AIR 2005 SUPREME COURT 1103 ::2005 AIR SCW 613 ::2005 ALL. L. J. 559 ::(2005) 58 KantLJ(Trib) 171 ::(2005) 194 CurTaxRep 257 ::2005 (2) SCC 515 ::2005 (1) Scale 465 ::2005 (139) STC 537 ::(2005) 2 SCJ 15 ::2005 (1) SLT 601 ::2005 (2) Supreme 267 ::(2005) 5 JT 587 (SC) ::2005 (2) SRJ 411

Supreme Court Of India

Hon'ble Judge(s): R. C. Lahoti, Ruma Pal, Arun Kumar, G. P. Mathur, C. K. Thakker , JJJ

Constitution of India , Art.246, Art.286, Sch.VII List II Entry 62— Uttar Pradesh Tax on Luxuries Act (11 of 1995) , S.3— Andhra Pradesh Tax on Luxuries in Hotels and Lodging Houses Act (24 of 1987) , S.3A— (as inserted by A.P. Act 28 of 1996) West Bengal Luxury Tax Act (15 of 1994) , S.4— Luxury tax - Levy of on goods viz. tobacco and not on any activity of indulgence or enjoyment - Is violative of Entry 62, List II of Sch. VII and hence be declared legislatively incompetent. Schedule VII, List II, Entry 62 of Constitution of India does not permit levy of tax on goods or articles. The word 'Luxuries' in said entry refers to activities of indulgence, enjoyment or pleasure. Hence, when U. P. Tax on Luxuries Act (1995); W.B. Luxury Tax Act (1994) and A.P. Tax on Luxuries Act (1987) seeks to levy tax on goods viz. tobacco, they must be declared to be legislatively incompetent. No State can, therefore, by describing an item as a luxury, seek to levy tax on its supply. So even if tobacco is an article of luxury, a tax on its supply is within the exclusive competence of the State but subject to the constitutional curbs prescribed under Art. 286 read with Ss. 14 and 15 of the Central Sales Tax Act, 1956 and most importantly the Additional Duties of Excise (Goods of Special Importance) Act of 1957, under which no sales tax can be levied on tobacco at ....