The Supreme Court observed that the State Government is not precluded from levying the tax under the Delhi Sales Tax Act, 1975 even if the Commodity, in the present case silk fabrics, forms part of Schedule I of the Additional Duties Excise(Goods of Special Importance) Act, 1957 (ADE Act).

A Writ Petition was filed by the Appellant-assessee before the Delhi High Court challenging the notification issued by the Delhi Government under Section 4(1) of the Delhi Sales Tax Act, 1975 (the DST Act) stating that the rate of the State sales tax on silk fabrics. An assessment order was issued to the Appellant for the levy of the State sales tax and the amount demanded was Rs.4,22,095/-.

The High Court dismissed the writ petition, and therefore, the aggrieved, the Assessee appealed to the Supreme Court.

The Bench of Justice Abhay S. Oka and Justice Sanjay Karol observed “The second Schedule of the ADE Act provides that during each financial year, each State shall be paid a certain percentage of net proceeds of the additional duties levied and collected during the financial year in respect of the goods described in column (3) of Schedule I. However, no additional duty was made payable on silk fabric under the ADE Act. The proviso makes it clear that notwithstanding the ADE Act, there is no bar on the States levying sales tax. If the States do that, no part of the additional duty under the ADE Act will be payable to the concerned States. Therefore, the argument that as silk fabric formed a part of Schedule I of the ADE Act, it disentitled the State Government from levying sales tax is fallacious and cannot be accepted.”

Advocate ML Lahoty appeared for the Appellant and Senior Advocate Rana Mukherjee along with ASG Balbir Singh appeared for the Respondents.

The Court also held “The High Court has noted that its Co-ordinate Bench in the case of M.R. Tobacco Pvt. Ltd. v. Union of India and Ors. upheld the validity of notification dated 31st March 2000 issued under the DST Act. We may note here that the view taken by the Delhi High Court in the said case has been affirmed by this Court by judgment dated 4th May 2023 in Civil appeal No. 8486 of 2011 and other connected appeals. The decision in the case of Godfrey Phillips India Ltd. v. State of U.P. does not deal with the issue arising in this case.”

Therefore, the Court did not find any error in the view taken by the Delhi High Court in the impugned judgment and, accordingly, dismissed the appeal.

Cause Title: Saree Sansar v. Govt. of NCT Delhi and Ors. (Neutral Citation: 2024 INSC 240)


Appellant: Advocates M. L. Lahoty, Himanshu Shekhar, Paban Kumar Sharma, Anchit Sripat, Pranab Kumar Nayak and Arvind Kumar.

Respondents: Senior Advocate Rana Mukherjee, ASG Balbir Singh, Advocates Rekha Pandey, Rupinder Sinhmar, B.K. Satija, Arun Kumar Yadav, Shreekant Neelappa Terdal and Gurmeet Singh Makker.

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