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PETITIONER: THE PUNJAB STATE, CHANDIGARH

       Vs.

RESPONDENT: SANSARI MAL PURAN CHAND

DATE OF JUDGMENT: 22/08/1967

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. WANCHOO, K.N. (CJ) RAMASWAMI, V. MITTER, G.K. HEGDE, K.S.

CITATION:  1968 AIR  331            1968 SCR  (1) 336  CITATOR INFO :  RF         1972 SC1760  (14)

ACT: Eeast  Punjab  General Sales Tax Act 46 of 1948, ss.  5  and 6(2)--whether  s.5 as amended by East Punjab Act 19 of  1962 effective in imposition of Sale-Tax on Essential gods  prior to  amendment of Art. 286(3) of the Constitution and  repeal of s. 3 of Central Act 52 of 1952.

HEADNOTE: The respondents were   dealers assessable to sales tax under the  East  Punjab  General Sales   Tax Act,  1948,  and,  in respect  of  the assessment years 1955-56 to  1957-58,  they claimed  an  exemption  from  tax on  sales  of  edible  oil produced  by  them  cal process.   The  assessing  authority rejected this claim on the ground that such sales we’re  not exempt from tax in view of the amendment of the Schedule  to the Act- specifying tax-free goods by the notification dated August 5, 1954.  The respondent’s appeals to the Excise  and Taxation  Commissioner:. and to the  Financial  Commissioner were  rejected  but the High Court, upon a  reference.  held that   the  notification  was  a  law  made  by  the   State legislature  after  the enactment of Central Act No.  52  of 1952  which,  read with Art. 286(3) of  the  Constitution  , placed a bar on a State by a law imposing or authorising the imposition  of a tax on the sale of essential  goods  unless the  law  in  question  had  received  the  assent  of   the President; and since the notification had not received  such assent,  it  was ultra vires and  invalid;  the  respondents were, therefore, entitled to exemption under Item No. 57  of the  Schedule prior to its amendment by the notification  of August 5, 1954. On appeal to this Court, Held: The respondents were not liable to pay tax on sales of edible  oils  produced  in ghanis run  by  mechanical  power effected  by them before September 11, 1956; but  they  were liable  to  pay tax on such sales made after  September  11, 1956, [348E] (i)  The amended s. 5 inserted in East Punjab Act No. 46  of

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1948 by East   Punjab  Act  No. 19 of 1952  authorising  the fixation of the rate of  tax   leviable   on   the   taxable turnover,  was  a law authorising the imposition  of  a  tax within  the  purview  of the unamended Art.  286(3)  of  the Constitution.   As  the East Punjab Act No. 19 of  1952  was passed after the enactment of Art 286(3) of the Constitution and after Parliament had by Central Act 52 of 1952  declared edible oil to be essential for the life of the community and it  was not reserved for consideration of the President  and did not receive his assent, it could not take effect  during the currency of Art. 286(3) prior to its amendment in so far as  it  authorised the imposition of a tax on  the  sale  or purchases  of edible oil.  It could however take  effect  in respect  of  sale  and purchases of  other  goods.  [344A-C; 348B--C] (ii)  The  effect  of the amendment of Art.  286(3)  of  the Constitution by the Constitution (Sixth Amendment) Act  with effect from September 11, 1956 was that the restriction  put by  Art.  286(3)  on the operation of the amended  s.  5  in respect of essential goods was 336 337 lifted and the section thereafter took effect on such  goods also.  There was no force in the contention that the amended s.  5  wag  a still-born Jaw and that the  section  was  not revived  by the removal of the ban.  It was inserted by  the East  Punjab  Act  No.  19 of 1952 which  was  passed  by  a competent  legislature and always took effect in respect  of nonessential goods. [344D-F] Section  3  of  Central Act 52 of 1952  had  no  independent existence  and after the amendment of Art. 286(3) it had  no force  from September 11, 1956 until its repeal with  effect from January 5, 1957 by Central Act 74 of 1954. [345C-D,E-F] (iii)  The notification of August 5, 1954 which amended  the Schedule  of tax-free goods was authorised by s. 6(2)  which was  a  pre-Constitution  law outside the  purview  of  Art. 286(3).  The notification did not require the assent of  the President  for affecting essential goods.  The  notification was therefore valid and 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 s. 5 could not then affect edible oil, no tax  was effectively imposed on it until September 11,  1956 during  the currency of the unamended Art. 286(3).  [346A-C, E-F] (iv)   Although  the  notifications  issued  by  the   State Government  under the unamended s. 5 which was invalid  were not authorised by law and also invalid, after the passing of the East Punjab Act 19 of 1952 the result was that from  the very  commencement  of  the main Act the amended  s.  5  was deemed  to  have authorised the State  Government  to  issue notifications  fixing  the rate of tax.   The  notifications issued  under s. 5 before 1952 must, therefore be deemed  to be and always to have been valid and not still-born.  It was not   necessary  to  pass  another  Act   validating   those notifications nor was it necessary for the State  Government to  issue fresh notifications fixing the rate of tax.   Here again,  such notifications could not take effect in  respect of  sales or purchases of essential goods  before  September 11, 1956. [346H-347C] (v)  There was no force in the contention that  the  present appeals   were  not  maintainable  because   the   Financial Commissioner had already directed disposal of the case under s.  22(5)  of the East Punjab Act 46 of 1948  in  accordance with the judgment of the High Court.  Effect had to be given to  the order of this Court and the  Financial  Commissioner

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must direct disposal of the cases accordingly. [347F 348A] Case law reviewed.

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  1182-1184 of 1965. Appeals  by special leave from the judgment and order  dated August  19, 1963 of the Punjab High Court in General  Sale’s Tax Reference Nos. 8, 10 and 11 of 1962. R.   Ganapathy  Iyer, R. N. Sachthey for R. H.  Dhebar,  for the appellant (in all the appeals). R.   K.  Garg,  S. C. Agarwal, Shive Pujab  Singh  and  Anil Kumar, for the respondent (in all the appeals). The 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 338 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 the application of  the respondents, the Financial ’Commissioner, Revenue, Punjab by his  order dated August 9, 1962 referred under S.  22(1)  of the  Punjab  General  Sales  Tax  Act,  1948  the  following question of law for the decision of the High Court of Punjab at Chandigarh:               "Whether   notification   No.  3483-E   &   T-               54/723(CH),   dated  the  5th  August,   1954,               whereby  exemption from Sales Tax  granted  by               the  Government in respect of edible oils  was               abolished  in  the case of  such  edible  oils               produced  in ghanis run by mechanical  process               was  intravires  and not the law made  by  the               Legislature  of the State which requires’  the               previous assent of the President of India." These  References were marked, as Sales Tax References  Nos. 8, 10 and 11 of 1962.  By its judgment dated August 19, 1963 the High Court held following its earlier decision in  Ganga Ram  Suraj  Prakash  v.  The State  of  Punjab(1)  that  the notification  was a law made by the State Legislature  after the  enactment of Central Act No. 52 of 1952, and  since  it did  not  receive the assent of the President it  was  ultra vires and invalid.  In the earlier decision, the Punjab High Court  held that (1) s. 5 of the East Punjab  General  Sales Tax-Act,  1948, as it originally stood, was invalid  on  the ground  of excessive delegation of legislative power to  the executive,  (2) the remaining sections of the Act  including S.  6 could not survive the invalidity of S. 5, (3) the  Act

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did not become valid until the insertion of the new s. 5  in the main Act by the East Punjab Act No. 19 of 1952, and  (4) as  the  East Punjab Act No. 19 of 1952  which  alone  could sustain  the impugned notification dated August 5, 1954  was passed  after the Central Act No. 52 of 1952,  the  impugned notification  could not be justified and was  invalid.   The High Court observed that it was not impressed with the argu- ment  that  the  notification  was not a  law  made  by  the legislature  of  the State and therefore the assent  of  the President could be dispensed with.  The present appeals have been  preferred  from  the orders of the  High  Court  dated August 19, 1963. (1)  S.T.C. 476. 339 To appreciate the points in. controversy, it is necessary to refer to the course of legislation.  The East Punjab General Sales  Tax Act (East Punjab Act No. 46 of 1948) was  enacted on November 15, 1948.  Section 4 of the Act provided for the incidence  of  taxation  and declared that  the  classes  of dealers specified in sub-ss. (1), (2), (3) and (4) would  be liabe  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 s. 2(i) included the aggregate  of the  amount of sales.  ’Taxable turnover’ as defined  in  s. 5(2) was ascertained after deducting from the gross turnover inter  alia  sales of goods declared tax-free  under  s.  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  s.  5  of  the East Punjab Act  No.  46  of  1948. Section 2 of the amending Act was in these terms:               "In  sub-section (1) of section 5 of the  East               Punjab General Sales Tax Act, 1948, after  the               word  ’rates’  the following  words  shall  be               inserted, namely, ’not exceeding two pice in a               rupee’." It is common ground before us that before the passing of the East  Punjab  Act No. 19 of 1952 the  State  Government  bad issued notifications under s. 5 fixing the rates of tax.  In exercise of its powers under s. 6(2) of the Act, the  Punjab Government  issued the notification No. 3483-E &  T-51/2518, dated  May 30, 1951 adding item No. 57 (edible oils) to  the schedule referred to in s. 6(2).  The entry was as follows:               "57.  Edible oils produced from sarson,  toria               and  till ghanis but not in hydrogenated  from               e.g. vegetable, ghee, vanaspati etc." By  a  later notification No. 3483-E  &  T-54/723(CH)  dated August  5,  1954,  the  Punjab  Government  substituted  the following entry No. 57 in the schedule:               "57.  Edible oils produced from sarson,  toria               and till indigenous kohlus worked by animal or               human  agency when sold by the owners of  such

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             kohlus only". 340 it  is  common  case  before us that as  a  result  of  this notification  sales of edible oil produced by ghanis run  by mechanical power ceased to be tax-free after August 5, 1954. It  may be recalled that Art. 286(3) of the Constitution  as it stood before the Constitution (Sixth Amendment) Act, 1956 provided:               "No  law  made by the Legislature of  a  State               imposing, or authorising the imposition of,  a               tax on the sale or purchase of any such  goods               as have been declared by Parliament 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." On August 9, 1952 Parliament passed the Essential Goods (De- claration  and Regulation of Tax on Sale or  Purchase)  Act, 1952 (Central Act No. 52 of 1952). By s. 2 of this Act  read with item 5 of the schedule, edible oils were declared to be essential for the life of the community.  Section 3 of  this Act was in these terms:               "3.  Regulation of tax on sale or purchase  of               essential   goods.-No  law  made   after   the               commencement of this 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  this  Act  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." On  September  11, 1956 the Constitution  (Sixth  Amendment) Act, 1956 was passed substituting a new cl. (3) in Art. 286. The amended Art. 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 s. 16 of the Central Sales  Tax  Act, 1956 (Act No. 74 of 1954) 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  respondents  and  the   revenue authorities  was whether the tax was effectively imposed  on those  sales so that the respondents may be held. liable  to pay  tax  thereon during the assessment years  in  question. This  dispute was not properly brought out in  the  question referred  to  the High Court.  We, therefore,  re-frame  the question thus: "Was  tax  effectively imposed  on  sales  of edible oil produced 341  in ghanis run by mechanical power, so that the  respondents can  be  held  liable to pay tax on such  sales  during  the assessment  years,  1955-56,  1956-57  and  1957-58?"   This question involves consideration of the validity of s. 5  and other  sections of the East Punjab Act No. 46 of 1948, s.  5 as  amended  by  East  Punjab Act No. 19  of  1952  and  the

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notifications issued under ss. 5 and 6(2) as also the effect of  Art.  286(3) of the Constitution, its amendment  by  the Constitution (Sixth Amendment) Act, s. 3 of Central Act  No. 52 of 1952 and its repeal by Central Act No. 74 of 1954. On  the arguments addressed before us, the  following  ques- tions arise for decisions:               (1) Was s. 5 of the East Punjab Act No. 46  of               1948 as originally passed in 1948, invalid?               (2)  If  so,  did  the  invalidity  of  s.   5               invalidate the other provisions of the Act?               (3)  Is s. 5 of the East Punjab Act No. 46  of               1948  as amended by East Punjab Act No. 19  of               1962 invalid?               (4)  Was  the amended s. 5 a law  imposing  or               authorising the imposition of a tax within the               meaning of Art. 286(3) of the Constitution  as               it   stood  before  the  Constitution   (Sixth               Amendment) Act?  If so, with what effect?               (5)  What  is the effect of the  amendment  of               Art.   286(3)  of  the  Constitution  by   the               Constitution  (Sixth  Amendment) Act  and  the               repeal  of  Central  Act No.  52  of  1952  by               Central Act No. 74 of 1954?               (6)   Is the notification dated August 5, 1954               issued under s. 6(2) valid?               (7)   Are the notifications issued under s.  5               before the passing   of  the East  Punjab  Act               No. 19 of 1952 valid?               (8)   Was tax effectively imposed on sales  of               the edible oil               in  question  during the  relevant  assessment               years? The  first three questions are concluded by the decision  of this  Court  in M/s.  Devi Das Gopal Krishan and  others  v. State of Punjab and others(1).  In that decision, this Court held  that  (1) s. 5 of East Punjab Act 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 s. 5 did  not  render void  s. 4 and the other sections of the Act though till  an appropriate  s. 5 was inserted s. 4  remained  unenforceable and  (3)  s. 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 stillborn  section. The Court held that though in (1)  [1967] 3 S.C.R. 557. 342 terms  Act  No. 19 of 1952 amended s. 5,  in.  substance  it inserted  a,  new amended s. 5 in Act No. 46  of  1948  with retrospective effect. The fourth question is whether the amended s. 5 inserted  by 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 Art. 286(3) of  the Constitution  as  it stood before  the  Constitution  (Sixth Amendment)  Act, and if so, what are the  consequences.   As pointed out by Ramachandra Iyer, J. in Sreenivas and Co.  v. Deputy  Commercial  Tax  Officer(1), the  decisions  on  the interpretation  of S. 55 of the Australian Constitution  are not  a  reliable guide to the interpretation  of  the  words "imposing  or authorising the imposition of a tax"  in  Art. 286(3) of the Constitution and s. 3 of Central Act No. 52 of

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1952.   Section  55  which is  directed  to  preserving  the privileges  of the House of Representatives with respect  to finance  and  providing against their abuse has  received  a somewhat  narrow interpretation from the Australian  Courts. See  the cases collected in Wynes.   Legislative,  Executive and Judicial Powers, 3rd Edn., p. 240.  We may add that  the observations  of  Isaccs,  J.  in  Federal  Commissioner  of Taxation v. Munro(2) suggest that an Act naming the rate but leaving  the  persons  on whom the tax  should  fall  to  be thereafter determined would be a measure "imposing taxation" even for the purposes of s. 55. Nor  is  much light thrown on the  interpretation  of  those words by the decisions under the Indian Income-tax Act.   In Messrs.  Chatturam Horilram Ltd. v. Commissioner of  Income- tax,  Bihar  and Orissa(3) this Court held that  income  was chargeable  under s. 3 of the Indian Income-tax  Act  though the Finance Act was not extended to the relevant area during the year in question.  In Kesoram Industries v. Commissioner of  Wealth  Tax(4) this Court by a  majority  following  the dicta  in  Wallace Brothers & Co. Ltd.  v.  Commissioner  of Income-tax, Bombay(5)  Chatturam v. Commissioner of  Income- tax,  Bihar(6) and explaining the dicta in  Commissioner  of Income-tax v. Western India Turf Club Ltd. (7 ) and Maharaja of Pithapuram v. Commissioner of Income-tax, Madras(8), held that there was a liability to pay income-tax and a debt owed by the assessee in respect of income-tax on the last day  of the  accounting  year within the meaning of s. 2(m)  of  the Wealth  Tax Act, 1957.  None of these decisions  dealt  with the  construction of the words "imposing or authorising  the imposition of a tax" in Art. 286(3) of the Constitution.  It is remarkable, however, (1)   [1960]  11 S.T.C.68, 75--77,On appeal from  (1959)  10 S.T.C.171. (2)   38 C.L.R. 153, 189. (3)   [1955] 2 S.C R. 290, 297-300 (4)   [1966] 2 S.C.R. 688. (5)   (1948) 16 I.T.R. 240, 244. (6)  (1947) 15 I.T.R. 302, 308. (7)   (1927) L.R. 55 I.A. 14, 17. (8)  (1945) 13 I.T.R. 221, 223-24. 343 that  in the Maharaja of Pithapuram’s case(1)  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(2), 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.  The Commissioner  of  Inland Revenue(3), Rowlatt,  J.  said  the English  Income-tax was annually imposed by the Finance  Act and  in Bowels v. Bank of England(4), 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 Apt  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  first  step  for imposing  the tax.  It declared who were the persons  liable to  pay tax under the Act.  But s. 5 of East Punjab Act  No. 46  of  1948 was invalid and until the passing of  the  East Punjab  Act No. 19 of 1952 and the insertion of the  amended s.  5  there  was no provision in the  main  Act  fixing  or authorising the fixation of the rate at which the tax was to

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be levied.  In the absence of such a provision, there  could be  no levy, assessment and collection of the tax  from  the dealer and s. 4 remained unenforceable.  The East Punjab Act No. 19 of 1952 by inserting the amended s. 5 in the main Act for  the  first time provided for the levy  on  the  taxable turnover of every dealer a tax at a rate to be fixed by  the State  Government.  The rate of tax could be fixed  and  the tax  could be actually imposed under the amended s. 5  only. The East Punjab Act No.19 of 1952 therefore belonged to  the category of laws authorising the imposition of a tax on  the sale of goods. The  object of Art. 286(3) of the Constitution was to put  a constitutional  check  on  the  operation  of  a  State  law imposing or authorising the imposition of a tax on the  sale or purchase of essential goods.  Commerce in such goods  was a  matter  of national concern and no such  law  could  take effect unless it had been reserved for the consideration  of the President and had received his assent.  An arbitrary  or unjust  rate  of sales tax would unduly hamper  dealings  in such  goods,  and it is reasonable to think that  a  measure fixing  or authorising the rate of tax would be  subject  to the  salutary  check of Art. 286(3).  In  our  opinion,  the amended  s. 5 inserted in East Punjab Act No. 46 of 1948  by East  Punjab Act No. 19 of 1952 authorising the fixation  of the  rate of tax leviable on the taxable turnover was a  law authorising  the imposition of a tax within the  purview  of the unamended Art. 286(3) of the Constitution. (1) (1945) 13 I.T.R. 221.     (2) [1955] 2 S.C.R. 290. (3) (1929) 15 T.C. 573, 581.  (4) (1913) 1. Ch. 57, 87. 344 The  East  Punjab Act No. 19 of 1952 was  passed  after  the enactment  of  Art.  286(3) of the  Constitution  and  after Parliament had by Central Act No. 52 of 1952 declared edible oil  to be essential for the life of the community.  It  was not reserved for the consideration of the President and  did not  receive  his  assent.  It was  a  law  authorising  the imposition  of a tax on the sale of goods.  In so far as  it authorised the imposition of a tax on the sales or purchases of edible oil, it could not take effect during the  currency of  Art. 286(3) of the Constitution as it stood  before  its amendment  by the Constitution (Sixth Amendment)  Act.   The fact  that the amended s. 5 inserted by the East Punjab  Act No.  52  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. 52 of 1952 did not  receive  the assent  of  the President, the amended s. 5 could  not  take effect  at  all either prospectively or  retrospectively  in respect of sales and purchases of essential goods while  the ban  of Art. 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 Art. 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 cl. (3) in Art. 286.  The effect of  this amendment was that the restriction put by Art. 286(3) on the operation  of the amended s. 5 inserted by the  East  Punjab Act No. 19 of 1952 in respect of essential goods was lifted, and  the section thereafter took effect on such goods  also. Counsel for the respondent submitted that in view of the ban imposed by Art. 286(3), the amended s. 5 was a stillborn law and  the section was not revived by the removal of the  ban. In this connection, our attention was drawn to the decisions

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under  Arts.  286(2) and 13 of  the  Constitution.   Article 286(2),   as  it  stood  before  the   Constitution   (Sixth Amendment) Act provided that "Except in so far as Parliament may  by  law  otherwise provide, no law  of  a  State  shall impose, or authorise the imposition of, a tax on the sale or purchase  of  any goods where such sale  or  purchase  takes place  in the course of inter-State trade or commerce".   In spite  of the prohibitory words of Art. 286(2), in M. P.  V. Sundararamier  & Co. v. The State of Andhra  Pradesh(1)  and Messrs.  Ashok Leyland Ltd. v. The State of Madras(2),  this Court held that a State law imposing a tax on sales of goods in  the  course of inter-State trade and  commerce  was  not void,  and the effect of the Sales Tax Laws Validation  Act, 1956  was to liberate State laws from the fetter  placed  on them by Art. 286(2) and enable such laws to operate on their own terms.  In Mahendra Lal Jaini v. State of U. P.(")  this Court  held,  reviewing  the earlier  cases,  that  a  post- Constitution (1) [1958] S.C.R. 1422, 1459. (2) [1962] 1 S.C.R. 607. (3) [1953] Supp.  1 S.C.R. 912. 345 Act  taking  away  or abridging the  fundamental  rights  in contravention  of  Article 13(2) was a stillborn law  but  a pre-Constitution  Act inconsistent with a fundamental  right was in view of Art. 13(1) eclipsed for the time being and on the  abolition of the fundamental right by a  constitutional amendment  the pre-Constitution Act would begin  to  operate once again from the date of the amendment.  These  decisions show  that  a law made by an incompetent legislature  or  in contravention of some constitutional limitation is void from its  inception.  But the amended s. 5 inserted by  the  East Punjab  Act  No.  19  of 1952  was  passed  by  a  competent legislature.   It  always  took effect in  respect  of  non- essential  goods.   Article  286 (3) did  not  prohibit  its making.   While  the  restriction  imposed  by  Art.  286(3) continued, the section could not affect essential goods, but as  soon  as the restriction was removed,  it  became  fully effective.  The section was not void or stillborn. 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 preamable to the Act shows that  it was  an Act to declare in pursuance of cl.3 of Art.  286  of the Constitution certain goods to be essential for the  life of the community.  By s. 2, the goods specified in the sche- dule  were  declared to be so essential.  As  soon  as  this declaration was made, Art. 286(3) came into play.  Section 3 stated  the  conjoint  effect of Art. 286(3) and  s.  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 and  had  received  his assent.  But s. 3 had no independent existence.  The subject of  a  tax  on  the sale or purchase  of  goods  other  than newspapers  was exclusively a State subject,, see  List  II, Entry  54.  Article 286(3) did not authorise  Parliament  to legislate on this subject.  It only conferred,on  Parliament the  authority to declare that certain goods were  essential

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for the life of the community.  On such a declaration  being made, the check. imposed by Art. 286(3) came into operation. But  on the amendment of Art. 286(3) this check  was  lifted and thereafter. s. 3 had no force.  It follows that as  from September 11, 1956 the. amended s. 5 inserted by East Punjab Act  No.  19 of 1952 took,effect on sales  or  purchases  of edible oil also. The   sixth  question  relating  to  the  validity  of   the notification   dated   August   15,   1954   involves    the interpretation   of   the  expression  "law  made   by   the legislature  of a State" in Art. 286(3) as it  stood  before the  Constitution  (Sixth Amendment) Act.  We are  not  con- cerned  in  these  appeals with the  interpretation  of  the expression 346 "law  of  a  State" in the amended  Art.  286(3)  and  other Articles.   The  notification  dated  August  5,  1954   was authorised  by  s. 6(2) of East Punjab Act No. 46  of  1948. Section  6(2) being a pre-Constitution law was  outside  the purview  of Art. 286(3) of the Constitution and Central  Act No. 52 of 1952.  See Sardar Soma Singh v. The State of Pepsu and  Union  of  India(1).  Consequently, s.  6(2)  from  its inception affected essential goods.  By force of s. 6(2) the notification  dated  August  5, 1954 issued  under  it  took effect  immediately  in  respect of  essential  goods.   The notification  issued by the State Government was not a  "law made  by the legislature of a State" within the  meaning  of Art. 286(3).  Though issued after the passing of Central Act No.  52  of  1952,  it did not require  the  assent  Of  the President for affecting essential goods.  In The Indore Iron & Steel Registered Stockholders’ Association v. The State of Madhya Pradesh(2), this Court held that a notification dated October  24,  1953  specifying the goods  whose  sales  were taxable  under s. 5(2) of the Madhya Bharat Sales  Tax  Act, 1950,  a  pre-Constitution Act, was outside the  purview  of Art. 286(3) of the Constitution and s. 3 of Central Act  No. 52  of  1952.   Similarly,  in Sreenivas  &  Co.  v.  Deputy Commercial  Tax Officer(3), 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 Art.  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  s.  5 could  not  then affect edible oil, no tax  was  effectively imposed  on it until September 11, 1956 during the  currency of  the  unamended  Art. 286(3) of  the  Constitution.   The respondents were, therefore, not liable to pay tax on  their sales  of  such edible oil effected before  September  11  , 1956. It is common case before us that before the insertion of the amended  s.  5 by East Punjab Act No. 19 of 1952  the  State Government  had issued notifications under s. 5  fixing  the rate  of tax.  The seventh question relates to the  validity of those notifications.  As the unamended s. 5 was  invalid, under  the  law as it stood before the passing of  the  East Punjab  Act  No.  19 of 1952 those  notifications  were  not

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authorised by law and were invalid.  The East Punjab Act No. 19  of  1952.  however, inserted  s.  5  with  retrospective effect.   The effect of the East Punjab Act No. 19  of  1952 was  that  the amended s, 5 was inserted and was  deemed  to have  always  been  inserted in the  main  Act.   After  the passing of (1) [1954] S.C.R. 955.           (2) [1962] 2 S.C.R. 924 (3)  [1960]  11 S.T.C. 68, 75-77, on appeal from  [1959]  10 S.T.C. 171. 347 the East Punjab Act No. 19 of 1952 the result was that  from the  very commencement of the main Act the amended s. 5  was deemed   to  have authorised the State Government  to  issue notifications  fixing  the rate of tax.   The  notifications issued by the State Government under s. 5 before 1952  must, therefore, be deemed to be and always to have been valid and not  stillborn.   It was not necessary to pass  another  Act validating those notifications, nor was it necessary for the State  Government  to issue fresh notifications  fixing  the rate  of tax.  In view of Art. 286(3), the amended s. 5  and the notifications issued under it before 1952 could not take effect  in respect of sales or purchases of essential  goods before September 11, 1956.  But they took effect in  respect of such sales after September 11, 1956.  The validity of the notifications  issued after 1952 under ’he amended s.  5  is not challenged before us. It  follows that the State law and the notifications  issued there  under effectively imposed tax on sales of edible  oil from September 11, 1956 and not before.  The respondents are liable  to  pay tax on all sales of edible oil  effected  by them  after September 11, 1956, but they are not  liable  to pay tax on their sales made before that date. in C. M. Ps.  No. 877 to 879 of 1964, the respondents raised several  additional contentions.  The first  contention  was that  the consideration of the several questions arising  in this  case  is  precluded by res judicata  in  view  of  the decisions  of the Punjab High Court in Sales Tax  References Nos.  4 and 13 of 1961.  But this plea of res  judicata  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  ac- cordingly.   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  s. 22(5) of 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 the copy of the judgment of  the High  Court in Sales Tax References Nos. 8, 1 0, and  11  of 1962  the  Financial  Commissioner  acting  under  s.  22(5) directed  that the cases should be disposed of according  to the  judgment of the High Court.  But those  very  judgments are  under  appeal  in  this Court.   In  so  far  as  those judgments are varied or reversed in these appeals,

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348 effect  must  be given to the order of- this Court  and  the Financial Commissioner must direct the disposal of the cases accordingly.   In  C. M. Ps.  Nos. 877 to 879 of  1964,  the respondents  prayed  for  revocation of  the  special  leave granted by this Court.  There is no ground for revoking  the special leave, and the petitions must be dismissed. To summarise our conclusions: (1) The unamended s. 5 of East Punjab Act No. 46 of 1948 was void. (2) The invalidity of s. 5  did not render ss. 4 and 6 and other sections of the  Act invalid.  (3) The amended s. 5 inserted by East  Punjab  Act No.  19  of 1952 is valid. (4) The amended s. 5  was  a  law authorising  the imposition of a tax within the  meaning  of Art.  286(3)  of  the Constitution as it  stood  before  the Constitution (Sixth Amendment) Act. (5) The amended s. 5 and the notifications issued under it did not take effect before September 11, 1956 in respect of sales or purchases of goods declared  essential to the life of the community by  Central Act No. 52 of 1952, but they took effect in respect of  such sales  or  purchases  after  September  11,  1956.  (6)  The notification  dated August 5, 1954 issued under S.  6(2)  is valid.  (7) The notifications issued under s. 5  before  the passing of the East Punjab Act No. 19 of 1952 are valid. (8) Tax  was  effectively imposed on the sales or  purchases  of edible oil from September II, 1956 and not before. We,  therefore, hold that the respondents are not liable  to pay  tax  on sales of edible oil produced in ghanis  run  by mechanical power effected by them before September 11, 1956. But  they  are liable to pay tax on such  sales  made  after September  11,  1956.   The Sales  Tax  References  and  the appeals  are disposed of accordingly.  C.M.Ps. Nos.  877  to 879  of  1964 are dismissed.  There will be no order  as  to costs. R.K.P.S.              Appeals partly allowed. 349