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TMI Blog1958 (4) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The appellant was a member and the Vice-President of that Association. The members of the Association in the course of their business purchased ground-nuts for the purpose of converting them into oil and trading in the same. The Hyderabad General Sales Tax Act came into force on May 1, 1950. The members of the Association who were "dealers" as defined in the Act, got themselves registered under its provisions. Soon after the Act came into force the Sales Tax Officer, Warangal, verbally informed the members of the Association that they would have to pay tax on the purchase of ground-nuts made by them. Thereafter certain correspondence ensued between the Association and the taxing authorities in which the Association took up the position that the members should collect the tax that they were called upon to pay from the persons from whom they bought the ground-nuts including the actual growers thereof whom we shall hereafter refer to as the agriculturists. The Association requested the Market Superintendent at Warangal to assist its members in collecting the tax from the agriculturists according to the practice prevailing in Hyderabad. The Market Superintendent inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts was to be collected on the total turnover of the purchaser and therefore the turnover of the sellers of the commodity was exempt from the tax; that the dealers could not be exempted from payment of sales tax for the period for which permission had been refused to them to collect tax from the agriculturists because the agriculturists could have refused to pay the tax as they had no liability to pay and there was nothing to show that the agriculturists would have agreed to accept a reduction of the price to the extent of the tax, if asked to do so. On June 19, 1951, the Sales Tax Officer made fresh demands for the payment of the tax in terms of the orders of assessment. In these circumstances the petitioner on July 5, 1951, filed the petition asking for the issued of a writ of certiorari quashing the orders contained in the letters of June 5, 1951, and June 19, 1951, and a writ of prohibition restraining the Government from proceeding further in the matter of levying the tax and lastly and in the alternative, a writ of mandamus directing the Government of Hyderabad to withdraw or cancel the orders contained in the letters of December 23, 1950, and June 5, 1951. He made the State o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become a dealer within the Act. The Learned Advocate next said that sections 3 and 4 levy a tax only on the transactions of a dealer and therefore the transactions of an agriculturist are not taxable. He then pointed out that in a transaction of sale by an agriculturist there are two aspect, namely, a sale by him and a purchase by another person. His contention is that since a transaction of sale by an agriculturist is not liable to tax, both aspects of it are exempt from taxation and therefore where an agriculturist sells to a dealer the purchase by the dealer is also not liable to tax, for otherwise a transaction by an agriculturist would not be wholly exempt. He sought to reinforce his argument by referring to a proviso added to the definition of turnover by the Hyderabad General Sales Tax (Amendment) Act, 1953. This amendment was not in force in the period with which this appeal is concerned. The definition of turnover in section 2(m) of the Act with the proviso added to it by the amendment reads as follows: "Turnover means the aggregate amount for which goods are either bought by or sold by a dealer....... Provided that the proceeds of the sale by a person of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable by a dealer on his turnover of purchases of these goods. The seller of these goods, whether he is an agriculturist or not, is not, in any case, as the Act and the Rules stand, liable to pay tax. For the purposes of the Act an agriculturist, not being a dealer, has no turn- over. That being so, no question of exemption of the transactions by an agriculturist from the liability to pay the tax arises. The learned Advocate for the appellant then argued that his client as a registered dealer was under section 11 of the Act and rule 10 of the Rules entitled to collect the tax which was leviable upon him, from the persons from whom he purchased the goods, and as he had been prevented from collecting them from his agriculturist sellers by the orders of the Government earlier mentioned, the Government was not entitled to claimed any tax from him. Section 11 of the Act authorises a registered dealer to collect an amount by way of tax under it subject to the conditions and restrictions prescribed by the rules. Rule 10 states that he shall not collect any amount as tax at a rate exceeding the rates specified in it and that he shall pay the amounts so collected by him to the Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." It was pointed out that the Essential Supplies (Temporary Powers) Act (Act XXIV of 1946) was extended to Hyderabad with effect from August 17, 1950, by a Notification made under Act LII of 1950. It is said that this Act declared ground-nuts to be an essential commodity. Therefore, it is said, a sale of ground-nuts was not liable to be taxed under the Hyderabad General Sales Tax Act as it had neither been reserved for the consideration of the President nor received his assent. The contention of the learned Advocate for the appellant is, in our view, unsustainable. The law declaring goods to be essential for the life of the community contemplated by Article 286(3) is a law of the "Parliament" and therefore a law passed after the Constitution came into force. Act XXIV of 1946 was passed before the Constitution had been promulgated and is therefore not such a law. But it is said that it was applied to Hyderabad by a Parliamentary law, namely, Act LII of 1950, and therefore as applied to Hyderabad it became a Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause of Article 286 of the Constitution. It cannot therefore be contended that in view of Article 286(3) no tax can be levied on the sale of a commodity declared essential by Act XXIV of 1946. We may add that Act LII of 1952 is not available to the appellant either, for it had not been passed at the date when the levy of the tax objected to in this case was made. In the result this appeal must fail and it is dismissed with costs. BOSE, J.-With deep respect I am unable to accept the distinction drawn in the majority judgment between an "essential commodity" under the Essential Supplies (Temporary Powers) Act, 1946, and "goods essential for the life of the community" under Article 286(3). The Hyderabad General Sales Tax Act came into force in Hyderabad on May 1, 1950. At that date there was no Parliamentary statute declaring ground-nuts to be an "essential commodity" in the State of Hyderabad. The Essential Supplies Act of 1946 did not apply to Hyderabad, but even if it had, Article 286(3) would not have applied because this was not a law made by Parliament. Therefore, I agree that the law taxing ground-nuts was not hit by this Article. But the position changed on Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs) Act of 1946 is covered by Article 286(3). The Article says that- "No law made by the Legislature of a State etc.......shall have effect unless it has been reserved for the consideration of the President and has received his assent." It is contended that the words that I have underlined indicate that the Article can only apply to laws that could have been reserved for the consideration of the President at the date they were enacted. The impugned Act came into force on May 1, 1950, and at that date no question of reservation could have arisen because Parliamentary ban affecting Hyderabad was not then in force. It did not come into force till August 17, 1950. I am not able to construe Article 286(3) in that way. What does it say. "No law etc.......shall have effect unless it has been reserved etc." Was this law reserved. The answer is no. What does it matter why it was not reserved. The fact remains that it was not reserved and if it was not reserved, the Article says clearly and simply that it shall not take effect. In my judgment, this means that on and from the date of a Parliamentary declaration no law existing or future can take effect. To hold otherwise would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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