TMI Blog1967 (8) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the classes of dealers specified in sub-sections (1), (2). (3) and (4) would be liable 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 section 2(1) included the aggregate of the amount of sales "Taxable turnover" as defined in section 5(2) was ascertained after deducting from the gross turnover inter alia sales of goods declared tax-free under section 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 section 5 of the East Punjab Act No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 clause (3) in Article 286. The amend- ed Article 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 section 16 of the Central Sales Tax Act, 1956 (Act No. 74 of 1956) 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 responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 section 5 did not render void section 4 of the other sections of the Act though till an appropriate section 5 was inserted section 4 remained unenforceable, and (3) section 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 still-born section. The Court held that though in terms Act No. 19 of 1952 amended section 5, in substance it inserted a new amended section 5 in Act No. 46 of 1948 with retrospective effect. The fourth question is whether the amended section 5 inserted by the 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 Article 286(3) of the Constitution as it stood before the Constitution (Sixth Amendment) Act, and if so, what a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remarkable, however, that in the Maharaja of Pithapuram's case [1955] 2 S.C.R. 290, 297-300; 27 I.T.R. 709. , 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 [1955] 2 S.C.R. 290, 297-300; 27 I.T.R. 709. , 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. Commissioners of Inland Revenue [1930] 15 T.C. 573, 581., Rowlatt, J., said that the English income-tax was annually imposed by the Finance Act and in Bowles v. Bank of England [1913] 1 Ch. 57, 87., 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 an Act 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 fist step for imposing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not take effect during the currency of Article 286(3) of the Constitution as it stood before its amendment by the Constitution (Sixth Amendment) Act. The fact that the amended section 5 inserted by the East Punjab Act No. 19 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. 19 of 1952 did not receive the assent of the President, the amended section 5 could not take effect at all either prospectively or retrospectively in respect of sales and purchases of essential goods while the ban of Article 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 Article 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 clause (3) in Article 286. The effect of this amendment was that the restriction put by Article 286(3) on the operation of the amended section 5 inserted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was not void or still-born. 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 preamble to the Act shows that it was an Act to declare in pursuance of clause (3) of Article 286 of the Constitution certain goods to be essential for the life of the community. By section 2, the goods specified in the Schedule were declared to be so essential. As soon as this declaration was made, Article 286(3) came into play. Section 3 stated the conjoint effect of Article 286(3) and section 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act No. 52 of 1952. Similarly, in Sreenivas and Co. v. Deputy Commercial Tax Officer [1960] 11 S.T.C. 68., 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 Article 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 section 5 could not then affect edible oil, no tax was effectively imposed on it until September 11, 1956, during the currency of the unamended Article 286(3) of the Constitution. The respondents were, therefore, not liable to pay tax on their s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cata 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 accordingly. 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 section 22(5) of the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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