Holding

Goods chargeable under the ADE Act cannot be taxed by a State under its sales tax statutes, and the larger‑bench precedent governs, rendering the reference to a Constitution Bench incompetent.

Summary

The appellant, Trimurthi Fragrances, challenged the levy of sales tax by Delhi, Uttar Pradesh and Tamil Nadu on pan masala containing tobacco and gutka, arguing that the product is covered by an entry in the First Schedule of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (ADE Act) and therefore exempt from state sales tax. The Court examined the interplay between the ADE Act and state sales tax statutes, reaffirming that once goods are chargeable under the ADE Act, states cannot impose sales tax on the same goods. It also addressed the apparent conflict between the Kothari Products line of cases and the Agra Belting line, concluding there is no conflict and that the larger‑bench precedent prevails. The Court further clarified the doctrine of stare decisis, emphasizing that decisions of a bench of larger strength bind all subsequent benches, irrespective of the number of judges forming the majority. Consequently, the reference to a Constitution Bench was deemed incompetent and the appeals were dismissed, with the matter to be placed before a regular bench.

Issues considered

Whether pan masala containing tobacco and gutka, covered by the First Schedule of the ADE Act, is taxable under the Delhi Sales Tax Act, 1975, the Uttar Pradesh Trade Tax Act, 1948, and/or the Tamil Nadu General Sales Tax Act, 1959.
Whether there is a conflict between the Kothari Products line of decisions and the Agra Belting line of decisions on the taxability of goods exempted under the ADE Act.
What guidelines should govern the overruling of earlier Supreme Court decisions, particularly concerning bench strength and the doctrine of precedent.

Legislation cited

Subjects

Additional Duties of ExciseSales TaxPan MasalaTobaccoGutkaStare DecisisBench StrengthArticle 145TaxabilityState TaxPrecedent

Judgment

516 [2022]REPORTS
SUPREME COURT 15 S.C.R. 516 [2022] 15 S.C.R.

A M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS
DIRECTOR SHRI PRADEEP KUMAR AGRAWAL
v.
GOVERNMENT OF N.C.T. OF DELHI THROUGH ITS
PRINCIPAL SECRETARY (FINANCE) & ORS.
B
(Civil Appeal No. 8486 of 2011)
SEPTEMBER 19, 2022
[INDIRA BANERJEE, SURYA KANT, M. M. SUNDRESH,
SUDHANSHU DHULIA AND HEMANT GUPTA, JJ.]
C
Tax/Taxation– Additional Duties of Excise (Goods of Special
Importance) Act, 1957 – Central Excise Act, 1944 – Delhi Sales
Tax Act, 1975 – Uttar Pradesh Trade Tax Act, 1948 – Tamil Nadu
General Sales Tax Act, 1959 – Whether, Pan Masala, which contains
tobacco and gutka, covered by an Entry in the First Schedule to
D the ADE Act, are taxable by the State under the 1975 Act and/or the
1948 Act and/or the 1959 Act – Held: The ADE Act has been enacted
to provide for the levy and collection of additional duties of excise
in respect of certain goods, over and above the duties of excise
levied under the Central Excise Act,1944 – Once goods are
chargeable under the ADE Act, the State cannot levy sales tax on
E
the same goods under a State enactment – There is no conflict
between the Kothari Products line of cases and the Agra Belting line
of cases – There being no conflict, the reference to Constitution
Bench is incompetent and the cases may be placed for decision
before the regular Bench.
F
Constitution of India – Article 145– Principle of stare decisis
– Doctrine of precedents– Guidelines for overruling an earlier
decision– Held: Per Indira Banerjee, J. (for herself and for Surya
Kant, M.M. and Sundresh, Sudhanshu Dhulia, JJ.): This question
is answered by the judgment of the Constitution Bench of Supreme
G Court in Dr. Jaishri Laxmanrao Patil v. The Chief Minister and Others
reported as (2021) 8 JT 337, in view of which it is not necessary for
this Court to answer the question – In view of Article 145(5)
concurrence of a majority of the judges at the hearing will be
considered as a judgment or opinion of the Court – The majority
decision of a Bench of larger strength would prevail over the decision
H
516
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 517
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE)
of a Bench of lesser strength, irrespective of the number of Judges A
constituting the majority – Per Hemant Gupta, J. (Concurring): A
decision delivered by a Bench of largest strength is binding on any
subsequent Bench of lesser or coequal strength – It is the strength
of the Bench and not number of Judges who have taken a particular
view which is said to be relevant – A Bench of lesser quorum cannot
B
disagree or dissent from the view of law taken by a Bench of larger
quorum – Thus, the numerical strength of the Judges taking a
particular view is not relevant, but the Bench strength is
determinative of the binding nature of the Judgment.
Dr. Jaishri Laxmanrao Patil v. The Chief Minister and
Others. (2021) 8 SCC 1 : 2021 (8) JT 337; Central C
Board of Dawoodi Bohra Community and Anr. v. State
of Maharashtra and Anr. (2005) 2 SCC 673 : [2004] 6
Suppl. SCR 1054; Union of India and Anr. v. Raghubir
Singh (Dead) By Lrs. Etc. (1989) 2 SCC 754 : [1989] 3
SCR 316 – followed. D
Kothari Products Ltd. v. State of A.P (2000) 9 SCC 263
: 2000 (3) JT 554; Central Sales Tax vs. Agra Belting
Work (1987) 3 SCC 140 : [1987] 3 SCR 93 – discussed.
Shanti Fragrances v. Union of India and others
(2018) 11 SCC 305 : [2017] 8 SCR 711; Union of E
India v. Raghubir Singh (1989) 2 SCC 754 : [1989]
3 SCR 316; Ningappa Ramappa Kurbar v. Emperor
1941 SCC OnLine Bom 41 : AIR 1941 Bom 408;
Supreme Court Advocates-on-Record Assn. v Union
of India (2016) 5 SCC 1 : [2015] 13 SCR 1; Harper F
v. National Coal Board [1974] QB 614; Mahalakshmi
Oil Mills v. State of A.P. (1989) 1 SCC 164 : [1988]
2 Suppl. SCR 1088; Godfrey Phillips India Ltd. v.
State of U.P (2005) 2 SCC 515 : [2005] 1 SCR 732;
State of Orrisa vs. Radhey Shyam Gudakhu Factory
(2018) 11 SCC 505; Gulabchand Harekchand v. State G
of West Bengal 1984 SCC Online Cal 274; Reliance
Trading Company, Kerala v. State of Kerala (2011)
15 SCC 762; Sales Tax Officer, Sector-IX, Kanpur
vs. Dealing Dairy Products and Anr. (1994) Supp. 2
H
518 SUPREME COURT REPORTS [2022] 15 S.C.R.

A SCC 639; State of Bihar and Others v. Krishna Kumar
Kabra and Another (1997) 9 SCC 763 – referred to.
State of Gujarat v Gordhandas Keshavji Gandhi and
Ors. AIR 1962 Guj 128 – approved.
Case Law Reference
B
In the judgment of Indira Banerjee, J.
[2017] 8 SCR 711 referred to Para 2
[1989] 3 SCR 316 referred to Para 3
[1987] 3 SCR 93 discussed Para 4
C
[2015] 13 SCR 1 referred to Para 4(ii)
[1988] 2 Suppl. SCR 1088 referred to Para 6
[2005] 1 SCR 732 referred to Para 7

D In the judgment of Hemant Gupta, J.
[2004] 6 Suppl. SCR 1054 followed Para F
[1989] 3 SCR 316 followed Para F
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8486
of 2011.
E
From the Judgment and Order dated 05.04.2006 of the High Court
of Delhi at New Delhi in Writ Petiton (C) No.2925 of 2005.
With
Civil Appeal Nos. 8485, 8487, 8496-8501, 8502 of 2011, 8617,
F 10374-10379 of 2014, 8488, 8491-8494, 8495 of 2011, Special Leave
Petition (C) No. 33322 of 2017.
Mr. Dhruv Agrawal, Sr. Adv., Nalin Talwar, Praveen Kumar, Nishit
Agrawal, Ms. Sunaina Kumar, Ms. Kanishka Mittal, Madhav Bhatia,
Dhruv Surana, Shreshth Arya, Aditya Pandey, Ms. Bharti Tyagi,
G Pawanshree Agrawal, Ms. Soumya Dhankar,. Mrs. Prabha Swami, Nikhil
Swami, Ms. Divya Swami, Ms. Upasna Agrawal, Vipin Kumar Jai, G.
Prakash, Advs. for the Appellant.
Tushar Mehta, SG, N. Venkatraman, ASG, Arijit Prasad, K.
Radhakrishnan, Sr. Advs., Rupesh Kumar, Zoheb Hussain, Kanu
H Aggarwal, V.C.S. Bharthi, H.R. Rao, Raghav, Mukesh Kumar Maroria,
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 519
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE)
Gurmeet Singh Makker, T. S. Sabarish, Vishnu Unnikrishnan, Ms. Shivani A
Jena, Shankar, M. Yogesh Kanna, Bhakti Vardhan Singh, Vikas Singh
Jangra, Amit Kumar Pathak, Tushar Thareja, R. Nedumaran, Advs. for
the Respondents.
The Judgments* of the Court were delivered by
INDIRA BANERJEE, J. B
1. The main question raised in this batch of appeals is, whether,
‘Pan Masala’, which contains tobacco and gutka, covered by an Entry
in the First Schedule to the Additional Duties of Excise (Goods of Special
Importance) Act 1957, hereinafter referred to as the ‘ADE Act’, are
taxable by the State under the Delhi Sales Tax Act 1975 and/or the
C
Uttar Pradesh Trade Tax Act 1948 and/or the Tamil Nadu General Sales
Tax Act, 1959.
2. In Shanti Fragrances v. Union of India and others 1, a
Division Bench of this Court observed:-
12. It does appear that there is a direct conflict between Kothari
Products [Kothari Products Ltd. v. State of A.P., (2000) 9 SCC D
263], Radheshyam Gudakhu Factory [State of Orissa v.
Radheshyam Gudakhu Factory, (2018) 11 SCC 505 : (1988) 68
STC 92 (SC)] and Reliance Trading Co. [Reliance Trading Co.
v. State of Kerala, (2011) 15 SCC 762] judgments on the one
hand, and Agra Belting Works [CST v. Agra Belting Works, E
(1987) 3 SCC 140 : 1987 SCC (Tax) 233] , which was also followed
by two other judgments, on the other. We may hasten to add that
there are three-Judge Bench decisions on both sides. ...”
3. The Bench further observed:-
“13. … One other interesting feature of this case is whether, F
after Union of India v. Raghubir Singh2, SCR at pp. 335-37 :
SCC pp. 777-78, para 27, it can be stated that Judges of this
Court do not sit in 2s and 3s for mere convenience, but that a
Bench which is numerically superior will prevail over a Bench
of lesser strength. If the doctrine of precedent, as applied by
this Court, is to be a matter of numbers, then, interestingly G
*
Ed. Note: There were two separate judgments in the matter- one judgment rendered by
Hon’ble Ms. Justice Indira Banerjee, for herself and on behalf of Hon’ble Mr. Justice
Surya Kant, Hon’ble Mr. Justice M.M. Sundresh and Hon’ble Mr. Justice Sudhanshu
Dhulia; and the other judgment rendered by Hon’ble Mr. Justice Hemant Gupta.
1
(2018) 11 SCC 305
2
(1989) 2 SCC 754; (1989) 3 SCR 316 H
520 SUPREME COURT REPORTS [2022] 15 S.C.R.

A enough, as has been held by Beaumont, C.J. in Ningappa
Ramappa Kurbar v. Emperor3, the position in law could be as
under: (AIR p. 409 : SCC OnLine Bom)
“…The Court in that case consisted of five Judges, one of
whom, Shah, J., dissented from that proposition. The
B authority of the case may be open to question, since there
had been a previous decision of a Full Bench of this Court
of four Judges in Queen Empress v. Mugappa Bin Ningapa
[Queen Empress v. Mugappa Bin Ningapa, ILR (1893) 18
Bom 377], which had reached a different conclusion.
Apparently it was considered that five Judges, by a majority
C of four to one, could overrule a unanimous decision of
four Judges, the net result being that the opinion of four
Judges prevailed over the opinion of five Judges of co-
ordinate jurisdiction. There seems to be very little authority
on the powers and constitution of a Full Bench. There can
D be no doubt that a Full Bench can overrule a Division
Bench, and that a Full Bench must consist of three or more
Judges; but it would seem anomalous to hold that a later
Full Bench can overrule an earlier Full Bench, merely
because the later Bench consists of more Judges than the
earlier. If that were the rule, it would mean that a Bench of
E seven Judges, by a majority of four to three, could overrule
a unanimous decision of a Bench of six Judges, though all
the Judges were of co-ordinate jurisdiction. In Enatullah
v. Kowsher Ali [Enatullah v. Kowsher Ali, 1926 SCC
OnLine Cal 104 : ILR (1927) 54 Cal 266] , Sanderson,
F C.J., stating the practice in Calcutta, seems to have been
of opinion that a decision of a Full Bench could only be
reversed by the Privy Council or by a Bench specially
constituted by the Chief Justice. Even if this be the true
rule, there is nothing to show that the Chief Justice acted
upon it in Emperor v. Purshottam Ishwar Amin [Emperor
G v. Purshottam Ishwar Amin, 1920 SCC OnLine Bom 144 :
ILR (1921) 45 Bom 834] . I do not recollect myself ever to
have constituted a Special Bench to consider the ruling of
a Full Bench, though I have constituted many Full Benches

3
H 1941 SCC OnLine Bom 41 : AIR 1941 Bom 408
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 521
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE) [INDIRA BANERJEE, J.]
to consider rulings of Division Benches. However, I need A
not pursue this subject further, since, for the purpose of
the present appeal, I am prepared to assume that an
alternative charge of perjury lies, and that it was a charge
of that nature which the learned Additional Sessions Judge
contemplated. The question then is whether it is expedient
B
in the interests of justice that such a charge should be
made.”
14. This conundrum was also addressed by M.B. Lokur, J.
in Supreme Court Advocates-on-Record Assn. v. Union of India
[Supreme Court Advocates-on-Record Assn. v. Union of India,
C
(2016) 5 SCC 1] , as follows: (SCC pp. 577-78, para 669)
“669. One of the more interesting aspects of Pradeep
Kumar Biswas [Pradeep Kumar Biswas v. Indian Institute
of Chemical Biology, (2002) 5 SCC 111 : 2002 SCC (L&S)
633] is that out of the 7 (seven) learned Judges constituting
D
the Bench, 5 learned Judges overruled the unanimous
decision of another set of 5 learned Judges in Sabhajit
Tewary [Sabhajit Tewary v. Union of India, (1975) 1 SCC
485 : 1975 SCC (L&S) 99] . Two of the learned Judges in
Pradeep Kumar Biswas [Pradeep Kumar Biswas v. Indian
Institute of Chemical Biology, (2002) 5 SCC 111 : 2002 E
SCC (L&S) 633] found that Sabhajit Tewary [Sabhajit
Tewary v. Union of India, (1975) 1 SCC 485 : 1975 SCC
(L&S) 99] had been correctly decided. In other words, while
a total of 7 learned Judges took a particular view on an
issue of fact and law, that view was found to be incorrect
F
by 5 learned Judges, whose decision actually holds the
field today. Is the weight of numbers irrelevant? Is it that
only the numbers in a subsequent Bench are what really
matters? What would have been the position if only 4
learned Judges in Pradeep Kumar Biswas [Pradeep Kumar
Biswas v. Indian Institute of Chemical Biology, (2002) 5 G
SCC 111 : 2002 SCC (L&S) 633] had decided to overrule
Sabhajit Tewary [Sabhajit Tewary v. Union of India,
(1975) 1 SCC 485 : 1975 SCC (L&S) 99] while the
remaining 3 learned Judges found no error in that
decision? Would a decision rendered unanimously by a
H
522 SUPREME COURT REPORTS [2022] 15 S.C.R.

A Bench of 5 learned Judges stand overruled by the decision
of 4 learned Judges in a subsequent Bench of 7 learned
Judges? Pradeep Kumar Biswas [Pradeep Kumar
Biswas v. Indian Institute of Chemical Biology, (2002) 5
SCC 111 : 2002 SCC (L&S) 633] presents a rather
anomalous situation which needs to be addressed by
B
appropriate rules of procedure. If this anomaly is
perpetuated then the unanimous decision of 9 learned
Judges in Third Judges case [Special Reference No. 1 of
1998, In re, (1998) 7 SCC 739] can be overruled (as sought
by the learned Attorney General) by 6 learned Judges in a
C Bench of 11 learned Judges, with 5 of them taking a
different view, bringing the total tally of Judges having
one view to 14 and having another view to 6, with the view
of the 6 learned Judges being taken as the law!”
15. It may be pointed out that in the present case, if numbers are
D totted up, the Kothari Products [Kothari Products Ltd. v. State
of A.P., (2000) 9 SCC 263] line, as followed in Radheshyam
Gudakhu Factory [State of Orissa v. Radheshyam Gudakhu
Factory, (2018) 11 SCC 505 : (1988) 68 STC 92 (SC)]
and Reliance Trading Co. [Reliance Trading Co. v. State of
E Kerala, (2011) 15 SCC 762], will go to a Bench strength,
numerically speaking, of eight learned Judges, as against the Agra
Belting Works [CST v. Agra Belting Works, (1987) 3 SCC 140
: 1987 SCC (Tax) 233] line, which goes up to a numerical strength
of six learned Judges. If the dissenting judgment of B.C. Ray, J. is
to be added to the Kothari Products [Kothari Products Ltd. v.
F State of A.P., (2000) 9 SCC 263] line, then we have a numerical
strength of 9:6. The question of numerical strength gains poignancy
when one judgment is overruled by another, as has been pointed
by Beaumont, C.J. in Ningappa Ramappa Kurbar [Ningappa
Ramappa Kurbar v. Emperor, 1941 SCC OnLine Bom 41 : AIR
G 1941 Bom 408], and by Lokur, J. in Supreme Court Advocates-
on-Record Assn. [Supreme Court Advocates-on-Record Assn.
v. Union of India, (2016) 5 SCC 1]”
4. The two-Judge Bench, referred to the Constitution Bench, the
following questions:
H
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 523
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE) [INDIRA BANERJEE, J.]
i) Whether the Kothari Products Ltd. v. State of A.P.4 line A
of judgments or the Central Sales Tax vs. Agra Belting
Work5, line of judgments is correct in law; and
ii) What should be the proper guidelines for the future for
overruling an earlier decision of this Court, and to what
extent should the Courts be guided by the propositions in B
Ningappa Ramappa Kurbar v. Emperor 6 , the
observations of Lokur, J. in Supreme Court Advocates-
on-Record Assn. v Union of India7 and the judgment of
the Court of Appeal in Harper v. National Coal Board8.
5. The ADE Act has been enacted to provide for the levy and
collection of additional duties of excise in respect of certain goods, over C
and above the duties of excise levied under the Central Excise Act 1944.
The Statement of Objects of the ADE Act reads:-
“The object of the Bill is to impose additional duties of
excise in replacement of the sales taxes levied by the Union
and States on sugar, tobacco and mill-made textiles and to D
distribute the net proceeds of these taxes, except the proceeds
attributable to Union Territories, to the States. The distribution
of the proceeds of the additional duties broadly follows the
pattern recommended by the Second Finance Commission.
Provision has been made that the States which levy a tax on the
E
sale or purchase of these commodities after 1.4.1958 do not
participate in the distribution of the net proceeds. Provision is
also being made in the Bill for including these three goods in
the category of goods declared 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 F
levied by any State are subject from 1.4.1958 to the restrictions
in Section 15 of the Central Sales Tax Act, 1956.”
6. In Mahalakshmi Oil Mills v. State of A.P.9, this Court, held:-
“5 .. In short, the object of the Act was to substitute
additional duties of excise in place of sales tax so far as G
4
(2000) 9 SCC 263
5
(1987) 3 SCC 140
6
1941 SCC Online Bom 41 : Air m1941 Bom 408
7
(2016) 5 SCC 1
8
[1974] QB 614
9
(1989) 1 SCC 164 H
524 SUPREME COURT REPORTS [2022] 15 S.C.R.

A these goods were concerned. Since the State legislatures were
at liberty, if they wished, to levy taxes on the sale or purchase
of these commodities, the Act provided that the additional
excise duties will be distributed only among such States as
did not levy a tax on the sale or purchase of these
commodities. Also, by including these goods in the category
B
of goods declared to be of special importance in inter-State
trade or commerce, the legislation ensured that, if any State
levied sales tax in respect of these commodities, such levy
was subject to the restrictions contained in the Central Sales
Tax Act, 1956.”
C
7. It is well settled that once goods are chargeable under the
ADE Act, the State cannot levy sales tax on the same goods under a
State enactment. In Godfrey Phillips India Ltd. v. State of U.P10., this
Court held:-

D “70. 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 Article
286 read with Sections 14 ad 15 of the Central Sales Tax Act,
1956 and most importantly the ADE Act of 1957 under which
no sales tax can be levied on tobacco at all if the State was to
E take the benefits under that Act.”
8. In Kothari Products Ltd. (supra), the question was, ‘tobacco’
being specified in the First Schedule to the ADE Act, and exempted
from Sales Tax under Section 8 of the Andhra Pradesh General Sales
Tax Act 1957, whether ‘gutka’ could be taxed by the State of Andhra
F Pradesh. The Court found that “gutka” being tobacco, covered by an
Entry in the First Schedule to the ADE Act and liable to be taxed under
the ADE Act, it was covered by the exemption in Section 8 of the Andhra
Pradesh General Sales Tax Act . The State Act could not have been
amended to tax “gutka”.
G 9. There is a line of decisions of this Court, taking the same view
as Kothari Products Ltd. (supra) and holding that items covered by
the expression ‘tobacco’ and other items included in the First Schedule
to the ADE Act are not taxable by the State.

10
H (2005) 2 SCC 515
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 525
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE) [INDIRA BANERJEE, J.]
10. In the State of Orrisa vs. Radhey Shyam Gudakhu A
Factory 11, the issue was whether Gudakhu was covered by the
expression ‘tobacco’ as defined in Section 2(c) of ADE Act. Following
the decision of the Calcutta High Court in Gulabchand Harekchand v.
State of West Bengal12, this Court held that Gudakhu is a product of
‘tobacco’ and hence, a product which falls within the exemption covered
B
by S. No. 35 of the Schedule to the Orissa Sales Tax Act 1947.
11. In Reliance Trading Company, Kerala v. State of Kerala13,
this Court took the view that cotton based tarpaulin was exempted from
Sales Tax under the Kerala General Sales Tax Act, 1963, since it was
exigible to Additional Excise Duty under the First Schedule of the ADE
Act. C

12. In Agra Belting Works (supra), the question was whether
any class of goods – cotton fabrics of all kinds, to be specific, exempted
from Sales Tax Act under section 4 of the Uttar Pradesh Sales Tax Act,
1948, would be exigible to Sales Tax by virtue of a subsequent Notification
under Section 3-A of the said Act, specifying the rate of sales tax in D
respect of an item of the class of goods exempted under Section 4,
without withdrawing the earlier Notification under Section 4. While the
majority held that a Notification of recall of exemption was not a condition
precedent for imposition of tax, by a valid Notification under Section 3-
A, B.C.Ray, J. dissented with the view of the majority. E
13. In Agra Belting Works (supra),the majority of the three-
Judge Bench of this Court, by ratio of 2:1, inter alia, held:-
“6. As has been pointed out above, Section 3 is the charging
provision; Section 3-A authorises variation of the rate of tax
and Section 4 provides for exemption from tax. All the three F
sections are parts of the taxing scheme incorporated in the
Act and the power both under Section 3-A as also under
Section 4 is exercisable by the State Government only. When
after a notification under Section 4 granting exemption from
liability, a subsequent notification under Section 3-A G
prescribes the rate of tax, it is beyond doubt that the intention
is to withdraw the exemption and make the sale liable to tax

11
(2018) 11 SCC 505
12
1984 SCC Online Cal 274
13
(2011) 15 SCC 762 H
526 SUPREME COURT REPORTS [2022] 15 S.C.R.

A at the rate prescribed in the notification. As the power both
for the grant of exemption and the variation of the rate of tax
vests in the State Government and it is not the requirement of
the statute that a notification of recall of exemption is a
condition precedent to imposing tax at any prescribed rate
by a valid notification under Section 3-A, we see no force in
B
the contention of the assessee which has been upheld by the
High Court. In fact, the second notification can easily be
treated as a combined notification — both for withdrawal of
exemption and also for providing higher tax. When power
for both the operations vests in the State and the intention to
C levy the tax is clear we see no justification for not giving
effect to the second notification. We would like to point out
that the exemption was in regard to a class of goods and while
the exemption continues, a specific item has now been notified
under Section 3-A of the Act.”
D 14. B.C. Ray, J. dissenting with the majority view, held:-
“14. The next question for consideration is what is the effect
of a notification under Section 3-A including an item in the
Schedule for imposition of sales tax though there is a general
exemption from sales tax under Section 4 of the Sales Tax
E Act.
…
15. A similar question also arose in the case of CST v. Rita
Ice Cream Co., Gorakhpur [1981 UPTC 1239 (DB)(All HC)]
and it was held that so long as the general exemption under
F Section 4 continues a particular item notified under Section
3-A of Sales Tax Act cannot be taxed.
16. On a conspectus of all these decisions aforesaid, the only
irresistible inference follows that so long as the general
exemption granted under Section 4 with regard to cotton
G fabrics of all kinds continues no sales tax can be imposed on
beltings of all kinds which fall within the cotton fabrics of all
kinds and the general exemption under Section 4 will prevail
over the notification made under Section 3-A of the Sales Tax
Act. I am unable to subscribe to the view that since the
notification under Section 3-A of the U.P. Sales Tax Act has
H
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 527
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE) [INDIRA BANERJEE, J.]
been made subsequent to the notification issued under Section A
4 of the said Act, the subsequent notification under Section
3-A will prevail over the general exemption granted under
Section 4 of the said Act. In my considered opinion the
reasonings and conclusions arrived at by the High Court are
unexceptionable.”
B
15. In Sales Tax Officer, Sector-IX, Kanpur vs. Dealing Dairy
Products and Anr.14, a two Judge Bench of this Court followed the
majority decision in Agra Belting Works (supra), and held that, even
though the State of Uttar Pradesh had been issuing notifications under
Section 4 of the U.P. Sales Tax Act 1948, exempting milk and milk
products from levy of sales tax, a later notification under Section 3-A C
notifying the rate of tax on ice-cream amongst other items, withdrew
the exemption in respect of all kinds of ice-cream and made the sale of
ice-cream exigible to sales tax at the rate specified in the Notification
under Section 3A.
16. In State of Bihar and Others v. Krishna Kumar Kabra and D
Another15, a two Judge Bench of this Court referred to and followed
Agra Belting Works (supra)and Dealing Dairy Products (supra)
and held that Sections 3-A and 4 of the U.P. Sales Tax Act were parts of
a taxing scheme incorporated in that Act and therefore, where the
notification was issued under Section 3-A prescribing the rate of tax on E
goods, which had been exempted from tax under Section 4, by an earlier
notification, it had to be held that the later notification was intended to
withdraw the exemption and make the sale leviable to tax at the rate
prescribed in the later notification.
17. In our considered opinion there is no conflict between the F
Kothari Products (supra) line of cases and the Agra Belting line of
cases. The Kothari Products (supra) line of cases was on the question
of whether “tobacco” or other goods specified in the First Schedule to
the ADE Act and hence exempted from Sales Tax under State sales tax
enactments, can be made exigible to tax under the State enactments by
amending the Schedule thereto. On the other hand, Agra Belting Works G
(supra) line of cases was on the question of interplay between general
exemption of specified goods from sales tax under Section 4 of the U.P.

14
(1994) Supp. 2 SCC 639
15
(1997) 9 SCC 763 H
528 SUPREME COURT REPORTS [2022] 15 S.C.R.

A Sales Tax Act and specification of rates of sales tax under Section 3-A
of the said Act. This Court held that goods exempted from sales tax
under Section 4 would be exigible to tax by virtue of subsequent notification
under Section 3-A specifying the rate of sales tax for any specific item
of the class of goods earlier exempted under Section 4. There being no
conflict, the reference to Constitution Bench is incompetent. The cases
B
may be placed for decision before the regular Bench.
18. The second question is answered by the judgment of the
Constitution Bench of this Court in Dr. Jaishri Laxmanrao Patil v.
The Chief Minister and Others.16. The Constitution Bench speaking
through Bhat, J. held:-
C
“10. A careful reading of the judgments in Indra
Sawhney v. Union of India [Indra Sawhney v. Union of India,
1992 Supp (3) SCC 217 : 1992 SCC (L&S) Supp 1] , clarifies
that seven out of nine Judges concurred that there exists a
quantitative limit on reservation—spelt out at 50%. In the
D opinion of four Judges, therefore, per the judgment of B.P.
Jeevan Reddy, J., this limit could be exceeded under
extraordinary circumstances and in conditions for which
separate justification has to be forthcoming by the State or
the agency concerned. However, there is unanimity in the
E conclusion by all seven Judges that an outer limit for
reservation should be 50%. Undoubtedly, the other two
Judges, Ratnavel Pandian and P.B. Sawant, JJ. indicated that
there is no general rule of 50% limit on reservation. In these
circumstances, given the general common agreement about
the existence of an outer limit i.e. 50%, the petitioner’s
F argument about the incoherence or uncertainty about the
existence of the rule or that there were contrary observations
with respect to absence of any ceiling limit in other judgments
(the dissenting judgments of K. Subba Rao, in T.
Devadasan v. Union of India [T. Devadasan v. Union of India,
G (1964) 4 SCR 680 : AIR 1964 SC 179] , the judgments of
S.M. Fazal Ali and Krishna Iyer, JJ. in State of Kerala v. N.M.
Thomas [State of Kerala v. N.M. Thomas, (1976) 2 SCC 310 :
1976 SCC (L&S) 227] and the judgment of Chinnappa Reddy,
J. in K.C. Vasanth Kumar v. State of Karnataka [K.C. Vasanth

H 16
(2021) 8 SCC 1
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 529
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE) [INDIRA BANERJEE, J.]
Kumar v. State of Karnataka, 1985 Supp SCC 714 : 1985 A
Supp (1) SCR 352] ) is not an argument compelling a review
or reconsideration of Indra Sawhney [Indra Sawhney v.
Union of India, 1992 Supp (3) SCC 217 : 1992 SCC (L&S)
Supp 1] rule.
11. The respondents had urged that discordant voices in B
different subjects (Devadasan [T. Devadasan v. Union of
India, (1964) 4 SCR 680 : AIR 1964 SC 179] , N.M.
Thomas [State of Kerala v. N.M. Thomas, (1976) 2 SCC 310
: 1976 SCC (L&S) 227] and Indra Sawhney [Indra Sawhney
v. Union of India, 1992 Supp (3) SCC 217 : 1992 SCC (L&S)
Supp 1] ) should lead to re-examination of the ratio in Indra C
Sawhney [Indra Sawhney v. Union of India, 1992 Supp (3)
SCC 217 : 1992 SCC (L&S) Supp 1]. It would be useful to
notice that unanimity in a given Bench (termed as a “super
majority”) — denoting a 5 : 0 unanimous decision in a
Constitution Bench cannot be construed as per se a strong or
D
compelling reason to doubt the legitimacy of a larger Bench
ruling that might contain a narrow majority (say, for instance
with a 4 : 3 vote, resulting in overruling of a previous
unanimous precedent). The principle of stare decisis operates
both vertically — in the sense that decisions of appellate courts
in the superior in vertical hierarchy, bind tribunals and courts E
lower in the hierarchy, and horizontally — in the sense that a
larger Bench formation ruling, would be binding and prevail
upon the ruling of a smaller Bench formation. The logic in
this stems from the raison d’être for the doctrine of precedents
i.e. stability in the law. If this rule were to be departed from
and the legitimacy of a subsequent larger Bench ruling were F
to be doubted on the ground that it comprises of either
plurality of opinions or a narrow majority as compared with
a previous Bench ruling (which might be either unanimous or
of a larger majority, but of lower Bench strength), there would
be uncertainty and lack of clarity in the realm of precedential G
certainty. If precedential legitimacy of a larger Bench ruling
were thus to be doubted, there are no rules to guide the courts’
hierarchy or even later Benches of the same court about which
is the appropriate reading to be adopted (such as for instance,
the number of previous judgments to be considered for
determining the majority, and consequently the correct law). H
530 SUPREME COURT REPORTS [2022] 15 S.C.R.

A 12. In view of the above reasoning, it is held that the existence
of a plurality of opinions or discordant or dissident judgments
in the past — which might even have led to a majority (on an
overall headcount) supporting a particular rule in a
particular case cannot detract from the legitimacy of a rule
enunciated by a later, larger Bench, such as the nine-Judge
B
Bench ruling in Indra Sawhney [Indra Sawhney v. Union of
India, 1992 Supp (3) SCC 217 : 1992 SCC (L&S) Supp 1] .”
19. The view of Bhat, J. was expressly concurred by Rao, J.
(Para 196) and Gupta, J. (Para 227). There was no dissent to the view.
In view of Article 145(5) of the Constitution of India concurrence of a
C majority of the judges at the hearing will be considered as a judgment or
opinion of the Court. It is settled that the majority decision of a Bench of
larger strength would prevail over the decision of a Bench of lesser
strength, irrespective of the number of Judges constituting the majority.
20. In view of the five-Judge Bench decision in Dr. Jaishri
D Laxman Rao (supra), it is not necessary for this Court to answer the
question.

HEMANT GUPTA, J.
E A. I entirely agree with the judgment authored by Hon. Indira
Banerjee J. However, in respect of Question No.2, I would like to
supplement the opinion expressed.
B. Mr. Gopal Sankaranarayanan, learned Senior Advocate
referred to Article 145(5) of the Constitution to contend that a judgment
F of this Court is mandated to be delivered with the concurrence of a
majority of the Judges present at the hearing of the case, but nothing in
this clause shall be deemed to prevent a Judge who does not concur
from delivering a dissenting judgment or opinion. Thus, the Constitution
itself envisaged that the judgment is by the majority of the Judges.
G C. A reference was made to insertion of Article 144A in the
Constitution by the 42nd Amendment with effect from 01.02.1977. The
amendment reads thus:
“144-A. Special provisions as to disposal of questions relating to
constitutional validity of laws – (1) The minimum number of Judges
H of the Supreme Court who shall sit for the purpose of determining
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 531
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE) [HEMANT GUPTA, J.]
any question as to the constitutional validity of any Central law or A
State law shall be seven.
A. A Central law or a State law shall not be declared to be
constitutionally invalid by the Supreme Court unless a majority of
not less than two-thirds of the Judges sitting for the purpose of
determining the question as to the constitutional validity of such B
law hold it to be constitutionally invalid.”
D. The said amendment was undone by 43rd Amendment when
Article 144-A was omitted with effect on and from 01.02.1977. Though
the said insertion of Article 144-A stands repealed, but it shows that the
legislature also considered majority of not less than 2/3rd of Judges should C
determine the question as to the constitutional validity of law. Therefore,
even such amendment contemplated dissent and a minority view.
E. A similar question has been examined by a Full Bench of the
High Court of Gujarat in a judgment reported as State of Gujarat v
Gordhandas Keshavji Gandhi and Ors.17. The Court was considering D
the binding nature of the judgments of the Bombay High Court in the
successor Gujarat High Court but an ancillary question was considered
in respect of numerical strength of the Bench as well. Though there is
divergence of opinion amongst the judges of the Court, but the minority
view was relevant for the second question arising for consideration. The
minority view is expressed by N.M. Miabhoy J and P.N.Bhagwati J. We E
are in agreement with the said view. The order passed by learned Hon’ble
Mr. Justice N.M. Miabhoy J reads thus:
“44. ……………The principles which guided the latter Court in
the matter of judicial precedents have been set out by that Court
in (1944) 1 KB 718. All Division Benches considered themselves F
to be bound by the judicial precedents created by Full Benches
not only on the ground of judicial comity but also on the ground
that a Full Bench consisted of more number of Judges than a
Division Bench. If a judicial precedent created by a Full Bench
required to be reconsidered, then, the usual practice was to refer G
the matter to a Full Bench consisting of more number of Judges
than the number which constituted the former Full Bench whose
decision was sought to be revised. The practice was to regard the
precedent of a larger Full Bench as having greater efficacy and
17
AIR 1962 Guj 128 H
532 SUPREME COURT REPORTS [2022] 15 S.C.R.

A binding authority than the precedent of a Full Bench consisting of
a smaller number of Judges. This practice was criticised by
Beaumont, C.J. in 43 Bom LR 864 at p. 868 : (AIR 1941 Bom
408 at p. 409). It is not necessary to express any opinion in this
case as to whether this criticism was or was not justified. However,
the observations made by the learned Chief Justice in the above
B
case ignores the important fact that, when a Full Bench consists
of a larger number of Judges, then, the decision is not merely
of a greater number of Judges, but it is one arising from out
of the joint deliberations and discussions of a greater number
of Judges and that this fact may give to the decision of a Full
C Bench consisting of a larger number of Judges a greater binding
authority than that of a Full Bench consisting of a smaller number
of Judges…………….. In view of the observations made by Their
Lordships of the Supreme Court in the aforesaid two cases18, the
view that should prevail in India is the view-that the decision of a
larger Full Bench should be followed in preference to the decision
D
of a smaller Full Bench.
xxx xxx xxx
The order passed by learned Hon’ble Mr. Justice P. N. Bhagwatireads
thus:-
E xxx xxx xxx
117. ……………………Is the subsequent Full Bench of the High
Court bound to follow the decision of the previous Full Bench of
the High Court, though the previous Full Bench consisted of a
lesser number of Judges than the subsequent Full Bench? The
F question ultimately resolves itself into a narrow one, namely, how
far the principle of superiority of numerical strength should be
carried. If the principle of superiority of numerical strength is applied
to Full Benches of the High Court whatever be the numerical
strength of the Judges constituting the Full Benches, a Full Bench
G of four Judges would be able to override the previous decision of
a Full Bench of three Judges, a Full Bench of five Judges would
be able to override the previous decision of a Full Bench of four
Judges and so on and so forth. Beaumont, C.J., expressed a doubt
18
(1) AIR 1960 SC 936
H (2) AIR 1960 SC 1118
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 533
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE) [HEMANT GUPTA, J.]
as regards the correctness of this position in 43 Bom LR 864 : A
(AIR 1941 Bom 408) in the following terms:—
“……Apparently it was considered that five Judges by a
majority of four to one, could overrule a unanimous decision of
four Judges, the net result being that the opinion of four Judges
prevailed over the opinion of five Judges of co-ordinate B
jurisdiction. There seems to be very little authority on the powers
and constitution of a Full Bench.-There can be no doubt that a
Full Bench can overrule a Division Bench, and that a Full Bench
must consist of three or more Judges; but it would seem
anomalous to hold that a later Full Bench can Overrule an
earlier Full Bench, merely because the later bench consists of C
more Judges than the earlier. If that were the rule, it would
mean that a Bench of seven Judges, by a majority of four to
three, could overrule a unanimous decision of a Bench of six
Judges, though all the Judges were of co-ordinate jurisdiction.”
.......................... It was the anomaly of this situation which D
prompted Beaumont, C.J., to make the aforesaid observations.
This anomaly is, however, inherent in the principle of
superiority of numerical strength and should not stand in the
way of acceptance of that principle in its application to Full
Benches of the High Court. The same anomaly also arises when E
four or five Judges of the High Court, each sitting singly take one
view of the law on a particular point while a Division Bench
consisting of two Judges takes a different view or when three or
four Division Benches, each consisting of two Judges, take one
view on a point of law while a Full Bench of three Judges takes a
different view. The opinion of two Judges prevails over the opinion F
of four or five Judges in the former case while in the latter case
the opinion of three Judges prevails over the opinion of eight or
ten Judges, though all the Judges are of co-ordinate jurisdiction.
This anomaly cannot, therefore, be a valid argument against the
application of the principle of superiority of numerical strength G
amongst Full Benches of the High Court. The principle of
superiority of numerical strength is a principle which, as I have
already pointed out above, imparts flexibility to the law and provides
an easy machinery within the framework of the High Court itself
for correction of erroneous decisions which would otherwise stand
H
534 SUPREME COURT REPORTS [2022] 15 S.C.R.

A inviolate, immune from challenge except on appeal to the Supreme
Court.” (Emphasis Supplied)
F. It may be mentioned that a Constitution Bench of this Court in
a judgment reported as Central Board of Dawoodi Bohra Community
and Anr. v. State of Maharashtra and Anr.19 quoted from the earlier
B Constitution Bench judgment in Union of India and Anr. v. Raghubir
Singh (Dead) By Lrs. Etc.20 and held as under:
“10. Reference was also made to the doctrine of stare decisis.
His Lordship observed by referring to Sher Singh v. State of
Punjab [(1983) 2 SCC 344 : 1983 SCC (Cri) 461] that although
C the Court sits in divisions of two and three Judges for the sake of
convenience but it would be inappropriate if a Division Bench of
two Judges starts overruling the decisions of Division Benches of
three. To do so would be detrimental not only to the rule of
discipline and the doctrine of binding precedents but it will also
lead to inconsistency in decisions on points of law; consistency
D and certainty in the development of law and its contemporary
status — both would be immediate casualty.
xxx xxx
12. Having carefully considered the submissions made by the
E learned Senior Counsel for the parties and having examined the
law laid down by the Constitution Benches in the abovesaid
decisions, we would like to sum up the legal position in the following
terms:
(1) The law laid down by this Court in a decision delivered by a
F Bench of larger strength is binding on any subsequent Bench of
lesser or coequal strength.
(2) A Bench of lesser quorum cannot disagree or dissent from the
view of the law taken by a Bench of larger quorum. In case of
doubt all that the Bench of lesser quorum can do is to invite the
attention of the Chief Justice and request for the matter being
G
placed for hearing before a Bench of larger quorum than the Bench
whose decision has come up for consideration. It will be open
only for a Bench of coequal strength to express an opinion doubting

19
(2005) 2 SCC 673
20
H (1989) 2 SCC 754
M/S TRIMURTHI FRAGRANCES (P) LTD. THROUGH ITS DIR. SHRI 535
PRADEEP KUMAR AGRAWAL v. GOVT. OF N.C.T. OF DELHI THROUGH
ITS PRINCIPAL SECRETARY (FINANCE) [HEMANT GUPTA, J.]
the correctness of the view taken by the earlier Bench of coequal A
strength, whereupon the matter may be placed for hearing before
a Bench consisting of a quorum larger than the one which
pronounced the decision laying down the law the correctness of
which is doubted.
(3)...........................” B
G. The conclusion (1) is that a decision delivered by a Bench of
largest strength is binding on any subsequent Bench of lesser or coequal
strength. It is the strength of the Bench and not number of Judges who
have taken a particular view which is said to be relevant. However,
conclusion (2) makes it absolutely clear that a Bench of lesser quorum C
cannot disagree or dissent from the view of law taken by a Bench of
larger quorum. Quorum means the bench strength which was hearing
the matter.
H. Thus, it has been rightly concluded that the numerical strength
of the Judges taking a particular view is not relevant, but the Bench D
strength is determinative of the binding nature of the Judgment.

Divya Pandey Reference disposed of.
(Assisted by : Deepak Panwar, LCRA)

E

F

G

H