TMI Blog1969 (11) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... om time to time after the passing of the Act in the matter of fixation of rate of taxation, grant of exemptions, assessment and collection of tax and imposition of penalty and thereby the Parliament has abdicated its essential legislative function. In the alternative, it was urged that the Act must be deemed to have adopted the sales tax laws as in force when the Act came into force on 21st December, 1956, and that the sales tax law in force at that time was the Mysore Sales Tax Act, 1948, which did not provide for making provisional assessment and hence respondent No. 1 had no jurisdiction to issue the impugned notice proposing to make provisional assessment to tax. During the pendency of the writ petition, section 9, among others, of the Act was amended by the Central Sales Tax (Amendment) Act, 1969, and it is the validity of section 9 as amended that has to be considered. The argument of the learned counsel for the petitioner was that the Act has adopted not only the sales tax laws of the States as they stood when the Act was passed but also the future sales tax laws as amended from time to time in the matter of fixation of rate of taxation, grant of exemptions, assessment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o abdication if the Legislature instead of going through the full formality of legislation applies its mind to an existing statute enacted by another Legislature for another jurisdiction, adopts such an Act and enacts to extend it to the territory under its jurisdiction. In doing so, it may perhaps be said that it has laid down a policy to extend such an Act and directs the executive to apply and implement such an Act. But when it not only adopts such an Act but also provides that the Act applicable to its territory shall be the Act amended in future by the other Legislature, there is nothing for it to predicate what the amended Act would be. Such a case would be clearly one of non-application of mind and one of refusal to discharge the function entrusted to it by the instrument constituting it. It is difficult to see how such a case is not one of abdication or effacement in favour of another Legislature at least in regard to that particular matter." Relying on the above statement of the law, it was argued by the learned counsel for the petitioner that the Central Sales Tax Act having adopted not only the sales tax laws of the appropriate States as they existed when the Act came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple between delegating a power to fix rates of taxes to be charged on different classes of goods and a power to fix rates simpliciter. In Devi Dass Gopal Krishnan v. State of Punjab[1967] 20 S.T.C. 430 (S.C.)., it was held that since under section 5 of the Punjab General Sales Tax Act, 1948, as it originally stood, an uncontrolled power was conferred on the Provincial Government to levy tax at such rates as the Government might direct, the Legislature practically effaced itself in the matter of fixation of rates and it did not give any guidance either under that section or under any other provisions of the Act and therefore section 5 as it was originally enacted was void. The decision in State of Madras v. Nataraja Mudaliar[1968] 22 S.T.C. 376 (S.C) . has reviewed the developments in the law relating to imposition of tax on transactions of sale and its inter-relation with the constitutional provisions leading to the enactment of the Act. The exercise of taxing power by the Provinces led to multiple taxation of the same transaction by many Provinces, the burden of tax falling ultimately on the consuming public. In order to remove the burden imposed upon the consumers, article 286 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State List, the subject "taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I" was substituted. Article 286 of the Constitution was also amended; by the amended article 286 the Parliament was authorised to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce in any of the ways mentioned in clause (1), and by clause (3) it was enacted that any law of a State shall, in so far as it imposes or authorises the imposition of, a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify. In article 269(1), clause (g) was added authorising the Government of India to collect tax on the sale or purchase of goods other than newspapers where such sale or purchase takes place in the course of inter-State trade or commerce and making it obligatory upon the Government of India to assign the tax to the States in the manner provided in clause (2). I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by sub-section (2A) of section 8, it was provided that notwithstanding anything contained in sub-section (1) or sub-section (2), if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent. of the tax payable under the Act on the turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil, or as the case may be, shall be calculated at the lower rate. Tax under the Act is payable by the seller. The State from which the movement of goods commences in the course of inter-State sale collects the tax as agent of the Central Government, and in the manner provided in sub-section (2) of section 9. By sub-section (3) of section 9 the proceeds in any financial year of any tax including any penalty levied and collected under the Act in any State other than a Union Territory on behalf of the Government of India are to be assigned to that State and are to be retained by it, and the proceeds attributable to Union Territories are to form part of the Consolidated Fund of India. Thus the Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of payment of tax. The Act, if it had intended, could have delegated to the State Governments the power to frame rules providing for assessment, reassessment, collection and enforcement of payment of tax under the Central Sales Tax Act. Instead of doing so, by section 9(2) the Act has adopted the procedure under the general sales tax law of the appropriate State. In adopting the procedural law of the State, the Parliament cannot be said to have abdicated its essential legislative function. Therefore, the first ground urged by the learned counsel for the petitioner has to be rejected as untenable. The second ground, viz., that the Act must be deemed to have adopted the sales tax laws as in force when the Act came into force on 21st December, 1956, is also, in our opinion, untenable. Section 2(i) has defined the expressions "sales tax law" and "general sales tax law" to mean the law for the time being in force in any State. The Legislature's intention is quite clear that it is not only the law in force when the Central Act was enacted but the State law in force from time to time. With respect, we are unable to agree with the decision in Shah Co. v. State of Madras[1967] 20 S.T.C. ..... 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