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PETITIONER: M.P. V. SUNDARARAMIER & CO.

       Vs.

RESPONDENT: THE STATE OF ANDHRA PRADESH& ANOTHER(with connected petition

DATE OF JUDGMENT: 11/03/1958

BENCH: AIYYAR, T.L. VENKATARAMA BENCH: AIYYAR, T.L. VENKATARAMA BOSE, VIVIAN DAS, SUDHI RANJAN (CJ) DAS, S.K. SARKAR, A.K.

CITATION:  1958 AIR  468            1958 SCR 1422

ACT: Sales  Tax-Inter-State sales--Sale outside State  but  goods delivered for consumption within State- Competence of States to levy tax-Conditional legislation--Power of Parliament  to authorise  such taxation-President’s Adaptation  Order-Scope of--Nature     of     Retrospective      operation-Enactment unconstitutional  in Part-Effect -Madras General  Sales  Tax Act, 1939 (Mad. 9 of 1939), as adapted to Andhra, SS.  2(h), 22-Sales  Tax Laws Validation Act, 1956 (7 of 1956),  S.  2- Constitution  of India, Arts. 246, 286, 301, 372, Sch.  VIl, List 1, Entry 42, List 11, Entry 54.

HEADNOTE: The  petitioners  were dealers carrying on business  in  the City  of  Madras  in the sale and  purchase  of  yarn.   The dealers in the State of Andhra used to place orders for  the purchase  of yarn with the petitioners in Madras, where  the contracts  were concluded and the goods were  delivered  ex- godown at Madras and thereafter despatched to the purchasers who  would  take delivery of them within their  State.   The present  dispute related to sales in which property  in  the goods sold passed outside the State of 1423 Andhra, but the goods themselves were actually delivered  as a  result  of the sale for consumption  within  that  State. After the coming into force of the Constitution of India the President  in the exercise of the powers conferred  by  Art. 372(2)  made Adaptation Orders with reference to  the  Sales Tax  Laws  of  all the States, and  as  regards  the  Madras General  Sales  Tax  Act,  1939,  he  issued  an   Amendment inserting  a  new section, S. 22 in that Act,  which  was  a verbatim reproduction of the Explanation to Art. 286  (i)(a) of  the  Constitution.   Oil July 13,  1954,  the  Board  of Revenue (Commercial Taxes) in the State of Andhra, acting on the  decision  in  The State of Bombay and  another  v.  The United Motors (India) Ltd., and others, [1953] S.C.R.  1069, called upon dealers in the State of Madras to submit returns of their turnover of sales in which goods were delivered  in the  State of Andhra for consumption.  Thereupon they  filed

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the  present  petitions under Art. 32  Of  the  Constitution challenging the demand on the grounds, inter alia, that  the sales  proposed to be taxed were inter-State sales and  that they  were  immune from taxation under Art.  286(2)  Of  the Constitution.  While the petitions were pending the  Supreme Court  pronounced on September 6, 1955, its judgment in  The Be  gal Immunity Company Limited v. The State of  Bihar  and others,  [1055]  2  S.C.R.  603,  according  to  which   the petitioners  were not liable to be taxed.  But before  final orders were passed on the petitions Parliament passed  Sales Tax Laws Validation Act, 1956, S. 2 whereof provided that no law of a State imposing or authorising the imposition of tax on  inter-State  sales during the period  between  April  1, 1951, and September 6, 1955, shall be deeme to be invalid or ever to have been invalid merely by reason of the fact  that the sales took place in the course of the inter-State trade. That section further provided that taxes levied or collected on such sales during the aforesaid period shall be deemed to have  been  validly levied or collected.  It  was  the  con- tention  of  the  State  of Andhra that  by  reason  of  the aforesaid provision it had the right to impose tax on inter- State sales during the aforesaid period.  On the other  hand the petitioners contended, inter alia, that (I) S. 22 Of the Madras  General Sales Tax Laws Validation Act,  1956,  which gave validity to laws which imposed a tax, did not authorise the  imposition, (2) the Sales Tax Laws Validation  Act  was ultra vires Art. 286(2), (3) S. 22 of the Madras Act was not a  "law  of  a State" within Art. 286(2) and  S.  2  of  the impugned  Act,  (4) the impugned Act only  validated  levies already  made and did not authorise the initiation of  fresh proceedings  for  imposing  tax,  (5)  S.  22  having   been unconstitutional when it was enacted and therefore void,  no proceedings  could be taken thereunder on the basis  of  the Validation Act, as the effect of unconstitutionality of  the law  was to efface it out of the statute book, and  (6)  the proposed levy was bad as infringing the Rule which  provided that the sale of yarn could be taxed only at one point.   It was  also contended that under the Constitution it was  only the  Parliament  that has the competence to  impose  tax  on inter-State sales and that the Sales Tax Laws Validation Act 1424 was  bad in that it gave validity, to the laws of the  State to impose the tax : Held  (Sarkar  J.  dissenting), that S.  22  of  the  Madras General Sales Tax Act, 1939, did in fact impose a tax on the class of sales covered by the Explanation to Art.  286(1)(a) but  that  it  was conditional on the ban  enacted  on  Art. 286(2)  being  lifted  by  law  of  Parliament  as  provided therein, and that it was therefore validated by S. 2 of  the Sales Tax Laws Validation Act, 1956. The construction put upon the Explanation to Art.  286(1)(a) of the Constitution in The Bengal Immunity Company case that it merely prohibited the outside States from imposing a  tax on the class of sales falling within the Explanation and did not  confer on the delivery State any power to impose a  tax on  such sales has no application to a taxing statute  of  a State  the object of which was primarily to confer power  on the State to levy and collect tax. Section  22 and S. 2(h) of the Madras General Sales Tax  Act must  be  read  together as’ defining the  sales  which  are taxable under the Act. Mettur Industries Ltd. v. State of Madras, A.I.R. 1957  Mad. 362,  The  Mysore  Spinning and Manufacturing  Co.  Ltd.  v. Deputy Commercial Tax Officer, Madras, A.I.R. 1957 Mad.  368 and  Dial  Das  v. P. S. Talwalkay,  A.I.R.  1957  Bom.  71,

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approved. Mathew v. Travancore-Cochin Board of Revenue, A.I.R. 1957 T. C.  300,  Cochin Coal Co. Ltd. v. The State  of  Travancore- Cochin,  (1956) 7 Sales Tax Cases 731 and The Government  of Andhra  v.  Nooney Govin arajulu, (1957) 8 Sales  Tax  Cases 297, disapproved. Queen  v. Burah, (1878) 5 I.A. 178 and In Ye The Delhi  Laws Act, 1912, etc. [1951] S.C.R. 747, relied on : Held (Per S. R. Das, C. J., Venkatarama Aiyar, S. K. Das and Vivian  Bose,  JJ.) that (i) the Sales Tax  Laws  Validation Act,  1956, is in substance one lifting the ban on  taxation of interState sales and is within the authority conferred on Parliament  tinder Art. 2 6(2) and further that  under  that provision it was competent to Parliament to enact a law with retrospective operation. Punjab  Province  v. Daulat Singh, (1946) L.R. 73  I.A.  59, distinguished. The United Province v. Atiqa Bcgum, [1940] F.C.R. 110, (2)  the  Adaptation Order made by the President under  Art. 372(2) is valid and is not open to attack on the ground that it goes beyond the limits contemplated by that Article. (3)the expression " law of a State " in Art. 286(2) and S. 2 of the Sales Tax Laws Validation Act means whatever operates as  law in the State, and that S. 22 of the  Madras  General Sales Tax Act is a law within those enactments. 1425 (4)  s. 2 of the Sales Tax Laws Validation Act validates not only  the levies already collected but also  authorises  the imposition  of tax on sales falling within  the  Explanation which  had taken place during the period specified in S.  2. The  Act  is  not a temporary Act though  its  operation  is limited to sales taking place within a specified period. Dial Das v. P. S. Talwalkay, A.I.R. 1937 Bom. 71, in so  far as  it held that it was not competent to the State to  start fresh proceedings for assessment, disapproved. (5)  though  S. 22 of the Madras General Sales Tax  Act  was unconstitutional when enacted the effect of the  unconstitu- tionality  was  not to efface it out of  the  statute  book. Unconstitutionality might arise either because the law is in respect  of  a  matter  not within  the  competence  of  the legislature  or because the matter itself being  within  the competence,   its  provisions  offend  some   constitutional restrictions.    Which  a  law  which  is  not  within   the competence of the legislature is a nullity a law on a  topic within  its competence but repugnant to  any  constitutional prohibition  is only unenforceable.  In the latter class  of legislation  when  once the  constitutional  prohibition  is removed  the law becomes enforceable  without  re-enactment. Where an enactment is unconstitutional in part but valid  as to  the rest, assuming that the two portions are  severable, it  cannot  be held to have been wiped out  of  the  statute book, as admittedly it must remain there for the purpose  of enforcement of the valid portion.  Moreover in the view that the  impugned  law is conditional legislation it  cannot  be held to have become non est. Behram  Khurshed Pesikaka v. The State of Bombay,  [1955]  I S.C.R.  6I3 and A. V. Fernandez v. State of  Kerala,  [1957] S.C.R. 837, distinguished. Bhikaji  Narayan Dhakras and others v. The State  of  Madhya Pradesh and a other, [1955] 2 S.C.R. 589, relied on. (6)  under   Entry   42  in  List  1,  Sch.   VII   of   the Constitution, legislation with respect to inter-State  trade and  commerce  is  exclusively  within  the  competence   of Parliament.  Under Entry 54, List 11, taxes on sale of goods is within the exclusive competence of the State Legislature,

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and  reading  the  two Entries together  Entry  42  must  be construed as excluding the power to tax sale of goods.   The scheme  of  the  Entries in the Lists is  that  taxation  is regarded  as  a distinct matter and is separately  set  out. Entry  42,  List  1,  must therefore  be  construed  as  not including the power to impose tax on inter-State sales. (7)  the proposed imposition does not infringe the rule that the sales of yarns should be subject to taxation at a single point  because the proposed levy is by the State  of  Andhra and the rule in question prohibits only multiple taxation in the same State. Per  Sarkar  J.-The  Sales Tax Act does  not  authorise  the taxation  of a sale under which goods are delivered  in  the State of 1426 Andhra  but the property in them passes outside that  State. The  Explanation  in S. 22 of the Act  only  contemplates  a State  other  than Andhra as the State inside which  a  sale shall  be deemed to have taken place.  The words "  for  the purposes  of  clause (a)(i) " have the same meaning  in  the Explanation in Art. 286(1) as in the Explanation in S. 22 of the  Act, and the present case is not  distinguishable  from the  decision in The Bengal Immunity Company Limited v.  The State of Bihar and others, [1955] 2 S.C.R. 603.

JUDGMENT: ORIGINAL JURISDICTION: Petitions Nos. 220, 222, 240 and  380 to 395 of 1955. Petitions under Article 32 of the Constitution of India  for the enforcement of Fundamental Rights. 1957.  Dec. 10, 11, 12, 13, 17, 18, 19. 1958.  Jan. 7, 8, 9. D.  Narsa  Raju, Advocate-General for the  State  of  Andhra Pradesh  and T. M. Sen, for the respondent.   The  petitions are   premature  and  incompetent  as  the  facts  of   each transaction of sale are yet to be investigated and it is not possible  to know the character of each sale, nor can it  be determined  which sales can be and which cannot be taxed  by Andhra Pradesh. [CHIEF JUSTICE.  You should be reasonably satisfied that the sales  are  of such a nature that you can levy tax  on  them before you issue a notice. BOSE J. You must state the facts on which you think you  can tax the sales.] S.   K. DAS J. Your stand is that all transactions could  be taxed by the delivery State.] D.   Narsa  Raju.  My State is taxing under the decision  of this Court in the United Motors case ( [1953]S.   C.      R. 1069). [ Upon the counsel for the petitioners stating that he would confine   his  arguments  to  the  imposition  of   tax   on Explanation  sales  only,  which some  of  the  transactions indisputably  were, the Court indicated that it  would  hear the petitions.  ] K.   S. Krishnaswami Iyengar, N. Srinivasan and R.     Ganapathy Iyer, for the petitioners.  The Andhra (Madras) Act does not seek to tax Explanation sales 1427 at  all.  It talks of " property passing " only and as  such Andhra  can  tax only such sales where  property  passes  in Andhra. See Poppatlal Shah v. State of’ Madras, ( [1953]  S. C.  R. 677).  Section 22 does not enlarge the definition  of sales; it only restricts the power of the State to tax.  The explanation  to s. 22, like the explanation to Art.  236(1),

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is  merely  for the purpose of defining what is  an  outside sale  and not for determining what is an inside  sale.   See Bengal  Immunity  Company case ( [1955] 2 S. C.  R.  603  at 640).   The power of the President under Art.  372(2)  being merely  to  bring the State laws into conformity  with  Art. 286,  s. 22, which was introduced by the Presidential  Adap- tation  Order  under  Art. 372(2), cannot  be  construed  as permitting the imposition of tax on Explanation sales  which was  prohibited  by  Art. 286.  If s. 22  was  construed  to permit such imposition it was unconstitutional, illegal  and void and must be deemed to be non est.  See Bengal  Immunity Company case ( [1955] 2 S. C. R. 603 at 667).  What did  not exist could not be validated. The  Sales  Tax Laws (Validation) Act, 1956, was  not  valid legislation under Art. 286(2).  Article 286(2) only empowers Parliament  to  lift  the ban on the imposition  of  tax  on inter-State -ales and after it has lifted the ban the  State legislature may impose the tax.  Parliament is not competent to impose sales tax; such power is vested only in the  State legislatures.  Article 286(2) does not give Parliament power to  validate or ratify laws of the State legislatures.   The power  under  Art.  286(2) can be exercised  only  once  and finally and fully, not partially.  Parliament can only  lift the  ban  as from the day the power is  exercised  and  riot retrospectively.  Punjab Province v. Daulat Singh, (73 I. A. 59);  Behram  Khurshed Pesikaka v. The State of Bombay  (  [ 1955 ] I S. C. R. 613, 654 and 655).  The case of Dialdas v. Talwalkar (A. 1. R. 1957 Bom. 71) has been wrongly  decided. But even this decision helps the petitioners in so far as it lays  down  that where tax had neither  been  collected  nor levied the Validation Act did not confer power to assess  or levy.  The whole 181 1428 policy  of  the Validation Act was to save  the  State  from disgorging  the,  tax illegally collected.   Both  levy  and collection  must be within the period specified in s.  2  of the, Act.  Mettur Industries Ltd. v. The State of Madras (A. 1.  R. 1957 Mad. 362) and Mysore Spinning and  Manufacturing Co.  Ltd.  v. Deputy Commercial Tax Officer (A. 1.  R.  1957 Mad. 368) are against the petitioners. R.   Ganapathy  Iyer  followed.  Section 22  of  the  Andhra (Madras) Act did riot enlarge the powers of taxation. Mathew v. Travancore-Cochin Board of Reventue (A. 1. R. 1957 T.  C. 300).   The  validation being for a temporary  period  which expired on September 6, 1.955, no action can be taken  after that date under the validated laws. Kesavan Madhava Menon v. The  State of Bombay, ( [1951] S. C. R. 228, 234,  235),  S. Krishnan v. The State of Madras, ( [1951]S. C. R. 62  1, and State of Punjab v. Mohar Singh,[1955 ] I S.  C.  R. 893). The tax being a sinole pointtax  under the  Act,  and the  petitioners having already paid the tax at the time  of the  purchase of the yarn from the Mills, no second tax  was payable.  The Andhra (Madras) Act being a new Act the tax on yarn  is hit by the Essential Commodities Act (52  of  1952) read with Art. 286(3) of the Constitution.  Petitioners  are not dealers in Andhra Pradesh and cannot be assessed.  There are no sales in Andhra; all sales being in Madras. V.L.  Narasimhamoorthy, J. B. Dadachanji  and  Rameshtvar Nath, for the Mysore Spinning & Mfg.  Co., Ltd., and Minerva Mills   Ltd.,  (Interveners),  supported  the   petitioners. Section  22  does  not authorise the imposition  of  tax  on Explanation sales.  It could not have been the intention  of the  President to allow the State to add a new  category  of sales - the Explanation Sales -to be taxed.  The language of

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Art.  286(2)  indicates  that the lifting of the  ban  is  a condition  precedent to legislation by the  States  imposing tax  on inter-State sales.  Alternatively, the power to  tax inter-State sales is with Parliament under Entry 97 of  List I of Schedule VII of the Constitution.  Section 22 was wiped out and obliterated by the judgment in the 1429 Bengal Immunity Company case.  See Behram Khurshed  Pesikaka v. The State of Bombay, ([1955] 1 S. C. R. 613); Newberry v. United  States,  (65 L. Ed. 913).  The  same  interpretation must be given to the explanation to s. 22 as has been  given to the explanation to Art. 286(1)(a). The     non-obstante clause in s. 22 has only the effectof       subtracting something from the power to tax andriot  of  adding  to it.   Ram Narain Sons Ltd. v. Asst.  Commissioner  of  Sales Tax  ([1955] 2 S.C..R. 483); Aswini Kumar Ghosh  v.  Arbinda Bose ([1953] S.C.R. 1, 22, 24); A. V. Fernandez v. The State of Kerala, ([1957] S. C. R. 837). N.   A. Palkhiwala, J. B. Dadachanji and Rameshwar Nath, for Tata Iron & Steel Co., Ltd., (Intervener).  There must be  a factual  levy  before Parliament can validate  it.   Section 22(ii)  removes  inter-State sales from the purview  of  the Act. Fernandez’s case supports this contention.  On a proper construction  of Art. 286(2), according to the  decision  in the  Bengal  Immunity  Company case, there was  no  levy  on interState  sales  and there was nothing for  Parliament  to lift the ban for. ( [ 1955 ] 2 S. C. R. 603, 621, 662, 667). There  is  a  vital  difference  between  retrospective  and retroactive  operation.  There is no power in Parliament  to validate   ex  post  facto  a  violation  of  Art.   286(2). Parliament  must  first  lift the ban  and  then  the  State legislation  may  come imposing tax  on  inter-State  sales. Parliament is competent to prevent what otherwise would have been  a  violation  of  the  Constitution,  but  it  is  not competent to condone an accomplished violation. Section  2 of the Validating Act will operate only where   taxes   have already been collected or have been     finally assessed. P.   N. Bhagwati and .1. N. Shroff, for Pashebbhai Patel & Co., Ltd., (Intervener) supported the petitioners. D.   Narsa  Raju, Advocate-General of Andhra Pradesh and  T. M.  Sen,  for  the respondents.  Article  372(2)  must  take regard  of  the provision of the Constitution to  bring  the State   laws  into  conformity  with  which  the  power   of adaptation is to be exercised.  That provision 1430 is  Art.  286.  Implicit in Art. 286(1) is  the  recognition that the delivery State alone may tax.  The -President would be  acting within his power to enable the delivery State  to tax -Such power is in accordance with the provisions of  the Constitution.   The  power of the legislature to  bring  the laws  in accordance with the Constitution is conferred  upon the  President.  Consequently, the explanation to s. 22  can be read along with the definition of sale and it does add to that definition by bringing Explanation sales within it. K.   V. Subramania Iyer, D. N. Mukherjee and B.   N.  Ghosh, for  Madura Mills Co., Ltd., (Intervener).   The  Adaptation Order made by tile President is not ’law of a State’  within the meaning of the Validating Act.  ’Law of a State’ in  the Validating  Act must mean the same thing as in Art.  286(2). The  President  exercising power under Art.  372(2)  is  not controlled  by Art. 286; he exercises a power which  belongs to  the  President and not a power on behalf of  the  State. Section 22 of the Andhra (Madras) Act is not law made by the State  Legislature  and is not validated by  the  Validating Act.   The power of imposition of sales tax  on  inter-State

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sales  was taken away from the States.  The bail under  Art. 286(2)  is  only in respect of existing laws;  there  is  no power in the States to enact laws imposing tax on interstate sales.   The  power to impose tax on  inter-State  sales  is within the exclusive domain of Parliament under Entry 42  of List I of the Seventh Schedule of the Constitution and Entry 54 of List 11 must be construed as not including such power. A reference to Art. 301 reinforces this interpretation.  The freedom under Art. 301 includes freedom from sales tax.  See The Commonwealth v. The State of South Australia, (38 C.  L. R. 408).  The Validation Act is not legislation within Entry 42.  See Bank of N. S. W. v. The Commonwealth, (76 C. L.  R. 1, 381); Robbins v. Taxing District of Shelby County ((1877) 30  L.  Ed. 694); McLeod v. Dilworth Co. ((1944) 88  L.  Ed. 1304). C.   K. Daphtary, Solicitor-General of India, G. N. 1431 Joshi  and T. M. Sen, for the Union of  India  (Intervener). The   Sales  Tax  Laws  Validation  Act,  1956,   is   valid legislation tinder Art. 286(2).  In effect and in  substance the Validation Act is a law which removes the ban imposed by Art.  286(2), and is not really a Validating  Act.   Article 286(2),  in respect of existing laws, merely said that  they should not be effective or operative.  It did not take  away the  competency of the legislatures to make  laws  providing for taxes oil inter-State sales.  Such a law may be  against the provision of the Constitution, but that does not  repeal or  obliterate  it.  It is only in  abeyance.   See  Bhikaji Narain  Dhakra,s and others v. The State Of  Madhya  Pradesh and another, ([ 1955] 2 S.C.R. 589, 600).  Legislative power generally  includes the power to legislate  retrospectively. There   is  no  limitation  in  Art.  286(2)   as   respects retrospective  legislation.   Parliament  could,  therefore, lift  the  ban retrospectively.  Section 22 is  a  piece  of conditional  legislation.   As soon as the  ban  under  Art. 286(2) was lifted by Parliament it came into operation.  The Validation  Act  is not a temporary  statute.   A  temporary statute  is one which says that it is to be effective for  a particular period.  The Validating Act operates even now and is  effective,  though  it  is in  respect  of  sales  of  a particular  period.   It is open to the States  to  initiate proceedings now for taxing the Explanation sales made during the period mentioned in s. 2 even though no such proceedings had been taken during that period.  Entry 42 of List I which reads:  " Inter-State trade and commerce " does  not  confer any  power of taxation on Parliament.  In the scheme of  our Constitution  a general Entry does not include the power  of taxation.  Taxes, duties, etc., are enumerated in a separate group in Entries 82-92 in List I. V.   K. T. Chari, Advocate-General for the State of  Madras, B.  R. Gopalakrishnan and T. M. Sen for the State of  Madras (Intervener).   In construing s. 22 of the  Andhra  (Madras) Act regard must be had to the law as it stood till September 6, 1955, when judgment was delivered in the Bengal  Immunity Company case.  In view of the decision in the United Motors 1432 case  ([1953]  S.  C.  R. 1069,  1085,  1086,  1093,  1094), Explanation  sales  were regarded as ’inside sales’  in  the delivery  State, and the delivery State was entitled to  tax sales.  The law of a State which imposed tax on  Explanation sales  would  remain on the statute book, in  spite  of  the decision in The Bengal Immunity Company case, but could  not be  enforced.  See Bhikaji Narain Dhakras and others v.  The State  of Madhya Pradesh and another ([1955] 2 S.C.R.  589); Ulster  Transport  Authority  v. James  Brown  &  Sons  Ltd.

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((1953)  Northern  Ireland Reports 79).  Section  2  of  the Validating Act refers to such a law. Mahabir  Prasad,  Advocate-General for the State  of  Bihar, Rajeshwar  Prasad and S.  P. Varma, for the State  of  Bihar (Intervener);  G. C. Mathur and C. P. Lal, for the State  of Uttar Pradesh (Intervener) supported the respondents and the Union of India. R.   Ganapathy Iyer, for the petitioners, replied. K.   V.  Subramania  Iyer,  for  Madura  Mills  Co.,   Ltd., (Intervener), also replied with the permission of the Court. 1958.   March  II.  The judgment of Das C.  J.,  Venkatarama Aiyar,  S.  K.  Das and Vivian Bose, JJ.  was  delivered  by Venkatarama   Aiyar  J.  Sarkar  J.  delivered  a   separate judgment. VENKATARAMA AIYAR J.-The petitioners are dealers carrying on business  in the City of Madras in the sale and purchase  of yarn,  and  they have filed the present  applications  under Art.  32  of  the Constitution for the issue of  a  writ  of prohibition or other appropriate writ restraining the  State of  Andhra  from  taking proceedings  for  imposing  tax  on certain  sales effected by them in favour of  merchants  who are  residing  or carrying on business in what  is  now  the State of Andhra Pradesh, on the ground, inter alia, that the said sales were made in the course of inter-State trade, and that  no  tax  could  be levied on them  by  reason  of  the prohibition contained in Art. 286(2) of the Constitution. The course of dealings between the parties resulting        1433 in  the above sales has been set out in para. 5 in  Petition No.  220 of 1955.  It is therein stated that the dealers  in Andhra would place orders for the purchase of yarn with  the petitioners in Madras, that the contracts would be concluded at  Madras, that the goods would be delivered  ex-godown  at Madras and would thereafter be despatched to the  purchasers either  by lorries or by rail as might be directed by  them, that when the goods were sent by rail, the railway  receipts would  be  taken either in the name of the  consignees,  and sent  to  them by post or in the name of the  consignor  and endorsed  to the purchasers and delivered to them in  Madras or sent to them by post endorsed in favour of a bank and the purchasers  would  take  delivery of  those  receipts  after payment to the bank.  It is said that in all cases price  of the goods was paid in Madras. On  the  above allegations, it is manifest  that  the  sales mentioned therein are not all of the same kind, and in point of law, the incidents attaching to them might be  different. A  consideration  of  the validity of  the  imposition  with reference  to the several classes of sales  mentioned  above would  he wholly airy and pointless without a  determination of the facts relating to them, which, however, have not been investigated.    Counsel  for  the   petitioners,   however, concedes that the, dispute in these proceedings is  confined to  the proposed imposition of tax, in so far as it  relates to  sales of the character mentioned in the  Explanation  to Art. 286(1)(a), that is to say, sales in which the  property in the goods sold passed outside the State of Andhra but the goods themselves were actually delivered as a result of  the sale  for consumption within that State.  These  sales  have been referred to in the arguments before us as  "Explanation sales ", and it will be convenient to adopt that  expression in referring to them in this judgment. It will be seen that the above sales would all of them  have been intrastate, so long as the Andhra State formed part  of the  composite  State  of  Madras,  and  questions  of   the character now agitated before us could not then have arisen.

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On September 14, 1953, 1434 Parliament  enacted  the  Andhra State  Act  (30  of  1953), whereby  a  separate State called the State  of  Andhra  was constituted  incorporating  therein  territories  which  had previously  thereto formed part of the State of Madras,  and this Act came into force on October 1, 1953.  Under s. 53 of the  Andhra State Act, the laws in force in the  territories in  the  Andhra  State  prior to  its  constitution  are  to continue  to be in force even thereafter, and one  of  those laws is the Madras General Sales Tax Act (Madras 9 of 1939), hereinafter  referred to as the Madras Act.  Section  54  of the Andhra State Act conferred on the Government a power  to adapt  laws for the purpose of facilitating the  application of  any  law previously made, and in exercise of  the  power conferred by this section, an Adaptation Order was passed on November  12,  1953,  whereby  the  word  "  Andhra  "   was substituted  for  the word "Madras" in the Madras  Act.   We shall  hereafter  refer to the Madras Act as  continued  and applied in the State of Andhra as the Andhra (Madras) Act. It will be convenient at this stage to refer to the relevant provisions of this Act.  The preamble to the Act states that "  it is expedient to provide for the levy of a general  tax on  the  sale of goods in the State of Madras".   "Sale"  is defined  in  s.  2(h), omitting what  is  not  material,  as meaning  "  every transfer of the property in goods  by  one person  to  another in the course of trade or  business  for cash   or   for   deferred   payment   or   other   valuable consideration."  Section 2(i) defines " turnover " as "  the aggregate  amount  for which goods are either bought  by  or sold  by a dealer, whether for cash or for deferred  payment or other valuable consideration ". Section 3 is the charging section  and provides that every dealer shall pay  for  each year tax on his total turnover for such year.  By the Madras General  Sales  Tax (Amendment) Act No. 25 of  1947,  a  new Explanation was added to the definition of " sale ", and  it is as follows: Explanation 2: " Notwithstanding anything to the contrary in the Indian Sale of (Goods Act, 1930, the sale or purchase of any goods shall be deemed, for 1435 the  purposes  of  this Act, to have  taken  place  in  this Province,  wherever the contract of sale or  purchase  might have been made- (a)  if the goods were actually in this Province at the time when the contract of sale or purchase in respect thereof was made, or (b)  in  case the contract was for the sale or  purchase  of future goods by description, then, if the goods are actually produced in this Province at any time after the contract  of sale or purchase in respect thereof was made." This  amendment  came  into force on  January  1,  1948. In   Poppatlal Shah v. The State of Madras (1),  this  Court had  to consider the scope of the definition of " sale "  in s.  2(h) and of Explanation 2, and it was therein held  that though  the power to tax a sale was really a power to tax  a transaction  of  sale and a law imposing such tax  would  be competent if any of the ingredients of sale had taken  place within the State, the Madras Act had, by its definition of " sale  " in s. 2(h) prior to the enactment of Explanation  2, imposed  a  tax only when the property in the  goods  passed within  the  State, and that in respect of sales  which  had taken  place  prior  to  the amendment,  the  tax  would  be unauthorised if the property in the goods passed outside the

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State  of  Madras.   It was also  observed  that  after  the amendment came into force, a tax on a sale which came within Explanation 2 would be valid.  That was the position in  law under  the  Madras  Act  prior  to  the  enactment  of   the Constitution. It is now necessary to refer to the changes effected in  the law by the Constitution.  Article 286, which is relevant for the present purpose, is as follows: 286(1).  " No law of a State shall impose, or authorise  the imposition of, a tax on the sale or purchase of goods  where such sale or purchase takes place- (a)  outside the State; or (b)  in  the  course of the import, of the  goods  into,  or export of the goods out of, the territory of India. (1) [1953] S.C.R. 677. 182 1436 Explanation.-For the purposes of Sub-clause (a), -a sale  or purchase shall be deemed to have taken place in the State in which  the  goods have actually been delivered as  a  direct result  of  such  sale  or  purchase  for  the  purpose   of consumption  in  that State, notwithstanding the  fact  that under the general law relating to sale of goods the property in  the goods has by reason of such sale or purchase  passed in another State. (2)  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 take,,; place in the course  of interstate trade or commerce: Provided that the President may by order direct that any tax on  the sale or purchase of goods which was  being  lawfully levied by the Government of any State immediately before the commencement  of  this Constitution  shall,  notwithstanding that  the  imposition  of  sucli  tax  is  contrary  to  the provisions of this clause, continue to be levied until  the, thirty-first day of March, 1951. (3)  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." Article  372(2) enacts that, "  For the purpose of bringing the provisions of any law  in force  in  the  territory  of India  into  accord  with  the provisions of this Constitution, the President may by  order make such adaptations and modifications of such law, whether by  way  of  repeal or amendment, as  may  be  necessary  or expedient, and provide that the law shall, as from such date as may be specified in the order, have effect subject to the adaptations   and  modifications  so  made,  and  any   such adaptation  or modification shall not be questioned  in  any court of law." In exercise of the power conferred by this provision, 1437 the  President made Adaptation Orders with reference to  the Sales Tax Laws of all the States, and as regards the  Madras Act,  he  issued  on July 2,  1952,  the  Fourth,  Amendment inserting  a  new section, s. 22 in that Act.   It  runs  as follows: " Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place- (a)  (i) outside the State of Madras, or

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(ii)in the course of import of the goods into the  territory of  India  or  of  the  export of  the  goods  out  of  such territory, or (b)  except  in  so far as Parliament may by  law  otherwise provide, after the 31st March, 1951, in the course of inter- State  trade  or commerce, and the provisions  of  this  Act shall be read and construed accordingly. Explanation:-For  the  purposes  of cl. (a) (i)  a  sale  or purchase shall be deemed to have taken place in the State in which  the  goods have actually been delivered as  a  direct result  of  such  sale  or  purchase  for  the  purpose   of consumption  in  that State, notwithstanding the  fact  that under the general law relating to sale of goods the property in  the goods has by reason of such sale or purchase  passed in another State." It will be noticed that the Explanation to Art. 286 (1)  (a) is reproduced verbatim in s. 22 of the Madras Act.  The true meaning   and  scope  of  this  Explanation  came   up   for consideration  before this Court in The State of Bombay  and another  v.  The United Motors India Ltd., and  others  (1). Therein,  it  was held by a majority that though  the  sales falling  within  the Explanation would, in fact, be  in  the course  of interState trade, they became, by reason  of  the fiction  introduced therein, invested with the character  of intra-State  sales, and would be liable to be taxed  by  the State within which the goods were delivered for consumption. Acting  on this judgment, the Board of  Revenue  (Commercial Taxes) Andhra State, issued a (1)  [1953] S.C.R. 1069. 1438 notification  on  July  13, 1954, calling  upon  dealers  to submit  returns  of their turnover of sales in  which  goods were  delivered in the Andhra State for consumption,  and  a copy  thereof  was  sent  to  the  Madras  Yarn   Merchants’ Association,  of  which the petitioners  are  members.   The Association disputed the liability of the Madras dealers  to pay  any tax in respect of the sales to the Andhra  dealers, and  after  some correspondence, the  Andhra  State  finally issued on June 30, 1955, notices to the petitioners to  send their returns of turnover by July 15, 1955, failing which it was  stated  that  assessments would be  made  on  the  best judgment  basis,  and that, further, the  dealers  would  be liable to the penalties prescribed by the law (Vide Annexure H  to the petition).  Thereupon, the petitionera have  filed the present petitions challenging the validity of the demand made by the Andhra State on the ground, inter alia, that the sales proposed to be taxed were inter-State sales, and  that they  were  immune from taxation under Art.  286(2).   These petitions  were filed on various dates in July  and  August, 1955. While  they were pending, the question of the true scope  of the  Explanation  to  Art. 286 (1) (a)  came  up  again  for consideration  before  this  Court in  The  Bengal  Immunity Company  Limited v. The State of Bihar and others  (1).   By its judgment dated September 6, 1955, this Court held, again by a majority, that the sales falling within the Explanation being inter-State in character, could not be taxed by reason of  Art. 286(2), unless Parliament lifted the ban, that  the Explanation to Art. 286 (1) (a) controlled only that  clause and  did not limit the operation of Art. 286 (2),  and  that the  law  had  not been correctly laid down  in  The  United Motors  case  (2).  On the decision in The  Bengal  Immunity Company  case(1) it cannot be doubted that the claim of  the Andhra   State   to   tax   Explanation   sales   would   be unconstitutional, and indeed, that was admitted by the State

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in  a  statement filed on October 21, 1955, wherein  it  was stated that having regard (1) [1955]2 S.C.R. 603. (2) [1953] S.C.R. 1069. 1439 to  the decision aforesaid, the petitions might  be  allowed but  without costs.  Before final orders were passed on  the petitions,  however, the Sales Tax Validation Ordinance  No. III  of 1956, was promulgated on January 30, 1956, and  that was  later replaced by the Sales Tax Laws Validation Act  (7 of  1956)  and  that  came into force  on  March  21,  1956. Section 2 of this Act runs as follows: " Notwithstanding any judgment, decree or order of any court no  law of a State imposing, or authorising  the  imposition of,  a tax on the sale or purchase of any goods  where  such sale  or  purchase took place in the course  of  inter-State trade  or commerce during the period between the 1st day  of April,  1951, and the 6th day of September, 1955,  shall  be deemed to be invalid or ever to have been invalid merely  by reason of the fact that such sale or purchase took place  in the  course  of interstate trade or commerce; and  all  such taxes levied or collected or purporting to have been  levied or  collected  during the aforesaid period shall  be  deemed always   to  have  been  validly  levied  or  collected   in accordance with law." On February 19, 1957, the Andhra State which had become  the State  of  Andhra  Pradesh  under s. 3  (1)  of  the  States Reorganisation Act (37 of 1956) filed a fresh statement that by  reason of the Validation Act the State was  entitled  to impose a tax on the Explanation sales, which had taken place during  the period between the 1st day of April,  1951,  and the  6th day of September, 1955 (which will  hereinafter  be referred to as the specified period), and that the petitions should therefore be dismissed. The petitioners challenge the correctness of this  position. They contend that the Andhra (Madras) Act does not, in fact, impose  a  tax  oh  the  Explanation  sales,  and  that,  in consequence,  the Validation Act can have no effect  on  it; that the Validation Act is itself unconstitutional and void; that  the Act even if valid, does not validate s. 22 of  the Andhra  (Madras)  Act;  that it validates  only  levies  and collections of tax already made, and does not authorise  the initiation 1440 of  fresh proceedings for assessment of tax or for  realisa- tion  of  the same; that even if the  Act  authorised  fresh imposition of taxes, that could not be done without  further legislation  pursuant  thereto  by the State,  and  that  no action  could be taken on the basis of s. 22 of  the  Andhra (Madras)  Act, as, being unconstitutional when  enacted,  it was for all purposes non est ; that tax on the sale of  yarn could under the Act be levied only at a single point and the State  of Madras having imposed a tax on the sale  of  goods now proposed to be taxed, the Andhra State could not  impose a  tax  once again on the sale of the self-same  goods,  and that,  further, the tax on yarn would, so far as the  Andhra State  is  concerned, be bad as being hit by  the  Essential Commodities Act (52 of 1952), read with Art. 286 (3). It  must be mentioned that similar to the  Adaptation  Order which enacted s. 22 in the Madras Act, there were Adaptation Orders by the President with reference to the Sales Tax Laws in  all  the States, and provisions similar to  s.  22  were enacted  therein.   As  any decision by this  Court  on  the questions  raised  in the petitions  must  conclude  similar questions  under  the  laws of other  States,  those  States

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applied  for and obtained permission to intervene  in  these proceedings,  and  we have heard  the  Advocates-General  of Madras,  Uttar Pradesh and Bihar on the questions.   As  the main  point for determination is the vires of the Sales  Tax Laws  Validation Act (which will hereinafter be referred  to as the impugned Act), the Union of India has intervened, and the  learned  Solicitor-General  has  addressed  us  on  the questions  relating  to the validity of that  Act.   Certain assessees  who are interested in the decision of  the  above questions  also  applied  for  and  obtained  permission  to intervene,   and   they   are  the   Mysore   Spinning   and Manufacturing  Co., the Minerva Mills, Ltd., the  Tata  Iron and  Steel  Co.  Ltd., and the Madura Mills  Co.  Ltd.,  and counsel  appearing for them have, in general, supported  the petitioners. Counsel  for  the Madura Mills Co. Ltd.,  raised  a  further contention different from and inconsistent with 1441 the  position  taken  by the petitioners  and  other  inter. veners,  and  that is that under Entry 42 in List I  of  the Seventh Schedule to the Constitution, inter-State trade  and commerce  is the exclusive domain of the Union  Legislature, that tax on inter-State sales is comprised therein, that the States have accordingly no power to tax such sales, and that Parliament is not competent to authorise them to impose such a  tax,  and that, accordingly, the impugned Act  is  wholly misconceived and inoperative. On  these  contentions,  the questions that  arise  for  our determination are: (I)  Whether the Andhra (Madras) Act, in fact, imposes a tax on the class of sales falling within the Explanation to Art. 286 (1) (a); (II)Whether the impugned Act is ultra vires the ground  that it is not authorised by the terms of Art. 286(2); (III) (a) Whether s. 22 of the Andhra (Madras) Act is within the protection of the impugned Act, and (III)(b) Whether the impugned Act validates only levies  and collections made during the specified period, or whether  it authorises  the imposition and collection of taxes  on  such sales in future; (IV)Whether s. 22 of the Madras Act was null and void on the ground  that  it was in contravention of Art. 286  (2),  and whether the proceedings sought to be taken thereunder on the strength of the impugned Act are incompetent; (V)  Whether   tax  on  inter-State  sales  is  within   the exclusive competence of Parliament, and whether the impugned Act  is,  in consequence, bad as authorising the  States  to levy tax ; (VI)Whether the proposed imposition of tax is illegal on the ground  that successive sales of yarn are subject under  the law  to  be  taxed at only one point, and as  the  State  of Madras  has  already taxed the present sales, the  State  of Andhra cannot again levy a tax on them ; and (VII)Whether  the proposed imposition of tax on yarn by  the Andhra  State is hit by the Essential Commodities Act,  read with Art. 286(3), and is illegal? 1442 (1):The  first  question  that falls  to  be  determined  is whether  the Andhra (Madras) Act, in fact, imposes a tax  on the  Explanation  sales.  Only if it does  that,  would  the further  questions as to the vires and the operation of  the impugned  Act  arise  for consideration.   We  have  already referred to the relevant provisions of the Madras Act and to the decision of this Court in Poppatlal Shah v. The State of Madras (1), wherein it was held that under the definition of

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"  sale  "  in  s.  2(h) of that  Act  and  apart  from  the Explanations  to it which are not material for  the  present discussion,  power had been taken by the Province of  Madras to  tax  only sales in which property in  the  goods  passed inside  the State.  It must, therefore, be taken that  under the Act, as it stood prior to the Constitution, the State of Madras  had  no power to impose a tax on sales of  the  kind mentioned  in the Explanation to Art. 286 (1)(a).  Now,  the question  is whether the Adaptation Order of  the  President (Fourth Amendment) dated July 2, 1952, has, by the insertion of  s.  22  in the Madras Act, altered  the  position.   The contention of the respondent is that it has, because it  has bodily  incorporated the Explanation to Art. 286 (1) (a)  in the section itself, and as under that Explanation, all sales falling within its ambit would be sales inside the State  of Madras,  they became taxable as sales within the  definition in s.     2  (h)  of the Madras Act;  and  that  accordingly under s.  22  of  the Andhra (Madras)  Act  the  Explanation sales become taxable by the Andra State as sales within that State. The petitioners dispute this position, and contend that that is not the true effect of the Explanation, and that properly construed, it does not authorise the  in position of any tax which  was  not leviable under the provisions  of  the  Act, prior  to  its enactment.  It is argued that the  object  of Art.   286  of  the  Constitution  was  merely   to   impose restrictions  on the power which the States had under  Entry 54 in List 11 to enact laws imposing tax on sales, and that, in  that context, the true scope of the Explanation to  Art. 286 (1) (a) was that it merely took away from the State  its power to (1)  [1953] S.C.R. 677. 1443 tax  a  sale in which the property passed inside it  if  the goods were actually delivered under the sale for consumption in  another State and not to confer on the delivery State  a power to tax such a sale, and that the Explanation in s.  22 which  is, word for word, a reproduction of the  Explanation to  Art.  286 (1) (a) must be construed as having  the  same import.  Reliance is placed in support of this contention on the  following  observations  of this Court  in  The  Bengal Immunity Company case(1) at p. 640: "  In clause (1) (a) the Constitution makers have  placed  a ban on the taxing power of the States with respect to  sales or  purchases  which take place outside the State.   If  the matter  had  been  left  there  the  ban  would  have   been imperfect, for the argument would have still remained as  to where  a  particular -,ale or purchase took place.   Does  a sale or purchase take place at the place where the  contract of  sale is made, or where the property in the goods  passes or  where  the  goods are delivered ?  These  questions  are answered  by the Explanation.  That Explanation is ’for  the purposes  of  sub-clause  (a)’, i.e.,  for  the  purpose  of explaining  which  sale  or purchase is to  be  regarded  as having taken place outside a State.  By saying that a Parti- cular  sale  or  purchase  is to be  deemed  to  take  in  a particular  State the Explanation only indicates  that  such sale  or purchase has taken place outside all other  States. The  Explanation is neither an Exception nor a  Proviso  but only  explains what is an outside sale referred to  in  sub- clause  (a).   This  it does by creating  a  fiction.   That fiction is only for the purposes of subclause (a) and cannot be  extended to any other purpose.  It should be limited  to its  avowed purpose.  To say that this  Explanation  confers legislative  power on what for the sake of brevity has  been

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called  the  delivery State is to use it  for  a  collateral purpose  which is not permissible. .Further, it  is  utterly illogical  and untenable to say that article 286  which  was introduced in the Constitution to place restrictions on  the legislative  powers  of the States, by a side  wind,  as  it were, (1) [1955] 2 S.C.R. 603. 183 1444 gave enlarged legislative powers to the State of delivery by an  explanation sandwiched between two  restrictions.   This construction  runs  counter  to the  entire  scheme  of  the article and the explanation and one may see no justification for  imputing  such  indirect and oblique  purpose  to  this article." Now,  the  contention  of  the  petitioners  is  that  these observations  are  decisive  of  the  present   controversy, because  the  same provision expressed  in  ipsissima  verba cannot  have  one  meaning in Art. 286(1) (a)  and  quite  a different  one  in  s.  22 of the Madras  Act;  and  on  the construction  put by this Court on the Explanation  to  Art. 286(1) (a), the Explanation to s. 22 of the, Andhra (Madras) Act  must  be interpreted as prohibiting States  other  than Andhra from taxing sales under which goods are delivered for consumption  outside  those  States,  even  though  property passed  inside  them  and not as authorising  the  State  of Andhra to tax sales in which goods are delivered therein for consumption  ,  even  though property in  the  goods  passed outside  that State.  It is argued that this  conclusion  is reinforced  by  the opening words of s. 22,  viz.,  "Nothing contained in this Act shall be deemed to impose or authorise the  imposition  of  a tax on the sale or  purchase  of  any goods".   The  effect of this, it is said, is  to  impose  a restriction   on  the  power  which  the  State   previously possessed,  of taxing sales coming within the definition  in s. 2 (h) and not to enlarge it.  The decision in  Government of Andhra v. Nooney Govindarajulu (1) is cited in support of these contentions. The  error  in this argument lies in this that  it  focusses attention exclusively on the terms in which the Explanations are  couched in Art. 286(1) (a) and in s. 22 and  completely overlooks  the  fundamental difference in  the  context  and setting  of these two enactments.  The scope and purpose  of Art. 286 have been considered at length in the decisions  of this  Court  in The United Motors case (2) as  also  in  The Bengal  Immunity Company case (3), and it is  sufficient  to briefly recapitulate them.  Under Entry 48 in List 11 of the (1) (1957) 8 Sales Tax Cases 297.  (2) [1953] S.C.R, 1069. (3) [1955] 2 S.C.R. 603. 1445 Seventh  Schedule to the Government of India Act, 1935,  the Provincial Legislature had the exclusive competence to enact a  law imposing a tax on the sale of goods, and under s.  99 (1), such a law could be made " for the Province or for  any part thereof ". In Wallace Brothers & Co. Ltd. v. Income-tax Commissioner  (1), the question arose as to the validity  of certain  provisions  of  the Indian  Income-tax  Act,  which sought  to tax non-resident foreigners in respect  of  their foreign  income.  The Indian Legislature had under Entry  54 in List I of the Government of India Act power to enact laws imposing  tax on income other than agricultural income,  and under  s.  99(1) the law could be made " for  the  whole  of :British India or for any part thereof ". It was held by the Privy Council that the requirements of s. 99 were  satisfied if  there was sufficient territorial connection between  the

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State  imposing the tax and the person who was sought to  be taxed, and the receipt of income by the assessees in British India  furnished  sufficient nexus to give validity  to  the legislation  imposing tax on their foreign income.  If  this doctrine  of  nexus is applicable to laws  imposing  tax  on sales-and it was applied by this Court to those laws in  the United  Motors case (2) at p. 1079 and in  Poppatlal  Shah’s case  (3) at pp. 682-683-then it would be competent  to  the State to enact a law imposing a tax on sales not merely when the  property in the goods passed within the State but  even when it (lid not, if there was sufficient connection between the State and the transaction of sale, such as the  presence of  the goods in the State at the date of the agreement,  as was  held  recently by this Court in Tata Iron &  Steel  Co. Ltd.  v. State of Bihar (4).  In fact, acting on  the  nexus theory the Legislatures of the States enacted Sales Tax Laws adopting  one or more of the nexi as the basis of  taxation. This  resulted  in multiple taxation, as  a  consequence  of which  the free flow of commerce between the  States  became obstructed and the larger economic interests of the  country suffered.    It  was  to  repair  this  mischief  that   the Constitution, while (1)  (1948) L.R. 75 I.A. 86. (2)  [1953] S.C.R. 1069. (3)  [1953] S.C.R. 677. (4)  [1958] S.C.R. 1355. 1446 retaining  the power in the States to tax sales under  Entry 54 in List II sought to impose certain restrictions on  that power  in Art. 286.  One of those restrictions is  contained in  Art.  286(1)(a)  which prohibits  a  State  from  taxing outside  sales.  The Explanation now under consideration  is attached to this provision, and it is in this context, viz., in  its  setting in an Article, the object of which  was  to impose fetters on the legislative powers of the States, that this Court observed that though positive in form, it was  in substance  negative in character, and that its true  purpose was  not to confer any fresh power of taxation on the  State but  to  restrict the power which it  previously  had  under Entry 54. These   considerations  will  clearly  be  in  apposite   in construing a taxing statute like the Madras Act, the  object of  which is primarily to confer power on the State to  levy and collect tax.  When we find in such a statute a provision containing a prohibition followed by an Explanation which is positive in its terms, the true interpretation to be put  on it  is  that while the prohibition is  intended  to  prevent taxation  of  outside  sales  on  the  basis  of  the  nexus doctrine, the Explanation is intended to authorise  taxation of  sales falling within its purview, subject of  course  to the  other provisions of the Constitution, such as Art.  286 (2).  It should be remembered that unlike the  Constitution, the   law  of  a  State  can  speak  only  within  its   own territories.   It  cannot operate either to  invest  another State  with a power which it does not possess, or divest  it of  a  power which it does possess under  the  Constitution. Its  mandates  can run only within its  own  borders.   That being the position, what purpose would the Explanation serve in  s.  22 of the Madras Act, if it merely meant  that  when goods are delivered under a contract of sale for consumption in the State of Madras, the outside State in which  property in  the goods passes has no power to tax the sale ? That  is not  the  concern of the State of Madras,  and  indeed,  the Legislature  of Madras would be incompetent to enact such  a law.  In its context and setting, therefore, the Explanation

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to s. 22 must mean that it 1447 authorises  the  State of Madras to impose a  tax  on  sales falling  within its purview.  Thus, while in the context  of Art. 286 (1) (a) the Explanation thereto could be  construed as purely negative in character though positive in form,  it cannot be so construed in its setting in s. 22 of the Madras Act, where it must have a positive content. Nor  is  there much force in the contention  that  the  non- obstante clause in s. 22 has only the effect of substracting something  from the power to tax conferred on the  State  by the  charging section, s. 3, read with s. 2 (h) and  not  of adding to it.  In Aswini Kumar Ghosh and another v. Arabinda Bose  and another (1), It was observed by this Court that  " the  enacting part of a statute must, where it is clear,  be taken  to control the non-obstante clause where both  cannot be read harmoniously ". Now, as the Explanation lays down in clear and unambiguous terms that the sales of the  character mentioned  therein  are  to be deemed to  have  taken  place inside   the  State  in  which  goods  are   delivered   for consumption,  full  effect  must be given  to  it,  and  its operation  cannot  be  cut down by  reference  to  the  non- obstante clause.  It cannot be put against this construction that  it  renders the non-obstante  clause  ineffective  and useless.  According to the definition in s. 2 (h), a sale in which  property  passes inside the State of Madras  will  be liable to be taxed, even though the goods are delivered  for consumption  outside that State, but under  the  Explanation such  a sale will be deemed to have taken place in the  out- side State in which goods are delivered for consumption, and therefore the State of Madras will have nO power to tax  it: The  purpose  which  the non-obstante clause  serves  is  to render  the Explanation effective against the definition  in s. 2 (h) and not to render it ineffective in its own sphere, as determined on its terms. But  it is contended that in order to reach this  result  it was necessary that the Explanation to s. 22 should have been made  a part of the definition of " sale " under s.  2  (h), because under s. 3, which is the charging (1)  [1953] S.C.R. 1, 24. 1448 section, it is the turnover of sales that is subject to tax, that  sale for the purpose of that section is only  what  is defined as " sale " under s. 2 (h), and that the Explanation sales  not  having been brought within that  definition,  no charge could be imposed thereon.  The Explanation in s.  22, it  is argued, cannot override s. 2 (h), and if  its  object was  to  confer on the State a power to  tax  sales  falling within its ambit, that has not, in fact, been achieved.   It is pointed out by way of contrast that in the Sales Tax Laws of  some other States, such as Bihar and Uttar Pradesh,  the Explanation has been added to the definition of sale.   Now, a  contention  that what the Legislature intended  to  bring about   it  has  failed  to  do  by  reason   of   defective draftsmanship is one which can only be accepted in the  last resort,  when there is no avenue left for escape  from  that conclusion.   But  that clearly is not  the  position  here. Section 22 opens with the words " Nothing contained in  this Act  ",  and that means that that section is to be  read  as controlling, inter alia, the definition of sale in s. 2 (h). Otherwise,  sales  in which property passes  in  Madras  but delivery  is outside that State would be taxable under s.  2 (h)  and  under  s.  3, even  though  they  are  within  the prohibition  enacted in s. 22.  If the provisions of  s.  22

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are  effective for the purpose of limiting the operation  of s.  2  (h), we do not see any difficulty in  construing  the Explanation therein as equally effective for the purpose  of enlarging  it.   Again, it is a rule of  construction  well- establisbed  that  the several sections forming  part  of  a statute should be read, unless there are compelling  reasons contra,  as  constituting a single scheme and  construed  in such  manner as would give effect to all of them.   On  this principle,  s.  2  (h) and s. 22 must be  read  together  as defining what are sales, which are taxable under the Act and what are not, and so read, the Explanation really means that in sales in which goods are delivered for consumption in the State  of  Madras, the property therein shall be  deemed  to have passed inside that State, notwithstanding that it  has, under the Sale of Goods Act, passed outside that State.   On this construction, those 1449 sales  will fall within the definition in s. 2 (h) and  will be  taxable.   The  contention  of  the  petitioners  highly technical and based oil the non-insertion of the Explanation in s. 2 (h) must, in our opinion, be rejected as unsound. It  is next contended that the power of the President  under Art,. 372 (2) is merely to bring the provisions of the State laws  into conformity with Art. 286, and that having  regard to  the  interpretation put on that Article  in  The  Bengal Immunity Company case (1), the Explanation in s. 22 would be valid  in  so far as it prohibits the State of  Madras  from imposing a tax on sales in which goods are delivered outside Madras,  though property therein passed inside  that  State, but  that  in  so far as it makes  taxable  sales  in  which property  passes outside the State of Madras but  the  goods themselves  are delivered for consumption in Madras,  it  is much more than bringing the. ,State law into conformity with Art. 286, and is, in consequence, unauthorised and bad.   It is  argued  that such a provision could be  enacted  by  the Legislature  of Madras, as was in fact, done by  the  legis- latures  of many of the States, but the President could  not do it in exercise of the special and limited power conferred on  him  by  Art.  372(2).  That  power  is  merely,  it  is contended, to take the definition of " sale " in s. 2(h)  of the  Madras Act, strike out therefrom whatever is  repugnant to Art. 286, such as sales in which goods are delivered  for consumption  outside Madras, and leave it there and  not  to add to it. We are not satisfied that that is a correct view to take  of the powers of the President under Art. 372(2).  It is to  be observed  that  Art. 286(1)(a) and the  Explanation  thereto form,  in their setting in a taxing statute, integral  parts of and different facets of the same concept.  Sales in which property passes outside the State of Madras but delivery for consumption  is inside Madras are at once inside  sales  for Madras  and outside sales for the other States.  Now, if  in exercise  of  the  power  to adapt,  the  enactment  of  the Explanation  is  requisite to give effect to one  aspect  of that (1)  [1955] 2 S.C.R. 603. 1450 concept,  that is, for prohibiting the State of Madras  from taxing  sales when goods are delivered outside, we  fail  to see  why it should not operate to give effect to  the  other aspect of the concept which is so integrally connected  with it,  viz., taxing of sales in which goods are delivered  for consumption  in  the  State of Madras, if  its  language  is comprehensive  and  wide enough to include such  sales.   We

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find it difficult to hold that the self-same Explanation  is intra  vires  the powers of the President in so  far  as  it prohibits  the State from taxing gales, in which  goods  are delivered Outside the State but is ultra vires in so far  as it  authorises  that State to tax sales in which  goods  are delivered inside it. It  should be remembered in this connection that  the  power which  the President has under Art. 372(2) to adapt  is  the legislative  power  of the State whose law is  adapted,  and that  includes the power to repeal and amend any  provision. Provided  that the law as adapted is within the  legislative competence of the State and its enactment is in the  process of bringing the State law into conformity with Art. 286,  it seems  to us that it is within the ambit of the  power  con- ferred  by  Art.  372(2).   The  question,  however,  is  of academic  interest, because of the concluding words of  Art. 372(2), which enact that no adaptation order made under that provision  shall  be  liable  to  be  questioned.   It   was suggested  for the -petitioners that these words would  have no  application  when the adaptation order went  beyond  the terms  of  Art.  372(2), and that it was  open  to  them  to challenge  its  validity on the ground that it  amounted  to more  than  bringing the existing law into  conformity  with Art. 286.  We are unable to agree.  If the adaptation  order is within the scope of Art. 372(2), then it is valid of  its own force, and does not require the aid of a clause such  as is contained in the concluding portions thereof.  It is only when  the adaptation amounts to something more  than  merely bringing   the   State   law  into   conformity   with   the Constitutional  provisions that there can arise a  need  for such a clause.  In our opinion, the effect of the concluding words of Art. 372(2) is to 1451 render  the question of the validity of the adaptation  non- justiciable.    The  Adaptation  Order  in  question   must, accordingly, be held to be not open to attack on the  ground that it goes beyond the limits contemplated by Art. 372(2). It  is then argued that even though the Adaptation Order  of the  President might not be open to question even if it  had imposed for the first time a tax on sales which had not been previously  imposed  by the Act,  nevertheless  in  deciding whether  it  does, in fact, impose such a tax, it  would  be relevant to take into account that the object of Art. 372(2) was  only to bring the State laws into conformity  with  the Constitution,  and that, in consequence, the Explanation  in s.  22 must be construed as having the same meaning  as  the Explanation  in Art. 286(1)(a).  This would, no doubt, be  a legitimate consideration in interpreting the language of the Explanation,  but  then, it must be remembered that  at  the time   when  the  Adaptation  Order  was  made,   the   true interpretation of the Explanation to Art. 286(1)(a) had  not been the subjectmatter of any decision, and it is  therefore difficult to impute to the framers of s. 22 the construction put  by this Court on the Explanation to Art.  286(1)(a)  in The  Bengal Immunity Company case (1) any more than the  one put  on it in The United Motors case (2).  We are  therefore thrown  back  on the language of the Explanation  itself  to discover  its true scope.  If, in enacting the  Explanation, the  Adaptation Order merely intended to prohibit the  State of  Madras from imposing tax on sales under which goods  are delivered  for  consumption outside that State  even  though property therein passed inside that State, it would  clearly have  expressed  that intention in words  to  the  following effect:  " For the purposes of clause (a)(i), a  sale  under which goods are delivered for consumption outside the  State

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of  Madras shall be deemed to have taken place outside  that State,  notwithstanding that property in those goods  passed inside that State ". But the language of the Explanation  is general, and fixes the situs of sales of (1) [1955] 2 S.C.R. 603. (2) [1953] S.C.R. 1069. 184 1452 an  inter-State  character in the State in which  goods  are actually delivered for consumption.  Under this Explanation, a sale under which goods are delivered outside the State  of Madras  will be an outside sale for that State  even  though property  in  the  goods  passed  inside  that  State,   and likewise, a sale under which goods are delivered inside  the State of Madras will be an inside sale for that State,  even though property in the goods passed outside that State.   As the language of the Explanation is general and of sufficient amplitude  not  merely to restrict but also to  add  to  the power  of  the State to tax Explanation sales,  and  as  the reasons  for  construing it as purely  restrictive  in  Art. 286(1)(a)  are,  as already stated, without force  in  their application to a taxing statute, we must give full effect to the  words of the enactment, and bold that they  operate  to confer on the State a power to tax Explanation sales. There is one other contention relating to this aspect of the matter,  which  remains to be considered, and that  is  that even  if the Explanation could be construed  as  authorising the  imposition of a tax on the sales mentioned  therein,  a reading  of the section as a whole makes it clear  that,  in fact,  no such tax was imposed, as it expressly enacts  that "Nothing  contained in this Act shall be deemed to impose  a tax  on  inter-State  sales  ". The  argument  is  that  the Explanation  sales being inter-State sales and  the  section having  exempted  them  from taxation, they go  out  of  the statute book altogether, and do not exist for the purpose of the  impugned  Act.   We  are  unable  to  agree  with  this contention.   Article  286(2)  consists of  two  parts,  one imposing a restriction on the power possessed by the  States to  tax sales under Entry 54 in so far as such sales are  in the  course of inter-State trade and commerce  and  another, vesting  in Parliament a power to enact a law removing  that restriction.   If s. 22 had merely enacted that  portion  of Art.   286(2)  which  prohibited  imposition  of  taxes   on interstate  sales, that might have furnished some  plausible ground for the contention now urged by the  petitioners.:but it enacts both the parts of Art. 286(2), 1453 the  restriction imposed therein and also the  condition  on which  that  restriction  is  to  cease,  viz.,   Parliament providing  otherwise by law.  Taken along with the  admitted power  of the States to impose tax on sales under Entry  54, the true scope of s. 22 is that it does impose    a  tax  on the Explanation sales, but the imposition    is   to    take effect only when Parliament lifts the ban.   In other words, it  is a piece of legislation imposing tax in praesenti  but with  a condition annexed that it is to come into  force  in futuro  as  and  when Parliament so  provides.   It  is  not contended  that there is in the Constitution any  inhibition against conditional legislation.  In The Queen v. Burah (1), it  was held by the Privy Council that a legislature  acting within  the  ambit  of  authority conferred  on  it  by  the Constitution has the power to enact a law either  absolutely or  conditionally,  and that position  has  been  repeatedly affirmed in this Court.  Vide In  The Delhi Laws Act,  1912, etc.  (2) and Sardar Inder Singh v. State  of  Rajasthan(3).

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It  would  clearly be within the competence  of  the  Madras Legislature  to  enact  a  law  imposing  a  tax  on   sales conditional  on the ban enacted in Art. 286(2) being  lifted by  Parliamentary legislation, and that, in our opinion,  is all that has been done in s. 22.  The Madras Act defines the event  on which the tax becomes payable and the person  from whom and the rate at which it has to be levied, and forms  a complete  code on the topic under consideration.   It  could have no immediate operation by reason of the bar imposed  by Art.  286(2),  but  when once that is removed by  a  law  of Parliament,  there is no impediment to its  being  enforced. That  satisfies  all  the  requirements  of  a   conditional legislation.  But it was argued that s. 22 of the Madras Act could  not be so construed, because it was not open  to  the President  acting in exercise of the power conferred on  him under Art. 372 (2) to impose a conditional levy ; nor  would it be competent to the Legislature of Madras to make a  levy conditional  or otherwise, unless Parliament had  authorised it.  We see no force in this argument.  As (1) (1878) L.R. 5 I.A. 178.        (2) [1951] S.C.R. 747. (3)  [1957] S.C.R. 605. 1454 Art. 286(2) is itself in two parts, one a restriction on the power of the State and the other, a condition on which  such restriction  will  cease  to  operate,  an  adaptation  made pursuant thereto must also be similar in its contents.   Nor is there in Art. 286 (2) any prohibition of any  legislation by tile State Legislature against enacting laws imposing tax on  interstate  sales.  It merely enacts that such  law  can have no effect.  The words "No law of a State shall impose " mean  only that no such law shall be effective to  impose  a tax. It is also contended that under the Sales Tax Acts, the levy of  tax  is annual and the rules contemplate  submission  of quarterly returns and payment of taxes every quarter on  the admitted turnover, and that a conditional legislation  under which payment of tax will become enforceable in futuro would be  inconsistent with the scheme of the Act and  the  rules. But this argument, when examined, comes to no more than this that  the existing rules do not provide a machinery for  the levy and the collection of taxes which might become  payable in  future,  when Parliament lifts the ban.   Assuming  that that  is the true position, that does not affect the  factum of the imposition, which is the only point with which we are now concerned.  That the States will have to frame rules for realizing the tax which becomes now payable is not a  ground for  holding that there is, in fact, no imposition  of  tax. It  should  also be mentioned in this  connection  that  the Madras Act makes a clear distinction between sales which are outside the operation of the Act, and sales which are within its  operation  but  are exempt from  taxation.   Section  4 provides  that the provisions of the Act shall not apply  to the  sale of electrical energy, motor  spirit,  manufactured tobacco and certain other articles.  In contrast to this  is the  language of s. 22, which expressly enacts that the  Act shall  not be deemed to impose a tax on  inter-State  sales, except in so far as Parliament may by law otherwise provide. We are of opinion that, on the true construction of s. 22 of the Act, there is an imposition of tax on Explanation  sales but  that  it  could be enforced  only  when  Parliament  so provides. 1455 We  have so far considered the question on principle and  on the  language  of the statute.  We may now.,. refer  to  the decisions of the High Courts, wherein this question has been

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considered.   In Mettur Industries Ltd. v. State  of  Madras (1), the point directly arose for decision as to whether  s. 22  of  the  Madras  Act did. in fact, levy  a  tax  on  the Explanation sales so as to fall within the protection of the Sales  Tax  Laws  Validation  Act.  It  was  held  that  the Explanation  to s. 22 had’ the effect of rendering the  sale one inside the State so as to fall within the definition  of that  word  in s. 2 (h), and that it was taxable.   Next  in point  of time is the decision of the Bombay High  Court  in Dial Das v. P. S. Talwalkar (2) in which the question  arose with  reference to s. 46 of the Bombay Sales Tax  Act  (Bom. III of 1953), corresponding to s. 22 of the Madras Act.   It was held that it did impose a tax, though it was to  operate only  if  Parliament  so  provided.  Then,  there  are   two decisions  of  the Travancore-Cochin High Court,  Mathew  v. Travancore-Cochin  Board of Revenue(3) and Cochin Coal  Co., Ltd. v. State Of Travancore-Cochin(4), in which it was  held that  s. 26 of the Travancore-Cochin General Sales  Tax  Act corresponding to s. 22 of the Madras Act, had not the effect of  imposing,  of its own force, a tax  on  the  Explanation sales, and the decision in Mettur Industries Ltd. v.  Madras State (supra) was not followed.  In The -Mysore Spinning and Manufacturing  Co., Ltd. v. Deputy Commercial  Tax  Officer, Madras (5) the Madras High Court re-affirmed the view  which it  had taken in Mettur Industries Ltd. v. State  of  Madras (supra),  and held that s. 22 had the effect of  imposing  a tax  on the Explanation sales.  In The Government of  Andhra v.   Nooney Govindarajulu (supra), the true effect of s.  22 of  the  Madras  Act came up for  consideration  before  the Andhra  High Court, and it was held therein,  dffering  from Mettur  Industries Ltd. v. State of Madras (1) and Dial  Das v.  P. S. Talwalkar (2) that in view of the observations  of this Court as to the scope of the (1)  A.I.R. 1957 Mad. 362. (2)  A.I.R. 1957 Bom. 71. (3)  A.I.R. 1957 T.C. 300. (4)  (1956) 7 Sales Tax Cases 731. (5)  A.I.R. 1957 Mad. 368. 1456 Explanation  in Art. 286 (1) (a), the Explanation in  s.  22 could  not  be  construed as imposing a  tax  on  the  sales mentioned therein, and that that conclusion also followed on the opening words of the section that " Nothing contained in this  Act shall be deemed to impose, or authorise the  impo- sition  of a tax.................. For the  reasons  already given,  we are unable to agree with the decisions in  Mathew v.  Travancore-Cochin Board of Revenue(1), Cochin  Coal  Co. Ltd. v. State of Travancore-Cochin(2) and The Government  of Andhra v. Nooney Govindarajulu (3).  We are of opinion  that the  law has been correctly laid down in  Mettur  Industries Ltd. v. State of Madras (4) and Dial Das v. P. S.  Talwalkar (5).   We accordingly hold that s. 22 operated to  impose  a tax falling within the Explanation, subject to authorisation by  Parliament as provided in Art. 286 (2).  In  this  view, the  contention  urged  on behalf of  the  States  that  the Explanation  to Art. 286 (1) (a), being a provision  of  the Constitution,  operated by its own force to impose a tax  on the  sales  covered  by  it,  and  did  not  require  to  be supplemented  by any State legislation to become  effective, does not call for any detailed consideration.  Suffice it to say  that it cannot be maintained if the true scope of  Art. 286 is to define and limit the powers of State  Legislatures with reference to imposition of sales tax and not to  itself impose it. (11) That brings us on to the next question which is whether

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the  impugned Act, Sales Tax Laws Validation Act,  is  ultra vires  on the ground that it is not authorised by the  terms of  Art.  286  (2).   Now,  it  is  a  well-known  rule   of interpretation  that in order to understand the true  nature and  scope of an Act it is necessary to ascertain  what  the evils  were which were intended to be redressed by it.   The starting  point of the trouble which ultimately led  to  the enactment  of  the impugned Act is the Explanation  to  Art. 286(1)(a),  which came into force on January 26, 1950.   The terms in which it is worded undoubtedly suggest that sales (1)  A.I. R. 1957 T.C. 300. (2)  (1956) 7 Sales Tax Cases 731. (3)  (1957) 8 Sales Tax Cases 297. (4)  A.I.R. 1957 Mad. 362. (5) A.I.R. 1957 Bom. 71. 1457 of  the description mentioned therein are to be  treated  as sales  inside the delivery State for purposes  of  taxation. That  is  how it would seem to have been understood  in  the Adaptation  Order  under  which s. 22 was  inserted  in  the Madras  Sales Tax Act and in the Adaptation Orders  relating to  the  Sales  Tax Laws of other States;  for,  as  already stated, in a taxing statute the language of the  Explanation can  only mean that a sale failing within its purview is  an inside  sale  enabling the State to tax it.  In  The  United Motors  case (1), the construction put by this Court on  the Explanation  was that though but for it the sales  mentioned therein  would  be  in the course of  interState  trade  and commerce,  its  effect was to convert them  into  intrastate sales,  so as to bring them within the taxing power  of  the delivery  State.   It was only later that  this  Court  held finally  in  The Bengal Immunity Company case (2)  that  the Explanation  sales were not divested of their  character  as inter-State sales as the Explanation to Art. 286 (1) (a) did not  govern  Art.  286  (2), and  that  in  the  absence  of Parliamentary  legislation as contemplated by Art. 286  (2), taxation  of  sales  falling within  its  purview  would  be unconstitutional.  This judgment was delivered on  September 6, 1955. But  acting  on  the  apparent  tenor  and  import  of   the Explanation  and the construction put upon it in The  United Motors case (1), the States in India had been levying  taxes oil  the sales falling within its purview.  The position  on September  6,  1955,  was that the States  had  imposed  and collected large amounts by way of tax on Explanation  sales; that there were proceedings pending for assessment of tax on such sales; and that apart from this, the States would  have been  entitled to take, but for the decision in  The  Bengal Immunity Company case (2), proceedings for the assessment of tax  in  respect  of those sales.  Now, the  result  of  the decision  in The Bengal Immunity Company case (2)  was  that the  levy  of  the  tax  on  the  Explanation  sales  became unauthorised and the States were faced with large claims for restitution of the (1) [1953] S.C.R. 1069. (2) [1955] 2 S.C.R. 603. 1458 amounts   realised,  involving  threat  to  their   economic stability.   It should also be mentioned that quite a  large number of dealers had, acting under provisions of the  Sales Tax Acts which empowered them to pass the tax on,  collected it  from their purchasers for the purpose of payment to  the State,  and  as after the decision in  The  Bengal  Immunity Company case (1) they could no longer be called upon to  pay it, they stood to make an unjust gain of it.

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These were the evils which called for redress, and it was to remedy them that Parliament enacted the Sales Tax Validation Ordinance No. III of 1956, and eventually replaced it by the impugned Act.  Section 2 of the Act provides that no law  of a  State  imposing a tax on sales which took  place  in  the course  of  interState trade or commerce  between  April  1, 1951,  and September 6, 1955, shall be deemed to be  invalid or  ever to have been invalid merely by reason of  the  fact that  such  sales were in the course of  inter-State  trade. The  section  further  provides that  all  taxes  levied  or collected under such a law during the specified period shall be  deemed  to have been validly levied  or  collected.  The policy  behind  the Act is obviously to declare the  law  as interpreted  in  The  United  Motors case  (2)  as  the  law governing  sales  filling within the Explanation up  to  the date of the judgment in The Bengal Immunity Company  case(1) and to give effect to the law as laid down in that  decision for the sales effected subsequent thereto. The  question  is whether this Act  is  unconstitutional  as being  ultra vires the powers of Parliament tinder Art’  286 (2).   The petitioners maintain that it is, and put  forward several grounds in support of that position.  It is  firstly contended by them that under Entry 54 in List II, the  power to  make  laws  in  respect  of  tax  on  sales  is   vested exclusively in the States, that the power which is conferred on  Parliament  under  Art. 286(2) is only to  enact  a  law directing or permitting the States to impose a tax on inter- States  sales and not to itself enact a law  with  reference thereto that the impugned Act being one to validate Sales (1) [1955] 2 S.C.R. 603. (2) [1953] S.C.R. 1069. 1459 Tax  Laws is substantive in character and is not  authorised by  the  terms  of  Art. 286 (2)  and  is,  in  consequence, unconstitutional.   It  is  argued that to  validate  is  to confirm  or ratify, and that can be only in respect of  acts which  one  could  have  himself  performed,  and  that   if Parliament  cannot  enact a law relating to  sales  tax,  it cannot  validate such a law either, and that such a  law  is accordingly unauthorised and void.  The only basis for  this contention in the Act is its description in the Short  Title as  the " Sales Tax Laws Validation Act " and  the  marginal note to s.     2,  which is similarly worded.  But the  true nature of a law has to be determined not on the label  given to   it  in the statute but on its substance.  Section 2  of the  impugned  Act which is the only  substantive  enactment therein  makes  no  mention  of  any  validation.   It  only provides that no law of a State imposing tax on sales  shall be deemed to be invalid merely because such sales are in the course of inter-State trade or commerce.  The effect of this provision  is  merely to liberate the State  laws  from  the fetter  placed  on them by Art. 286 (2) and to  enable  such laws  to operate on their own terms.  The true scope of  the impugned Act is, to adopt the language of this Court in  the decisions  in  The  United Motors case (1)  and  The  Bengal Immunity Company case (2), that it lifts the ban imposed  on the States against taxing inter-State sales and not that  it validates  or  ratifies  any  such  law.   Considering   the legislation  on its substance, we have .no doubt that it  is within the scope of the authority conferred on Parliament by Art. 286 (2) and is not ultra vires. It  is  next  contended  that the  impugned  Act  is  wholly retrospective  in  character in that it  operates  on  sales which took place during the specified period, and that  such

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a  legislation is, having regard to the intendment  of  Art. 286 (2), outside its terms.  It is argued that this Article, to  start  with, enacts a restriction on the  power  of  the State to impose taxes on inter-State sales and then vests in Parliament a power (1) [1933] S.C.R. 1069. (2) [1955] 2 S.C.R. 603. 185 1460 to  remove  that restriction, and that in  logical  sequence therefore, there should first be a legislation by Parliament authorising  the States to impose a tax on interState  sales and  then a law of the State made in  accordance  therewith, and  that  that order having been reversed  in  the  present case, the impugned Act is unconstitutional.  We do not agree with this contention.  Article 286 (2) merely provides  that no  law of a State shall impose tax on inter-State  sales  " except in so far as Parliament may by law otherwise  provide ". It places no restrictions on the nature of the law to  be passed by Parliament.  On the other hand, the words " in  so far  as " clearly leave it to Parliament to decide  oil  the form  and  nature of the law to be enacted by it.   What  is material   to  observe  is  that  the  power  conferred   on Parliament  under Art. 286 (2) is a legislative  power,  and such  a power conferred on a Sovereign  Legislature  carries with  it  authority to enact a law either  prospectively  or retrospectively,   unless   there  can  be  found   in   the Constitution itself a limitation on that power.  Now,  there is nothing express in Art. 286 (2) imposing a restriction on the  power of Parliament to enact a law  with  retrospective operation.  But it is argued for the petitioners that such a restriction is to be implied from the scheme of it, which is that  there  is a prohibition on the power of the  State  to enact  a  law  imposing tax  on  inter-State  sales,  unless Parliament lifts the ban, and it is said that a  prohibition operates  only in futuro and therefore a law  removing  that prohibition  must also operate in futuro.  The  decision  of the  Privy Council in Punjab Province v. . Daulat Singh  (1) is  relied  on in support of this proposition.   There,  the question arose with reference to the validity of a  mortgage of  agricultural  lands in the Punjab executed in  the  year 1933.   Section  13-A of the Punjab Alienation of  Land  Act which  came  into force in 1939 enacted that transfer  of  a land  by  a  member of an agricultural tribe  in  favour  of another member of the tribe was void if the transferee was a benamidar  for a person who was not a member of that  tribe, whether such transfer was (1)  (1946) L.R. 73 I.A. 59. 1461 made  before or after the Act.  The mortgagee  instituted  a suit,  challenging the vires of this section on  the  ground that  it  contravened s. 298(1) of the Government  of  India Act,  1935,  which provided that no subject of  His  Majesty domiciled  in  India  shall be  prohibited  from  acquiring, holding  or  disposing  of  property  on  grounds  only   of religion, place of birth or descent.  The mortgagor in reply relied  on  s. 298 (2) which enacted that  nothing  in  that section  shall  affect  the  operation  of  any  law   which prohibits the sale or mortgage of agricultural land  situate in  any particular area and owned by a person  belonging  to the agriculturist class.  In rejecting this contention,  the Privy Council observed that what was saved by s. 298 (2) was a law prohibiting certain kinds of transfers, that the  word " prohibition " could properly apply only to acts to be done in  futuro,  and that the impugned provision, s.  13-A,  was

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intra  vires  the Constitutional provision in so far  as  it prohibited transfers after the date of its enactment, but to the  extent that it avoided transfers which had taken  place prior  to  that  date, it was ultra  vires.   This  decision proceeded solely on the connotation of the word "  prohibits "  in s. 298 (2) of the Government of India Act, and can  be of  no  assistance  in the construction  of  Art.  286  (2), wherein that word does not occur.  And even on the substance of  it,  we see no real analogy between the case  in  Punjab Province  v. Daulat Singh (1) and the present.   There,  the law  which was authorised by s. 298 (2) was one  prohibiting certain   transfers;  here  the  law  which  Parliament   is authorised  to make is one not prohibiting the  States  from imposing tax on inter-State sales, but permitting them to do so.  While a law prohibiting transfers must be  prospective, a law authorising imposition of tax need not be.  It can  be both prospective and retrospective. A  decision more directly in point is the one in The  United Provinces  v. Atiqa Begum(2).  There, the question arose  on the  construction of s. 292 of the Government of India  Act, 1935, which enacted that, " Notwithstanding the repeal by this Act of the (1) (1946) I. R. 73 I. A. 59. (2) [1940] F. C. R.   110. 1462 Government of India Act, but subject to the other provisions of  this  Act,  all  the  law  in  force  in  British  India immediately before the commencement of Part III of this  Act shall  continue in force in British India until  altered  or repealed  or  amended by a competent  Legislature  or  other competent authority." The  Legislature of the United Provinces had enacted  a  law modifying  the pre-existing law relating to the  payment  of rents  by tenants to landlords and giving  it  retrospective operation.   The  question  was whether  the  enactment  was repugnant to s. 292 which had provided that the  preexisting law  was to continue in force until it was altered.  It  was held that the power of a legislature to pass a law  included a power to pass it retrospectively, and that the words of s. 292 did not operate to impose any restriction on that power, and  that the legislation was intra vires. In  our  opinion, the principle of this decision is applicable to the  present case,  and the impugned Act cannot be held to be bad on  the ground that it is retrospective in operation. It  is next contended that the impugned Act is ultra  vires, inasmuch  as it is much more than a mere retrospective  law, and that it is really a piece of ex post facto  legislation, which  is  not authorised by Art. 286(2).  The  argument  in support  of  this contention may thus be stated :  A’  State legislature is competent under Entry 54 in List II to  enact a  law taxing sale of goods, and when such a law is made  to operate  retrospectively it may not be open to challenge  on constitutional grounds, though its propriety may be open  to question on grounds of policy.  Parliament has no competence to  enact  laws in respect of tax on  sales  filling  within Entry  54 in List 11, but Art. 286(2) confers on it a  power to  authorise  the  States to impose a  tax  on  inter-State sales.  The impugned Act does not do that, but validates  ex post   facto   laws   of  States   imposing   such   a   tax retrospectively  for the specified period.  Such  a  general law may be intra vires the States but not Parliament, nor is it one which can be justified by the power granted to it  to "  provide otherwise." It is therefore unconstitutional  and void, In 1463

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our  opinion,  this argument is only an amalgam of  the  two contentions already dealt with, and does not require further detailed  consideration.  The impugned Act, though it is  in name  a validating Act, is in essence a law lifting the  ban under Art. 286 (2), and if no limitation on the character of that law could be spelt out of the language of that Article, then it must be upheld as within the authority conferred  by it. It  is  also  argued that even if the power to  make  a  law conferred  on  Parliament under Art. 286 (2)  comprehends  a power  to  enact a law with  retrospective  operation,  that power cannot extend to authorising what is unconstitutional, and  that as s. 22 of the, Madras Act and the  corresponding provisions   in   the   statutes  of   other   States   were unconstitutional  and illegal when made as contravening  the prohibition  enacted in Art. 286 (2), the impugned Act  must be held to be unauthorised and bad in that it seeks to  give effect  to  those provisions.  But this is to beg  the  very question which we have to decide.  If it is competent to the legislatures of the States to enact a law imposing a tax  on inter-State   sales  to  take  effect  when  Parliament   so provides,  there  is  nothing  unconstitutional  or  illegal either  in s. 22 of the Madras Act or in  the  corresponding provisions  in  the Acts of other  States.   If  conditional legislation  is valid, as we have held it is, then s. 22  is clearly  intra  vires,  and the  foundation  on  which  this contention of the petitioners rests, disappears and it  must fall  to the ground.  In the result, we are of opinion  that the  impugned  Act  is  intra vires,  and  is  not  open  to challenge  on  any  of  the  grounds  put  forward  by   the petitioners. (111)     (a).  We have now to consider the contention  that even  if  the  impugned Act is valid, that  would  not  give efficacy  to  s. 22 of the Madras Act or  the  corresponding provisions  in  the laws of other States which  came  in  by adaptation under Art. 372 (2).  The ground urged in  support of this contention is that the expression " law of a State " in  Art.  286 (2) has a technical import, and  means  a  law which is enacted by the legislature of a State in the manner prescribed  by  the Constitution and open  to  challenge  in courts if 1464 it is unconstitutional, that that expression occurring  ,-in s. 2 of the impugned Act must bear the same meaning which it has  in  Art.  286 (2) as it was enacted,  pursuant  to  the authority  contained therein, and that s. 22 of  the  Madras Act is not a law of that description, as it was made by  the President in exercise, of the special power conferred on him by  Art. 372 (2), and is, as provided therein, not  open  to attack in a court of law. We do not see why we should restrict the connotation of  the words " law of a State " in the manner contended above.  The law  of  a  State signifies, in  its  ordinary  acceptation, whatever   is   an  expression  of   the   legislative,   as distinguished  from  the executive or judicial  power  of  a State.   Its normal mode under the Constitution is no  doubt that  it  is  enacted  by  the  legislature  of  the   State constituted  in  accordance with  the  procedure  prescribed therein.   But  that  is  not the only  mode  in  which  the legislative  power of the State could be  exercised.   Under Art.  213,  the  Governor  is  authorised,  subject  to  the conditions laid down therein, to issue Ordinances which have the  force of law, and these Ordinances are clearly laws  of the State and not the less so by reason of their not  having been passed by the State legislature.  Under Art. 252, it is

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open to Parliament acting on resolutions of the legislatures of  two or more States, to enact laws on subjects which  are within  the  exclusive competence of the  States,  a  recent instance  of  such  legislation being Act 42  of  1955,  the validity of which was the subject of consideration in R.  M. D.  Charnarbaugwalla  v.  Union of  India(1).   Can  it,  be contended  that these are not laws of the States  for  which they  were  enacted,  because they were not  passed  by  the legislatures of those States ? We entertain no doubt that by the expression " law of a State " in Art. 286 (2) and s.   2 of the impugned Act is meant whatever operates as law in the state, and that s. 22 of the Madras Act is   a  law   within those  enactments.  Nor does it affect this conclusion  that that law may not be open to challenge in a court of law.   A right to challenge a (1)  [1957] S.C.R. 930. 1465 law  must  depend  on the  provisions  of  the  Constitution governing the matter, and if those provisions enact that  it is  not  open to question in a court of law or’ that  it  is liable  to be questioned only on certain specified  grounds, that  will not have the effect of depriving a  statute  duly enacted of its character as law.  We are also not  satisfied that  a  law as adapted under Art. 372 (2) is  not  open  to attack on the ground that it contravenes some constitutional provision.   We  are disposed to think that  the  concluding words  of Art. 372 (2) preclude an attack on the  Adaptation Order  only  on  the ground that it does  more  than  merely bringing the State law into conformity with the Constitution and is, in consequence, ultra vires the powers conferred  by that article.  In the result, we must hold that s. 22 of the Madras Act is within the protection afforded by s. 2 of  the impugned Act. (111)  (b)  : The next contention of  the  petitioners  that falls  to be considered is whether even on the footing  that the  impugned  Act is intra vires the powers  of  Parliament under Art. 286 (2), the proceedings which are proposed to be taken by the State of Andhra against them for assessment  of tax  are incompetent, because the Act validates only  levies or collections made during the specified period but does not authorise  the initiation of fresh proceedings for  levy  or collection of tax.  It is contended that though s. 2 of  the impugned  Act consists of two clauses, one giving effect  to laws  of States imposing tax on inter-State sales in so  far as they took place during the specified period and the other validating  levy  or  collection of  tax  made  during  that period,  the first clause has no independent operation,  the only purpose which it serves being to lead up to the  second which  is the only effective clause in the section.   It  is argued  that  if the intention of the  legislature  was  not merely  to validate the levies or collections  already  made but  also to maintain the laws in force so as to enable  the States to take fresh proceedings for assessment and levy  of tax,  then  there  was no need  whatsoever  for  the  second clause,  as  effectuation  of the  Act  would  automatically validate the levies and collections made thereunder.  It  is said 1466 that the object of the legislation was only to see that  the States had not to refund amounts collected by them, and that for  achieving  that object it was necessary  only  to  give effect to the second clause.  The decision in Dialdas v.  P. S. Talwalkar (1) already cited, was relied on as  supporting the petitioners on this point. In our judgment, the language of the enactment is too  clear

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and unambiguous to admit of this contention.  If the purpose of  the enactment is what the petitioners contend it to  be, then nothing would have been easier for the legislature than to have so framed the section as to confine its operation to levies or collections already made, without giving effect to the  law itself.  On the contention of the petitioners,  the first clause has to be discarded as wholly inoperative,  and we  should  be 10th to adopt a construction which  leads  to that result.  It is true that on the contention of the State that  the first clause has independent operation the  second clause would be unnecessary, as even without it, the  result sought to be achieved by it must follow on the first  clause itself.   But  it is to be noted that the first  clause  has reference  to  the exercise of legislative power  while  the second  is concerned with administrative action, and  it  is possible  that the second clause might have been enacted  by way  of abundant caution.  It is nothing strange or  unusual for  a  legislature  to  insert  a  provision  ex  abundanti cautela,  so as to disarm possible objection; but it is  in- conceivable that it should enact a provision which is wholly inoperative.  Of two alternative constructions of which  one leads  to  the  former and the  other  involves  the  latter result,  there cannot be any question that it is the  former that is to be preferred.  Nor is it permissible to cut  down the plain meaning of the terms of the statute on  considera- tions of policy behind the legislation.  But even from  that point  of view, there was the fact that there  were  dealers who had collected taxes from their purchasers for payment to the State, but were relieved of (1)  A.I.R. 1957 Bom. 71. 1467 that  obligation  by  the judgment in  The  Bengal  Immunity Company case (1) and that, further, to validate only  levies and  collections made would give an advantage to  those  who evaded  the law as then understood, over those  who  loyally obeyed it.  It follows that we are unable to agree with  the decision in Dialdas v. P. S. Talwalkar (2), in so far as  it held  that it was not competent to the State to start  fresh proceedings  for  assessment of tax on the strength  of  the impugned Act.  In our opinion, the true construction of s. 2 is  that  the two clauses therein are, as indicated  by  the conjunction, distinct and independent in their opera.  tion, and that the laws of the States are kept in force in respect of sales which had taken place during the specified  period, and  that proceedings in respect thereof for assessment  are within the protection of the Act. It  was  next argued that the impugned Act  is  a  temporary statute,  as  its operation is limited to sales  which  took place  during the specified period, and that  period  having expired,  no proceedings could now be taken on the  strength of  the provisions of that Act, and reliance was  placed  on the observations of this Court in Keshavan Madhava Menon  v. The  State of Bombay (3), in support of this position.   But the  impugned Act is in no sense a temporary Act.  Its  life is  not limited to any specified period.  It is a  permanent statute  operating on all sales which took place during  the specified  period.   The fallacy in this contention  of  the petitioners  lies in mixing up the period, the sales  during which are brought within the operation of the Act, with  the period  of the operation of the Act itself.  The former  may be said to be temporary, but the latter clearly is not. (IV) It  is  next contended that even if  the  impugned  Act authorised  starting of fresh proceedings for assessment  of tax  on the Explanation sales which had taken  place  during the  specified  period, no action in that  behalf  could  be

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taken under s. 22 of the (1) [1955] 2 S.C.R. 603.      (2) A.I.R. 1957 Bom. 71. (3) [1951] S.C.R. 228, 235. 186 1468 Andhra  (Madras) Act, because it was, when it  was  enacted, repugnant  to  Art.  286(2) of  the  Constitution,  and  was therefore  void.   It  is argued that  a  statute  which  is unconstitutional is a nullity and must be treated as non est and that the impugned Act could not infuse life into it.  It may be open, it is said, to the Legislature of the State  of Andhra  to  enact a fresh law giving it  even  retrospective operation  as  provided  in the impugned  Act,  but  in  the absence of such a legislation, the provisions of the Act  as they  stood  prior  to the impugned  Act  are  incapable  of enforcement.    It  would  be  sufficient  answer  to   this contention  that s. 22 of the Madras Act is only a piece  of conditional  legislation, imposing tax on  interState  sales when  Parliament should enact a law lifting the ban, and  if such legislation is competent as we have held it is, then no question  of unconstitutionality of the section when it  was enacted  could arise.  But it would be more satisfactory  to decide  the point on its own merits, as the question  raised has been, of late, the subject of considerable discussion in this Court. Now,  in  considering  the  question as  to  the  effect  of unconstitutionality  of  a statute, it is necessary  to  re- member  that unconstitutionality might arise either  because the law is in respect of a matter not within the  competence of  the  legislature,  or because the  matter  itself  being within   its   competence,  its   provisions   offend   some constitutional  restrictions.   In  a  Federal  Constitution where  legislative powers are distributed between  different bodies,  the  competence  of  the  legislature  to  enact  a particular  law must depend upon whether the topic  of  that legislation  has  been assigned by the Constitution  Act  to that  legislature.  Thus, a law of the State on an Entry  in List  1,  Sch.   VII of the  Constitution  would  be  wholly incompetent and void.  But the law may be on a topic  within its competence, as for example, an Entry in List II, but  it might  infringe restrictions imposed by the Constitution  on the  character  of  the law to be passed,  as  for  example, limitations  enacted in Part III of the Constitution.   Here also, the law to the extent of the repugnancy will be 1469 void.   Thus,  a  legislation  on a  topic  not  within  the competence  of the legislature and a legislation within  its competence but violative of constitutional limitations  have both the same reckoning in a court of law; they are both  of them unenforceable.  But does it follow from this that  both the laws are of the same quality and character, and stand on the  same footing for all purposes ? This question has  been the  subject of consideration in numerous decisions  in  the American  Courts, and the preponderance of authority  is  in favour  of the view that while a law on a matter not  within the  competence of the legislature is a nullity, a law on  a topic   within   its  competence  but   repugnant   to   the constitutional  prohibitions  is only  unenforceable.   This distinction   has   a  material  bearing  on   the   present discussion.  If a law is on a field not within the domain of the  legislature,  it  is absolutely null and  void,  and  a subsequent cession of that field to the legislature will not have the effect of breathing life into what was a still-born piece of legislation and a fresh legislation on the  subject would  be  requisite.   But if the law is in  respect  of  a

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matter  assigned  to  the  legislature  but  its  provisions disregard constitutional prohibitions, though the law  would be  unen.  forceable by reason of those  prohibitions,  when once they are removed, the law will become effective without re-enactment. Willoughby on the Constitution of the United States, Vol. 1, at p. 11 says : "  The  validity  of  a  statute is  to  be  tested  by  the constitutional  power  of a legislature at the time  of  its enactment  by  that legislature, and, if thus tested  it  is beyond  the  legislative power, it is  not  rendered  valid, without re-enactment, if later, by constitutional amendment, the necessary legislative power is granted. However,  it has been held that where an act is  within  the general  legislative  power  of the enacting  body,  but  is rendered  unconstitutional  by reason of  some  adventitious circumstance,  as for example, when a State  legislature  is prevented  from  regulating a matter by reason of  the  fact that the Federal 1470 Congress  has  already legislated upon that  matter,  or  by reason of its silence is to be construed as indicating  that there should be no regulation, tile act does not need to  be re-enacted  in  order to be enforced, if this cause  of  its unconstitutionality is removed." In Cooley on Constitutional Law at p. 201, it is stated that "  a  finding of unconstitutionality does  not  destroy  the statute  but merely involves a refusal to enforce  it".   In Wilkerson  v. Rahrer (1), the State of Kansas had enacted  a law  in  1889 forbidding the sale  of  intoxicating  liquor. This was bad in so far as it related to sales in the  course of  interstate  trade,  as it was in  contravention  of  the Commerce  Clause.   But in 1890, the Congress passed  a  law conferring  authority  on the States  to  enact  prohibition laws.  The question was whether a prosecution under the  law of 1889 in respect of a breach of that law subsequent to the Congress  legislation in 1890 was  maintainable.   Repelling the  contention that the statute of 1889 was a nullity  when it was passed and could not be enforced without reenactment, the Court observed: " This is not the case of a law enacted in the  unauthorized exercise of a power exclusively confided to Congress, but of a  law  which it was competent for the State  to  pass,  but which  could not operate upon articles occupying  a  certain situation  until the passage of the Act of  Congress.   That Act  in  terms  removed the obstacle,  and  we  perceive  no adequate  ground  for adjudging that a re-enactment  of  the state law was required before it could have the effect  upon imported which it had always had upon domestic property." It should be noted that in this case the law of 1889 applied to  intrastate  sales also, and it was admittedly  valid  to that   extent.   The  impugned  legislation  was   therefore unconstitutional only in part.  Rottschafer after  referring to  the  conflict of authorities on ’this  question  in  the States, refers to the decision in Wilkerson v. Rahrer (1) as embodying  the  better view.  Vide  American  Constitutional Law, 1939 Edn. p. 39. A similar view was taken in Ulster Transport (1)  (1891) I40 U.S. 545; 35 L. Ed. 572. 1471 Authority v. James Brown & Sons Ltd. (1).  There, construing s. 5(1) of the Act of 1920 which enacts that " any law  made in  contravention of the restrictions imposed by  this  sub- section  shall so far as it contravenes these  restrictions, be void ", Lord MacDermott

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L.   C. J. observed: " I am not aware of any authority for the view that language such  as  this  necessarily means  that  contravention  must produce an actual gap in the statute book in the sense  that the measure concerned, or some specific part thereof, simply drops out of the authorized text.  As well as this  vertical severability, if I may so describe it, I see no reason  why, if  the  circumstances warrant such a course, the  terms  of section  5(1) should not be sufficiently met by what  I  may call  a  horizontal severance, a severance  that  is  which, without  excising  any of the text, removes from  its  ambit some  particular  subject-matter, activity  or  application. This, I think, would give effect to the words ’ so far as it contravenes’  without impinging on the meaning or weight  to be attached to the word ’ void ’. " It  will  be  noted that this decision  also  deals  with  a statute which was in part unconstitutional. Coming to the authorities of this Court where this  question has  been  considered: In Behram Khurshed  Pesikaka  v.  The State of Bombay (2) the question arose with reference to the Bombay  Prohibition  Act of 1949 which, subject  to  certain exceptions  provided therein, prohibited the consumption  of liquor.  In The State of Bombay and another v. F. N. Balsara (3) this Court had held that this provision was obnoxious to Art. 19(1)(g) of the Constitution in so far as it related to medicinal  and toilet preparations containing alcohol.   The appellant  was  prosecuted  for  the  offence  of  consuming liquor,  and  his  defence was that he  had  taken  medicine containing  alcohol.  The point in dispute was  whether  the burden  was  upon the appellant to prove that he  had  taken such  a medicine or for the prosecution to show that he  had not.  This (1)  (1953) Northern Ireland Reports 79. (2) [1955] 1 S. C. R. 613, 654.  (3) [1951] S. C. R. 682. 1472 Court  held  that the onus was on the prosecution,  and  the same not having been discharged, the appellant was  entitled to be acquitted.  In the course of the judgment, Mahajan  C. J.  made the following observations, which are relied on  by the petitioners: "  The constitutional invalidity of a part of section  13(b) of  the Bombay Prohibition Act having been declared by  this Court,  that  part of the section ceased to have  any  legal effect in judging cases of citizens arid had to be  regarded as null and void in determining whether a citizen was guilty of an offence." It  must  be  observed that the question  of  the  constitu- tionality  of  the  Act did not arise  directly  for  deter- mination  and was incidentally discussed as bearing  on  the incidence   of   burden  of  proof.   And   further,   these observations  have  reference to the enforceability  of  the provisions  of  the Bombay Prohibition Act,  while  the  bar under  Art. 19 continued to operate.  There was no  question of the lifting of ban imposed by Art. 19, ’and the  question as  to  the  effect of lifting of a ban did  not  arise  for decision.   In the context in which they occur, the words  " null  and  void " cannot be construed as implying  that  the impugned  law  must  be  regarded as non est  so  as  to  be incapable  of taking effect, when the bar is removed.   They mean  nothing  more than that the Act  is  unenforceable  by reason of the bar. In A. V. Fernandez v. State of Kerala (1) the question arose with  reference to the Travancore-Cochin General  Sales  Tax Act   and   the  Rules  made  thereunder.   Prior   to   the Constitution,  the assessees were liable to pay tax  on  the

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total turnover of sales including those inside the State and those  outside the State.  Where the sales were of  cocoanut oil,  there was a provision for deduction of the price  paid for  the purchase of copra from the total  turnover.   After the coming into force of the Constitution, a new section, s. 26, corresponding to s. 22 of the Madras Act, was introduced incorporating  therein  the  provisions  of  Art.  286,  and consequent  thereon, the sales which took place outside  the State were excluded from the turnover.  On this, (1)  [1957] S. C. R. 837. 1473 a question arose as to the quantum of deduction to which the assessee  was entitled in respect of his purchase of  copra. He claimed that he was entitled to deduct the price paid for copra  not only in respect of oil which was sold inside  the State but also oil sold outside the State.  This  contention was rejected by the High Court, which limited the  deduction to  purchase  of  copra relating to the  sales  inside’  the State, and in affirming that decision, this Court observed : "  In our opinion, section 26 of the Act, in  cases  falling within  the  categories specified under Article 286  of  the Constitution  has  the effect of setting at  nought  and  of obliterating  in regard thereto the provisions contained  in the  Act  relating to the imposition of tax on the  sale  or purchase  of  such goods and in  particular  the  provisions contained  in  the  charging  section  and  the   provisions contained  in  rule  20(2) and other  provisions  which  are incidental  to the process of levying such tax.  So  far  as sales falling within the categories specified in Article 286 of the Constitution and the corresponding section 26 of  the Act  are concerned, they are, as it were, taken out  of  the purview  of  the Act and no effect is to be given  to  those provisions  which  would otherwise have been  applicable  if section 26 had not been added to the Act.  " On  the strength of the above observations, the  petitioners contend  that the provisions relating to  inter-State  sales must  be  treated as non-existent, and  that,  therefore,  a fresh  enactment of the statute would be necessary to  bring them into operation.  Here again, the point for decision was only  as  to  the effect of the ban under Art.  286  on  the transactions  which came within its purview.  That  ban  had not then been lifted and the effect of the lifting of such a ban  on the existing law did not fall to be considered.   We are  unable  to  read  the observations  relied  on  by  the petitioners as implying that s. 22 of the Madras Act must be taken to have been blotted out of the statute book. A  case  directly in point is Bhikaji  Narayan  Dhakras  and others  v.  The  State of Madhya Pradesh  and  another  (1). There, the question arose with reference (1)  [1955] 2 S. C. R. 589. 1474 to  the C. P. & Berar Motor Vehicles (Amendment)  Act,  1947 (Act  3 of 1948).  That Act had amended s. 43 of  the  Motor Vehicles   Act,  1939,  by  introducing   provisions   which authorised the Provincial Government " to take up the entire motor  transport  business  in the Province and  run  it  in competition  with  and  even  to  the  exclusion  of   motor transport operators ". These provisions, though valid at the time when they were enacted, became void on the coming  into force  of  the  Constitution as  infringing  the  rights  of citizens  to carry on business, protected by Art.  19(1)(g). The Constitution, however, was amended on June 18,1951,  and Art. 19(6) was amended so as to authorise the State to carry on  business  " to the exclusion, complete  or  partial,  of citizens  or otherwise ". Subsequent to this amendment,  the

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Government  issued  a  notification  under  s.  43  of   the Amendment  Act  of  1948, and it was the  validity  of  that notification that was in issue.  The contention was that  as s. 43 of the Act of 1948 had become void at the date of  the Constitution, a notification issued by the Government  under that section after the date of the amendment of the  Consti- tution was not valid, as it must be taken to have become non est.   It  was held by this Court that s. 43 of the  Act  of 1948  could  not  be held to have been effaced  out  of  the statute   book,   because  it  continued   to   operate   on transactions   prior  to  the  coming  into  force  of   the Constitution, and that even after the Constitution, it would be  operative as against non-citizens, that the  consequence of s. 43 being repugnant to Art. 19(1)(g) was that it  could not be enforced so long as the prohibition contained therein was  in force, but that when once that prohibition had  been removed as it was by the First Amendment, the provisions  of that  Act which had been dormant all the time became  active and enforceable. The result of the authorities may thus be summed up:   Where an enactment is unconstitutional in part but valid as to the rest, assuming of course that the two   portions         are severable,  it cannot be held to have been wiped out of  the statute  book  as it admittedly must remain  there  for  the purpose of enforcement of 1475 the  valid portion thereof, and being on the  statute  book, even that portion which is unenforceable on the ground  that it is unconstitutional will operate proprio vigore when  the Constitutional  bar is removed, and there is no need  for  a fresh legislation to give effect thereto.  On this view, the contention   of  the  petitioners  with  reference  to   the Explanation  in  s. 22 of the Madras Act  must  fail.   That Explanation  operates, as already stated, on two classes  of transactions.   It  renders taxation of sales in  which  the property  in the goods passes in Madras but  delivery  takes place  outside  Madras illegal on the ground that  they  are outside  sales  falling  within Art. 286(1)  (a).   It  also authorises  the imposition of tax on the sales in which  the property  in the goods passes outside Madras but  goods  are delivered for consumption within Madras.  It is valid in  so far as it prohibits tax on outside sales, but invalid in  so far  as sales in which goods are delivered inside the  State are  concerned, because such sales are bit by  Art.  286(2). The fact that it is invalid as to a part has not the  effect of  obliterating it out of the statute book, because  it  is valid as to a part and has to remain in the statute book for being enforced as to that part.  The result of the enactment of  the impugned Act is to lift the ban under  Art.  286(2), and  the  consequence  of it is that  that  portion  of  the Explanation  which relates to sales in which  property  paws outside Madras but the goods are delivered inside Madras and which   was   unenforceable   before,   became   valid   and enforceable.   In this view, we do not feel called  upon  to express  any  opinion  as  to  whether  it  would  make  any difference  in  the  result if the  impugned  provision  was unconstitutional in its entirety. There is one other aspect of the question to which reference must be made.  The decisions in Behram Khurshed Pesikaka  v. The  State  of  Bombay (1) and Bhikaji  Narain  Dhakras  and others  v. The State of Madhya Pradesh and another (2)  both turn  on  the construction of Art. 13 of  the  Constitution, which enacts that laws shall be void to the extent they are (1)  [1955] 1 S.C.R. 613. 187 (2) [1955] 2 S.C.R. 589,

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187 1476 repugnant  to the provisions of Part III.  We are  concerned in  these  petitions  not with infringement of  any  of  the provisions of Part III but of Art. 286(2), and the point for our decision is as to the effect of the infringement of that provision.   Art. 286(2) does not provide that a  law  which contravenes  it  is  void, and when regard  is  had  to  the context  of  that  provision, it is difficult  to  draw  the inference  that that is the consequence of contravention  of that provision.  Art. 372(1) provides for the continuance in force of all laws existing at the date of the  Constitution. The proviso to Art. 286(2) enacts that the President may  by an order continue the operation of the Sales Tax Laws up  to March 31, 1951, and Art. 286(2) itself enacts that no law of a  State shall impose a tax.  In the context in  which  they occur,  the true meaning to be given to these words  is,  as already observed, that no law of a State shall be  effective to impose a tax; that is to say, the law cannot be  enforced in so far as it imposes such a tax.  Whether we consider the question  on  broad  principles  as to  the  effect  of  un- constitutionality  of a statute or on the language  of  Art. 286(2),  the  conclusion is inescapable that s.  22  of  the Madras  Act  and the corresponding provisions in  the  other statutes  cannot be held to be null and void and non est  by reason of their being, repugnant to Art. 286(2) and the  bar under  that  Article having been now removed,  there  is  no legal impediment to effect being given to them. (V)  We  shall now deal with the contention of  the  learned counsel  for  the Madura Mills Ltd., who struck a  new  path cutting  across the lines on which the petitioners  and  the other interveners proceeded.  He contended that the decisive factor in the determination of the question was Entry 42  in List  I  of  the Seventh Schedule,  "Inter-State  trade  and commerce",  that  under  that  Entry,  Parliament  had   the exclusive  power  to enact laws in  respect  of  inter-State trade  and commerce and that included power to impose a  tax on  inter-State  sales,  that the States  had  therefore  no competence  under the Constitution to enact a  law  imposing tax on such sales, that the laws passed 1477 by  the  States after the Constitution imposing such  a  tax were ultra vires and void, that the impugned Act  purporting to  give  effect to such laws was likewise ultra  vires  and inoperative,  and  that,  in  consequence,  the  proceedings sought  to  be taken under s. 22 of the Madras Act  and  the corresponding provisions in the sister Acts of other  States were  unauthorised and illegal.  The argument in support  of this contention was as follows: Entry 42 in List I is  based on the Commerce Clause of the American Constitution, Art. 1, s.  8  that  " The Congress shall  have  power  to  regulate commerce  among  the  several States ", and  that  has  been interpreted  by  the Supreme Court of the United  States  as meaning  that  the  States  have no power  to  enact  a  law imposing a tax on the carrying on of inter-State trade (Vide Robins v. Taxing District of Shelby County (1), or  imposing tax on inter-State sales (Vide McLeod v. Dilworth Co.  (2)). The  contents  of  Entry 42 are the same  as  those  of  the Commerce  Clause, and it must therefore be construed  as  of the  same  effect.  It is also a  well-established  rule  of construction that the Entries in the Legislative Lists  must be  interpreted  liberally and in a wide  sense.   The  true interpretation  therefore  to be put upon Entry 42  is  that Parliament  has, and therefore, in view of the  non-obstante clause in Art. 246(1) and of the words "subject to" in  Art.

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246(3),  the  States have not, the power to  impose  tax  on inter-State  sales.  Article 301 which provides  that  trade and commerce in the territory of India shall be free is also intended to achieve the same result.  It reproduces s. 92 of the  Commonwealth  of Australia Constitution  Act,  and  the authorities  on that section have held that imposition of  a tax  on  inter-State  trade  would  be  obnoxious  to   that provision.   That the freedom in Art. 301  includes  freedom from  taxation is also implicit in Art. 304 (a) in which  an exception  to Art. 301 is made in respect of the  imposition of tax on goods imported from other States.  The result  is, it is argued, that after the Constitution no law of a  State can impose a tax on (1)  (1887) 120 U.S. 489; 30 L. Ed. 694. (2)  (1044) 322 U.S. 327 ; 88 L. Ed. 1304. 1478 inter-State  sales, and in consequence, s. 22 of the  Madras Act, which came into force after the Constitution, would, if it is construed as imposing a tax, be bad, and the  impugned Act  which  proceeds on the view that the  States  have  the power to enact laws imposing a tax on inter-State sales  and seeks to give effect to them would also be  unconstitutional and void. This  contention  suffers,  in  our  opinion,  from  serious infirmities.   It  overlooks that our Constitution  was  not written  on a tabula rasa, that a Federal  Constitution  had been  established under the Government of India  Act,  1935, and though that has undergone considerable change by way  of repeal,  modification  and addition, it  still  remains  the framework  on which the present Constitution is  built,  and that the provisions of the Constitution must accordingly  be read  in  the light of the provisions of the  Government  of India  Act.  It fails to give due weight to the  setting  of the   relevant  provisions  of  the  Constitution  and   the interpretation  which  is  to  be put  upon  them  in  their context.  In the Government of India Act, 1935, there was no Entry  corresponding to Entry 42 in List I of the  Constitu- tion.  But there was in List II, Entry 48 which  corresponds to Entry 54 in the Constitution.  It is not in dispute  that under Entry 48 the States had power to pass a law imposing a tax on inter-State sales, because the terms of the Entry are wide  and  would include inter-State as well  as  intrastate sales.   It was on this view that the Provinces had  enacted laws imposing tax on inter-State sales.  Then the  Constitu- tion  came into force, and it included for the first time  a new Entry 42 in List 1. It also reproduced Entry 48 in Entry 54  in  List  II in terms,  for  our  -purposes,  identical. Having  regard  to  the connotation of  that  Entry  in  the Government of India Act, 1935, one would have expected  that if  it  was  intended by the  Constitution-makers  that  the States  should  be deprived of the power to  tax  interstate sales  which  they had under Entry 48 in the  Government  of India  Act,  that would have been made clear  in  the  Entry itself.   It is material to note that while Entry 48 in  the Government 1479 of  India  Act  was  "Taxes on the  sale  of  goods  and  on advertisement ", Entry 54 in List II of the Constitution  as originally  enacted was " Taxes on the’ sale or purchase  of goods  other than newspapers".  Thus, the  Constitution  did limit the scope of Entry 48 by excluding from it newspapers, and  if  it was its intention to exclude  inter-State  sales from its purview, nothing would have been easier for it than to  have  said  so, instead of leaving  that  result  to  be inferred  on  a construction of Entry 42 in List  I  in  the

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light  of the American authorities on the  Commerce  Clause. This Is strong indication that Entry 42 is not to be read as including  tax  on inter-State sales.   This  conclusion  is further  strengthened, when regard is had to the  scheme  of the  Lists  in  the  Seventh  Schedule  and  the   principle underlying the enumeration of heads of legislation therein. In List 1, Entries I to 81 mention the several matters  over which Parliament has authority to legislate.  Entries 82  to 92  enumerate the taxes which could be imposed by a  law  of Parliament.   An examination of these two groups of  Entries shows that while the main subject of legislation figures  in the  first  group, a tax in relation thereto  is  separately mentioned  in  the second.  Thus, Entry 22 in List  I  is  " Railways  ",  and Entry 89 is " Terminal taxes on  goods  or passengers, carried by railway, sea or air; taxes on railway fares  and  freights ". If Entry 22 is to  be  construed  as involving  taxes  to  be imposed, then  Entry  89  would  be superfluous.   Entry  41 mentions "Trade and  commerce  with foreign   countries;  import  and  export   across   customs frontiers  ". If these expressions are to be interpreted  as including  duties to be levied in respect of that trade  and commerce,  then  Entry  83  which is  "  Duties  of  customs including  export  duties  "  would  be  wholly   redundant. Entries  43 and 44 relate to incorporation,  regulation  and winding  up of corporations.  Entry 85  provides  separately for  Corporation tax.  Turning to List II, Entries I  to  44 form  one group mentioning the subjects on which the  States could legislate.  Entries 45 to 63 in that List form another group, and they deal with 1480 taxes.  Entry 18, for example, is " Land " and Entry 45 is " Land  revenue  ". Entry 23 is " Regulation of  mines  "  and Entry 50 is " Taxes on mineral rights ". The above analysis- and  it is not exhaustive of the Entries in the  Lists-leads to  the  inference  that  taxation is  not  intended  to  be comprised  in  the  main subject in which  it  might  on  an extended  construction  be  regarded  as  included,  but  is treated  as  a distinct matter for purposes  of  legislative competence.   And this distinction is also manifest  in  the language  of Art. 248, Cls. (1) and (2), and of Entry 97  in List  I  of the Constitution.  Construing Entry  42  in  the light  of  the above scheme, it is difficult to  resist  the conclusion  that  the power of Parliament  to  legislate  on inter-State  trade  and  commerce under Entry  42  does  not include  a power to impose a tax on sales in the  course  of such trade and commerce. Article  286  has a direct bearing on the  point  now  under discussion.  It imposes various restrictions on the power of the State to enact laws imposing taxes on sale of goods  and one  of those restrictions has reference to taxes on  inter- State  sales,  vide  Art. 286(2).  It is  implicit  in  this provision  that it is the States that have got the power  to impose a tax on such sales, as there can be no question of a restriction on what does not exist.  That is how Art. 286(2) has  been construed by this Court both in The United  Motors case  (1) and in The Bengal Immunity Company case  (2).   It was observed therein that under Entry 54, as under Entry  48 of  the  Government  of India Act, the power  to  tax  sales rested  with  the States, and that Art. 286(2)  was  enacted with the object of avoiding multiple taxation of inter-State sales  in  exercise of the power conferred  by  that  Entry. This  again strongly supports the conclusion that  Entry  54 must  be  interpreted as including the power to  tax  inter- State sales and Entry 42 as excluding it. In  order  to  get over this  hurdle,  learned  counsel  put

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forward  the contention that Art. 286(2) had reference  only to  laws  which  were  in existence at  the  time  when  the Constitution came into force, and that the (1) [1953] S.C.R. 1069. (2) [1955] 2 S.C.R. 603. 1481 power  given to Parliament was one to continue  those  laws. Reference  was  made  to the proviso to  Art.  286(2)  which authorised the President to direct that the taxes which were being  levied  by the State before the commencement  of  the Constitution might be continued to be levied until March 31, 1951,  and it was said that the power conferred  under  Art. 286(2) was of the same character, and that it merely enabled Parliament to continue pre-Constitution laws. Now, it cannot be disputed that the language of Art.  286(2) would,  in terms, comprehend future  legislation.   Language similar to the one used in Art. 286 (2) is also to be  found in Art. 287, and there, it clearly has reference to laws  to be enacted after the Constitution.  Indeed, it was  conceded that on the wording of Art. 286(2) both existing and  future legislation  would be included.  But it was  contended  that its operation should be limited to existing laws, because as Entry  42 in List I includes tax on inter-State  sales,  any law  of  the State subsequent to the  Constitution  imposing such a tax would be incompetent.  This, however, is  petitio principii.  The point for decision is whether tax on  inter- State  sales is included within Entry 42.  The inference  to be  drawn from the plain language of Art. 286(2) is that  it is  not.   It  is no answer to this to  say  that  Entry  42 includes it, and that, therefore, the meaning of Art. 286(2) should be cut down.  We cannot accede to such a contention. To  sum  up: (1) Entry 54 is successor to Entry  48  in  the Government  of  India  Act, and it would  be  legitimate  to construe  it  as including tax on interState  sales,  unless there  is anything repugnant to it in the Constitution,  and there  is none such. (2) Under the scheme of the Entries  in the Lists, taxation is regarded as a distinct matter and  is separately set out. (3) Article 286(2) proceeds on the basis that  it  is the States that have the power  to  enact  laws imposing tax on inter-State Sales. it is a fair inference to draw  from these considerations that under Entry 54 in  List 11  the States are competent to enact laws imposing  tax  on inter-State sales. We must now consider the arguments that have 1482 been put forward as supporting the opposite conclusion.   It is  firstly  contended that the Entries in  the  Legislative Lists  must  be construed broadly and not narrowly or  in  a pedantic   manner,  and  that,  in  accordance   with   this principle,  Entry  42 should be construed,  there  being  no limitation  contained therein, as inclusive of the power  to tax  sales in inter-State trade and commerce.  The  rule  of construction relied on is no doubt well-established; but the question  is  as  to the application of  that  rule  in  the present case.  The question here is not simpliciter  whether a  particular piece of legislation falls within an Entry  or not.  The point in dispute before us is whether between  two Entries   assigned   to  two  different   Legislatures   the particular subject of legislation falls within the ambit  of the  one  or  the other.  If Entry 42 in List  I  is  to  be construed liberally, so must Entry 54 in List II be, and the point is not settled by reference to Art. 246, Cls. (1)  and (3) and to the principle laid down in Union Colliery Company of  British  Columbia v. Bryden (1) that where  there  is  a conflict of jurisdiction between a Central and a  Provincial

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Legislature, it is the law of the Centre that must  prevail. Art. 246, Cls. (1) and (3) have to be invoked only if  there is  a  conflict as to the scope of two Entries  in  the  two Lists  and  not otherwise.  What has therefore first  to  be decided is whether there is any conflict between Entry 42 in List  I  and  Entry 54 in List 11.  If  there  is  not,  the application of the non-obstante clause in Art. 246(1) or  of the words " subject to " in Art. 246(3) does not arise. There is another rule of construction also wellsettled  that the  Entries in two Legislative Lists must be  construed  if possible  so as to avoid a conflict.  In Province of  Madras v.  Boddu  Paidanna  and Sons (2) the  question  was  as  to whether  the  first sales by a manufacturer  of  goods  were liable  to be taxed by the Province under Entry 48  in  List II,  or  whether  it was really a tax on  excise  which  was within the exclusive competence of the Centre under Entry 45 in List 1. It was held by the Federal Court that the (1) [1899] A. C. 580. (2) [1942] F.C.R. 90. 1483 correct  approach to the question was to see whether it  was possible to effect a reconciliation between the two  Entries so  as  to avoid a conflict and overlapping,’ and  that,  in that  view,  though excise duty might in  a  extended  sense cover the first sales by the manufacturer, in the context of entry 48 in List II it should be held not to include it, and that  therefore the Province had the right to tax the  first sales.   This  view  was approved by the  Privy  Council  in GovernorGeneral in Council v. Province of Madras (1).  If it is possible therefore to construe Entry 42 as not  including tax on interstate sales, then on the principle enunciated in Province  of  Madras  v. Boddu Paidanna  and  Sons  (2)  and Governor-General  in  Council v. Province of Madras  (1)  we should so construe it, as that will avoid a conflict between the two Entries. It  was also argued in support of the contention that  Entry 42 in List I must be held to include the power to tax,  that that was the interpretation put by the American  authorities on  the Commerce Clause, and that there was no reason why  a different construction ,should be put on Entry 42 in list  I of  our  Constitution.  It is true  that  our  Constitution- makers   bad  before  them  the  Commerce  Clause  and   the authorities  thereon,  but it is a mistake to  suppose  that they intended to bodily transplant that clause in Entry  42. We  had in the Government of India Act, 1935, a  fullfledged Federal Constitution in force in this Country, and what  the Constitution-makers  did  was  to draw  from  other  Federal Constitutions of the world, adapt and modify the  provisions so   as  to  sent  our  conditions  and  fit  them  in   our Constitution.  In this new context, those provisions do  not necessarily mean what they meant in their old setting.   The threads  were no doubt taken from other  Constitutions,  but when  they were woven into the fabric of  our  Constitution, their   reach  and  their  complexion   underwent   changes. Therefore, valuable as the American decisions are as showing how the question is dealt with in a sister (1)  (1945) L.R. 72 I.A. 91. (2)  [1942] F.C.R. 90. 188 1484 Federal Constitution, great care should be taken in applying them  in the interpretation of our Constitution.  We  should not  forget  that  it is our Constitution  that  we  are  to interpret,  and  that  interpretation  must  depend  on  the context and setting of the particular provision which has to

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be interpreted.  Applying these principles and having regard to the features already set out, we must hold that Entry  42 in  List I is not to be interpreted as  including  taxation. The  same remarks apply to the argument based upon s. 92  of the Commonwealth of Australia Constitution Act and Art.  301 of ’our Constitution.  We should also add that Art. 304  (a) of  the Constitution cannot be interpreted as  throwing  any light  on.  the  scope of Art. 301  with  reference  to  the question of taxation, as it merely reproduces s. 297 (1) (b) of  the  Government  of --India Act, and  as  there  was  no provision  therein corresponding to Art. 301, s. 297  (1)(b) could  not  have implied what is now sought to  be  inferred from Art. 304 (a). In the result, we are of opinion that if the States had  the power  under Entry 54 to impose a tax on inter- State  sales subject  only  to the restriction enacted in Art.  286  (2), then  by  virtue of the impugned Act such  law  is  rendered operative  and proceedings taken thereunder are  valid.   We have  reached  this  conclusion on  a  construction  of  the statutory   provisions  bearing  on  the  question   without reference to the Sixth Amendment of the Constitution  which, proceeding on the view that the States had the power to  tax interState  sales under Entry 54, has amended the  Constitu- tion, and has vested the power to tax interstate sales in the Centre. (VI) Another contention urged by the petitioners is that the levy  of tax proposed to be made by the Andhra State on  the sale  of yarn by them to dealers in the State of  Andhra  is illegal,  because  under the Madras Act and the  Rules  made thereunder, where there are successive sales of yarn the tax can  be imposed at only one point, and as the Government  of Madras  had  already imposed a tax on the sale  within  that State, a second levy on the self-same goods by the State  of Andhra is unauthorised. and that therefore 1485 the  threatened proceedings for assessment are  incompetent. This  contention is clearly untenable.  When the Madras  Act provides  for a single levy on successive sales of yarn,  it can  have only application to sales in the State of  Madras, as  it would be incompetent to the Legislature of Madras  to enact  a law to operate in another State.  But it is  argued that  s.  53  of the Andhra State Act,  1953,  on  its  true interpretation  enacts  that though for  political  purposes Andhra  is  to  be regarded as a  separate  State,  for  the enforcement of laws as they stood on that date it should  be deemed to be a part of the State of Madras.  We do not agree with  this  interpretation.  In our opinion,  s.  53  merely provides that the laws in existence in the territories which were  constituted into the State of Andhra  should  continue to,  operate  as before.  In fact, by  an  Adaptation  Order issued  on  November 12, 1953, even the name of  Andhra  was substituted for Madrts in the Madras General Sales Tax  Act. There is no substance in this contention. (VII)     Lastly,   it   is  argued   that   the   Essential Commodities  Act  enacted by Parliament in exercise  of  the power conferred by Art. 286 (3) has declared that yarn is an essential  commodity,  and that if the Madras Act is  to  be construed  as  a  fresh enactment for the  Andhra  State  by reason  of  ss. 53 and 54 of the Andhra State  Act  and  the Adaptation  Order dated November 12, 1953, then it would  be bad  inasmuch as the procedure prescribed in that  provision had not been followed.  The basis of this contention is that the  Madras Act as applied to the Andhra State is a now  Act for purposes of Art. 286 (3), but that is not so. The Madras Act  was in force in the territories which now form part  of

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the Andhra State until October 1, 1953, and thereafter  that Act  continues to be in operation by force of s. 53  of  the Andhra State Act.  Moreover, the Madras Act become operative in  the new State of Andhra not under any law passed by  the Legislature of the State of Andhra but under s. 53 of a  law enacted  by  Parliament and therefore Art. 286  (3)  has  no application.   We should add that the Essential  Commodities Act (LII of 1952) has itself 1486 been   repealed  and  is  no  longer  in  operation.    This contention of the petitioners also should be rejected. The  petitioners sought to raise certain  other  contentions such as that they are not "dealers" in the Andhra State, and that  the  Explanation to s. 22 had no  application  to  the sales sought to be taxed, as the goods were delivered not in the State of Andhra but in Madras.  But these are  questions which  ought  properly  to be raised  before  the  assessing authorities, and cannot be gone into in these proceedings. In  the  result, the petitions fail and are  rejected.   The petitions  have  had  a  chequered  career,  their  fortures fluctuating  with changes in the interpretation of  the  law and in the law itself.  In the circumstances, we direct  the parties to bear their own costs. SARKAR  J.-The  petitioners who are dealers in  cotton  yarn carrying on business in the city of Madras had sold goods to various  persons  in the State of Andhra.  This  State,  the respondent in these petitions, demanded taxes on these sales under  the provisions of the Sales Tax Act applying  to  its territories.   The  petitioners challenged  the  respondents right to tax the, sales, and filed these petitions for writs of  prohibition  or  other suitable  writs  restraining  the respondent  from  levying and collecting the tax.   The  Act mentioned various kinds of sales which could be taxed  under it. The procedures followed by the petitioners in  effecting the  sales were diverse and have not yet  been  ascertained, and it is not possible without such ascertainment to  decide whether they are or are not taxable under the provisions  of the  Act  read  with other relevant  laws.   To  avoid  this difficulty  it has been agreed between the parties that  the only  question  that will be decided on these  petitions  is whether  the respondent can tax a sale under which the  pro- perty  in the goods sold passed outside the State of  Andhra but  the goods were delivered in that State for  consumption there.   Before  proceeding to discuss this question  it  is necessary to refer to certain antecedent events. On January 26, 1950, the Constitution of India was 1487 promulgated.   It continued the laws previously in force  in the territories of India subject to its provisions.  Article 372(2) of the Constitution provides that, "For  the purpose of bringing the provisions of any  law  in force  in  the  territory  of India  into  accord  with  the provisions of this Constitution, the President may by  order make such adaptations and modifications of such law, whether by  way  of  repeal or amendment, as  may  be  necessary  or expedient." Article  286  of the Constitution as it stood prior  to  its amendment  in 1956, that being what this case  is  concerned with, contained the following provisions : " Art. 286. (1) No law of a State shall impose, or authorise the  imposition of, a tax on the sale or purchase  of  goods where such sale or purchase takes place- (a)  outside the State ; or (b)  in  the  course  of the import of the  goods  into,  or

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export of the goods out of, the territory of India,. Explanation.-For  the purposes of sub-clause (a), a sale  or purchase shall be deemed to have taken place in the State in which  the  goods have actually been delivered as  a  direct result of such sale or purchase for the purpose of  consump- tion in that State, notwithstanding the fact that  under the general  law relating to sale of goods the property  in  the goods  has  by  reason of such sale or  purchase  passed  in another State. (2)  Except  in  so far as Parliament my  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 talks place in the  course  of inter-State trade or commerce : " In  the year 1939 the legislature of Madras had enacted  the Madras General Sales Tax Act and this was continued in force by  the  Constitution after its promulgation.  In  order  to bring its provisions into accord with the Constitution,  the President under his power mentioned earlier, passed on  July 2,  1952,  the Adaptation of  Laws(Fourth  Amendment)  Order which 1488 added  a  new section to the Madras Act, being s.  22.   The terms of this section are important in this case and will be set out later. The effect of the Explanation in Art. 286(1)(a) came up  for consideration  by  this Court in the case of  The  State  of Bombay  v. The United Motors (India) Ltd. (1).   This  Court held by its judgment pronounced by a majority, on March  30, 1953, that a State ’could tax a sale under which goods  were delivered  within  its  territories  for  consumption  there though   the  property  in  the  goods  passed  beyond   its territories and a provision in a State statute purporting to levy such a tax did not contravene Art. 286. Andhra  is a new State which came into existence on  October 1,  1953.   It was created by the Andhra  State  Act,  1953, largely out of territories previously belonging to the State of  Madras.  Later, the new State came to be  designated  as the  State of Andhra Pradesh but I will refer to it  as  the State of Andhra or simply Andhra.  Section 53 of the  Andhra State Act provided that the laws in force prior to the  Con- stitution of the State of Andhra in the territories included in  it,  were thereafter to continue in  force  there.   The Madras General Sales Tax Act therefor(, became applicable to the State of Andhra and it became go applicable with the new s. 22 previously added to it.  Subsequently, the Madras  Act as  applying in the State of Andhra was, to suit the  latter State, adapted by substituting for the name Madras the  name Andhra  wherever it occurred in that Act.  I will  hereafter call this Act the Sales Tax Act. Sometime  in  the  year 1954 the respondent,  the  State  of Andhra,  issued notices to the petitioners  demanding  taxes under  its  Sales  Tax Act.  As I have  earlier  stated  the petitioners  challenged the right of the respondent to  levy the  tax  and  certain  correspondence  followed.   As   the respondent  insisted on collecting the tax, the  petitioners instituted  the  present proceeding,-, in July  and  August, 1955. While  these proceedings were pending, the question  of  the effect of Art. 286 again came up for consideration (1)  [1953] S.C.R. 1069. 1489 by  this  Court in the case of the Bengal  Immunity  Company Ltd.  v. The State of Bihar(1).  This Court by its  judgment pronounced, again by a majority, on September 6, 1955,  held

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that until Parliament by law made in the exercise of  powers vested in it under Art. 286(2) otherwise provided, no  State could  impose  any tax on a sale or purchase of  goods  when such  sale  or purchase took place in the course  of  inter- State  trade  or commerce and the majority decision  in  the State of Bombay v. The United Motors (India) Ltd. (2) in  so far  as  it decided to the contrary could  not  be  accepted andfurther  that  the explanation in Art.  286(1)(a)did  not confer  any  right  on the State in  which  the  goods  were delivered  under a sale, to tax it notwithstanding that  the property in the goods passed in another State. In view of this decision the respondent was advised that  it could  not oppose the petitions and on October 21, 1955,  it actually  filed statements in these  proceedings  submitting that  the  petitions might be allowed.  Before  however  the petitions  could  be  heard and disposed  of,  an  Ordinance called  the Sales Tax Laws Validation Ordinance,  1956,  was promulgated  by  the President on January  30,  1956.   This Ordinance  was  later, on March 21, 1956,  replaced  by  the Sales Tax Laws Validation Act, 1956.  Both these  enactments were  in  identical terms.  The operative provision  of  the Validation Act is set out below. 2.   " Notwithstanding any judgment, decree or order of  any court  no  law  of  a State  imposing,  or  authorising  the imposition  of, a tax on the sale or purchase of  any  goods where  such  sale or purchase took place in  the  course  of inter-State trade or commerce during the period between  the 1st day of April, 1951, and the 6th day of September,  1955, shall  be deemed to be invalid or ever to have been  invalid merely by reason of the fact that such sale or purchase took place  in the course of interstate trade or commerce  ;  and all  such  taxes levied or collected or purporting  to  have been levied or collected during the (1)  [1955] 2 S.C.R. 603. (2)  [1953] S.C.R. 1069. 1490 aforesaid period shall be deemed always to have been validly levied or collected in accordance with law.  " The  respondent  was  advised that the  Validation  Act  had changed the situation and in view of it the petitions  could no  longer succeed.  Thereupon, the respondent  on  February 19,  1957,  filed  fresh  statements  submitting  that   the petitions should be dismissed.  The petitions have now  come up for hearing in these circumstances. The   validity  of  the  Validation  Act  itself  has   been challenged.  But I do not think it necessary to decide  that question.   I will assume that that Act is perfectly  valid. It  does not however itself levy any tax.  Its only  effect, so far as these cases are concerned, is to permit the  Sales Tax  Act  to operate to tax sales which took  place  in  the course  of trade between Andhra and any other State  between certain dates.I will not refer to these dates hereafter for what Ihave to  say   applies to sales between them only. As has been    agreed  between the parties, as mentioned  at the commencement of this judgment, the only question that we have to decide is whether a sale under which the goods  were delivered in Andhra for consumption there though property in them passed in Madras, can be taxed by the respondent.  Such a  sale  would  no doubt be a sale in the  course  of  trade between  Andhra  and Madras.  It is said that  such  a  sale cannot  be  taxed  by  the  respondent  notwithstanding  the Validation Act, because the Sales Tax Act does not-  purport to tax  it. Does  the  Sales Tax Act then contain any  provision  taxing such  a sale ? Now the Act authorises the levy of a  tax  on

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sales as defined in it.  A sale is defined in s. 2(h) of the Act.   It is not disputed however that that definition  does not include a sale under which goods are delivered in Andhra for consumption there but property in them passes in  Madras and  no  further  reference to  that  section  is  therefore necessary.   It  is  however said that  the  effect  of  the Explanation in s.   22 is to make such a sale, a sale within the meaning of the  Act  and therefore liable  to  be  taxed under it. So   I  proceed to examine that section.   Section 22 as it  stood at the relevant time reads thus: 1491 S.22.  "Nothing contained in this Act shall be deemed  to impose, or authorise the imposition of, a tax on the sale or purchase  of any goods, where such’ sale or  purchase  takes place (a)  (i) outside the State of Andhra, or (ii) in  the  course  of the import of the  goods  into  the territory of India or of the export of the goods out of such territory, or (b)  except  in  so far as Parliament may by  law  otherwise provide,  after the 31st day of March 1951 in the course  of inter-State  trade or commerce, and the provisions  of  this Act shall be read and construed accordingly. Explanation.-For  the purposes of clause (a)(i), a  sale  or purchase shall be deemed to have taken place in the State in which  the  goods have actually been delivered as  a  direct result  of  such  sale  or  purchase  for  the  purpose   of consumption  in  that State, notwithstanding the  fact  that under  the  general  law  relating to  sale  of  goods,  the property in the goods has by reason of such sale or purchase passed in another State.  " Does  the  Explanation in this section then  say  that  when under  a sale goods are delivered in Andhra, the sale  shall be  deemed to have taken place there though the property  in the  goods  may have passed in another State,  for  example, Madras ? It no doubt says, without specifying any particular State,  that a sale shall be deemed to have taken  place  in the State in which the goods were delivered under it  though the  property in them has passed in another State.   But  it seems to me impossible from the language used to say that it contemplated  a  case in which the goods were  delivered  in Andhra though property in them passed in another State.  For the sake of clarity I have left out in what I have just said the  term as to consumption in the State in which the  goods were delivered and no question as to such consumption is  in dispute in these cases. The  Explanation opens with the words " For the purposes  of clause (a) (i) ". What then is that clause ? 189 1492 It  only contains the words "outside the State of  -Andhra". It  completes  the sentence part of which has  preceded  it. The complete sentence says, Nothing in this Act shall be deemed to impose, or  authorise the  imposition  of, a tax on the sale or  purchase  of  any good,,;, where such sale or purchase takes place (a) (i) outside the State of Andhra. It then savs that no tax shall be levied under the Act on  a sale  which  takes place outside Andhra.  It is  after  this that  the Explanation comes and starts with the words "  for the purposes of clause (a) (i)".  These words must therefore mean,  for  the purpose of explaining which sale  is  to  be regarded   as  having  taken  place  outside  Andhra.    The Explanation  then is for this purpose.  I will now  turn  to the   remaining   and  the  substantive   portion   of   the

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Explanation.   That  must  explain  when a  sale  is  to  be regarded   as  having  taken  place  outside  Andhra.    The substantive  portion of the Explanation however  mentions  a sale  which  is to be deemed to have taken  place  inside  a State.   Keeping  its purpose in mind, it must be  taken  by saying  that a certain sale is to be deemed inside a  State, to  say that it is outside the State of Andhra.  It  follows that  the  Explanation does not contemplate that  the  State inside which a sale is to be deemed to have taken place, can be  the State of Andhra.  That State cannot be the State  of Andhra, for then the Explanation would not show when a  sale is  to  be  deemed  to be outside Andhra  and  that  by  its language  is  the  only purpose for  which  it  is  enacted. Therefore the Explanation can only be read as  contemplating a  State other than Andhra as the State inside which a  sale shall be deemed to have taken place.  This is the inevitable result  produced  by the opening words  of  the  Explanation understood  according  to  their  plain  meaning.   So   the Explanation,  omitting  portions  of  it  for  the  sake  of clarity, can only be read in the manner shown below: For  the purposes of clause (a)(i) a sale or purchase  shall be  deemed  to have taken place in the State being  a  State other than Andhra, in which the goods have 1493 been actually delivered notwithstanding that the property in the goods has passed in the State of Andhra. I  therefore find it impossible to say that the  Explanation states  that  a  sale shall be deemed to  have  taken  place inside  Andhra  if under it the goods  have  been  delivered there  though the property in them passed in another  State. The  Explanation does not hence, in my view,  authorise  the taxation of a sale under which goods are delivered in Andhra though property in them passed in Madras. The view that I have taken of the purpose of the Explanation in s. 22 was taken of the purpose of the Explanation in Art. 286(1)(a)  in the Bengal Immunity Company case (1).  It  was said  at p. 646 of the report, " Here the avowed purpose  of the Explanation is to explain what an outside sale  referred to in sub-clause (a) is ". The language of the  Explanations and  the  setting of each in its  respective  provision  are identical.   That  language  must therefore  have  the  same meaning.   It is said that the consideration that  prevailed with  the Court in the Bengal Immunity Company case  (1)  in dealing with Art. 286 cannot apply in dealing with s. 22 for the  latter  is a provision in a taxing  statute  which  the former is not.  But I do not see that this comment, even  if justified,  would lead to a different meaning being  put  on words  used  when they occur in a taxing statute  from  that when they occur in a statute which does not purport to  levy a  tax.  As a matter of language only, words must  have  the same meaning.  The words "for the purpose of clause  (a)(i)" must therefore have tile same meaning in the Explanation  in Art.  286(1)(a) as in the Explanation in s. 22. 1 am  unable to  distinguish  the present case from the  Bengal  Immunity Company case (1) for the purpose of determining the meaning of the words used. It  is  then  said that the Explanation in  i.  22  has  two facets; that when it talks of a sale inside one State, it at the same time necessarily talks of a sale outside all  other States.  Therefore it is said that when under a (1)  [1955] 2 S.C.R. 603. 1494 sale  goods  are delivered in Andhra but property  in  .them passes  outside  Andhra, the Explanation at  the  same  time makes  such  a  sale inside Andhra  and  outside  all  other

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States.   I do not follow this.  Why should the  Explanation in  this  Andhra Act be concerned with saying  when  a  sale shall be deemed to have taken place outside all other States ?  Andhra  cannot of course legislate for any  other  State. Nor  is there anything in this Act which makes it  necessary for the purposes of it to say when a sale shall be deemed to be  outside all other States.  It follows therefore  that  a construction  cannot  be put on the language  used  in  tile Explanation  which produces the result of showing a sale  to be inside Andhra and so outside all other States.   Further, as I have earlier pointed out, the words " For the  purposes of  clause (a)(i)" with which the Explanation  starts,  show conclusively that it is necessarily confined to a sale under which  goods are delivered in a State other than Andhra  and the  property  in  the goods passes in  Andhra.   It  is  no objection to this reading of the Explanation to say that the Andhra Act would then be saying when a sale is to be  deemed to have taken place inside another State and it has no power to  do  so as it can legislate only for itself  and  for  no other  State.  Such an objection would be pointless  because Andhra  by saying that a sale shall be deemed to have  taken place  inside another State is only legislating  for  itself and  only  saying that such a sale is therefore  an  outside sale  so far as it is concerned and cannot be taxed in  view of  s. 22(a) of its Act.  It may be that it is  possible  in construing the Explanation in Art. 286(1)(a) to conceive  of two  facets  because that dealt with all States or  any  two States  at  a time and for all these  the  Constitution  was fully  competent to lay down the law.  That however  is  not possible   when   construing  a  law  passed  by   a   State legislature.   Such  law cannot regulate the laws  of  other States.   And  in  this  case  the  conception  is   further impossible  because the language shows that the  Explanation is for explaining when a sale is to be deemed to have  taken place outside the State of Andhra.  It is not meant to 1495 explain  when it is deemed to have taken place  outside  any State  whatsoever that State may be.  I am therefore  unable to see that the Explanation has any facet showing what would be a sale inside Andhra. The  conclusion that I reach is that the Sales Tax Act  with which  these  cases are concerned does  not  authorise  ’.he taxing  of a sale under which goods are delivered in  Andhra but the property in them passes in Madras.  In this view  of the  matter  I  do not think it  necessary  to  discuss  the various other grounds on which the respondent’s right to tax these sales was also challenged. In the result I would allow these petitions. BY  COURT:  In  view of the opinion  of  the  majority,  the petitions  an dismissed.  The parties are to bear their  own costs.                           Petitions dismissed.