TMI Blog1955 (11) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ment should not be included in the turnover of the registered dealer as part of the sale price of the goods sold, and that that amount was not liable to be taxed over again. Subsequent to that, the Madras Legislature passed the Madras General Sales Tax (Definition of Turnover and Valid- ation of Assessments) Act, 1954 (Act XVII of 1954) (hereinafter refer- red to as the impugned Act). That Act received the assent of the Pre- sident on 6th July, 1954. Section 2 of the impugned Act ran: " In the case of sales made by a dealer before the 1st April, 1954, amounts collected by him by way of tax under the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939) (hereinafter re- ferred to as the principal Act), shall be deemed to have formed part of his turnover." Section 3(1) ran: " All assessments and collections made, all orders passed, and all action taken by any officer in the exercise or purported exercise of jurisdiction or powers conferred by the principal Act, and all judgments, decrees or orders pronounced by any Tribunal or Court in the exer- cise of its jurisdiction or powers with respect to matters in the principal Act, on the basis that amounts collected by a dealer by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision in Bata Shoe Co. v. Board of Revenue, West Bengal(2), on the application of the provisions of the Bengal Act was not challenged and was not doubted in Krishna- swami Mudaliar's case(1). Nor was its correctness with reference to the provisions of the Bengal Act challenged before us. The learned counsel for the petitioner urged that the principle laid down in Krishnaswami Mudaliar's case(1) was really left unaffected by (1) [1954] 5 S.T.C. 88. (2) [1949] 1 S.T.C. 193. the provisions of the impugned Act. The definitions of "sale" and "turn- over" in the Act were left untouched. Section 8-B of the Act was still retained. The levy still retained the character of a tax on sales tax, and that, the learned counsel for the petitioner urged, was beyond the legislative competence of the legislature. Entry 54 of List II of the Seventh Schedule of the Constitution is: "Taxes on the sale or purchase of goods other than newspapers." The contention of the learned counsel for the petitioner was that that entry empowered only a tax on sale or purchase of goods, and that it did not empower the legislature to levy a tax on the tax on the sale or purchase of goods. The fallacy that underlies thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of the legislative competence. No doubt section 8-B called the payment an amount (collected) by way of tax. It is equally true that the statutory liability to pay the sales tax is laid on the dealer. What is taxable is not each transaction of sale but the total turnover of the dealer, computed in accordance with the provisions of the Act and the Rules. But it is well-recognised that whatever be' the form of the statutory provisions, the ultimate economic incidence of the tax is on the consumer, the purchaser. It was that well-settled principle that was restated in Bengal Immunity Co., Ltd. v. State of Bihar(1). Even if the registered dealer collects the amount by way of tax under the authority of section 8-B of the Act, the payment is by the purchaser on the occasion of the sale by the dealer. Vis-a-vis the dealer it is in reality part of the price the purchaser has to pay the seller for purchasing the goods. A tax on such a payment, in our opinion, is well within the ambit of Entry 54 of List II, Schedule VII, read with Article 246(3) of the Constitution. In Paprika Ltd. v. Board of Trade(2) Lawrence, J., pointed out: "Wherever a sale attracts purchase tax, that tax p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich would have been invalid under the provisions of the Act as they stood before the date of the validating Act as those provisions were explained in Krishnaswami Mudaliar's case(1). It is well-settled that the power to validate illegal assessments made by executive authorities is incidental to the power to levy the tax, pro- vided, of course, the legislature had the power to levy the tax. In the present case the power to levy the tax was based upon Entry 54 in List II of Seventh Schedule of the Constitution. In United Provinces v. Atiqua Begum(2), Gwyer, C.J., observed at page 136: "The validation of doubtful executive acts is not so unusual or extraordinary a thing that little surprise would be felt if Parliament had overlooked it, and it would take a great deal to persuade me that legislative power for the purpose has been denied to every legislature including the Central or Federal Legislature in India. It is true that validation of executive orders' or any entry even remotely analogous to it is not to be found in any of the three Lists; but I am clear that legislation for that purpose must necessarily be regarded as subsidiary or ancillary to the power of legislating on the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commonwealth, I should unhesitatingly say that section 12-A was a valid enactment making the failure of the present action inevitable." The validity of section 3 of the impugned Act was attacked further on the ground, that it set aside decrees of court, and that that amounted to an usurpation of the powers assigned to the judiciary by the Consti- tution. The basic assumption of this argument was that the Constitu- tion enshrined the doctrine of separation of powers. That contention must be negatived in view of the pronouncements of the Supreme Court, one of which is in Ram Jawaya Kapur v. State of Punjab(1). At page 510 Mukherjea, C.J., observed: (1) (1955) S.C.J. 504. "The Indian Constitution has not indeed recognised the doctrine of separation of powers in its absolute rigidity but the functions of the different parts or branches of the Government have been sufficiently differentiated and consequently it can very well be said that our Consti- tution does not contemplate assumption, by one organ or part of the State, of functions that essentially belong to another." The pith and substance of the impugned Act was to validate the assessments made by the assessing authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X
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