Full Judgment Text
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PETITIONER:
THE PUNJAB STATE, CHANDIGARH
Vs.
RESPONDENT:
SANSARI MAL PURAN CHAND
DATE OF JUDGMENT:
22/08/1967
BENCH:
BACHAWAT, R.S.
BENCH:
BACHAWAT, R.S.
WANCHOO, K.N. (CJ)
RAMASWAMI, V.
MITTER, G.K.
HEGDE, K.S.
CITATION:
1968 AIR 331 1968 SCR (1) 336
CITATOR INFO :
RF 1972 SC1760 (14)
ACT:
Eeast Punjab General Sales Tax Act 46 of 1948, ss. 5 and
6(2)--whether s.5 as amended by East Punjab Act 19 of 1962
effective in imposition of Sale-Tax on Essential gods prior
to amendment of Art. 286(3) of the Constitution and repeal
of s. 3 of Central Act 52 of 1952.
HEADNOTE:
The respondents were dealers assessable to sales tax under
the East Punjab General Sales Tax Act, 1948, and, in
respect of the assessment years 1955-56 to 1957-58, they
claimed an exemption from tax on sales of edible oil
produced by them cal process. The assessing authority
rejected this claim on the ground that such sales we’re not
exempt from tax in view of the amendment of the Schedule to
the Act- specifying tax-free goods by the notification dated
August 5, 1954. The respondent’s appeals to the Excise and
Taxation Commissioner:. and to the Financial Commissioner
were rejected but the High Court, upon a reference. held
that the notification was a law made by the State
legislature after the enactment of Central Act No. 52 of
1952 which, read with Art. 286(3) of the Constitution ,
placed a bar on a State by a law imposing or authorising the
imposition of a tax on the sale of essential goods unless
the law in question had received the assent of the
President; and since the notification had not received such
assent, it was ultra vires and invalid; the respondents
were, therefore, entitled to exemption under Item No. 57 of
the Schedule prior to its amendment by the notification of
August 5, 1954.
On appeal to this Court,
Held: The respondents were not liable to pay tax on sales of
edible oils produced in ghanis run by mechanical power
effected by them before September 11, 1956; but they were
liable to pay tax on such sales made after September 11,
1956, [348E]
(i) The amended s. 5 inserted in East Punjab Act No. 46 of
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1948 by East Punjab Act No. 19 of 1952 authorising the
fixation of the rate of tax leviable on the taxable
turnover, was a law authorising the imposition of a tax
within the purview of the unamended Art. 286(3) of the
Constitution. As the East Punjab Act No. 19 of 1952 was
passed after the enactment of Art 286(3) of the Constitution
and after Parliament had by Central Act 52 of 1952 declared
edible oil to be essential for the life of the community and
it was not reserved for consideration of the President and
did not receive his assent, it could not take effect during
the currency of Art. 286(3) prior to its amendment in so far
as it authorised the imposition of a tax on the sale or
purchases of edible oil. It could however take effect in
respect of sale and purchases of other goods. [344A-C;
348B--C]
(ii) The effect of the amendment of Art. 286(3) of the
Constitution by the Constitution (Sixth Amendment) Act with
effect from September 11, 1956 was that the restriction put
by Art. 286(3) on the operation of the amended s. 5 in
respect of essential goods was 336
337
lifted and the section thereafter took effect on such goods
also. There was no force in the contention that the amended
s. 5 wag a still-born Jaw and that the section was not
revived by the removal of the ban. It was inserted by the
East Punjab Act No. 19 of 1952 which was passed by a
competent legislature and always took effect in respect of
nonessential goods. [344D-F]
Section 3 of Central Act 52 of 1952 had no independent
existence and after the amendment of Art. 286(3) it had no
force from September 11, 1956 until its repeal with effect
from January 5, 1957 by Central Act 74 of 1954. [345C-D,E-F]
(iii) The notification of August 5, 1954 which amended the
Schedule of tax-free goods was authorised by s. 6(2) which
was a pre-Constitution law outside the purview of Art.
286(3). The notification did not require the assent of the
President for affecting essential goods. The notification
was therefore valid and took effect in respect of edible oil
as from August 5, 1954 and thereafter sales of edible oil
produced in ghanis run by mechanical power were taxable.
But as the amended s. 5 could not then affect edible oil, no
tax was effectively imposed on it until September 11, 1956
during the currency of the unamended Art. 286(3). [346A-C,
E-F]
(iv) Although the notifications issued by the State
Government under the unamended s. 5 which was invalid were
not authorised by law and also invalid, after the passing of
the East Punjab Act 19 of 1952 the result was that from the
very commencement of the main Act the amended s. 5 was
deemed to have authorised the State Government to issue
notifications fixing the rate of tax. The notifications
issued under s. 5 before 1952 must, therefore be deemed to
be and always to have been valid and not still-born. It was
not necessary to pass another Act validating those
notifications nor was it necessary for the State Government
to issue fresh notifications fixing the rate of tax. Here
again, such notifications could not take effect in respect
of sales or purchases of essential goods before September
11, 1956. [346H-347C]
(v) There was no force in the contention that the present
appeals were not maintainable because the Financial
Commissioner had already directed disposal of the case under
s. 22(5) of the East Punjab Act 46 of 1948 in accordance
with the judgment of the High Court. Effect had to be given
to the order of this Court and the Financial Commissioner
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must direct disposal of the cases accordingly. [347F 348A]
Case law reviewed.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1182-1184
of 1965.
Appeals by special leave from the judgment and order dated
August 19, 1963 of the Punjab High Court in General Sale’s
Tax Reference Nos. 8, 10 and 11 of 1962.
R. Ganapathy Iyer, R. N. Sachthey for R. H. Dhebar, for
the appellant (in all the appeals).
R. K. Garg, S. C. Agarwal, Shive Pujab Singh and Anil
Kumar, for the respondent (in all the appeals).
The Judgment of the Court was delivered by
Bachawat, J. The respondents are dealers assessable to sales
tax under the East Punjab General Sales Tax Act, 1948. In
their return for the assessment years 1955-56, 1956-57 and
1957-58 they
338
claimed exemption from tax in respect of sales of edible
oils. It is common case before us that this exemption was
claimed in respect of Sales of edible oil produced in ghanis
run by mechanical process. By his orders dated March 3,
1959, April 9, 1959 and July,17, 1959, the Assessing
Authority, Jullundur held that exemption from tax was not
allowable under item No. 57 of the schedule of, tax-free
goods as, substituted by the Punjab Government Notification
No. 3483-E & T-54/723(CH) dated August 5, 1954. The appeals
from these orders were dismissed by the Deputy Excise and
Taxation Commissioner, Jullundur Division by his orders
dated August 3, 1959 and February 16, 1960. Revision
Petitions from these orders were dismissed by the Excise and
Taxation Commissioner, Punjab by his orders dated November
24, 1961. .Revision Petitions from the last orders were
dismissed by the Financial Commissioner, Revenue, Punjab by
his orders dated April 27, 1962. On the application of the
respondents, the Financial ’Commissioner, Revenue, Punjab by
his order dated August 9, 1962 referred under S. 22(1) of
the Punjab General Sales Tax Act, 1948 the following
question of law for the decision of the High Court of Punjab
at Chandigarh:
"Whether notification No. 3483-E & T-
54/723(CH), dated the 5th August, 1954,
whereby exemption from Sales Tax granted by
the Government in respect of edible oils was
abolished in the case of such edible oils
produced in ghanis run by mechanical process
was intravires and not the law made by the
Legislature of the State which requires’ the
previous assent of the President of India."
These References were marked, as Sales Tax References Nos.
8, 10 and 11 of 1962. By its judgment dated August 19, 1963
the High Court held following its earlier decision in Ganga
Ram Suraj Prakash v. The State of Punjab(1) that the
notification was a law made by the State Legislature after
the enactment of Central Act No. 52 of 1952, and since it
did not receive the assent of the President it was ultra
vires and invalid. In the earlier decision, the Punjab High
Court held that (1) s. 5 of the East Punjab General Sales
Tax-Act, 1948, as it originally stood, was invalid on the
ground of excessive delegation of legislative power to the
executive, (2) the remaining sections of the Act including
S. 6 could not survive the invalidity of S. 5, (3) the Act
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did not become valid until the insertion of the new s. 5 in
the main Act by the East Punjab Act No. 19 of 1952, and (4)
as the East Punjab Act No. 19 of 1952 which alone could
sustain the impugned notification dated August 5, 1954 was
passed after the Central Act No. 52 of 1952, the impugned
notification could not be justified and was invalid. The
High Court observed that it was not impressed with the argu-
ment that the notification was not a law made by the
legislature of the State and therefore the assent of the
President could be dispensed with. The present appeals have
been preferred from the orders of the High Court dated
August 19, 1963.
(1) S.T.C. 476.
339
To appreciate the points in. controversy, it is necessary to
refer to the course of legislation. The East Punjab General
Sales Tax Act (East Punjab Act No. 46 of 1948) was enacted
on November 15, 1948. Section 4 of the Act provided for the
incidence of taxation and declared that the classes of
dealers specified in sub-ss. (1), (2), (3) and (4) would be
liabe to pay tax under the Act. Section 5(1) was in these
terms:
"5. Rate of tax-(1) Subject to the provisions
of this Act there shall be levied on the
taxable turnover every year of a dealer a tax
at such rates as the Provincial Government may
by notification direct."
’Turnover’ as defined in s. 2(i) included the aggregate of
the amount of sales. ’Taxable turnover’ as defined in s.
5(2) was ascertained after deducting from the gross turnover
inter alia sales of goods declared tax-free under s. 6.
Section 6(1) provided that no tax shall be payable under the
Act on the sale of goods specified in the first column of
the schedule to the Act. Section 6(2) provided:
"The Provincial Government after giving by
notification not less than three months’
notice of its intention so to do, may by like
notification add to or delete from the
schedule, and thereupon the schedule shall be
deemed to be amended accordingly."
On November 19, 1952 the East Punjab General Sales Tax
(Second Amendment) Act, 1952 (Act No. 19 of 1952) was passed
amending s. 5 of the East Punjab Act No. 46 of 1948.
Section 2 of the amending Act was in these terms:
"In sub-section (1) of section 5 of the East
Punjab General Sales Tax Act, 1948, after the
word ’rates’ the following words shall be
inserted, namely, ’not exceeding two pice in a
rupee’."
It is common ground before us that before the passing of the
East Punjab Act No. 19 of 1952 the State Government bad
issued notifications under s. 5 fixing the rates of tax. In
exercise of its powers under s. 6(2) of the Act, the Punjab
Government issued the notification No. 3483-E & T-51/2518,
dated May 30, 1951 adding item No. 57 (edible oils) to the
schedule referred to in s. 6(2). The entry was as follows:
"57. Edible oils produced from sarson, toria
and till ghanis but not in hydrogenated from
e.g. vegetable, ghee, vanaspati etc."
By a later notification No. 3483-E & T-54/723(CH) dated
August 5, 1954, the Punjab Government substituted the
following entry No. 57 in the schedule:
"57. Edible oils produced from sarson, toria
and till indigenous kohlus worked by animal or
human agency when sold by the owners of such
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kohlus only".
340
it is common case before us that as a result of this
notification sales of edible oil produced by ghanis run by
mechanical power ceased to be tax-free after August 5, 1954.
It may be recalled that Art. 286(3) of the Constitution as
it stood before the Constitution (Sixth Amendment) Act, 1956
provided:
"No law made by the Legislature of a State
imposing, or authorising the imposition of, a
tax on the sale or purchase of any such goods
as have been declared by Parliament by law to
be essential for the life of the community
shall have effect unless it has been reserved
for the consideration of the President and has
received his assent."
On August 9, 1952 Parliament passed the Essential Goods (De-
claration and Regulation of Tax on Sale or Purchase) Act,
1952 (Central Act No. 52 of 1952). By s. 2 of this Act read
with item 5 of the schedule, edible oils were declared to be
essential for the life of the community. Section 3 of this
Act was in these terms:
"3. Regulation of tax on sale or purchase of
essential goods.-No law made after the
commencement of this Act by the legislature of
a State imposing, or authorising the
imposition of, a tax on the sale or purchase
of any goods declared by this Act to be
essential for the life of the community shall
have effect unless it has been reserved for
the consideration of the President and has
received his assent."
On September 11, 1956 the Constitution (Sixth Amendment)
Act, 1956 was passed substituting a new cl. (3) in Art. 286.
The amended Art. 286(3) did not put any check on a State law
imposing or authorising the imposition of a tax on the sale
or purchase of essential goods. The Central Act No. 52 of
1952 was repealed by s. 16 of the Central Sales Tax Act,
1956 (Act No. 74 of 1954) passed on December 21, 1956. The
repealing section came into force on January 5, 1957.
It is to be noticed that the respondents claimed that they
were not liable to pay tax on their sales of edible oil
produced in ghanis run by mechanical power. The revenue
authorities rejected this claim on the ground that such
sales were not exempt from tax in view of the amendment of
the schedule of tax-free goods by the notification dated
August 5, 1954. Confronted with this notification, the
respondents challenged its validity on the ground that it
required the assent of the President of India. On the
materials and arguments before us, we are satisfied that the
real dispute between the respondents and the revenue
authorities was whether the tax was effectively imposed on
those sales so that the respondents may be held. liable to
pay tax thereon during the assessment years in question.
This dispute was not properly brought out in the question
referred to the High Court. We, therefore, re-frame the
question thus: "Was tax effectively imposed on sales of
edible oil produced
341
in ghanis run by mechanical power, so that the respondents
can be held liable to pay tax on such sales during the
assessment years, 1955-56, 1956-57 and 1957-58?" This
question involves consideration of the validity of s. 5 and
other sections of the East Punjab Act No. 46 of 1948, s. 5
as amended by East Punjab Act No. 19 of 1952 and the
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notifications issued under ss. 5 and 6(2) as also the effect
of Art. 286(3) of the Constitution, its amendment by the
Constitution (Sixth Amendment) Act, s. 3 of Central Act No.
52 of 1952 and its repeal by Central Act No. 74 of 1954.
On the arguments addressed before us, the following ques-
tions arise for decisions:
(1) Was s. 5 of the East Punjab Act No. 46 of
1948 as originally passed in 1948, invalid?
(2) If so, did the invalidity of s. 5
invalidate the other provisions of the Act?
(3) Is s. 5 of the East Punjab Act No. 46 of
1948 as amended by East Punjab Act No. 19 of
1962 invalid?
(4) Was the amended s. 5 a law imposing or
authorising the imposition of a tax within the
meaning of Art. 286(3) of the Constitution as
it stood before the Constitution (Sixth
Amendment) Act? If so, with what effect?
(5) What is the effect of the amendment of
Art. 286(3) of the Constitution by the
Constitution (Sixth Amendment) Act and the
repeal of Central Act No. 52 of 1952 by
Central Act No. 74 of 1954?
(6) Is the notification dated August 5, 1954
issued under s. 6(2) valid?
(7) Are the notifications issued under s. 5
before the passing of the East Punjab Act
No. 19 of 1952 valid?
(8) Was tax effectively imposed on sales of
the edible oil
in question during the relevant assessment
years?
The first three questions are concluded by the decision of
this Court in M/s. Devi Das Gopal Krishan and others v.
State of Punjab and others(1). In that decision, this Court
held that (1) s. 5 of East Punjab Act No. 46 of 1948, as
originally passed in 1948, was void on the ground of
excessive delegation of legislative power to the State
Government, (2) the striking down of s. 5 did not render
void s. 4 and the other sections of the Act though till an
appropriate s. 5 was inserted s. 4 remained unenforceable
and (3) s. 5 as amended by the East Punjab Act No. 19 of
1952 was not invalid on the ground of excessive delegation
of legislative authority nor was it invalid on the ground
that Act 19 of 1952 purported to amend a stillborn section.
The Court held that though in
(1) [1967] 3 S.C.R. 557.
342
terms Act No. 19 of 1952 amended s. 5, in. substance it
inserted a, new amended s. 5 in Act No. 46 of 1948 with
retrospective effect.
The fourth question is whether the amended s. 5 inserted by
East Punjab Act No. 19 of 1952 levying a tax on the taxable
turnover of the dealer at such rates not exceeding 2 pice in
a rupee as the State Government by notification may direct
was a law imposing or authorising the imposition of a. tax
on essential goods within the meaning of Art. 286(3) of the
Constitution as it stood before the Constitution (Sixth
Amendment) Act, and if so, what are the consequences. As
pointed out by Ramachandra Iyer, J. in Sreenivas and Co. v.
Deputy Commercial Tax Officer(1), the decisions on the
interpretation of S. 55 of the Australian Constitution are
not a reliable guide to the interpretation of the words
"imposing or authorising the imposition of a tax" in Art.
286(3) of the Constitution and s. 3 of Central Act No. 52 of
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1952. Section 55 which is directed to preserving the
privileges of the House of Representatives with respect to
finance and providing against their abuse has received a
somewhat narrow interpretation from the Australian Courts.
See the cases collected in Wynes. Legislative, Executive
and Judicial Powers, 3rd Edn., p. 240. We may add that the
observations of Isaccs, J. in Federal Commissioner of
Taxation v. Munro(2) suggest that an Act naming the rate but
leaving the persons on whom the tax should fall to be
thereafter determined would be a measure "imposing taxation"
even for the purposes of s. 55.
Nor is much light thrown on the interpretation of those
words by the decisions under the Indian Income-tax Act. In
Messrs. Chatturam Horilram Ltd. v. Commissioner of Income-
tax, Bihar and Orissa(3) this Court held that income was
chargeable under s. 3 of the Indian Income-tax Act though
the Finance Act was not extended to the relevant area during
the year in question. In Kesoram Industries v. Commissioner
of Wealth Tax(4) this Court by a majority following the
dicta in Wallace Brothers & Co. Ltd. v. Commissioner of
Income-tax, Bombay(5) Chatturam v. Commissioner of Income-
tax, Bihar(6) and explaining the dicta in Commissioner of
Income-tax v. Western India Turf Club Ltd. (7 ) and Maharaja
of Pithapuram v. Commissioner of Income-tax, Madras(8), held
that there was a liability to pay income-tax and a debt owed
by the assessee in respect of income-tax on the last day of
the accounting year within the meaning of s. 2(m) of the
Wealth Tax Act, 1957. None of these decisions dealt with
the construction of the words "imposing or authorising the
imposition of a tax" in Art. 286(3) of the Constitution. It
is remarkable, however,
(1) [1960] 11 S.T.C.68, 75--77,On appeal from (1959) 10
S.T.C.171.
(2) 38 C.L.R. 153, 189.
(3) [1955] 2 S.C R. 290, 297-300
(4) [1966] 2 S.C.R. 688.
(5) (1948) 16 I.T.R. 240, 244.
(6) (1947) 15 I.T.R. 302, 308.
(7) (1927) L.R. 55 I.A. 14, 17.
(8) (1945) 13 I.T.R. 221, 223-24.
343
that in the Maharaja of Pithapuram’s case(1) the language
used by Lord Thankerton suggests that the income-tax is
imposed for a particular fiscal year by a Finance Act and in
Chatturam Horilram’s case(2), Jagannadhadas, J. said that
the Finance Act of each year imposed the obligation for the
payment of a determinate sum for each such year. Moreover,
in Luipaard’s Vlei Estate and Gold Mining Co. Ltd. v. The
Commissioner of Inland Revenue(3), Rowlatt, J. said the
English Income-tax was annually imposed by the Finance Act
and in Bowels v. Bank of England(4), Parker, J. held that
the Crown could not lawfully levy income-tax before the rate
of tax was ascertained and the tax was actually imposed by
Apt of Parliament. These dicta suggest that an Act fixing
the rate of tax is a law imposing a, tax.
The specification of the class or classes of persons liable
to pay the tax and the fixation of the rate of tax are both
necessary for the imposition of a tax. Section 4 of the
East Punjab Act No. 46 of 1948 took the first step for
imposing the tax. It declared who were the persons liable
to pay tax under the Act. But s. 5 of East Punjab Act No.
46 of 1948 was invalid and until the passing of the East
Punjab Act No. 19 of 1952 and the insertion of the amended
s. 5 there was no provision in the main Act fixing or
authorising the fixation of the rate at which the tax was to
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be levied. In the absence of such a provision, there could
be no levy, assessment and collection of the tax from the
dealer and s. 4 remained unenforceable. The East Punjab Act
No. 19 of 1952 by inserting the amended s. 5 in the main Act
for the first time provided for the levy on the taxable
turnover of every dealer a tax at a rate to be fixed by the
State Government. The rate of tax could be fixed and the
tax could be actually imposed under the amended s. 5 only.
The East Punjab Act No.19 of 1952 therefore belonged to the
category of laws authorising the imposition of a tax on the
sale of goods.
The object of Art. 286(3) of the Constitution was to put a
constitutional check on the operation of a State law
imposing or authorising the imposition of a tax on the sale
or purchase of essential goods. Commerce in such goods was
a matter of national concern and no such law could take
effect unless it had been reserved for the consideration of
the President and had received his assent. An arbitrary or
unjust rate of sales tax would unduly hamper dealings in
such goods, and it is reasonable to think that a measure
fixing or authorising the rate of tax would be subject to
the salutary check of Art. 286(3). In our opinion, the
amended s. 5 inserted in East Punjab Act No. 46 of 1948 by
East Punjab Act No. 19 of 1952 authorising the fixation of
the rate of tax leviable on the taxable turnover was a law
authorising the imposition of a tax within the purview of
the unamended Art. 286(3) of the Constitution.
(1) (1945) 13 I.T.R. 221. (2) [1955] 2 S.C.R. 290.
(3) (1929) 15 T.C. 573, 581. (4) (1913) 1. Ch. 57, 87.
344
The East Punjab Act No. 19 of 1952 was passed after the
enactment of Art. 286(3) of the Constitution and after
Parliament had by Central Act No. 52 of 1952 declared edible
oil to be essential for the life of the community. It was
not reserved for the consideration of the President and did
not receive his assent. It was a law authorising the
imposition of a tax on the sale of goods. In so far as it
authorised the imposition of a tax on the sales or purchases
of edible oil, it could not take effect during the currency
of Art. 286(3) of the Constitution as it stood before its
amendment by the Constitution (Sixth Amendment) Act. The
fact that the amended s. 5 inserted by the East Punjab Act
No. 52 of 1952 was retrospective in operation made no
difference. It was still a law made after the Constitution
came into force and after Parliament had by law declared
edible oil to be essential for the life of the community.
As the East Punjab Act No. 52 of 1952 did not receive the
assent of the President, the amended s. 5 could not take
effect at all either prospectively or retrospectively in
respect of sales and purchases of essential goods while the
ban of Art. 286(3) continued. But it could take effect in
respect of sales and purchases of other goods.
The fifth question involves consideration of the effect of
the amendment of Art. 286(3) of the Constitution and the
repeal of Central Act No. 52 of 1952. The Constitution
(Sixth Amendment) Act, 1956 passed on September 11, 1956
substituted a new cl. (3) in Art. 286. The effect of this
amendment was that the restriction put by Art. 286(3) on the
operation of the amended s. 5 inserted by the East Punjab
Act No. 19 of 1952 in respect of essential goods was lifted,
and the section thereafter took effect on such goods also.
Counsel for the respondent submitted that in view of the ban
imposed by Art. 286(3), the amended s. 5 was a stillborn law
and the section was not revived by the removal of the ban.
In this connection, our attention was drawn to the decisions
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under Arts. 286(2) and 13 of the Constitution. Article
286(2), as it stood before the Constitution (Sixth
Amendment) Act provided that "Except in so far as Parliament
may by law otherwise provide, no law of a State shall
impose, or authorise the imposition of, a tax on the sale or
purchase of any goods where such sale or purchase takes
place in the course of inter-State trade or commerce". In
spite of the prohibitory words of Art. 286(2), in M. P. V.
Sundararamier & Co. v. The State of Andhra Pradesh(1) and
Messrs. Ashok Leyland Ltd. v. The State of Madras(2), this
Court held that a State law imposing a tax on sales of goods
in the course of inter-State trade and commerce was not
void, and the effect of the Sales Tax Laws Validation Act,
1956 was to liberate State laws from the fetter placed on
them by Art. 286(2) and enable such laws to operate on their
own terms. In Mahendra Lal Jaini v. State of U. P.(") this
Court held, reviewing the earlier cases, that a post-
Constitution
(1) [1958] S.C.R. 1422, 1459.
(2) [1962] 1 S.C.R. 607.
(3) [1953] Supp. 1 S.C.R. 912.
345
Act taking away or abridging the fundamental rights in
contravention of Article 13(2) was a stillborn law but a
pre-Constitution Act inconsistent with a fundamental right
was in view of Art. 13(1) eclipsed for the time being and on
the abolition of the fundamental right by a constitutional
amendment the pre-Constitution Act would begin to operate
once again from the date of the amendment. These decisions
show that a law made by an incompetent legislature or in
contravention of some constitutional limitation is void from
its inception. But the amended s. 5 inserted by the East
Punjab Act No. 19 of 1952 was passed by a competent
legislature. It always took effect in respect of non-
essential goods. Article 286 (3) did not prohibit its
making. While the restriction imposed by Art. 286(3)
continued, the section could not affect essential goods, but
as soon as the restriction was removed, it became fully
effective. The section was not void or stillborn.
But the question still remains whether the check on a State
law imposing or authorising the imposition of a tax on the
sale or purchase of essential goods continued even after
September 11, 1956 until January 5, 1957 when Central Act
No. 52 of 1952 was repealed. Article 286(3) authorised
Parliament to declare by law which goods were essential for
the life of the community. Accordingly, Parliament passed
Act No. 52 of 1952. The preamable to the Act shows that it
was an Act to declare in pursuance of cl.3 of Art. 286 of
the Constitution certain goods to be essential for the life
of the community. By s. 2, the goods specified in the sche-
dule were declared to be so essential. As soon as this
declaration was made, Art. 286(3) came into play. Section 3
stated the conjoint effect of Art. 286(3) and s. 2 and
declared that no law made after the commencement of the Act
by the legislature of a State imposing or authorising the
imposition of a tax On the sale or purchase of any goods
declared by the Act to be essential for the life of the
community would have effect unless it had been reserved for
the consideration of the President and had received his
assent. But s. 3 had no independent existence. The subject
of a tax on the sale or purchase of goods other than
newspapers was exclusively a State subject,, see List II,
Entry 54. Article 286(3) did not authorise Parliament to
legislate on this subject. It only conferred,on Parliament
the authority to declare that certain goods were essential
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for the life of the community. On such a declaration being
made, the check. imposed by Art. 286(3) came into operation.
But on the amendment of Art. 286(3) this check was lifted
and thereafter. s. 3 had no force. It follows that as from
September 11, 1956 the. amended s. 5 inserted by East Punjab
Act No. 19 of 1952 took,effect on sales or purchases of
edible oil also.
The sixth question relating to the validity of the
notification dated August 15, 1954 involves the
interpretation of the expression "law made by the
legislature of a State" in Art. 286(3) as it stood before
the Constitution (Sixth Amendment) Act. We are not con-
cerned in these appeals with the interpretation of the
expression
346
"law of a State" in the amended Art. 286(3) and other
Articles. The notification dated August 5, 1954 was
authorised by s. 6(2) of East Punjab Act No. 46 of 1948.
Section 6(2) being a pre-Constitution law was outside the
purview of Art. 286(3) of the Constitution and Central Act
No. 52 of 1952. See Sardar Soma Singh v. The State of Pepsu
and Union of India(1). Consequently, s. 6(2) from its
inception affected essential goods. By force of s. 6(2) the
notification dated August 5, 1954 issued under it took
effect immediately in respect of essential goods. The
notification issued by the State Government was not a "law
made by the legislature of a State" within the meaning of
Art. 286(3). Though issued after the passing of Central Act
No. 52 of 1952, it did not require the assent Of the
President for affecting essential goods. In The Indore Iron
& Steel Registered Stockholders’ Association v. The State of
Madhya Pradesh(2), this Court held that a notification dated
October 24, 1953 specifying the goods whose sales were
taxable under s. 5(2) of the Madhya Bharat Sales Tax Act,
1950, a pre-Constitution Act, was outside the purview of
Art. 286(3) of the Constitution and s. 3 of Central Act No.
52 of 1952. Similarly, in Sreenivas & Co. v. Deputy
Commercial Tax Officer(3), the Madras High Court held that
Rules 15 and 16 of the Madras General Sales Tax (Turnover
and Assessment) Rules specifying the transactions attracting
the tax liability and framed under the Madras General Sales
Tax Act, 1939, a pre-Constitution Act, did not require the
assent of the President for affecting hides and skins which
had been declared by Parliament to be essential for the life
of the community by Central Act No. 52 of 1952. These
decisions show that a, notification issued under the
authority of a pre-Constitution Act is not a law made by the
legislature of a State within the meaning of the unamended
Art. 286(3). It follows that the impugned notification
’took effect in respect of edible oil as from August 5, 1954
and thereafter sales of edible oil produced in ghanis run by
mechanical power were taxable. But as the amended s. 5
could not then affect edible oil, no tax was effectively
imposed on it until September 11, 1956 during the currency
of the unamended Art. 286(3) of the Constitution. The
respondents were, therefore, not liable to pay tax on their
sales of such edible oil effected before September 11 ,
1956.
It is common case before us that before the insertion of the
amended s. 5 by East Punjab Act No. 19 of 1952 the State
Government had issued notifications under s. 5 fixing the
rate of tax. The seventh question relates to the validity
of those notifications. As the unamended s. 5 was invalid,
under the law as it stood before the passing of the East
Punjab Act No. 19 of 1952 those notifications were not
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authorised by law and were invalid. The East Punjab Act No.
19 of 1952. however, inserted s. 5 with retrospective
effect. The effect of the East Punjab Act No. 19 of 1952
was that the amended s, 5 was inserted and was deemed to
have always been inserted in the main Act. After the
passing of
(1) [1954] S.C.R. 955. (2) [1962] 2 S.C.R. 924
(3) [1960] 11 S.T.C. 68, 75-77, on appeal from [1959] 10
S.T.C. 171.
347
the East Punjab Act No. 19 of 1952 the result was that from
the very commencement of the main Act the amended s. 5 was
deemed to have authorised the State Government to issue
notifications fixing the rate of tax. The notifications
issued by the State Government under s. 5 before 1952 must,
therefore, be deemed to be and always to have been valid and
not stillborn. It was not necessary to pass another Act
validating those notifications, nor was it necessary for the
State Government to issue fresh notifications fixing the
rate of tax. In view of Art. 286(3), the amended s. 5 and
the notifications issued under it before 1952 could not take
effect in respect of sales or purchases of essential goods
before September 11, 1956. But they took effect in respect
of such sales after September 11, 1956. The validity of the
notifications issued after 1952 under ’he amended s. 5 is
not challenged before us.
It follows that the State law and the notifications issued
there under effectively imposed tax on sales of edible oil
from September 11, 1956 and not before. The respondents are
liable to pay tax on all sales of edible oil effected by
them after September 11, 1956, but they are not liable to
pay tax on their sales made before that date.
in C. M. Ps. No. 877 to 879 of 1964, the respondents raised
several additional contentions. The first contention was
that the consideration of the several questions arising in
this case is precluded by res judicata in view of the
decisions of the Punjab High Court in Sales Tax References
Nos. 4 and 13 of 1961. But this plea of res judicata has
now been abandoned before us by counsel for, the
respondents. Secondly, it was urged that the appeals are
infructuous because the respondents had obtained refund of
the tax deposited by them in respect of the years, 1958-59
and 1959-60. But the present appeals do not relate to
those assessment years,and the fact that the respondents
obtained refund of the tax for,those years is irrelevant in
these appeals. Thirdly, it was pointed out that by an order
dated September 23, 1963 the Financial Commissioner gave
effect to the decision of the High Court under appeal and
directed that the assessment cases be disposed of ac-
cordingly. The contention of the respondents was that in
view of this order of the Financial Commissioner the present
appeals are not maintainable. There is no substance in this
contention. The order of the Financial Commissioner was
passed under s. 22(5) of East Punjab Act No. 46 of 1948.
Section 22(5) provides that the High Court shall send to the
Financial Commissioner a copy of its judgment in a Sales Tax
reference under its seal and the signature of the Registrar
and the Financial Commissioner shall dispose of the case
accordingly. On receipt of the copy of the judgment of the
High Court in Sales Tax References Nos. 8, 1 0, and 11 of
1962 the Financial Commissioner acting under s. 22(5)
directed that the cases should be disposed of according to
the judgment of the High Court. But those very judgments
are under appeal in this Court. In so far as those
judgments are varied or reversed in these appeals,
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348
effect must be given to the order of- this Court and the
Financial Commissioner must direct the disposal of the cases
accordingly. In C. M. Ps. Nos. 877 to 879 of 1964, the
respondents prayed for revocation of the special leave
granted by this Court. There is no ground for revoking the
special leave, and the petitions must be dismissed.
To summarise our conclusions: (1) The unamended s. 5 of East
Punjab Act No. 46 of 1948 was void. (2) The invalidity of s.
5 did not render ss. 4 and 6 and other sections of the Act
invalid. (3) The amended s. 5 inserted by East Punjab Act
No. 19 of 1952 is valid. (4) The amended s. 5 was a law
authorising the imposition of a tax within the meaning of
Art. 286(3) of the Constitution as it stood before the
Constitution (Sixth Amendment) Act. (5) The amended s. 5 and
the notifications issued under it did not take effect before
September 11, 1956 in respect of sales or purchases of goods
declared essential to the life of the community by Central
Act No. 52 of 1952, but they took effect in respect of such
sales or purchases after September 11, 1956. (6) The
notification dated August 5, 1954 issued under S. 6(2) is
valid. (7) The notifications issued under s. 5 before the
passing of the East Punjab Act No. 19 of 1952 are valid. (8)
Tax was effectively imposed on the sales or purchases of
edible oil from September II, 1956 and not before.
We, therefore, hold that the respondents are not liable to
pay tax on sales of edible oil produced in ghanis run by
mechanical power effected by them before September 11, 1956.
But they are liable to pay tax on such sales made after
September 11, 1956. The Sales Tax References and the
appeals are disposed of accordingly. C.M.Ps. Nos. 877 to
879 of 1964 are dismissed. There will be no order as to
costs.
R.K.P.S. Appeals partly allowed.
349