entries are - [SECTION] - Union List. [SECTION] reads thus :-
"52. Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.
89. Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights.
97. Any other matters not enumerated in [SECTION] or [SECTION]I including any tax not mentioned in either of those Lists."
[SECTION] - State List. [SECTION] reads thus :-
"52. Taxes on the entry of goods into a local area for consumption, use or sale therein.
56. Taxes on goods and passengers carried by road or on inland waterways."
10. The question, therefore, is whether the Parliament has by law declared intention to be expedient in public interest, i.e., control of the Bidi industry in the particular case.
11. Learned counsel for the petitioners relied on provisions of [ACT], [ACT], and submitted that the Parliament having enacted the law, the State has no jurisdiction to impose any tax and reliance has been placed on [ACT] Ltd. and Ors. v. State of Karnataka, (1985) (Supp.) SCC 476 and the decision of this Court in [PRECEDENT], [CASE NUMBER] decided on 23-11-1987. We may here reproduce some of the provisions of [ACT]. In the instant case we are concerned with Bidi Industry and [SECTION] of the [ACT] reads as under :
"2. Declaration as to expediency of control by the Union. - It is hereby declared that it is expedient in the public interest that the Union should take under its control the tobacco industry."
[SECTION] deals with establishment and constitution of the Board. [SECTION] deals with functions of the Board. [SECTION] deals with registration of growers of Virginia tobacco and [SECTION] deals with power to levy fee. [SECTION] deals with constitution of Tobacco Fund and [SECTION] deals with control by Central Government.
12. It may be seen that the functions of the Board would be confined to the area where the Act has been extended as is clear from [SECTION] of the [ACT]. The provisions of the Act have not been extended to the State of Madhya Pradesh as it is clear from the notifications to be found under the said sections.
13. True that the [ACT] case (supra) holds that the State Government is denuded of the power to impose any tax. It is stated that where two Acts, one passed by the Parliament and the other by the State Legislature, collide and there is no question of harmonising them, then the Central Legislation must prevail.
14. The [ACT] case (supra) is no doubt an authority for the proposition that where the field is covered the State Legislature cannot make a law in the said field. It is pointed out that the principle of pith and substance will be required to be invoked to find out whether the law made by the Parliament falls entirely within the scope of the Entry which totally forbids any legislation by State much so in the field of taxation.
15. The [ACT] case (supra) was followed in [PRECEDENT] and by this court in [PRECEDENT] which has already been referred earlier, and the learned Judges rejected the argument for the Market Committee stating that once the Centre takes over an industry under [SECTION] and passes an Act to regulate the industry, the State Legislature ceases to have any jurisdiction to legislate in that field and if it does so, that legislation would be ultra vires the powers of the State Legislature. The Bombay High Court held in [ENTITY] and Company's case (supra) that once there is a judgment of the Supreme Court, it is a law binding on all Courts in view of [SECTION] of the [ACT] and the Court would refuse to consider any aspect by which it can be shown that the view taken by the Court was not correct. It was said that the only remedy lay in approaching the Supreme Court. Learned Counsel for the respondent No. 2 submitted that the tax in the instant case is one which docs not operate in any field of regulation of industry and as such the judgment in [ACT] case (supra) could not cover the case of the petitioners. It is argued that the taxing power cannot be controlled with reference to a field of legislation which is only in respect of regulation.
16. Shri [ENTITY], counsel for the respondent No. 2, relied on the judgment of the Supreme Court in [PRECEDENT] wherein earlier judgment of the Supreme Court in [PRECEDENT] was considered. In the said case [ACT] [ACT] was challenged and the Supreme Court while considering the scope stated that there cannot be curtailment of taxing powers by reference to the regulatory provisions. It is argued that no restriction can be read in [SECTION] or [SECTION] by reading [SECTION]. The entries in the three lists of the [SECTION] which confer legislative competence on the respective legislatures to deal with the topics covered by them must receive wider interpretation and so it would be unreasonable to read in the entries any limitation. We may refer to para 19 of the said judgment which is quoted below :-
"19. This argument of legislative incompetence seems to assume that [SECTION] requires that the tax must be levied by the State Legislature on goods which are carried only against the owner of the goods that are carried, or against the persons who carry them. We do not see any justification for introducing such limitations in the said Entry. It is hardly necessary to emphasize that Entries in three lists in the [SECTION] which confer legislative competence on the respective legislatures to deal with the topics covered by them must receive the widest possible interpretation; and so it would be unreasonable to read in the Entry any limitation of the kind which Mr. [ENTITY]'s argument seems to postulate. Besides, it is well settled . that when a power is conferred on the Legislature to levy a tax, that power itself must be widely construed; it must include the power to impose a tax and select the articles or commodities for the exercise of such power; it must likewise include the power to fix the rate and prescribe the machinery for the recovery of the tax. This power also gives jurisdiction to the Legislature to make such provisions as, in its opinion, would be necessary to prevent the evasion of the tax. In imposing taxes, the legislature can also appoint authorities for collecting taxes and may prescribe the procedure for determining the amount of taxes payable by any individual; all these provisions are subsidiary to the main power to levy a tax and, therefore, once it is shown that the tax in question has been levied on goods carried, it would be open to the legislature to prescribe the machinery for recovering the said tax. As was observed by Chief Justice [ENTITY] in [PRECEDENT] at P. 607 "the power of taxing the people and their property is essential to the very existence of Government, and may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the Government may choose to carry it." The statement of the law must, however, be read subject to the condition that even tax statutes have to satisfy the test of reasonableness prescribed by the [SECTION] and the fundamental right of equality before law guaranteed by [SECTION] as well as the test prescribed by [SECTION]."
In the said case the Supreme Court considered the Scheme of the Act and found that the Act was enacted with the previous sanction of the President and in that view of the matter the Court negatived the contentions of the petitioners that the State had no legislative competence to pass such a law. The Act which was upheld by the Supreme Court in [PRECEDENT] was earlier challenged in [PRECEDENT]. The Court had struck down the provision for the reasons that no sanction of the President was obtained before enacting the said law. However, the Court observed :-
"The test of pith and substance is generally and more appropriately applied when a dispute arises as to the legislative competence of the legislature, and it has to be resolved by reference to the entries to which the impugned legislation is relatable. When there is a conflict between two entries in the legislative lists, and legislation by reference to one entry would be competent but not by reference to the other, the doctrine of pith and substance is invoked for the purpose of determining the true nature and character of the legislation in question."
17. So what is required to be seen is whether the imposition in the instant case could not have been made with reference to [SECTION]. Incidentally, we may also refer to [PRECEDENT], in which case the Supreme Court had considered the legislative competence of the State in respect of the levy of purchase tax on industrial alcohol. The Supreme Court considered the scope of taxing powers of the State and in paras 19 and 22 held as under :-
"19. In [PRECEDENT], [ENTITY], J., speaking for the [ACT] Bench, referred to the entries in the three lists of the [SECTION] of the [ACT] and drew a distinction between the main subjects of legislation forming one group and taxes forming another group. Entries 1 to 81 of [SECTION] are the main subjects of legislation within the competence of Parliament. Entries 82 to 92 of that List (92-A and B have-been added) enumerate the taxes which Parliament is competent to impose. Likewise, Entries 1 to 44 forming one group in [SECTION] relate to the main subjects within the legislative competence of the States, while Entries 45 to 63 of that List deal specifically with the taxes leviable by the States. The general power of legislation vested in the States regarding trade and commerce, production, supply etc. is referable to Entries 26 and 27 of [SECTION]. The power of the State to levy taxes on the sale or purchase of goods other than newspapers is mentioned in [SECTION]. This power is, however, subject to certain restrictions imposed under [SECTION]. [SECTION] prohibits a State from imposing, or authorising the imposition of, a tax on the sale or purchase of goods taking place outside the State or in the course of import into or export out of the territory of India. Parliament is empowered under Clause (2) of this article to formulate by law principles for determining when a sale or purchase takes place outside a State or in the course of import into or export out of the territory of India. Clause (3) of this Article empowers Parliament to impose certain restrictions and conditions on the taxing power of the State in respect of- goods declared by Parliament to be of special importance in interstate trade or commerce and certain other goods falling under [SECTION]. The legislative power of Parliament in respect of interstate trade or commerce and its taxing power in regard to it are respectively mentioned in Entries 42, 92-A and 92-B of [SECTION].
22. None of the entries in the Concurrent List deals with tax but general subjects of legislation. No conflict can, therefore, arise between the taxing power of the Union and the States. Parliament has the power to legislate in respect of a 'controlled' industry falling under [SECTION], and both Parliament and the States have the power to legislate in respect of the trade and commerce in, and the production, supply and distribution of products of 'controlled' industry ([SECTION]. These are not taxing entries and do not, therefore, relate to taxes, but powers of regulation and control. The power to control industry being thus vested in Parliament ([SECTION] and, the legislative power in respect of trade and commerce in such industry being concurrently vested in the Union and the States ([SECTION] any exercise of control by the State must be subject to the legislative power of Parliament and the power conferred on the Central Government by such legislation ([SECTION]). Any exercise of power by the State which transgresses upon the power of Parliament or of the Central Government, as its delegate, is to the extent of such transgression null and void."
In the Entries in the three lists of [SECTION] to the [ACT] a distinction is drawn between the main subjects of legislation forming one group and taxes forming another group. None of the entries deals with tax but general subjects of legislation.
18. The legislative power of the State cannot be taken away in respect of taxing entries on presupposed concept of occupied field or the supposed repugnancy. If there is a clash between the exercise of power under [SECTION] and 'the [SECTION]' then the State Legislation may be invalid due to [SECTION] of the [ACT]. But since there cannot be any clash or invalidity relating to taxing powers which are separate and distinct power conferred, the question of invalidity cannot arise. In this background we have to examine whether the right to impose terminal tax is taken away by reason of enactment of [ACT] or [ACT].
19. It may be mentioned that [PRECEDENT] and [PRECEDENT] were dealing with the [ACT], in which there was a similar provision regarding regulation and declaration of expediency of control by the Union.
20. The Supreme Court upheld the levy as the same was enacted with previous consent of the President. In view of the case of [PRECEDENT], the question of conflict cannot arise as they are separate powers conferred on each of the Legislatures. Viewed from this point of view we have to find out the powers under the [ACT] which confer jurisdiction on the Notified Area Committee to impose such a tax. In the instant case, the State Govt. under [SECTION] of the [ACT], made the impost. The [ACT] received the assent of the President and as such the State law cannot be invalidated on the ground of any repugnancy between the Central Law and the State Law. The [ACT], received the assent of the President on 6th November, 1961; the assent was first published in the M. P. Gazette Extraordinary, on the 20th November, 1961.
21. The question to be considered in the present case, therefore, is whether the latter legislation passed by the Parliament i.e. [ACT] and the [ACT], in any way curtails the jurisdiction of the State to make such a law or even if the said jurisdiction was there, could it be exercised after 1975.
22. If the principle as laid down in [PRECEDENT] (supra) is applied, it will be clear that the taxing entries being altogether independent entries, there cannot be any conflict. The Union has right to make a regulation in respect of marketing of tobacco but does not in any way denude the right of the State to impose a tax. There may be double taxation but the two events are different. Entry of goods in local area or import of the goods in the local area is one event which takes place in that particular area, entry tax is imposed as revenue for performing of its mandatory duties under the Act.
23. It is settled that the imposition of tax does not in any way impede interstate trade or commerce and the two cases referred to earlier i.e. [PRECEDENT], [PRECEDENT] are the authority for the same.
24. In this view of the matter there is no invalidity on account of violation of [SECTION] of the [ACT] also. In the second writ petition which is being decided along with this writ petition an argument was put forth that it violates [SECTION] of the [ACT]. Incidentally, it may be pointed out that there is no averment in the writ petition that the Bidis are transported or exported outside or oh the subject matter of interstate trade or commerce. In the absence of any definite averment such objection cannot be decided.
25. Another objection taken by the learned counsel Shri [ENTITY] was that it offends [SECTION] of the [ACT] inasmuch as by imposing such a tax on Bidis produced or manufactured in the local area and since in the neighbouring local area there is no tax, it will ultimately result in closure of the factory, the employees of the Bidi Factory will be rendered jobless. Suffice it to say that the argument is too farfetched. Even otherwise, this argument has no substance.
26. Shri [ENTITY], learned counsel for the petitioners relied on [PRECEDENT] wherein rate of tax was reduced in respect of locally manufactured items. The Supreme Court struck down the provision. No such contingency obtains in the present case. He also relied on [PRECEDENT]. The said case also does not help the petitioners inasmuch as the only point decided there was that no terminal tax can be imposed on goods which are merely in transit and have not become the part of the mass of the property inside the local area. The said case was distinguished by this Court in [PRECEDENT] wherein imposition of terminal tax by the Municipal Council was upheld.
27. The question that finally arises for consideration is whether this Court should allow the petition relying on the judgment of the Supreme Court in ITC Ltd. case (supra) and declare the levy as invalid or ultra vires of the provisions of the [ACT] or applying the test laid down in Synthetics and Chemicals case (supra) hold the levy as competent. This Court relying on [ACT] Ltd. case (supra) has struck down the levy from tobacco in the case of [PRECEDENT] and against which this Court granted leave to appeal to the Supreme Court and the matter is pending before the Supreme Court. We in the instant case are of the view that the imposition of terminal tax falls within the competence of the State Legislature in view of the Synthetics and Chemical Ltd. case (supra). In view of decision in regard to the taxing entries (Synthetics and Chemicals Ltd. case referred to above) we dismiss these petitions. However, we grant leave to appeal to the Supreme Court while finally disposing of these writ petitions. Security amount, if any, be refunded to the petitioners. There shall be no order as to costs.