1970 (6) TMI 45 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of Sections 8 and 9 of the Central Sales Tax Act, 1956.
2. Alleged abdication of legislative power by Parliament.
3. Delegation of legislative power to State Legislatures.
4. Compliance with Articles 301, 303(1), and 14 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Validity of Sections 8 and 9 of the Central Sales Tax Act, 1956:
The core issue is whether Sections 8 and 9 of the Central Sales Tax Act, 1956, are void and still-born. The contention is that Parliament abdicated its legislative power by adopting future State laws for imposing sales tax on inter-State transactions, fixing tax rates, and effecting exemptions. The judgment clarified that Section 8(1) is not the charging provision but merely declares the rate, goods, and dealers subject to tax, with Section 6 being the actual charging section. It was concluded that the proper Legislature has exercised its judgment regarding the imposition of Central sales tax on dealers and their transactions, and there is no delegation of the power to impose tax to State Legislatures.

2. Alleged Abdication of Legislative Power by Parliament:
The argument was that Parliament could not adopt future laws of the State without applying its mind, which would amount to abdication of its legislative function. The judgment referenced Shama Rao v. Union Territory of Pondicherry, where the Supreme Court held that adopting future laws without applying its mind is a case of abdication. However, the judgment distinguished this case by stating that the Parliament had laid down a clear policy for imposing Central sales tax and had not abdicated its essential legislative function.

3. Delegation of Legislative Power to State Legislatures:
The judgment discussed the permissible limits of delegation, citing cases like R. v. Burah, Delhi Laws case, and Municipal Corporation of Delhi v. Birla Cotton Spinning & Weaving Mills Limited. It was held that Parliament can delegate legislative authority to subordinate bodies, including State Legislatures, as long as it retains control over the delegated legislation. The judgment concluded that Sections 8 and 9 of the Act merely delegate the power to determine tax rates and exemptions to State Legislatures, which is permissible and does not amount to abdication of legislative function.

4. Compliance with Articles 301, 303(1), and 14 of the Constitution of India:
The contention that the levy of Central sales tax violates Articles 301 and 303(1) of the Constitution was rejected, referencing the Supreme Court's decision in State of Madras v. N. K. Nataraja Mudaliar. The argument that the Act violates Article 14 was also dismissed, citing the High Court's decision in E. I. Sandal Oil Distilleries Limited v. State of A.P. The judgment noted that the amending Act 28 of 1969, which has retrospective effect, addresses previous concerns raised in State of Mysore v. Lakshminarasimhiah Setty and Sons.

Conclusion:
The writ petitions were dismissed with costs, and the judgment upheld the validity of Sections 8 and 9 of the Central Sales Tax Act, 1956, confirming that these provisions do not constitute an abdication of legislative function by Parliament. The judgment emphasized that Parliament has the authority to delegate legislative power within permissible limits, retaining control over the delegated legislation.