JUDGMENT P. A. MOHAMMED, J. – The main question involved in these writ petitions relates to the constitutional validity of section 4A of the Kerala Tax on Luxuries Act, 1976 as amended by the Kerala Finance Bill, 1994. This Act was called the "Kerala Tax on Luxuries in Hotels and Lodging Houses Act, 1976" as originally introduced and published in the Kerala Gazette Extraordinary No. 647 dated November 13, 1976. By the Finance Bill, 1994 the name of the Act was substituted as "the Kerala Tax on Luxuries Act, 1976" (hereinafter referred to as "the impugned Act"). The provisions contained in section 4A of the Act as amended authorising levy and collection of luxury tax have been challenged by the petitioners as violative of articles 301 and 304(b), 286(3), 265, 245 and 246 and 14 and 19(1)(g) of the Constitution of India, section 15 of the Central Sales Tax Act, 1956 and section 9 of the Kerala General Sales Tax Act, 1963. There are two alternative prayers; the first being that in the event of its being held by this Court that the first respondent, Government of Kerala, is entitled to levy and collect luxury tax on cigarettes, the second respondent, Union of India, is not entitled to levy and collect additional excise duty on cigarettes and the second being that the first respondent in the event of its being held by this Court is entitled to levy and collect luxury tax on tobacco at 5 per cent, then the first respondent is not entitled to its proportionate share of additional excise duty collected by the second respondent under the provisions of the additional Duties of Excise (Goods of Special Importance) Act, 1957 (for short, "the 1957 Act"). 2. The petitioners are M/s. I.T.C. Limited, M/s. Hallmark Tobacco Co. Ltd. and M/s. Shyam Agencies owned by Krishna Consumer Products Pvt. Ltd. They are dealers carrying on business and trade in manufacture, production, distribution and sale of cigarettes. They are aggrieved by the levy of luxury tax on cigarettes at 5 per cent on manufacturers and importers of cigarettes. 2. The petitioners are M/s. I.T.C. Limited, M/s. Hallmark Tobacco Co. Ltd. and M/s. Shyam Agencies owned by Krishna Consumer Products Pvt. Ltd. They are dealers carrying on business and trade in manufacture, production, distribution and sale of cigarettes. They are aggrieved by the levy of luxury tax on cigarettes at 5 per cent on manufacturers and importers of cigarettes. The said tax has been imposed for the first time by the Kerala Finance Bill, 1994 and by virtue of the declaration under section 3 of the Kerala Provisional Collection of Revenue Act, 1985 the provisions of the Bill and the levy of luxury tax on cigarettes shall have effect from 1st April, 1994. 3. The impugned Act is intended to provide for the levy and collection of tax in respect of luxuries. Section 4A of the impugned Act authorising the levy and collection of luxury tax which is mainly challenged in these writ petitions is reproduced below : "4A. Collection of luxury tax on certain commodities. - (1) The luxury tax in respect of a commodity included in the Schedule shall be at the rate specified against it calculated on the basis of the value of the commodity, under whatever head it is charged, received or receivable at the point of supply and be payable by the person who uses or consumes the same. (2) The luxury tax shall be collected by the stockist and paid, within such period and in such manner as may be prescribed, into the Government treasury. (3) Where a luxury tax is collected by a stockist at the point of first supply in the State, whether by way of sale or otherwise, no luxury tax under this Act shall be collected at any successive point of supply. (4) The provisions of this Act shall, in so far as they relate to the assessment, levy and collection of tax in respect of a commodity included in the Schedule, including inspection, search and inspection apply with the substitution of the word 'stockist', for the word 'proprietor' wherever it occurs." What is levied under sub-section (1) of section 4A is "luxury tax" in respect of a commodity included in the Schedule. The Schedule referred to in sub-section (1) is as follows : THE SCHEDULE ------------------------------------------------------------------------ Serial Description of commodity Rate of luxury tax number per cent ------------------------------------------------------------------------ (1) (2) (3) ------------------------------------------------------------------------ 1 Cigarette 5 ------------------------------------------------------------------------ The only commodity included in the Schedule is cigarette. It is classified as a luxury item coming within the definition of the word "luxury" contained in clause (ee) of section 2. It means a commodity or service that ministers comfort or pleasure. Under sub-section (1) of section 4A the luxury tax has been levied at the rate specified in the Schedule on the basis of the value of the commodity at the point of supply and be payable by the person who uses or consumes the same. Under sub-section (2) the tax shall be collected by the "stockist" and paid into the Government treasury. The word "stockist" is defined in clause (k) of section 2 as below : "(k) 'stockist' means a person who, for the purpose of business, manufactures, produces, brings or causes to be brought in the State a commodity included in the Schedule or to whom such commodity is despatched from any place outside the State for supply within the State or who supplies such commodity within the State, whether by way of sale or otherwise." In substance a person who for the purpose of business, manufactures, produces, brings or causes to be brought in the State cigarette or to whom it is despatched from any place outside the State for supply within the State or who supplies cigarette within the State, whether by way of sale or otherwise is called "stockist", Sub-section (3) provides that where a luxury tax is collected by a stockist at the point of first supply in the State whether by way of sale or otherwise, no luxury tax under this Act shall be collected at any successive point of supply. That means, what is authorised by sub-section (3) is single point levy at the point of first supply within the State. 4. What is apparent from the above provision is that cigarette is classified as a commodity of luxury : "The connotation of the word 'luxury' is something which conduces enjoyment over and above the necessaries of life. It denotes something which is superfluous and not indispensable and to which we take with a view to enjoy, amuse or entertain ourselves. 4. What is apparent from the above provision is that cigarette is classified as a commodity of luxury : "The connotation of the word 'luxury' is something which conduces enjoyment over and above the necessaries of life. It denotes something which is superfluous and not indispensable and to which we take with a view to enjoy, amuse or entertain ourselves. An expenditure on something which is in excess of what is required for economic and personal well-being would be expenditure on luxury although the expenditure may be of a nature which is incurred by a large number of people, including those not economically well-off." The above observation is made by the Supreme Court in A. B. Abdul Kadir v. State of Kerala AIR 1976 SC 182 . In Express Hotels Private Ltd. v. State of Gujarat [1989] 74 STC 157; AIR 1989 SC 1949 the apex Court observed : "It is true that while frugal or simple food and medicine may be classified as necessities, articles such as jewellery, perfume, intoxicating liquor, tobacco, etc., could be called articles of luxury." Thus tobacco is a luxury item and therefore it cannot be disputed that the "cigarette" included in the Schedule to the impugned Act is also a luxury article used for human consumption. This is sufficiently clear also from the following observation of the Supreme Court in Anwarkhan Mehboob Co. v. State of Bombay [1960] 11 STC 698; AIR 1961 SC 213 : "The act of consumption with which people are most familiar occurs when they eat, or drink or smoke. Thus, we speak of people consuming bread, or fish or meat or vegetables, when they eat these articles of food; we speak of people consuming tea or coffee or water or wine, when they drink these articles; we speak of people consuming cigars or cigarettes or bidis, when they smoke these. The production of wealth, as economists put it, consists in the creation of 'utilities'. Consumption consists in the act of taking such advantage of the commodities and services produced as constitutes the 'utilization' thereof. For each commodity, there is ordinarily what is generally considered to be the final act of consumption." 5. The production of wealth, as economists put it, consists in the creation of 'utilities'. Consumption consists in the act of taking such advantage of the commodities and services produced as constitutes the 'utilization' thereof. For each commodity, there is ordinarily what is generally considered to be the final act of consumption." 5. A glimpse at the brief history behind the legislation on tobacco is found to be necessary in order to have full understanding of the issues in the present case in the context of the over-whelming importance of trade and commerce in tobacco including cigarettes, in the course of intra-State as well as inter-State. When the Government of India imposed its Central excise duty on tobacco with effect from April 1, 1943 the provincial Governments which were levying duties on tobacco under special Acts were persuaded to give up their taxes and were compensated for the revenue forgone. However, after independence the problem of taxation by the States and levy of excise duty by the Centre on tobacco has become an acute problem. The report of the Taxation Enquiry Commission appointed by the Ministry of Finance, Government of India, April, 1953 reveals that in certain States tobacco and tobacco manufacturers were made liable to the general sales tax and in a few States chewing tobacco were exempted; while in some States higher duties were levied on cigars, cheroots and pipe tobacco. The Commission expressed its concern on the fact that tobacco and tobacco products were subjected to a very high level of taxation by the States as well as by the Centre and observed in the report that : "The need is obvious for ensuring proper co-ordination between the different taxes on tobacco levied by the Central Government, the States and the local authorities." Pursuant to the above observations, the Centre and the State at a meeting of the National Development Council held in December, 1956, agreed unanimously that sales tax levied in States on mill-made textiles, tobacco including manufactured tobacco and sugar should be replaced by a surcharge on the Central excise duties on these articles with the income derived therefrom being distributed among the States on the basis of consumption. In pursuance of this agreement between the States and the Centre, the Centre decided to levy additional excise duty on these three goods of special importance and referred to the Second Finance Commission the question of appointment of the proceeds of the additional excise duty amongst all the States. The Second Finance Commission after studying the entire problem made certain recommendations. It was in pursuance of the said recommendations the Parliament enacted Additional Duties of Excise (Goods of Special Importance) Act, 1957 on December 24, 1957. This Act expressly provides that in the event of State levying a tax, inter alia, on the sale or purchase of tobacco, it shall lose its proportionate share of revenue from the additional excise duty levied and collected by the Centre. 6. A combined reading of the provisions contained in the Constitution, the Additional Duties of Excise (Goods of Special Importance) Act, 1957 and the Central Sales Tax Act, 1956, according to the petitioners, would bring forth the following propositions : (i) All forms of manufactured tobacco including cigarettes are declared by Parliament to be goods of special importance in inter-State trade or commerce [section 14(ix) of the CST Act, 1956]. (ii) Under the provisions of the said 1957 Act, on and after 1st April, 1958, manufactured tobacco including cigarettes were liable to levy and collection of additional duties of excise in lieu of sales tax (section 3 read with Schedules I and II of the said 1957 Act). (iii) If any State levied and collected a tax on the sale or purchase of tobacco by or under any law of that State, the amount of additional excise duty which would otherwise be payable to that State in respect of that financial year, would not be payable to that State unless specifically directed otherwise by the Central Government. (iv) Any law of a State imposing or authorising imposition of a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce would necessarily be required to conform to such restrictions and conditions in accordance with the system of levy, rates and other incidents of the tax as Parliament may be law specify. (Consequently since Parliament has by law specified that the amount of levy shall be a single point levy and the rate of tax be not more than a maximum of 4 per cent, no State law imposing a tax on the sale or purchase of any goods declared by Parliament by law to be special importance to inter-State trade or commerce can impose a tax in excess of 4 per cent or other than at a single point [article 286(3) read with section 15(a) of the CST Act, 1956]. (v) A tax on the sale or purchase of goods includes a tax on the supply in any manner whatsoever of goods, being food or other article for human consumption or any drink where such supply or service is for cash or other valuable consideration and such supply of any goods shall be deemed to be a sale of the goods by the person making a supply or purchase of those goods by the persons to whom such supply is made [article 366(29A)(f)]. 7. On behalf of the third respondent a counter-affidavit has been field. The points raised therein can be summarised thus : (i) That the State Legislature is competent to levy tax on luxury by virtue of entry 62 of List II of the Seventh Schedule. (ii) That the levy of luxury tax introduced as per the Kerala Finance Bill, 1994 does not in any way violate the provisions of the Constitution. (iii) That the provisions of the impugned Act do not levy any tax on the sale or purchase of tobacco and the levy is on the use or consumption of cigarettes. (iv) That the Additional Duties of Excise (Goods of Special Importance) Act, 1957 does not debar the State Government from levying tax on the sale or purchase of goods covered by the Act. (v) That articles 286 and 366 of the Constitution do not operate against the levy on luxury. (vi) That the constitutional validity of the Gujarat Tax on Luxuries (Hotel and Restaurants) Act, 1977 and similar enactments was upheld by the Supreme Court in the decision in State of Karnataka v. Hansa Corporation AIR 1981 SC 463 . (vii) That the levy of the impugned tax on cigarettes to the exclusion of all other forms of tobacco is in no way discriminatory and violative of article 14. 8. (vii) That the levy of the impugned tax on cigarettes to the exclusion of all other forms of tobacco is in no way discriminatory and violative of article 14. 8. In view of the respective pleadings of the parties, the first question which requires to be decided by this Court is whether the State Legislature has competence to enact the impugned Act. Entry 62 of List II of the Seventh Schedule is as follows : "Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling." Under this entry a tax may be imposed not only on the person spending on luxuries, entertainments or amusements but also on the act of entertaining or the subject of entertainment. In the present case the tax is directly imposed on luxuries. The validity of the Kerala Luxury Tax on Tobacco (Validation) Act (9 of 1964) came up for consideration before the Supreme Court in A. B. Abdul Kadir's case AIR 1976 SC 182 . This Act was, inter alia, challenged on the ground that the State Legislature lacked legislative competence to enact the Act. On this ground the Supreme Court found that the enactment of law for levying luxury tax is "unquestionably within the legislative competence of the the State Legislature" in view of entry 62 of List II of the Seventh Schedule to the Constitution. The validity of the West Bengal Entertainments and Luxuries (Hotels and Restaurants) Tax Act and Gujarat Tax on Luxuries (Hotels and Lodging Houses) Act came up for consideration before the Constitution Bench of the Supreme Court in Express Hotels Private Ltd.'s case [1989] 74 STC 157; AIR 1989 SC 1949 . That was a case where the luxury tax was imposed on the services for lodging provided at the hotels. There the court observed : "The concept of a tax on 'luxuries' in entry 62, List II, cannot be limited merely to tax things tangible and corporeal in their aspect as 'luxuries'." It also observed : "The entry encompasses all the manifestations or emanations, the notion of 'luxuries' can fairly and reasonably be said to comprehend and the element of extravagance or indulgence that differentiates 'luxury' from 'necessity' cannot be confined to goods and articles. There can be elements of extravagance or indulgence in the quality of services and activities." Therefore the impugned Act is not void for want of legislative competence of the State. 9. There can be elements of extravagance or indulgence in the quality of services and activities." Therefore the impugned Act is not void for want of legislative competence of the State. 9. The prime point argued by Mr. Anil Diwan, learned Senior Counsel for the writ petitioners is that the provisions contained in the impugned Act violate article 301 of the Constitution which eloquently declares the freedom of trade, commerce and intercourse throughout the country. He also pointedly brings to my notice that no previous sanction of the President was obtained as required under the proviso to clause (b) of the article 304. This point was not disputed by the respondents. It is also admitted that no assent of the President was obtained after the Act was passed by the State Legislature. 10. Part XIII of the Constitution deals with trade, commerce and intercourse within the territory of India. Though it contains articles 301 to 307, for the present purpose this Court is mainly concerned with articles 301 to 304, which are reproduced hereunder : "301. Freedom of trade, commerce and intercourse. - Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. 302. Power of Parliament to impose restrictions on trade, commerce and intercourse. - Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. 303. Restrictions in the legislative powers of the Union and of the States with regard to trade and commerce. - (1) Notwithstanding anything in article 302, neither Parliament nor the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. (2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. 304. Restrictions on trade, commerce and intercourse among States. - Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law - (a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest : Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President." In the draft Constitution, these articles were contained in articles 274A, 274B, 274C and 274D respectively. In order to understand the width and amplitude of the freedom of trade enshrined in Part XIII it would be apt to know as to how the members of the Constituent Assembly reacted to these draft articles. While moving these draft articles Dr. B. R. Ambedkar in his speech before the Constituent Assembly said : "I should also like to say that according to the provisions contained in this Part it is not the intention to make trade and commerce absolutely free, that is to say, deprive both Parliament as well as the States of any power to depart from the fundamental provision that trade and commerce shall be free throughout India. The freedom of trade and commerce has been made subject to certain limitations, which may be imposed by Parliament or which may be imposed by the Legislatures of various States, subject to the fact that the limitation contained in the power of Parliament to invade the freedom of trade and commerce is confined to cases arising from scarcity of goods in any part of the territory of India and in the case of the States it must be justified on the ground of public interest. The action of the States in invading the freedom of trade and commerce in the public interest is also made subject to a condition that any Bill affecting the freedom of trade and commerce shall have the previous sanction of the President otherwise, the State would not be in a position to undertake such legislation." During the debate Sri T. Krishnamachari said in his speech as follows : "Article 274A lays down the general principles of freedom of trade and commerce as the governing principle. Then 274B deals with certain restrictions, 'as may be required in the public interests'. I do not want to go into that metaphysical or subtle distinction between 'the interests of the public' and 'public interest'. I do not think there is any substance in that contention; the interest of the public and the public interest are in my view identical. Therefore, instead of leaving the freedom of trade guaranteed under article 274 unfettered, it clothes Parliament with the power to interfere with the freedom in certain cases in 274B; that is, certain restrictions may be made in the interests of any part of the territory of India as may be required in public interest. That is the principle of article 274B." 11. Article 301 declares that the trade, commerce and intercourse throughout the territory of India shall be free subject to other provisions of the said Part. Article 302 provides that the Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. Therefore, any law framed by the Parliament imposing restrictions on the freedom of trade, commerce and intercourse as may be required in the public interest will not be affected by the freedom of trade guaranteed under article 301. Therefore, any law framed by the Parliament imposing restrictions on the freedom of trade, commerce and intercourse as may be required in the public interest will not be affected by the freedom of trade guaranteed under article 301. Article 303 further provides that neither the Parliament nor the Legislature of a State shall have the power to make any law giving, or authorising the giving of any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. Clause (2) of article 303 further provides that the provisions contained in clause (1) shall not prevent the Parliament from making any law giving or authorising the giving of any preference or making or authorising the making of any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. Article 304 provides that notwithstanding anything in article 301 or article 303, the Legislature of a State may by law impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subjected so however as not to discriminate between goods so imported and goods so manufactured or produced and impose such reasonable restrictions on the freedom of trade, commerce and intercourse with or within that State as may be required in the public interest. But the proviso to article 304 mandates that no Bill or amendment for the purpose of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. In other words, what the above provision indicates is that the State can impose reasonable restrictions on the freedom of trade, commerce and intercourse with or within that State as may be required in the public interest only after obtaining previous sanction of the President. Since no previous sanction of the President has been obtained before passing the impugned Act, the State cannot impose even reasonable restriction on the freedom of trade as may be required in the public interest in the facts of this case. 12. Since no previous sanction of the President has been obtained before passing the impugned Act, the State cannot impose even reasonable restriction on the freedom of trade as may be required in the public interest in the facts of this case. 12. The width and amplitude of the provisions contained in articles 301 to 304 have been a frequent debate before the Supreme Court and that is evident from the catena of decisions from Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232 to Shri Digvijay Cement Co. v. State of Rajasthan [1997] 106 STC 11. A discussion on this subject would no doubt be incomplete if it is made without making any reference to the first three decisions of the Constitution Bench of the Supreme Court. Those decisions are : (i) Atiabari Tea Co. Ltd. v. State of Assam AIR 1961 SC 232 , (ii) Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan AIR 1962 SC 1406 and Firm A.T.B. Mehtab Majid & Co. v. State of Madras [1963] 14 STC 355 (SC); AIR 1963 SC 928 . 13. The propositions that emerged from the decision in Atiabari Tea Co.'s case AIR 1961 SC 232 , in so far as they are relevant for the present are as follows : (1) Article 301 applies not only to inter-State trade, commerce and intercourse but also to intra-state trade, commerce, and intercourse. (2) Article 301, read in its proper context and subject to the limitations prescribed by the other relevant articles in part XIII, must be regarded as imposing a constitutional limitation on the legislative power of Parliament and the Legislatures of the States. (3) The freedom of trade guaranteed by article 301 is freedom from all restrictions except those which are provided by the other articles in Part XIII. (4) The content of freedom provided for by article 301 was larger than the freedom contemplated by section 297 of the Constitution Act of 1935, and whatever else it may or may not include, it certainly includes movement of trade which is of the very essence of all trade and is its integral part. If the transport or the movement of goods is taxed solely on the basis that the goods are thus carried or transported that directly affects the freedom of trade as contemplated by article 301. If the transport or the movement of goods is taxed solely on the basis that the goods are thus carried or transported that directly affects the freedom of trade as contemplated by article 301. (5) Restrictions freedom from which is guaranteed by article 301, would be such restrictions as directly and immediately restrict or impede the free-flow or movement of trade. Taxes may and do amount to restrictions, but it is only such taxes as directly and immediately restrict trade that would fall within the purview of article 301. 14. In the year 1962, the Constitution Bench of the Supreme Court consisting of seven Judges in Automobile Transport's case AIR 1962 SC 1406 explained the earlier five-Judge decision in Atiabari Tea Co.'s case AIR 1961 SC 232 in paragraph 17 thus : "We have, therefore, come to the conclusion that neither the widest interpretation nor the narrow interpretations canvassed before us are acceptable. The interpretation which was accepted by the majority in the Atiabari Tea Co. case [1961] 1 SCR 809; AIR 1961 SC 232 is correct, but subject to this clarification. Regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of the restrictions contemplated by article 301 and such measures need not comply with the requirements of the proviso to article 304(b) of the Constitution." The following observation contained in the majority judgment in paragraph 10 is relevant for the present purpose : "For the tax to become a prohibited tax it has to be a direct tax the effect of which is to hinder the movement part of trade. So long as a tax remains compensatory or regulatory it cannot operate as a hindrance." Subba Rao, J., who concurred with the above majority view has laid down in His Lordship's separate judgment seven propositions, of which two are relevant for the present purpose and they are : (i) Article 301 declares a right of free movement of trade without any obstructions by way of barriers, inter-State or intra-State or other impediments operating as such barriers. (ii) The said freedom is not impeded, but, on the other hand, promoted, by regulations creating conditions for the free movement of trade, such as, police regulations, provision for services, maintenance of roads, provision for aerodromes, wharfs, etc., with or without compensation. 15. (ii) The said freedom is not impeded, but, on the other hand, promoted, by regulations creating conditions for the free movement of trade, such as, police regulations, provision for services, maintenance of roads, provision for aerodromes, wharfs, etc., with or without compensation. 15. The above two Constitution Bench decisions came up before another Constitution Bench of the Supreme Court consisting of five Judges, in the year 1963 in Firm A.T.B. Mehtab Majid & Co. v. State of Madras [1963] 14 STC 355; AIR 1963 SC 928 . After analysing the earlier decisions, the Supreme Court observed : "It is therefore now well-settled that taxing laws can be restrictions on trade, commerce and intercourse, if they hamper the flow of trade and if they are not what can be termed to be compensatory taxes or regulatory measures. Sales tax, of the kind under consideration here, cannot be said to be a measure regulating any trade or a compensatory tax levied for the use of trading facilities. Sales tax, which has the effect of discriminating between goods of one State and goods of another, may affect the free-flow of trade and it will then offend against article 301 and will be valid only if it comes within the terms of article 304(a)." While dealing with the correctness of the decision of the Division Bench of the Delhi High Court in Amrit Banaspati Co. Ltd. v. Union of India 1973 Tax LR 2546 the Supreme Court in Amrit Banaspati Co. Ltd. v. Union of India AIR 1995 SC 1340 , discussed the law on this subject which has some relevance in the present context has been summarised below : "Suffice it to say that it is only when the intra-State or inter-State movement of the persons or goods are impeded directly and immediately as distinct from creating some indirect or inconsequential impediment, by any legislative or executive action, infringement of the freedom envisaged by article 301 can arise. Without anything more, a tax law, per se, may not impair the said freedom. At the same time, it should be stated that a fiscal measure is not outside the purview of article 301 of the Constitution." 16. The Supreme Court in Buxa Dooars Tea Co. Without anything more, a tax law, per se, may not impair the said freedom. At the same time, it should be stated that a fiscal measure is not outside the purview of article 301 of the Constitution." 16. The Supreme Court in Buxa Dooars Tea Co. Ltd. v. State of West Bengal [1989] 74 STC 447; [1989] 179 ITR 91; AIR 1989 SC 2015 while dealing with the validity of the cess in respect of tea estate under the West Bengal Rural Employment and Production Act, 1976 observed : "Now, for determining the true nature of the legislation, whether it is a legislation in respect of tea estates, and therefore of land, or in respect of despatches of tea, we must, as we have said, take all the relevant provisions of the legislation into account and ascertain the essential substance of it. It seems to us that although the impugned provisions speak of a levy of cess in respect of tea estates, what is really contemplated is a levy on despatches of tea instead." After analysing the provisions of the Act the Supreme Court said that the substance of the impugned levy is a levy in respect of despatches of tea and not in respect of tea estate. It further said : "Treating it as a levy on despatches of tea it is evident that the levy must be regarded as constituting a direct and immediate restriction on the flow of trade and commerce in tea throughout the territory of India, and the levy can avoid the injunction declared in article 301 only if it satisfies the provisions of article 304(b) and the proviso thereto." 17. The discussion hereinbefore would, no doubt, supply certain effective tests to find out as to whether a particular levy violates the freedom of trade, commerce and intercourse guaranteed under article 301. They are : (1) Regulatory or non-regulatory test, that is to say, whether the impugned provisions are in the nature of regulatory or non-regulatory, or compensatory or non-compensatory. That means if the provisions are regulatory or compensatory for the use of trading facilities then they will not come within the purview of restriction. (2) Movement restriction test, that is to say, whether the impugned levy in any way impedes the free movement of the goods inter-State or intra-State which is the very essence of all trades and its integral part. (2) Movement restriction test, that is to say, whether the impugned levy in any way impedes the free movement of the goods inter-State or intra-State which is the very essence of all trades and its integral part. (3) Direct and immediate restriction test, that is to say, whether impugned levy impedes directly and immediately the movement of the goods or persons as distinct from creating indirect and inconsequential impediment. These tests are only illustrative and not exhaustive. Various factors of different types may constitute restrictions on movement of goods. The levy of tax either on despatch or supply may be a restriction on movement of the goods direct and immediate. When the tax is determined on the value of the goods it amounts to a levy direct on the movement part of the trade. 18. Before proceeding further it would be appropriate to elicit the nature of the impugned levy and the manner as to how transactions are effected. An analysis of the provisions of section 4A read with the Schedule and section 2(k) brings forth the following features : (1) The luxury tax is payable on cigarettes at the rate of 5 per cent on the total value of the goods despatched or supplied. (2) It is leviable at the point of supply on the goods involved in business or trade. (3) The tax is payable by the person who uses or consumes the cigarettes. (4) The tax shall be collected by the stockist and paid within such time into the Government treasury. (5) Once the tax is collected by the stockist at the point of first supply in the State, no tax shall be collected at any successive point of supply. (6) The primary liability to pay tax is on the "stockist", who receives the supply. (7) The stockist is a person who is engaged in the business or trade. (8) For the purpose of business a stockist may manufacture, produce or bring or cause to be brought in the State cigarette. (9) A "stockist" may be a person to whom cigarette is despatched from any place outside the State for supply within the State. (10) A "stockist" may also be a person who supplies cigarettes within the State whether by way of sale or otherwise. 19. (9) A "stockist" may be a person to whom cigarette is despatched from any place outside the State for supply within the State. (10) A "stockist" may also be a person who supplies cigarettes within the State whether by way of sale or otherwise. 19. From the above what is prominently revealed is that the person to whom the cigarette is despatched from any place outside the State for supply within the State is made liable to pay the tax at the point of first supply on the value of the goods so despatched for supply. This despatch and supply is inevitable in the course of inter-State or intra-State trade and commerce inasmuch as the person who is made liable to pay the tax, i.e., the stockist who receives despatch of cigarettes for supply for the purpose of his business or trade. What indubitably evinced here is that the levy of tax directly collides with the despatch and supply of cigarettes in the course of its movement from place to place or from State to State since tax is directly on value of goods. This is no doubt a direct and immediate restriction on the free movement of the goods in the course of inter-State trade and commerce. This is the result when tests 2 and 3 formulated above are applied to the facts of this case. 20. The Supreme Court in Buxa Dooars' case [1989] 74 STC 447 : [1989] 179 ITR 91; AIR 1989 SC 2015 , while striking down the amendments effected in the West Bengal Rural Employment and Production Act, 1976 by amending Acts of 1981 and 1982, observed : "The question then is whether the impugned levy impedes the free-flow of trade and commerce throughout the territory of India, and if it does, whether it falls within the exception carved out in article 304(b). If the levy imposes a cess in respect of tea estates, it may well be said that even though the free-flow of tea is impended in its movement throughout the territory of India is it in consequence of an indirect or remote effect of the levy and that it cannot be said that article 301 is contravened. The contention of the petitioners is, however, that it is ostensibly only in respect of tea estates but in fact it is a levy on despatches of tea. The contention of the petitioners is, however, that it is ostensibly only in respect of tea estates but in fact it is a levy on despatches of tea. If that contention is sound, there can be no doubt that it constitutes a violation of article 301 unless the legislation is brought within the scope of article 304(b). To determine whether the levy is in respect of tea estates or is a levy on despatches of tea, the substance of the legislation must be ascertained from the relevant provisions of the statute. It cannot be disputed that the subject of the levy, the nature of which defines the quality of the levy, must not be confused with the measure of liability, that is to say, the quantum of the tax. There is a plentitude of case law supporting that principle, among the cases being Union of India v. Bombay Tyre International Ltd. [1986] 59 Comp Cas 460 (SC); [1984] 1 SCR 347; AIR 1984 SC 420 ." There is no scope for argument in the present case that the impugned levy though impedes the free-flow of cigarette and its movement inter-State and intra-State, it is a consequence of an indirect or remote effect of the levy, which does not contravene article 301 because the requirement provided under article 304(b) is not complied with in this case. 21. In A. B. Abdul Kadir's case AIR 1976 SC 182 the validity of the Kerala Luxury Tax on Tobacco (Validation) Act was challenged on the ground that the provisions of the Act contravened article 301 and were not promoted by article 304 of the Constitution. The Supreme Court on this question agreed with the finding of the High Court that the levy directly impedes the free-flow of trade and as such is violative of article 301 of the Constitution. However, the Supreme Court further observed : "We may observe that the requirement of the proviso regarding the sanction of the President has been satisfied. It is no doubt true that the assent of the President was given subsequent to the passing of the Bill by the Legislature but that fact would not affect the validity of the impugned Act in view of the provisions of article 255 of the Constitution." 22. Article 255 is as follows : "255, Requirements as to recommendations and previous sanctions to be regarded as matters of procedure only. Article 255 is as follows : "255, Requirements as to recommendations and previous sanctions to be regarded as matters of procedure only. - No Act of Parliament or of the Legislature of a State and no provision in any such Act, shall, be invalid by reason only that some recommendation or previous sanction required by this Constitution was not given, if assent to that Act was given - (a) where the recommendation required was that of the Governor, either by the Governor or by the President; (b) where the recommendation required was that of the Rajpramukh, either by the Rajpramukh or by the President; (c) where the recommendation or previous sanction required was that of the President, by the President." It has been laid down by the Supreme Court that absence of previous sanction to a Bill as required by the proviso to article 304 does not invalidate an Act, if the Bill as passed received the assent of the President. [See : Jawaharmal v. State of Rajasthan AIR 1966 SC 764 and Mangalore Ganesh Beedi Works v. State of Mysore [1963] 14 STC 198 (SC); AIR 1963 SC 589 ]. In this case, as pointed out above, neither previous sanction nor subsequent assent is available. Therefore, the invalidity attached to the impugned Act for the reason of the absence of the previous sanction cannot be wiped off by invoking article 255. 23. The question still poses is whether the impugned provision can be justified as a regulatory or compensatory measure which encompasses within the first of the three tests formulated above. In Automobile Transport's case AIR 1962 SC 1406 it has been laid down that regulatory measures or measures imposing compensatory taxes for the use of trading facilities do not come within the purview of restrictions contemplated in article 301. In order to answer this question it is essential to ascertain the nature of the tax levied under section 4A of the impugned Act. While answering this question it must be recalled what Rowlatt, J. said in Cape Brandy Syndicate v. Inland Revenue Commissioner [1921] 1 KB 64. "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." In order to say that the impugned Act is a compensatory measure it must be seen what is imposed is a fee and and not a tax. The distinction between tax and fee is evident from the following passage laid down by Colley : "A charge fixed by statute for the service to be performed by an officer, where the charge has no relation to the value of the services performed and where the amount collected eventually finds its way into the treasury of the branch of the Government whose officer or officers collect the charge is not a fee but a tax." Therefore, it is arduous to entertain a plea what is authorised under the provisions of the impugned Act is a fee and hence it is compensatory in nature. A cursory reading of the impugned provisions will demonstrate that they are not provisions intended to regulate the trade or business in cigarettes inter-State or intra-State; nor are they aimed at levy of compensatory taxes. 24. The adverse effects on the trade and business in cigarettes by reason of the implementation and enforcement of the impugned Act have been outlined in the writ petition and they remain true and proved in the absence of denial. They are summarised hereunder : The rate of tax is inordinately high and will have a direct, material and immediate impact on the import of cigarettes into the State. As a result of the dramatic decrease in the legal import of tobacco the State far from increasing its revenue from the tobacco industry will suffer a precipitous and calamitous decline in the collection of revenue including local taxes such as octroi. There will be very large scale smuggling of cigarettes into the State from adjoining States to the extent of 40 per cent to 50 per cent, if not more. The past experience of other States in India where this experiment was tried and rapidly abandoned, due to colossal smuggling of cigarettes, proves this point beyond doubt. There will be very large scale smuggling of cigarettes into the State from adjoining States to the extent of 40 per cent to 50 per cent, if not more. The past experience of other States in India where this experiment was tried and rapidly abandoned, due to colossal smuggling of cigarettes, proves this point beyond doubt. No levy of a tax avowedly designed to raise revenue can be considered to be either reasonable or in the public interest if as a direct result of the tax the State is a net loser of enormous amounts of revenue. 25. The concept of direct and immediate restriction or impediment on the free movement of trade intra-State or inter-State requires some elaboration. What is meant by "direct" and immediate" ? The New Websters Dictionary gives the meaning of these words. The word "direct" means as "to set in a direct line" or "uninterrupted route or method". The word "immediate" means "occurring or done without separation by an interval of space or time". When these two words are added together for emphasis, it envisages a situation where there is an uninterrupted straight process without a separation by an interval of space or time. If the proposed levy could not be implemented because of the existence of certain prohibitions or limitations arising out of the compulsions of statute or statutes it would then amount to a direct and immediate restriction. That means the proposed levy would be a straight and direct process which collides with the existing law. Therefore, the impact of the proposed levy on the existing law or laws has necessarily to be examined. 26. The Constitution Bench of the Supreme Court in State of Madras v. N. K. Nataraja Mudaliar [1968] 22 STC 376 (SC); AIR 1969 SC 147 as to the scope of article 301 declared : "This article is couched in terms of the widest amplitude; trade, commerce and intercourse are thereby declared free and unhampered throughout the territory of India. 26. The Constitution Bench of the Supreme Court in State of Madras v. N. K. Nataraja Mudaliar [1968] 22 STC 376 (SC); AIR 1969 SC 147 as to the scope of article 301 declared : "This article is couched in terms of the widest amplitude; trade, commerce and intercourse are thereby declared free and unhampered throughout the territory of India. The freedom of trade so declared is against the imposition of barriers or obstructions within the State as well as inter-State; all restrictions which directly and immediately affect the movement of trade are declared by article 301 to be ineffective." It further observed in paragraph 14 (page 388 of 22 STC) as to the variety of factors on which flow of trade depends for its free movement : "The flow of trade does not necessarily depend upon the rates of sales tax; it depends upon a variety of factors, such as the source of supply, place of consumption, existence of trade channels, the rates of freight, trading facilities, availability of efficient transport and other facilities for carrying on trade. Instances can easily be imagined of cases in which notwithstanding the lower rate of tax in a particular part of the country goods may be purchased from another part, where a higher rate of tax prevails. Supposing in a particular State in respect of a commodity, the rate of tax is 2 per cent, but if the benefit of that low rate is offset by the freight which a merchant in another State may have to pay for carrying that commodity over a long distance, the merchant would be willing to purchase the goods from a nearer State, even though the rate of tax in that State may be higher. Existence of longstanding business relations, availability of communications, credit facilities and a host of other factors - natural and business - enter into the maintenance of trade relations and the free-flow of trade cannot necessarily be deemed to have been obstructed merely because in a particular State the rate of tax on sales is higher than the rates prevailing in other States." What is revealed from the above exposition is that there must be all trading facilities for the free movement of trade and commerce. There is large scale smuggling of cigarettes into the State from adjoining States to the extent of 40 per cent to 50 per cent in view of the inordinate high rates on the despatch and supply of tobacco. This allegation remains uncontroverted. This, no doubt, decreases the import and in such situation it adversely affects the free-flow of trade. No doubt, this factor can reasonably be included among the "variety of factors" for maintenance of free-flow of trade. 27. It is pointed out that the levy of tax under Section 4A of the impugned Act is a levy on sale or purchase of goods provided in article 366(29A)(f) of the Constitution. The levy of tax "on the sale or purchase of goods" is authorised under entry 54 of List II of the Seventh Schedule which is as follows : "54. Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92-A of List I." By section 4 of the Constitution (Forty-sixth Amendment) Act, 1982, article 366 of the Constitution was amended inserting a new clause (29A) which defines "tax on the sale or purchase of goods". It is an inclusive definition and as far as the present case is concerned clause (f) is relevant and it is ectyped hereunder : "(f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration. and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made." What is involved here is a "deemed sale" of any goods and it takes place when the supply, by way of or as part of any service or in any other manner whatsoever of goods, being food or any other article for human consumption where such supply or service is for cash, deferred payment or other valuable consideration. Such transfer, delivery and supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and purchase of those goods by the person to whom such transfer, delivery or supply is made. This entry explains the ambit of the expression "sale or purchase of goods" in article 286 and entry 54 of List II and amplifies it by fiction. 28. When the provisions contained in the impugned Act are tested within the extended definition given to the words "sale or purchase of goods" contained in clause (29A) of article 366, it is plausible to contend that what is authorised under the said provisions is the levy of tax on the sale or purchase of goods. The tax is imposed under the impugned Act on supply of cigarette by the stockist. Sections 4A and 2(k) of the impugned Act sufficiently indicate the existence or involvement of transfer, delivery or supply of cigarette. It consequently comes within the definition of the words "sale or purchase of goods" contained in clause (29A) of article 366. 29. Then the question is whether the impugned levy can be declared invalid for the reason aforesaid. The impugned Act, no doubt, imposes levy on luxuries and it has sanction under entry 62 of List II. That means, this is not a case where the legislative competence is lacking in any manner. This may be a case where the impugned Act gets sanction under two legislative entries in the same List. Two items of the same entry are not necessarily exclusive of each other and it is possible for the same matter to come under more than one entry. (See : Commissioner of Income-tax, West Bengal v. Benoy Kumar Sahas Roy AIR 1957 SC 768 ). In the aforesaid cases it must be held that the different entries are supplementary to each other. The point kept in view while drawing the List was to include all possible legislative power within the ambit. In this context, I am being reminded of what the Supreme Court said in Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71 (SC); AIR 1990 SC 781 . The point kept in view while drawing the List was to include all possible legislative power within the ambit. In this context, I am being reminded of what the Supreme Court said in Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71 (SC); AIR 1990 SC 781 . It said : "A constitutional court, one must bear in mind, will not strengthen, but only derogate from its position if it seeks to do anything but declare the law; but it may rightly reflect that a Constitution is a living and organic thing, which of all instruments, has the greatest claim to be construed broadly and liberally." "The Legislature must be presumed to know its limitations and acted within those limits." Therefore, reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act. [See : Hotel Balaji v. State of Andhra Pradesh [1993] 88 STC 98 (SC); AIR 1993 SC 1048 ]. 30. That the impugned Act is not bad for want of legislative power does not mean that it is immune from attack on the ground of violation of other constitutional provisions. Article 286 of the Constitution is as follows : "286. Restrictions as to imposition of tax on the sale or purchase of goods. - (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place - (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. (2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). (2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1). (3) Any law of a State shall, in so far as it imposes, or authorises the imposition of, - (a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce, or (b) a tax on sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29A) of article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify." The argument advanced on behalf of the petitioners is that the impugned levy is a tax on the sale or purchase of goods and it must be necessarily conform to the provisions of article 286 and also the provisions of the Central Sales Tax Act, 1956 since tobacco is a declared goods. Therefore it was pointed out that the impugned tax being a tax on the sale or purchase or stocking of manufactured tobacco, i.e., cigarettes is clearly ultra vires article 286(3), section 15 of the Central Sales Tax Act and section 9 of the Kerala General Sales Tax Act. In this connection it must be borne in mind that the impugned Act in effect purports to levy a sales tax on the cigarettes manufactured in the State or imported into the State. 31. Under clause (3)(a) of article 286, any law of a State in so far as it imposes, or authorises the imposition of a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or the subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify. What is projected under this article is the levy of any tax on the sale or purchase of goods in inter-State trade and commerce. What is projected under this article is the levy of any tax on the sale or purchase of goods in inter-State trade and commerce. In this context it must be recalled that what is levied under section 4A of the impugned Act is the levy of tax on the despatches and supply of a declared commodity, i.e., cigarettes in the course of inter-State trade and commerce. In other words, the movement part of the inter-State trade and commerce in cigarettes is involved here. Under section 4A, the tax is levied on the value of the tobacco despatched for supply in the course of inter-State trade and commerce and the rate of tax is 5 per cent. What is necessary to find out here is whether the impugned levy directly and immediately impedes or restricts the movement of cigarette in the course of trade and commerce. 32. The Central Sales Tax Act, 1956 is in Act intended to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India, to provide for the levy, collection and distribution of taxes on sales of goods in the course of inter-State trade or commerce and to declare certain goods to be of special importance in inter-State trade or commerce and specify the restrictions and conditions to which State Laws imposing taxes on the sale or purchase of such goods of special importance shall be subject. Whilst considering the constitutional amendment, Parliament considered it to be in the public interest that there should be a uniform rate of tax on the goods declared by Parliament to be of special importance. Chapter II of the Central Sales Tax Act formulates principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce in or outside a State or in the course of import or export. Chapter IV deals with goods of special importance in inter-State trade or commerce. By section 14 of the Central Sales Tax Act, the Parliament has declared the goods of special importance in the inter-State trade and commerce. Chapter IV deals with goods of special importance in inter-State trade or commerce. By section 14 of the Central Sales Tax Act, the Parliament has declared the goods of special importance in the inter-State trade and commerce. The tobacco is included in entry (ix) of section 14, which runs thus : "(ix) unmanufactured tobacco and tobacco refuse covered under sub-heading No. 2401.00, cigars and cheroots of tobacco covered under heading No. 24.02, cigarettes and cigarillos of tobacco covered under sub-heading Nos. 2403.11 and 2403.21 and other manufactured tobacco covered under sub-heading Nos. 2404.11, 2404.12, 2404.13, 2404.19, 2404.21, 2404.29, 2404.31, 2404.39, 2404.41, 2404.50 and 2404.60 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986)." 33. Section 15 of the Central Sales Tax Act in so far as it is relevant for the present purpose is ectyped hereunder : "15. Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State. - Every sales tax law of a State shall in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions namely :- (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed four per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage; (b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such gods are sold in the course of inter-State trade or commerce, and tax has been paid under this Act in respect of the sale of such goods in the course of inter-State trade or commerce the tax levied under such law shall be reimbursed to the person making such sale in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State." Thus all forms of manufactured tobacco including cigarettes are declared by Parliament to be goods of special importance in inter-State trade commerce as per section 14(ix) of the Act. From the provisions contained in section 15(a) of the Act, it is crystalline that any law of a State imposing or authorising imposition of a tax in the sale or purchase of declared goods shall conform to such restrictions and conditions in accordance with the system of levy, rates and other incidents of the tax. Therefore it is contended that the levy of tax at the rate of 5 per cent on cigarettes under the impugned Act is opposed to the levy of tax at the rate of 4 per cent specified in section 15(a) of the Central Sales Tax Act. The argument therefore is that the impugned Act in so far as it authorises the levy of tax at the rate more than what is prescribed under section 15(a) of the Central Sales Tax Act is invalid. The levy of tax under the impugned Act is not invalid for want of legislative competence. Then the question is the impugned Act can be regarded as a law of the State authorising the imposition of tax on the sale or purchase of goods declared by Parliament at a rate higher than the rate specified in section 15(a) of the Central Sales Tax Act. It may be so, but this Court cannot attach total invalidity though it contravenes section 15(a) of the Central Sales Tax Act because the enactment of the impugned Act is specifically authorised under entry 62 of List II. When the power of the Legislature to enact the law is admitted, then it has power to adopt any mode or any manner as it thinks appropriate. The Legislature cannot be compelled to confine the levy only in one form and in one rate. The wisdom of the Legislature is paramount as to the social life of the community and its economic necessities. 34. However, the impact of the levy is totally different when it is viewed within the framework of the guarantee of freedom of trade, commerce and intercourse declared under article 301 of the Constitution. Section 4A of the impugned Act in substance and form imposes a levy of tax at the rate of 5 per cent on the despatch of cigarettes for supply made in the course of inter-State trade and commerce which is declared to be free. Section 4A of the impugned Act in substance and form imposes a levy of tax at the rate of 5 per cent on the despatch of cigarettes for supply made in the course of inter-State trade and commerce which is declared to be free. In other words, it is an imposition of tax direct on the movement of goods at the rate higher than 4 per cent specified under section 15(a) of the Central Sales Tax Act. It is an impediment or restriction which is direct and immediate. Due to compulsion arising out of existing statute the impugned levy cannot be enforced on the movement of the goods in the course of inter-State trade and commerce, whatever form and shape it may assume at the point of levy or collection. 35. The Parliament enacted 1957 Act [Additional Duties of Excise (Goods of Special Importance) Act, 1957] after the enactment of the Central Sales Tax Act, 1956. That is an Act to provide for the levy and collection of additional duties of excise on certain goods and for the distribution of a part of the net proceeds thereof among the States in pursuance of the principles of distribution formulated and the recommendations made by the Finance Commission in its report dated the 30th day of April, 1984. In order to understand the ambit and scope of the said Act it would be appropriate to refer to the statement of objects and reasons for the enactment. It, inter alia, reveals that the object of the Bill is to impose additional duties of excise in replacement of the sales tax levied by the Union and the States on sugar, tobacco and mill-made textiles and to distribute the net proceeds of these taxes, except the proceeds attributable to Union territories, to the States. It further reveals that provision is also being made in the Bill for including these three goods to be of special importance in inter-State trade or commerce so that, following the imposition of uniform duties of excise on them, the rates of sales tax if levied by any State are subject from 1st April 1958 to the restrictions in section 15 of the Central Sales Tax Act, 1956. 36. 36. By virtue of section 3 of the said 1957 Act read with the First Schedule, additional excise duty was levied, inter alia, on tobacco purchased or manufactured in India at the rates specified in column 4 of the said Schedule. Section 4 provides for the distribution of additional duties of excise levied and collected during the financial year amongst the States as specified in Schedule II. Item 2 of Schedule. It pertains to tobacco and it states that on and after 1st April, 1984 there shall be paid to each of these States specified in column 1 of the table below, such percentage of the net proceeds of additional duties levied and collected during the financial year in respect of tobacco after deducting a sum equal to 2.192 per cent of the said proceeds as being attributable to the Union territories, as set out against it in column 2. Item 2 of Schedule II is as follows : 2. Tobacco - During the financial year commencing on the 1st day of April, 1984 there shall be paid to each of the States specified in column 1 of the Table below such percentage of the net proceeds of additional duties levied and collected during that financial year in respect of tobacco, after deducting therefrom a sum equal to 2.192 per cent of the said proceeds as being attributable to Union territories, as is set out against it in column 2 : Provided that if during that financial year there is levied and collected in any State a tax on the sale or purchase of tobacco by or under any law of that State, no sums shall be payable to that State under this paragraph in respect of that financial year, unless the Central Government by special order otherwise directs. The argument is that during the relevant financial years the excise duty on tobacco has been collected by virtue of section 4 of 1957 Act and therefore the State is precluded from collecting tax on the sale or purchase of tobacco. In pursuance of the provision contained in section 4, sums representing a part of net proceeds of the additional duties levied and collected during the relevant financial year had been paid to the State under the consolidated fund of India in accordance with the provisions of the Second Schedule. In pursuance of the provision contained in section 4, sums representing a part of net proceeds of the additional duties levied and collected during the relevant financial year had been paid to the State under the consolidated fund of India in accordance with the provisions of the Second Schedule. Therefore, when the State had already received its share in the excise duty collected under the provisions of the 1957 Act, collection of any tax on sale or purchase of goods under the State Act cannot be allowed. This is the effect of the proviso to item 2 of the Schedule II which provides that no sums shall be payable to the State under the paragraph in respect of that financial year if the State had collected the tax during the said year a tax on the sale or purchase of tobacco under any law of that State. 37. Under section 9 of the Kerala General Sales Tax Act, 1963 a dealer who deals in the goods specified in Third Schedule shall not be liable to pay any tax under the Act in respect of sale or purchase of such goods. Item 57 of the Schedule relates to tobacco and its products and it is as follows : "57. Tobacco and its products covered under heading Nos. 2402, sub-heading Nos. 2401.00, 2403.11, 2403.21, 2404.11, 2404.12, 2404.13, 2404.19, 2404.21, 2404.29, 2404.31, 2404.39, 2404.41, 2404.50 and 2404.60 except unmanufactured tobacco on which duty is not levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Central Act 58 of 1957)." What is relevant from the above entry is that the unmanufactured tobacco on which duty is not levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 is not exempted from levy of tax under the Kerala General Sales Tax Act. What is exempted under the said entry is tobacco and its products under heading No. 2402, etc. etc. Under the First Schedule to the 1957 Act no duty is levied on unmanufactured tobacco and tobacco refuse. Under the said entry cigarettes is included in the category of "cigarettes and cigarilos of tobacco" and "other manufactured tobacco" and the duty is levied at the rate prescribed. 38. etc. Under the First Schedule to the 1957 Act no duty is levied on unmanufactured tobacco and tobacco refuse. Under the said entry cigarettes is included in the category of "cigarettes and cigarilos of tobacco" and "other manufactured tobacco" and the duty is levied at the rate prescribed. 38. In view of the provisions contained in section 9 of the Kerala General Sales Tax Act and section 3 of the 1957 Act, it is said that the levy of tax under the impugned Act on cigarette which is a manufactured item of tobacco is invalid. If it is a levy of tax directly on sale or purchase of cigarettes it may be possible to argue that such levy contravenes the provisions of those Acts. But the impugned Act as well as the Kerala General Sales Tax Act and the 1957 Act derive sanction from specific legislative entries under Lists I and II of the Seventh Schedule. 39. What is submitted is the levy of excise duty in the guise of "luxury tax" on manufacture of cigarettes is really colourable and the impugned tax is consequently unconstitutional. The 1957 Act is a legislation under entry 84 of List I. As aforesaid the levy of luxury tax is under entry 62 of List II. When the exercise of power by the Parliament and State Legislature is specifically under the related legislative entries this Court cannot assume such powers are misused or misapplied in order to increase the revenue. It is not the function of this Court to restrain the Legislatures from exercising their legitimate legislative powers on the specified subjects. The contention in this regard is rejected. 40. It is argued that the cigarette manufacture is an industry which was at all relevant times and continues at present to be covered by the relevant provisions of the Industries (Development and Regulation) Act, 1951. It is further pointed out as a direct consequence thereof the entire field of legislation as far as cigarette is concerned is fully occupied. The field being thus occupied the States are totally denuded of legislative power. In support of this, counsel has relied on the decisions of the Supreme Court in Buxa Dooars Tea Company Ltd. v. State of West Bengal [1989] 74 STC 447; [1989] 179 ITR 91; AIR 1989 SC 2015 and I.T.C. Ltd. v. State of Karnataka (1985) Sup. SCC 476. In support of this, counsel has relied on the decisions of the Supreme Court in Buxa Dooars Tea Company Ltd. v. State of West Bengal [1989] 74 STC 447; [1989] 179 ITR 91; AIR 1989 SC 2015 and I.T.C. Ltd. v. State of Karnataka (1985) Sup. SCC 476. In Buxa Dooar's case [1989] 74 STC 447 (SC); [1989] 179 ITR 91; AIR 1989 SC 2015 the West Bengal Rural Employment and Production Act, 1976 was challenged. There the court said : "If the impugned legislation were to be regarded as a levy in respect of tea estates, it would be referable to entry 49 in List II of the Seventh Schedule to the Constitution which speaks of 'taxes on lands and buildings'. But if the legislation is in substance legislation in respect of despatches of tea, legislative authority must be found for it with reference to some the entry. We have not been shown any entry in List II or in List III of the Seventh Schedule which would be pertinent. It may be noted that the Parliament had made a declaration in section 2 of the Tea Act, 1953, that it was expedient in the public interest that the Union should take under its control the tea industry. Under the Tax Act, Parliament has assumed control of the tea industry including the tea trade and control of tea prices. Under section 25 of the Act a cess on tea produced in India has also been imposed. It appears to us that the impugned legislation is also void for want of legislative competence as it pertains to a covered field." It is arduous for this Court to apply the said decision of the Supreme Court in the present context. That was a case where there was no legislative entry to include the legislation in respect of despatches of tea. At the same time, the Parliament has declared that under section 2 of the Tea Act, 1953 it was expedient in the public interest that the Union should take under its control the tea industry. But in the present case, the levy of luxury tax is directly within entry 62 of List II, even though the levy of tax in substance is on the despatch and supply of cigarettes. 41. The Supreme Court in I.T.C. Ltd. v. State of Karnataka (1985) Supp. But in the present case, the levy of luxury tax is directly within entry 62 of List II, even though the levy of tax in substance is on the despatch and supply of cigarettes. 41. The Supreme Court in I.T.C. Ltd. v. State of Karnataka (1985) Supp. SCC 476 considered the validity of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966. The Supreme Court in the above case observed in paragraph 28 as follows : "Thus, it would appear that in view of the recent decisions, once the Centre takes over an industry under entry 52 of List I and passes on Act to regulate the legislation, 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." Therefore the Supreme Court has struck down that part of the Karnataka Act which took in itself the power to levy market fee on tobacco or its products. The court further said : "Even if the products may be sold in the markets in Karnataka or near about the same place situated in that State, the power to levy fees will not belong to that State : it will remain with Centre which would regulate the sale and purchase of tobacco. It may be reiterated at the risk of repetition that an application for registration with the Tobacco Board was made by the Karnataka Government which was, however, rejected by the Board. This indirectly shows that the Government of Karnataka was aware that it could not encroach on the field which was fully occupied by the Centre by virtue of the 1975 Act." 42. In this context it would be essential to examine the scope of the Tobacco Board Act. The Tobacco Board Act, 1975 is an Act to provide for the development of the tobacco industry under the control of the Union. Section 2 of the said Act declared that it is expedient in the public interest that the Union should take under its control the tobacco industry. The Tobacco Board has got power to maintain and improve the existing markets and development of new markets as specified in section 8 of the Act, Section 10 of the Act provides for registration of growers of virginia tobacco. Section 11 provides for registration of curing of virginia tobacco. The Tobacco Board has got power to maintain and improve the existing markets and development of new markets as specified in section 8 of the Act, Section 10 of the Act provides for registration of growers of virginia tobacco. Section 11 provides for registration of curing of virginia tobacco. Under the above provision no person other than a registered curer shall cure or undertake the curing of virginia tobacco. It is averred in the writ petition that by the notification dated May 31, 1980 the Central Government fixed May 31, 1980 as the date on which sections 10 and 11 would come into force in the States of Maharashtra, West Bengal, Gujarat, Tamil Nadu and Uttar Pradesh. It is not stated when sections 10 and 11 came into force in the State of Kerala. Anyway the case of the petitioners is that the cigarette manufacture is an industry covered by the provisions of the Industries (Development and Regulation) Act, 1951. 43. An argument is advanced in somewhat different form, that is to say, the State Legislature has no competence to enact the impugned Act since the field is wholly occupied by the Central laws namely, Industries (Development and Regulation) Act, 1951 and Tobacco Board Act. A somewhat similar situation arose before the Supreme Court in Western Coalfields Ltd. v. Special Area Development Authority AIR 1982 SC 697 . While examining the applicability of the decision in H. R. S. Murthy v. Collector of Chittoor AIR 1965 SC 17 it held thus : "The reasoning adopted in this decision shows it is not correct to say that the property tax provided for in the Act of 1973 is beyond the legislative competence of the State Legislature; that tax has nothing to do with the development of mines. The power conferred by the State Legislature on Special Area Development Authorities to impose the property tax on lands and buildings is therefore not in conflict with the power conferred by the Coal Mines Nationalisation Act on the Union Government to regulate and develop the coal mines so as to ensure rational and scientific utilisation of coal resources. The power conferred by the State Legislature on Special Area Development Authorities to impose the property tax on lands and buildings is therefore not in conflict with the power conferred by the Coal Mines Nationalisation Act on the Union Government to regulate and develop the coal mines so as to ensure rational and scientific utilisation of coal resources. The paramount purpose behind the declaration contained in section 2 of the Mines and Minerals (Regulation and Development) Act, 1957 is not in any manner defeated by the legitimate exercise of taxing power under section 69(d) of the Act of 1973." What is required to be examined in the present case is whether the State law has substantially transgressed on the field occupied by the law of Parliament. The subject-matter of the impugned Act namely, the levy of tax on cigarette is different from the subject of the enactment under the Industries (Development and Regulation) Act, 1951 and the Tobacco Board Act. Both these Central enactments do not deal with the levy of tax on tobacco or cigarette. The following observation of the Supreme Court in Tika Ramji v. State of Uttar Pradesh AIR 1956 SC 676 is relevant in the present context : "If the two fields were different and the Central legislation did not intend at all to cover that field, the field was clear for the operation of State legislation and there was no repugnancy at all between Act 65 of 1951 and the U.P. Sugarcane (Regulation of Supply and Purchase) Act (24 of 1953)." Since the subjects of enactments are different, the point under discussion is found against the petitioners. 44. However, for the reasons stated in the earlier paragraphs, it is sufficiently established that the impugned levy under section 4A and the Schedule to the impugned Act violate article 301 of the Constitution and are not saved under article 304(b). 45. On behalf of the petitioners it was submitted that in case the impugned provision is found to be ultra vires of the provisions of the Constitution, the entire Act shall be declared void. 45. On behalf of the petitioners it was submitted that in case the impugned provision is found to be ultra vires of the provisions of the Constitution, the entire Act shall be declared void. This is a question concerning the doctrine of severability restated by the Supreme Court in R. M. D. Chamarbaugwalla v. Union of India AIR 1957 SC 628 , which is as follows : "If the valid and invalid provisions are so inextricably mixed up that they cannot be separated from one another, then the invalidity of a portion must result in the invalidity of the Act in its entirety. On the other hand, if they are so distinct and separate that after striking out what is invalid, what remains is in itself complete code independent of the rest, then it will be upheld notwithstanding that the rest has become unenforceable." But it is pointed out that the valid and invalid provisions are not so inextricably mixed up that they can be separated from one another. Originally the impugned Act was called as "Kerala Tax on Luxuries in Hotels and Lodging Houses Act, 1976". What is declared invalid is section 4A and Schedule which were introduced by the Finance Act, 1994. There is no difficulty in implementing valid provisions since the valid and invalid provisions are not inextricably mixed up. The invalid provisions relate to the levy of luxury tax on cigarette, whereas the valid provision relates to the levy of luxury tax payable by a person residing in a hotel. The scheme of levy of luxury tax on cigarette and luxury provided in a hotel are distinct and separate. In the case of the former, levy of tax is on goods whereas in the latter case the levy is on services. The Act originally passed was only intended to levy tax on the person residing in a hotel for the accommodation for residence and other amenities and services provided in the hotel. The Supreme Court in Jia Lal v. Delhi Administration AIR 1962 SC 1781 held thus : "It was argued that the history of a legislation would be admissible for ascertaining the legislative intent when the question is one of severability. The Supreme Court in Jia Lal v. Delhi Administration AIR 1962 SC 1781 held thus : "It was argued that the history of a legislation would be admissible for ascertaining the legislative intent when the question is one of severability. That is so as held by this Court in R. M. D. Chamarbaugwalla's 1957 SCR 930 ; AIR 1957 SC 628 at pages 951-952 (of SCR) at pages 636-637 of AIR." Thus after striking out the invalid provisions the remaining provisions stand as a complete code independent of the rest which can be enforced with vigour and vitiality. Therefore the prayer to strike down the entire Act is disallowed. In the result, section 4A of the Kerala Tax on Luxuries Act, 1976 and Schedule thereto as amended by the Kerala Finance Bill, 1994 are declared unconstitutional, invalid and inoperative. Accordingly, the said provisions are set aside. The writ petitions are allowed as above. No order as to costs. Order on C.M.P. No. 10274 of 1994 in O.P. No. 5716 of 1994 dismissed. Writ petitions allowed.