Bench Strength, Not Headcount, Decides Which Precedent Binds; Pan Masala Tax Reference Returned: Constitution Bench

The appeals raised whether pan masala containing tobacco and gutka, covered by the First Schedule to the ADE Act, can be taxed under the Delhi, Uttar Pradesh and Tamil Nadu sales tax laws (para 1). In Shanti Fragrances a two-judge Bench saw a direct conflict between Kothari Products and Agra Belting Works, both with three-judge Benches on each side, and questioned whether the doctrine of precedent should turn on the number of judges in a majority (paras 2-3). It referred two questions to a Constitution Bench (para 4).

Once goods are chargeable under the ADE Act, a State cannot levy sales tax on the same goods if it is to share in the additional duties (paras 5-7). The Kothari Products line held that tobacco and other First Schedule goods, being exempt under State law, could not be taxed by amending the State schedule (paras 8-11). Agra Belting Works, by a 2:1 majority, dealt with a different question: whether a later notification under Section 3-A fixing a rate withdrew a general exemption under Section 4 of the U.P. Act (paras 12-16). The two lines decided different questions, so there was no conflict and the reference was incompetent (para 17). The second question was answered by Dr. Jaishri Laxmanrao Patil: under Article 145(5) the concurrence of a majority of the judges at the hearing is the Court's judgment (paras 18-19). Hemant Gupta J., concurring, added that the Bench strength, not the number of judges taking a view, determines a judgment's binding nature.