Full Judgment Text
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PETITIONER:
M/S. R. M. D. C. (MYSORE) PRIVATE LTD.
Vs.
RESPONDENT:
THE STATE OF MYSORE
DATE OF JUDGMENT:
08/08/1961
BENCH:
ACT:
Prize Competitions--State enactment for control and tax on
such competitions--Central enactment for control and
regulation of such competitions, adopted by
State--Subsequent amendment of State enactment by State
Legislature--Constitutional validity--Mysore Lotteries and
Prize Competitions Control and Tax Act, 1951 (Mysore 27 of
1951), as amended by Act 26 of 1957, ss. 8, 12(1) (b), 15
Proviso--Prize Competitions Act, 1955 (42 of 1955), ss. 4,5
-Constitution of India, Arts. 252, 254, Seventh Schedule,
List II, entries 34, 62.
HEADNOTE:
The Mysore Lotteries and Prize Competitions Control and Tax
Act, 1951, was passed by the Mysore Legislature arid came
into force on February 1, 1952. Some of the States
comprising the Union of India passed resolutions under Art.
252(1) of the Constitution of India authorising Parliament
to legislate for the control and regulation of Prize
Competitions, and in pursuance thereof Parliament passed the
Prize Competitions Act, 1955, which came into force on April
1, 1956, On February 23, 1956, the Mysore Legislature
adopted the said Act by passing a resolution under Art.
252(1) that "for the purpose of securing uniformity in
legislation ... the control and regulation of Prize
Competitions and all other matters ancillary thereto should
be regulated in the State of Mysore by the Prize Com-
petitions Act, 1955". The appellants who were conducting
prize competitions in the State of Mysore since 1948 filed a
petition under Art. 32 of the Constitution challenging the
constitutional validity of the Act, and obtained a stay of
the operation of the Act pending disposal of the petition.
The judgment of the Supreme Court dismissing the petition
was given on April 9, 1957, and on August 31, 1957, an
Ordinance was issued, which later was enacted into an Act,
Mysore Act 26 of 1957, by which the Mysore Act of 1951 was
amended under which, inter alia, all prize competitions
conducted between March 31, 1956, and August 31, 1957, were
brought within the purview of the amended Act. As a result
of this, the prize competitions which, as a result of the
stay of the operation of the Central Act of 1955, were
conducted by the appellants for the said period became
liable for taxation. The appellants challenged the
constitutional validity of the amendment on the grounds that
(1) the Mysore Legislature by adopting the Central Act was
no longer competent to pass any law in regard to prize
competitions because the whole matter
231
including the power of taxation was surrendered in favour of
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Parliament; (2) even if the whole power had not been surren-
dered the impugned Act i.e., the Mysore Act as amended
violated Art. 252(2) inasmuch as it indirectly amended the
Central Act by adding a new method of control by imposition
of penalties of a monetary nature; (3) the Mysore
Legislature could not amend an Act which stood repealed as a
result of the enactment of the Central Act; (4) the Mysore
Act as amended was repugnant to the Central Act and was,
therefore, to the extent of repugnancy, void under Art.
254(1) of the Constitution; and (5) it was colourable
legislation inasmuch as the tax was imposed on the prize
competitions with the object of controlling them.
Held: (1) that by the adoption of the words "control and
regulation of prize competitions and all other matters
ancillary thereto" in the resolution dated February 23,
1956, the Mysore Legislature did not surrender every matter
and power connected with prize competitions including the
power to tax:
B.R.M.D. Chamarbaugwala v. The Union of India, (1957) S.C.R.
930, relied on.
(2) that the subject of "betting and gambling" in entry 34
of List II of the Seventh Schedule to the Constitution of
India and that of II taxes on betting and gambling" in entry
62 of List II have to be read separately as separate powers,
and, therefore, when control and regulation of prize
competitions was surrendered to Parliament by the resolution
dated February 23, 1956, the power to tax could not be said
to have been surrendered;
In re The Central Province8 & Berar Art No. XIV of 1938,
(1939) F.C.R. 18 and State of Bombay v. B.M.D. Chamarbaug-
wala, (1957) S.C.R. 874, relied on.
(3) that the tax imposed under the Mysore Lotteries and
Prize Competitions Control and Tax Act, 1951, was not by way
of penalty but was in the exercise of the power which the
State Legislature possessed of imposing tax under entry 62,
and, consequently, the amendment of the Mysore Act of 1951
could not be said to be a new method of controlling prize
competitions nor was it a piece of colourable legislation.
K. C. Gajapati Narayan Deo v. The State of Orissa, (1954)
S.C.R. 1, relied on.
(4) that the Prize Competitions Act, 1955, dealt with
"betting and gambling" in entry 34, whereas the taxing
sections of the Mysore Act related to "tax on betting and
gambling" under entry 62 and, therefore, Art. 252(2) was not
contravened by the amendment of the Mysore Act,
232
State of Bombay v. R.M.D. Chamarbaugwala, (1957) S.C.R.
874,relied on.
(5) that there was no amendment of the Mysore Act which
stood repealed nor was the retroactive operation of the
remending Act affected by Art. 254(1) of the Constitution.
Deep Chand v. The State of Uttar Pradesh and others (1959)
Supp. 2 S.C.R. 8, relied on.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 517 of 1960.
Appeal from the Judgment and order dated November 20, 1958,
of the Mysore High Court in Civil Writ Petition No. 234 of
1957.
Porus A. Mehta, J. R. Gagrat and
G. Gopalakrishnan, for the appellants.
N. C. Chatterjee, G. Channappa, R. Gopalakrishnan and T.
M. Sen, for the respondent.
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1961. August 8. The Judgement of the Court was delivered by
KAPUR, J. This is an appeal against the judgment and order
of the High Court of Mysore dismissing the petition of the
appellants made under Art. 226 of the Constitution. The
appellants. were conducting since the month of August 1948,
what were called "prize competitions" in the State of Mysore
with the permission of the Government of the erstwhile State
of Mysore. An Act called the Mysore Lotteries and Prize
Competitions Control and Tax Act, 1951 (Act 27 of 1951),
hereinafter called the "Mysore Act" was passed by the Mysore
Legislature and came into force as from June 21, 1951. The
Rules made thereunder came, into force on February 1, 1952.
Previous to that the Bombay Legislature had passed a similar
Act called the Bombay Lotteries and Prize Competitions
Control and Tax Act, 1948, which was amended in November
1952. by the Bombay Act 30 of 1952. In December 1952 and
January 1953 petitions under Art. 226 were filed in the High
Court of Bombay challenging the Bombay Act. On January 12,
1955
233
the Bombay High Court held that the provisions of the Bombay
Amendment Act above referred to were unconstitutional and
that the taxes imposed under the provisions of that Act were
hit by Art. 301 of the Constitution. The result of that
judgment was that though prize competitions could be
controlled by the States within their respective borders,
their ramifications beyond those borders could only be dealt
with by action under Art. 252(1) of the Constitution. It
was for that reason that the States of Andhra, Bombay,
Madras U. P., Hyderabad, Madhya, Bharat, Pepsu and
Saurashtra passed resolutions under Art. 252(1) of the
Constitution authorising Parliament to legislate for the
control and regulation of prize competition% and in
pursuance thereof Parliament passed the Prize Competitions
Act (Act 42 of 1955) hereinafter called the "Central Act"
which Received the assent of the President on October 22,
1955, and came into force on April 1, 1956. On February 24,
1956, the Mysore Legislature passed a, resolution adopting
the said Act. The resolutions passed by the various States
and the resolution passed by the Mysore Legislature will be
quoted in a later part of this judgment.
On April 7, 1956, the appellants filed a petition under Art.
32 of the Constitution in the Supreme Court challenging the
validity of the Central Act but that petition was dismissed
and is reported as R.M.D.C. Chamarbaugwala v. The Union of
India (1). The appeal against the Bombay judgment declaring
the Bombay Act to be unconstitutional was brought in this
court and, was allowed and that case is reported as State of
Bombay v. R. M. D. Chamarbaugwala (2) . During the pendency
of their petition under Art. 32 the appellants applied for
and wore granted a stay of the operation of the Central Act
pending the disposal of the said writ petition. This was on
April; 16, 1956. The judgment of the Supreme Court in that
petition was given. on April 9, 1957. On August 31, 1957,
the
(1) [1957] S.C.R. 930, 939.
(2) [1957] S.C.R. 874, 929.
234
Mysore Lotteries & Prize Competitions Control and Tax
(Amendment) Ordinance, 1957 (Ord. 6 of 1957) was issued by
the Governor of Mysore and thus for the period of about 16
months the appellants carried on prize competitions as
before.
The Ordinance was enacted into an Act on September 28, 1957,
which is Mysore Act 26 of 1957. Certain amendments were
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made by this in the Mysore Act as originally passed in 1951.
As a result of this amendment the definition of prize
competition was amended the definition as given in the
Central Act was adopted and ss. 8 & 9 of the Mysore Act.
were omitted with retrospective effect from April 1, 1956;
cl.(b) of sub-s. (1) of s.12 was amended and certain words
referring to licences under s.8 were retrospectively omitted
and retrospective effect was given to the Mysore Act as
amended. By adding a proviso to s.15 of the Mysore Act all
’prize competitions conducted between March 31,1956, and
August 31 1957, were brought within the purview of the
amended Act. Thus the prize competitions which as a result
of the stay of the operation of the Central Act were
conducted by the appellants became subject to the operation
of the Mysore Act as amended. The appellants on September
10, 1957, were called upon to file their returns but at
their request for extension of time, they were given another
15 days in which to file their return. They filed their
return but under protest. The gross collections were of a
sum of Rs. 26,47,147-5-9 and on that the appellants were
"called open to pay up provisionally" a sum of Rs. 3,30,893-
7-0. As the money was not paid within the time specified
proceedings were taken under s. 6 (1) of the Revenue
Recovery Act, 1890 (Central Act 1 of 1890), and certain
properties moveable and immoveable were attached ’and one of
the properties was sold and the price so realised was
deposited in the Government treasury.
The Mysore amending Act was challenged in the High Court of
Mysore by a petition under Art, 226 which was dismissed on
November 20, 1958
235
and against that judgment and order this appeal has been
brought pursuant to a certificate of the, High Court under
Art. 132 (1) of the Constitution. The Certificate was
confined to the interpretation of Art. 252 of the
Constitution. The respondent in the present appeal is the
State of Mysore.
The challenge to the constitutionality of the Mysore Act was
on the ground that (1) the Mysore Legislature by. adopting
the Central Act was no longer competent to pass any law in
regard to prize, competitions because the whole matter
including the power of taxation was surrendered in favour of
Parliament. (2) Even if the whole power had not been
surrendered the impugned Act i.e. the, Mysore Act as amended
violated Art.252(2) of the Constitution inasmuch as it
indirectly amends the Central Act by adding a new method of
control by imposition of penalties of a monetary nature. (3)
The Mysore Legislature could not amend an Act which stood
repealed as a result of the enactment of the Central Act.
(4) The Mysore Act as amended was repugnant to the Central
Act and is therefore, to the extent of repugnancy, void
under Art. 254 (1) of the Constitution and (5) it was color-
able legislation in as much as the tax was imposed on the
prize competitions with the object of controlling them.
Certain other questions relating to the legality of the
imposition of the tax and the proceedings for the recovery
of the tax were also raised but on all these points the High
Court found against the appellants
The first question, raised before us is the effect of the;
resolution passed by the, legislatures of the States above
mentioned and of the resolution passed by the Mysore
legislature adopting,the central Act. The resolution Passed
by the States was in the following terms.
"This Assembly do resolve that it is desirable
that control and regulation of Prize
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236
Puzzle competitions and all other matters
consequential and incidental thereto insofar
as these matters are matters with respect to
which Parliament has no power to make laws for
the States should be regulated by Parliament
by law."
The two Houses of the Mysore Legislature
passed the following resolution on February
23, 1956 *and February 21, 1956, respectively
:-
Resolution passed by the Mysore Legislative
Assembly on 23rd, February, 1956.
"Whereas for the purpose of securing
uniformity in legislation it is desirable that
the control and regulation of Prize Compe-
titions and all other matters ancillary
thereto should be regulated in the State of
Mysore by the Prize Competitions Act, 1955
(Central Act 42 of 1955) passed by Parliament;
Now, therefore, in pursuance of Clause, (1) of
Article 252 of the Constitution, this Assembly
resolves that the Act aforesaid be adopted by
the State of Mysore."
It was contended that by these resolutions the
legislatures of the various States had
surrendered their power of legislation in
regard to the "control and regulation of prize
puzzle competitions and all other matters
consequential and incidental thereto and had
thus no legislative power left in regard to
that matter including the power to tax.
Article 252 provides
Art. 252(1) "If it appears to the legislature
of two or more, States, to be desirable that
any of the matters with respect to which
Parliament has no power to make laws for the
States except as provided in articles 249 and
250 should be regulated in such States by
Parliament by law, and if resolutions to that
effect are passed by all the Houses of the
legislatures-of those States, it shall be
lawful
237
for Parliament to pass an, Act for regulating
that matter accordingly, and any Act so passed
shall apply to such States and to any other
State by which it is adopted afterwards by
resolution passed in that behalf by the House
or, where them are two Houses, by each of the
Houses of the Legislature of that State.
(2) Any Act so passed by Parliament maybe
amended or repealed by an Act of Parliament
passed or adopted in like manner but shall
not, as respects any State to which it
applies, be amended or repealed by an Act of
the Legislature of that State."
The result of the passing of a, resolution under Art. 952(1)
is that any matter with respect to which Parliament has no
power to enact laws becomes a matter for the regulation of
which Parliament becomes empowered to pass any Act, and such
Act, if passed by the Parliament, becomes applicable to the
States passing the resolution or adopting that Act. Sub-
clause (2) of that Article provides that any such Act may be
amended or repealed by an Act of Parliament in the like
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manner i.e. in the manner provided in cl. (1) and it cannot
be amended or repealed by the Legislature of the State or
States passing the resolution. The question then arises do
the resolutions as passed and particularly the words
"control and regulation of prize puzzle competitions and all
other matters ancillary thereto" surrender the whole subject
of prize competitions to the Central Parliament i.e. every
matter and power connected therewith including the power to
tax. The argument raised was that the language of the
resolutions was wide enough to comprise the legislative
power under entries 34 and 62 of List II the former dealing
with betting and gambling" and the latter with taxation of
luxuries including "betting and gambling". One of the
methods of control and regulations, it was submitted, is by
238
taxation and as the power ; to control, and regulate and all
powers ancillary to the subject were surrendered the power
to ’tax, being included- therein was also surrendered. In
support of this -Argument reliance was placed on. certain
judgments of the American Supreme Court. The first case
relied upon was.Rudolph Helen V. United States (1). In that
ease the question was about the jurisdiction of the United
States District Court which, depended upon the nature-. of
-the, imposition of -an, additional- duty i.e. whether it
was penalty or’ not. The imposition, was held to be a
penalty as it was not imposed for the purpose of revenue but
was based -upon the particular act of the importer i.e. his
undervaluation of the goods imported ; in other words this
additional sum was a penalty for undervaluation whether
innocently done or not and whether it was called a further
sum or an additional duty ’the amount imposed was not a duty
upon imported article but a penalty and nothing else.
The next case relied upon was J. W. Bailey v. Dexel
Furniture Company (2). That was a case of colorable
exercise, of legislative power. .Under the Child Labour Tax
Law a tax of 10% of the net profits of the year could be
imposed upon an employer and knowingly during any portion of
the taxable period employed children within certain age-
limits irrespective of whether only one child was employed
or several, This was held not to be a valid exercise by
Congress of power of taxation but an unconstitutional
regulation by the use of the tax as a penalty for the
employment of child labour in the States which was
exclusively a State function. That case was one in which
the Congress exercised its. power of regulation by imposing
a tax by way of penalty in,order to prevent the employment
of child...labour and thus by If the exercise of the power
which it possessed i.e. of
(1) (1903)188 U.S.605: 47 L.Ed. 614. (2) (1922)259 U.S.33:
66 L. Ed. 817.
239
taxation it tried to regulate a subject over which it had no
jurisdiction and that really was the matter which was
decided by the American Supreme Court.
The next case relied upon was Gloucester Perry Th (company
v. Commonwealth of Pennsylvania (1). That was a case of
interstate commerce and it was hold that no State could
impose a tax on that portion of interstate commerce which is
involved in the transportation of persons and property what-
ever be the instrumentality by which it is carried on. The
tax there was levied upon receiving and landing of
passengers and freight which was held to be a tax on
transportation i.e., upon commerce. between the two States
involved in such transportation. The following passage in
the judgment of Field, J., at p. 162 was relied upon by
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counsel for the appellants
"The Power to regulate that commerce, as well
as commerce with foreign nations, vested in
Congress is the power to prescribe the rules
by which it shall be governed that is, the
conditions upon which it shall be conducted ;
to determine when it shall be free, and when
subject to duties or other exactions."
But these observations were made in a different context,
i.e., whether the tax could be levied upon transportation
made in ferry boats which passed between States every hour
of the day and as this transportation was within the
commerce clause no tax could be levied by the States.
Reference was next made to certain observations made in the
State of Bombay v. R.M.D. chamarbaugwala (2) which was an
appeal against the judgment of the. Bombay High Court.
Das, C. J., observed at p. 926
"The fact that regulatory provisions have been
enacted to control gambling by issuing
(1) (1885) 114 U.S. 196: 29 L. Ed. 158. (2)
[1957] S.C. R. 874, 929.
240
licences and by imposing taxes does not in any
way alter the nature, of gambling which is
inherently vicious and pernicious."
In that case no question as to the meaning of the word
"control and regulation" arose nor whether those words
included the power ’of taxation. All that the Court was
called upon to decide was whether prize competitions were
trade, commerce or business or were anti-social activities.
It was then argued that it was because of the decision by
the Bombay High ’Court in State of Bombay v. R. M. D.
Chamarbaugwala (1) whereby the tax imposed on prize
competitions was struck down as contravening Art. 304(b),
that the various States combined together and passed the
resolution under Art. 252(1) of the Constitution. The
object of the resolutions, it was submitted, was to get over
the unconstitutionality pointed out by the Bombay High Court
and therefore the resolutions were passed in the language
used therein, i.e., for the control and regulation of prize
competitions which power was transferred and surrendered to
Parliament along with the powers incidental and ancillary
thereto which must include taxation. It was further argued
that as Parliament had failed to impose any tax it implied
that it had refused to do so. In support of this argument
reliance was placed on Sabine Robbins v. Taxing District of
Shelby County, Tennessee (2). It was there held that where
the power of the Legislature is exclusive its failure to
make express regulation indicated its will that the subject
shall be left free from any restriction or imposition. The
pivot of the appellants’ argument is that the words "control
and regulation" and ,’incidental and ancillary thereto"
included power of taxation but this argument is not well
founded. The power in regard to betting and gambling is
contained in entry 34 of the State List which as follows .
Entry 34: "Betting and gambling".
(1) I. L. R. [1955] Bom. 680.
(2) 30 L. Ed. 694.
241
The power of taxation is contained in entry 62 which is as
under
Entry 62 : "Taxes on luxuries including taxes on
entertainments., amusements, betting and gambling."
In the Indian Constitution as it was in the Government of
India Act the power of legislation is distributed between
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the Union and the States and the subjects on which the
respective Legislatures can legislate are enumerated in the
three ’Lists and in the Articles of the Constitution,
provision is made as to what is to happen if there is a
conflict between the Statutes passed by Parliament and the
Legislatures of the States. The peculiar nature of the
Indian Constitution in regard to the enumeration of powers
in the entries in the Lists was emphasised by Gwyer, C. J.,
in re The Central Provinces & Berar Act No. XIV of 1938 (1)
at p. 38 and by Sulaiman, J., at pp. 73 and 74. Gwyer,
C.J., said:-
"But there are few subjects on which the
decision of other Courts require to be treated
with greater caution than that of federal and
provincial powers, for in the last analysis
the decision must depend upon the words of the
Constitution which the Court is interpreting ;
and since no two Constitutions are in
identical terms, it is extremely unsafe to
assume that a decision on one of them can be
applied without qualification to another.
This may be so even where the words or
expressions used are the same in both cases ;
for, a word or a phrase may take a colour from
its context and bear different senses
accordingly."
(1) [1939] F.C.R.18,38,73,74.
242
At p. 74 Sulaiman, J., observed:
"The heads have been separately specified in
great detail ; and a special head "’taxes on
the sale. of goods" has been assigned to the
Provinces, which did not at all find a
separate and distinct place in the State or
Provincial List of any of the Dominions. This
peculiarity is a unique feature of the Indian
Constitution, having an important bearing on
the present case, as taxes on Bales have been
adopted as a post-war measure in most
countries."
The entries in the Lists have to be read in accordance with
the words employed and it will be wholly unjustified in
forcing into them a meaning which they cannot reasonably
bear. See Brophy v. Att. Gen. of Manitoba (1) Similar
observations were made by Lord Wright, M. R. in James v.
Commonwealth of Australia (2) and both these oases were
quoted with approval in re The Central Provinces and Berar
Act No. XIV of 1938 (3) by Sulaiman, J. Thus the subject of
"betting and gambling" given in entry 34 of List II and the
taxes on betting and gambling as given in entry 62 of List
II have to be read separately as separate powers and
therefore when control and regulation of prize competitions
was surrendered to Parliament by the resolutions above
quoted the power to tax under entry 62 of List II which is a
separate head, cannot be said to have been surrendered. See
the observations of Das, C. J., in State of Bombay v. R. M.
D. Chamarbaugwala quoted a little later in this judgment.
The scheme of the Indian Constitution and distribution of
powers under it are entirely different from what it is in
America and therefore the construction of the entries in the
manner contended for by the appellants would be erroneous.
It was then contended that a tax must be
(1) [1895] A.C. 202, 215.
(2) [1936] A.C. 578, 613.
243
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levied for the purpose of revenue and cannot be for purpose
of control and that in the Mysore Act was really colourable
legislation in that the impugned tax had been levied for the
purpose of controlling prize competitions although it was
given the form of a tax. It may be remarked that the Court
in construing and interpreting the Constitution or
provisions of an enactment has to ascertain the meaning and
intention of Parliament from the language used in the
statute itself and it is not concerned with the motives of
Parliament. To use the language of Gwyer, C.J., in re, The
Central Provinces and Berar Act No XIV of 1938 (1) :
"It is not for the Court to express, or indeed
to entertain, any opinion on the expediency of
a particular piece of legislation, if it is
satisfied that it was within the competence of
the Legislature which enacted it ; nor will it
allow itself to be influenced by any
considerations of policy, for these lie wholly
outside its sphere."
Similar observations in regard to the doctrine
of colourable legislation were made by
Mukherjea, J., (as he then was), in K. C.
Gajapati Narayan Deo & Others v. The State of
Orissa (2), where it was observed :
"It may be made clear at the outset that the
doctrine of colourable legislation does not
involve any question of bona fides or mala
fides on the part of the legislature. The
whole doctrine resolves itself into the
question of competency of a particular
legislature to enact a particular law. If
’the legislature is competent to pass a
particular law, the motives which impelled it
to act are really irrelevant. On the other
hand, if the legislature lacks competency, the
question of motive does not arise at all.
Whether a
(1) [1939] F.C.R. 18, 38, 73, 74.
(2) [1954] S.C.R. 1, 10.
244
statue is constitutional or not is thus.
always a question of power."
Therefore if the Mysore Legislature had the
power, which in our opinion, it had and it had
not surrendered its power to Parliament which,
in our opinion, it had not then it cannot be
said that the imposition of the tax is a piece
of colourable legislation and is on that
ground unconstitutional. It will be opposite
to quote at this stage the observations of
Das, C.J., in the State of Bombay v. R.M.D.
Chamarbaugwala (1):-
"For the reasons stated above, we have come to
the conclusion that the impugned law is a law
with respect to betting and gambling under
entry 34 and the impugned taxing section is a
law with respect to a tax on betting and
gambling under entry 62 and that it was within
the legislative competence of the State
legislature to have enacted it. There is
sufficient territorial nexus to entitle the
State legislature to collect the tax from the
petitioners who carry on the prize competition
s
through the medium of a newspaper printed and
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published outside the State of Bombay."
Thus the Central Act is with respect to betting and gambling
under entry 34 of List II and the taxing sections of the
Mysore Act are with respect to a tax on betting and gambling
under entry 62. It is also instructive to note that
Venkatarama Ayyar, J., in B. M.D. Chamarbaugwala v. The
Union of India (2) in construing the language of the
resolution was of the opinion that the use of the word
"control and regulation" was requisite in the case of
gambling and as regards regulation of competitions involving
skill mere regulation would have been sufficient.
In view of our finding that by passing the resolution the
States did not surrender their power of taxation it cannot
be said that al. (2) of Art. 252
(1) [1957] S.C.R. 874, 929.
(2) [1957] S.C.R. 930, 939.
245
of the Constitution was violated by the amendment of the
Mysore Act ; nor can it be said that in reality it was a
piece of colourable legislation by an indirect attempt to
amend the Central Act and a new method of control was
devised by imposing a penalty under the name of tax. We
have already held that the tax imposed under the Mysore Act
was not by way of penalty but was the exercise of the power
which the legislature possessed of imposing tax under entry
62.
The next contention raised was that after the passing of the
Central Act, s.12(1)(b) of the Mysore Act became, void
because of the provisions of Art. 254(1) of the Constitution
which provides :
Art. 254(1) "If any provision of a law made by
the Legislature of a State is repugnant to any
provision of a law made by Parliament which
Parliament is competent to enact or to any
provision of an existing law with respect to
one of the matters enumerated in the
Concurrent List, then, subject to the
provisions of clause (2) the law made by
Parliament whether passed before or after the
law made by the Legislature of such State or
as the case may be, the existing law shall
prevail and the law made by the Legislature’
of the State shall, to the extent of the
repugnancy, be void."
It was contended that because of the repugnancy between the
Central Act and the Mysore Act in regard to licensing all
provisions which had any reference to licensing became void
under Art. 254(1) and if they were void they could not be
amended. On behalf of the State it was submitted that Art.
252(1) was a complete code by itself and Art. 254 was
inapplicable because the latter Article like its
predecessor, s.107 of the Government of India Act, 1935,
applied where the repugnancy arose under List III of the
Constitution i.e., the
246
Concurrent List. It is not necessary to decide this latter
contention or to refer to cases which have been relied upon
i.e. Megh Raj v. Allah Rakhia (1) or Deep Chand v. The State
of Uttar Pradesh & Others (2) The inconsistency would
operate on that portion of the Mysore Act which became
repugnant to ss. 4 and 5 of the Central Act as to
prohibition of prize competitions and licensing. of prize
competitions e.g., s.8 of the Mysore Act and consequently
that portion of s.12(1)(b) which deals with taxes in respect
of prize competitions for which a licence had been .Obtained
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under s.8 might be said to have become void and not the
rest. Therefore by the omission of words "for which a
licence had been obtained", under s.8, the rest of the
clause would be valid. The effect of the amending Act is
that the above mentioned words were deemed to have been
omitted as from April 1, 1956, and the rest of clause (b) is
not repugnant to any of the provisions of the Central Act.
Article 254(1) therefore did not make s.12(1)(b) wholly
void. All that it did was that the portion which refers to
licensing became repugnant but it did not affect the rest of
the section. At the time when the Mysore Act was passed it
was within the legislative power of the Mysore Legislature
and it may be that it was rendered unconstitutional by
reason of ss. 4 and 5 in the Central Act but that portion
which deals with taxation cannot be held to be void because
as a result of the Amending Act the words which were
repugnant to the provisions of the Central. Act were
subsequently declared by. the Mysore Legislature to be
deemed to have been omitted as from April 1, 1956, the day
when the Central Act came into force. This is in accord
with the view taken in Deep Chand v. The State of Uttar
Pradesh and Others(2), i.e., the doctrine of eclipse could
be invoked in the case of a ’law which was valid when made
but was rendered invalid by a supervening constitutional
inconsistency. This
(1).(1947) L. R. 74 I.A. 12,19.
(2) [1959] Supp. 2 S. C. R. 8, 24,42.
247
disposes of the challenge to the constitutionality of the
Mysore Act on the five points set out above. Therefore the
law may be summed up as follows
(1) By passing the resolutions as to control
and regulation the power to tax had not been
surrendered to Parliament.
(2) The amending Act was not a new method of
controlling prize competitions nor was it a
piece of colourable legislation.
(3) There was no amendment of an Act which
stood repealed nor was the retroactive
operation of the Amending Act affected by Art.
254(1) of the Constitution.
The next three objections to the legality of the assessment
were: (1) that the assessment was provisional which was not
contemplated under the Act ; (2) there should have been a
fresh notification after the amendment of the Mysore Act and
(3) at the time when the recovery proceedings were taken the
tax had not become due as it was payable within a week which
had not expired. On September 10, 1957, the Deputy
Commissioner, Bangalore, called upon the appellants to
produce accounts in respect of prize competitions conducted
as from April 1, 1956, up to the date of the closure of the
competitions and three days were given to comply with that
notice. Their reply was that the Ordinance under which the
notice was issued was unconstitutional and illegal and they
also asked for thirty days in which to prepare their
statements but they were granted a period of fifteen days
only. They agreed to file their statements within the time
allowed though under protest. These statements were
submitted on October 9, 1957, and at the end of the
statements which showed a gross collection of Rs. 26,47,147-
5-9, there was the following endorsement :-
"The above figures of collections are verified
partly with available bank statements and
partly with the books of accounts and are
248
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subject to reconciliation between the amount
as per ledger and that as above. The commis-
sion and expenses deducted by Collectors are
accepted as per certificate of the Management
and the State Account. Collections are
verified only with. the Collection Register.
(Sd.).................................
Chartered Accountants."
Under this the Deputy Commissioner wrote a
letter on October 16,1957, in which it was
said:
"You are, hereby called upon to pay up
provisionally a sum of Rs. 3,30,893-7-0
towards tax amount to the Reserve Bank of
India and forward the challan in token of pay-
ment to this office within a week."
As the tax was not paid the provisions of the Revenue
Recovery Act were resorted to. This cannot be said to be a
provisional assessment. The return submitted by the
appellants as far as it went was accepted and on that the
tax was demanded which was not a case of provisional
assessment at all but as was held by the High Court it must
be taken to be a final assessment and if and when any
further assessment or a revised assessment is made the
question may become relevant.
The next question As to the necessity of a fresh
notification, the submission is equally unsubstantial. Its
legality depends upon the constitutionality of amended
s.12(1)(b) and if that is valid, as we have held it to be,
the notification is equally valid. The notification was
only in regard to the rate of taxation and had no reference
to the obtaining or not obtaining of the licence.
The last point raised was that the tax was payable within a
week which had not expired. As we have pointed out the
notice of demand called upon the appellants to pay the sum
therein specified and to produce the challan in token of
payment
249
within a week. It is not the case of the appellants that
they had paid or-were in a position to produce the challan
within a week. It was not an order making the tax payable
within a week. These objections, in our opinion, are
without substance and are therefore overruled.
In the result this appeal fails and is dismissed with costs.
Appeal dismissed.
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