TMI Blog1990 (3) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... l be forwarded to the dealer at his last address known to the officer issuing the notice) require- (a) any person from whom any money is due or may become due to a dealer who has failed to comply with a notice served under sub-section (4) or sub-section (5) of section 13, or has failed to pay any interest due from him under this Act; or (b) any person who holds or may subsequently hold any money for or on account of such dealer, to pay into the Government treasury in the manner specified in the notice issued under this sub-section either forthwith or upon the money becoming due or being held, or at or within the time specified in the notice not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount of tax due from the dealer or penalty or both, as the case may be, under this Act, or the whole of the money when it is equal to or less than that amount." 3.. It is common knowledge that such a provision finds place in sales tax laws of various States and as such the point involved is of seminal importance not only for this State but for other States of the country also. 4.. Such a notice under section 13-A(1) has been issued both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the 'Union List'). (2) Notwithstanding anything in clause (3), Parliament, and, subject to clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the 'Concurrent List'). (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the 'State List'). (4)............." 7.. Before proceeding to examine the constitutional point involved, let us clear the deck by considering whether to these cases at hand section 22(1) of the Central Act has at all any application. It has not been disputed before us by the learned Standing Counsel that the petitioner as well as the intervenor is a sick industrial company and that a scheme as contemplated by section 17 of the Central Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of section 13-A of the State Act because of what has been contained in section 32(1) of the Central Act and what has been provided in article 246 of the Constitution. 9.. We are thus required to enter the constitutional thicket relating to the distribution of legislative powers between the Union and the States and the field of operation of the same. Though an effort has been made in the Constitution to make the three Lists of the Seventh Schedule mutually exclusive, it has not been possible to avoid conflict between the Union law and the State law. It is because of this that article 246 of the Constitution had to lay down the principle of federal supremacy, otherwise "an absurd situation would result if two inconsistent laws, each of equal validity, could exist side by side within the same territory". (Per Gwyer, C.J., in Subrahmanian Chettiar v. Muttuswami Goundan AIR 1941 FC 47). Of course, an attempt has first to be made to see whether a conflict can be avoided by construction. It is only when that reconciliation proved impossible............then, and only then, will the non obstante clause operate and the federal power prevail; for the clause ought to be regarded as a last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat can properly be given to it and equally giving to the language of the State Legislative List a meaning which it can properly bear. The non obstante clause in article 246(1) must operate only if such reconciliation should prove impossible. Thirdly, no question of conflict between the two Lists will arise if the impugned legislation, by the application of the doctrine of pith and substance, appears to fall exclusively under one List, and the encroachment upon another List is only incidental. 12.. Another doctrine with which we would be concerned in resolving the tangle at hand is that of colourable legislation. When the legislature transgresses the limits of its constitutional power, the same may either be patent, manifest or direct; but it may also be disguised, covert and indirect. In the case of the former, the law is obviously bad for non-compliance of the requirements of the Constitution and the law in such a case is "ultra vires". Where, however, the transgression is disguised, it is referred to as colourable legislation. The connotation is that although apparently a legislature purports to act within the limits of its own powers, yet in substance and reality it encroache ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attempt should be made to harmonize its contents with some other entries operating in the same field so that the latter may not be robbed of its entire content and rendered it nugatory, as stated in Calcutta Gas Co. v. State of West Bengal AIR 1962 SC 1044. 15.. Before we apply the aforesaid legal principles to resolve the dispute at hand, it may be pointed out that there is no challenge before us to the constitutional validity of either of the two provisions with which we are concerned, namely, section 22(1) of the Central Act and section 13-A of the State Act. We would, therefore, confine ourselves to find out the real scope of the two sections and whether both of them can be allowed to operate on their own fields in harmony. To do so, we have first to note the language of the relevant entries. According to Shri Chandurkar, the Central Act is covered by entry 52 of List I which reads "industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest". It is impressed upon us by Shri Chandurkar by referring to the preamble of the Central Act and its Statement of Objects and Reasons that what has been laid down in section 22(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 6 of the Essential Commodities Act according to which any order made under section 3 would have effect notwithstanding anything inconsistent therewith contained in any enactment other than the Essential Commodities Act. The Apex Court pointed out that the power of the State Legislature under entry 54 of List II was not controlled by the power of Parliament to make law under entry 33 of List III which is the relevant entry relating to the Essential Commodities Act, 1955. The provision of section 6 of the Essential Commodities Act was, therefore, not allowed to override the provisions of section 5(3) of the Bihar Finance Act. 17.. Though in Hoechst Pharmaceuticals' case [1984] 55 STC 1 (SC); [1985] 154, ITR 64 (SC); AIR 1983 SC 1019, the Apex Court was concerned with the law made by the Parliament under entry 33 of List III, according to us, the same would apply to the law made under entry 52 of List I. We have said so because by virtue of what has been stated in clauses (2) and (3) of article 246, the law made by the Legislature of any State with respect to any of the matters enumerated in List II is subject to any law made by the Parliament with respect to any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omers of entry 54 of List II, the ratio of Hoechst Pharmaceuticals' case [1984] 55 STC 1 (SC); [1985] 154 ITR 64 (SC); AIR 1983 SC 1019, has to apply. It was observed in that case at para 31 on this aspect of the controversy that it was difficult to comprehend the submission that there could be intrusion by law made by the Parliament under entry 33 of List III in a forbidden field, viz., the State's exclusive power to make law with respect to levy and imposition of tax on sale or purchase of goods relatable to entry 54 of List II. It was, therefore ultimately, held that the two provisions of law with which that case was concerned operated on two separate and distinct fields and both were capable of being obeyed. We would take the same view in the present case and state that the principle of federal supremacy laid down in article 246 of the Constitution would not be available in the present case as there is no "irreconcilable " conflict between the two provisions of law with which we are concerned as they operate on two separate and distinct fields and, therefore, both are capable of being obeyed. The result of this view is that section 22(1) of the Central Act would not protect the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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