1967 (8) TMI 37 - SUPREME COURT

Whether sub-section (4) of section 41 of the Act can be upheld read along with the second proviso thereof?

Whether sub-sections (2) and (3) of section 41 of the Act which have been struck down by the High Court on the ground that they are unreasonable restrictions on the right to hold property and to carry on trade have been correctly struck down?

Held that:- Clearly it is clause (a) in the proviso which under the circumstances must fall, for we cannot hold that the entire Act must fall because of this inconsistency with respect to recovery of tax under clause (a) of the second proviso even before the taxable event occurs in the large majority of cases which would be covered by the Act. We are therefore of opinion that clause (a) of the second proviso being repugnant to the entire scheme of the Act, in so far as it provides for recovery of tax even before the first sale in the State, which is the point of time in a large majority of cases for recovery of tax, must fall on the ground of repugnancy.

Considering the fact that the legislature added this cornpulsory proviso later, it is clear that the legislature intended that the main part of the section and the second proviso should go together. It is difficult to hold therefore that after the introduction of the second proviso in 1961, the legislature could have intended that the main part of sub-section (4) should stand by itself. We are therefore of opinion that sub-section (4) with the two provisos must fall on this narrow ground. We therefore agree with the High Court and strike down sub-section (4) but for reasons different from those which commended themselves to the High Court.

Cannot agree with the High Court that sub-sections (2) and (3) of section 41 of the Act are unreasonable restrictions on the right to hold property or carry on trade for reasons indicated. We are of opinion that they are reasonable restrictions which are protected by clauses (5) and (6) of article 19 of the Constitution. Thus the final order of the High Court allowing the writ petitions must stand, though we do not agree with the interpretation of the High Court with respect to sub-section (2) and the finding of the High Court that sub-sections (2) and (3) are unconstitutional on the ground of their being unreasonable restrictions on the right to hold property and to carry on trade. Appeal dismissed.