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PETITIONER: M/S.  J. K. JUTE MILLS CO.  LTD.

       Vs.

RESPONDENT: THE STATE OF UTTAR PRADESH AND ANOTHER

DATE OF JUDGMENT: 17/04/1961

BENCH: AIYYAR, T.L. VENKATARAMA BENCH: AIYYAR, T.L. VENKATARAMA DAS, S.K. KAPUR, J.L. HIDAYATULLAH, M. SHAH, J.C.

CITATION:  1961 AIR 1534            1962 SCR  (2)   1  CITATOR INFO :  R          1962 SC1753  (19)  R          1963 SC 966  (19)  C          1963 SC1667  (15)  R          1965 SC 560  (1,23,18)  RF         1972 SC2455  (12,13)  R          1973 SC 376  (10)  F          1973 SC1034  (13,28)

ACT: Sales Tax-Enactment  enabling Government to fix rate of tax by  notification-Notification  declared  invalid  by  court- Enactment  validating notification-Retrospective  operation- Validity  of  enactment-U.  P. Sales Tax  (Validation)  Act, 1958  (U.   P. 15 of 1958), s. 3-U.P. Sales  Tax  Act,  1948 (U.P.  15  of 1948), s. 3A-Constitution  of  India,  Seventh Schedule, List II, Entry 54.

HEADNOTE: In  exercise of the power conferred by s. 3A(2) of the  U.P. Sales Tax Act, 1948, which enabled the State Government,  by notification, to fix the rate of the tax to be levied on the sales  of goods specified in the section not exceeding  nine pies per rupee, the Government issued at notification  dated June  8,  1948 imposing a tax of six pies in  the  rupee  on sales  of  jute.  On March 31, 1956, the Governor  of  Uttar Pradesh  issued an Ordinance, inter alia, amending S.  3A(2) of  the  Act, the effect of which was to enact  one  ceiling rate  of  one anna per rupee on the sale  proceeds  for  all goods leaving it to the State to fix within the ceiling such rates  of tax for such goods as it might determine.  On  the same  date  the Government issued a  notification  by  which sales  on jute were liable to pay sales tax at the  rate  of one anna per rupee on the sale proceeds.  The Ordinance  was replaced  by  U.P. Sales Tax (Amendment)  Act,  1956,  under which the amended section shall "be deemed to have effect on and  from April 1, 1956".  One of the dealers who  had  been assessed  to sales tax in accordance with  the  notification filed  an application under Art. 226 of the Constitution  of India, calling in question its validity, and the High  Court

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of  Allahabad held that there was no power in the  State  to issue the notification under s. 3A(2) on March 31, 1956,  as that section was itself to come into force only on April  1, 1956.  With a view to remove the defect pointed out in  said decision,  the State Legislature passed the U.P.  Sales  Tax (Amendment) Act, 957, but this in turn having been  declared by  the Allahabad High Court not being effective  in  saving the  notification,  the legislature ultimately  enacted  the U.P.  Sales Tax (Validation) Act, 1958.  Section 3  of  this Act provided that notwithstanding any judgment of any  court the  notification dated March 31, 1956, shall be  deemed  to have  been issued in exercise of the powers conferred by  s. 3A  of the U.P. Sales Tax Act, 1948, as if the said  section was in force on the date on 2 which  the notification was issued in the form in  which  it was  in  force immediately before the commencement  of  this Act.   The  petitioner who was carrying on business  in  the manufacture  and  sale of jute goods  filed  an  application under  Art.  32 of the Constitution and contended  that  the Validation Act of 1958, had not brought about any change  in the situation on the grounds (1) that the words "in the form in which it was in force immediately before the commencement of  this  Act" in s. 3 must be read as qualifying  the  word "notification"  and not the word "section" and in that  view the  notification  in  question  was  subject  to  the  same infirmity  which  attached to it when it  was  published  on March  31, 1956, and (2) that the State Legislature was  not competent to enact a law imposing sales tax  retrospectively and therefore the Validation Act was ultra vires. Held:     (1) that on its proper construction, the words "in the  form  in which it was in force immediately  before  the commencement  of  this Act" in s. 3 of the  U.P.  Sales  Tax (Validation)  Act, 1958, qualify the word "section" and  not the word "notification", and that on that view the  impugned notification was within the saving clause of the  Validation Act. H.   L. M. Biri Works v. Sales Tax Officer, A.I.R. 1959 All. 208, approved. (2)  that the power of a legislature to enact a law with re- ference  to a topic entrusted to it is unqualified and  that in the exercise of such a power it will be competent for the legislature  to enact a law which is either  prospective  or retrospective.  Accordingly, the Validation Act is not ultra vires  the powers of the legislature under entry 54 in  List II  of  the Seventh Schedule to the  Constitution,  for  the reason that it operates retrospectively. The  fact that the seller is not in a position to  pass  the sales tax on to the consumer does not affect the  competence of  the  legislature  to enact a law imposing  a  sales  tax retrospectively as that is a matter of policy. The  Province of Madras v. Boddu Paidanna and  Sons,  [1942] F.C.R. go, explained. The  Tata  Iron  & Steel Co., Ltd. v. The  State  of  Bihar, [1958]  S.C.R.  1355,  Buchirajalingam v.  State  of  Bihar, A.I.R.  1958 S.C. 756 and M.P.V. Sundararamier & Co. v.  The State of Andhya Pradesh, [1958] S.C.R. 1422, followed. The Union of India v. Madan Gopal Kabra, [1954] S.C.R.  541, relied on.

JUDGMENT: ORIGINAL JURISDICTION: Writ Petition No. 108 of 1961. Writ Petition under Art. 32 of the Constitution of India for

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the enforcement of Fundamental Rights. 2 M.   C. Setalvad, Attorney-General of India, Rameshwar Nath, S. N. Andley and P. L. Vohra, for the petitioner. C.   K.  Daphtary, Solicitor-General of India, K. L.  Misra, Advocate-General, U.P., K. B. Asthana and C. P. Lal, for the respondents. 1961.   April 17.  The  Judgment of the Court was  delivered by VENKATARAMA  AIYAR,  J.  -  The  petitioner  is  a   company incorporated under the Indian Companies Act, its  registered office being at Kanpur in the State of Uttar Pradesh, and it is carrying on business in the manufacture and sale of  jute goods.  By a notification dated March 31, 1956, the State of Uttar Pradesh imposed a tax of one anna in the rupee on  the sale proceeds of jute.  Previously thereto, the tax  payable on   sale  of  jute  was  six  pies  in  the  rupee.    This notification  having been struck down by the High  Court  of Allahabad   as  unauthorised  and  inoperative,  the   State legislature  enacted the U. P. Sales Tax (Validation)  Act,. 1958 (U.  P. Act XV of 1958), hereinafter referred to as the Validation  Act,  validating the said notification  as  from March 31, 1956.  In this petition filed under Art. 32 of the Constitution,  the petitioner contends that  notwithstanding the  Validation Act, the notification in question  continues to be void and inoperative, because it has not in fact  been validated,  and because the Act itself is ultra vires.   The impugned  notification was, it may be mentioned,  superseded by  a fresh notification on August 1, 1956, and the  present dispute  relates only to the tax on sales  effected  between April 1, 1956, and July 31, 1956.  If the Validation Act  is intro  vires,  the tax payable by the petitioner  would,  in accordance   with   the  impugned   notification,   be   Rs. 1,26,529-3-0,  whereas if the said Act is ultra  vires,  the tax would be reduced by half Though the point for decision is a simple one lying within a narrow  compass,  to  reach it one has  to  wade  through  a perfect  morass  of  statutes,  notifications  and  judicial pronouncements.  We begin with what has 4 been  termed  the  "Principal Act" by which  sales  tax  was imposed  in the Province.  That is the U. P. Sales  Tax  Act No.  XV of 1948, and that came into force on April 1,  1948. There  were  subsequent amendments to it in 1948,  1950  and 1952, but they are not material for the present  discussion. It is sufficient to refer to s. 3-A as it stood on March 31, 1956,  when the notification in question was  issued.   This section ran as follows: "3-A.   Single point taxation-(1)  Notwithstanding  anything contained  in  Section  3,  the  State  Government  may   by notification  in  the  official  Gazette  declare  that  the turnover in respect of any goods or class of goods shall not be  liable to tax except at such single point in the  series of  sales by successive dealers as the State Government  may specify. (2)  If the State Government makes a declaration under  sub- section (1) of this section, it may further declare that the turnover of the dealer, who is liable to pay tax on the sale of  such goods, shall in respect of such sales, be taxed  at such  rate  as may be specified not exceeding one  anna  per rupee if the sale relates to goods specified below:- (i)  Motor  vehicles including motor cars, motor  taxi-cabs, motor   cycles  and  cycle  combinations,  motor   scooters, motorettes,  motor omnibuses, motor vans and motor  lorries. Chassis  of motor vehicles.  Articles including  rubber  and

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other tires and tubes and batteries adapted for use as motor part and accessories of motor vehicles, not being such arti- cles as are ordinarily also used for other purposes than  as parts of accessories of motor vehicles. (ii) Refrigerators and air conditioning plants. (iii)     (a) Wireless reception instruments, apparatus  and component  parts thereof, including all  electrical  valves, accumulators,  amplifiers  and loudspeakers  which  are  not specially   designed  for  purposes  other   than   wireless reception. (b)  Radiogramophones. (iv) Cinematographic,   photographic  and   other   cameras. projectors and enlargers and films, plates, papers and cloth required for use therewith. 5 (v) Scents and perfumes, and nine pies per rupee if it relates to any other goods." It  was under this provision that the U. P.  Government  had issued   a   notification   on  June   8,   1948,   imposing a tax of six pies in the rupee on the sale of jute. In  exercise  of the power conferred by Art. 213(1)  of  the Constitution, the Governor of Uttar Pradesh issued on  March 31,  1956, Ordinance No. IX of 1956, and that was  published in  the  Official  Gazette on the  same  date.   Under  this Ordinance  the whole of subsection (2) of s. 3-A as it  then stood was deleted and the following substituted:- "(2)  If  the  State Government makes  a  declaration  under subsection (1), it may further declare that the turnover  in respect  of such goods shall be liable to tax at  such  rate not exceeding one anna per rupee as may be specified." The  effect of this provision was to exact one ceiling  rate of  one  anna per rupee on the sale proceeds for  all  goods leaving it to the State to fix within the ceiling such rates of tax for such goods as it might determine. On  the  same date, the Government published  the  following notification  No. ST. 905/X on which the entire  controversy has arisen.               "In exercise of the power conferred by section               3-A  of  the  U. P. Sales Tax  Act,  1948,  as               amended from time to time, and in supersession               of all previous notifications on the  subject,               the  Governor  of  Uttar  Pradesh  is   hereby               pleased  to  declare  that  the  turnover   in               respect  of  the goods specified in  the  List               below  shall  not with effect  from  April  1,               1956, be liable to tax except-               (a)   in  the  case  of  goods  imported  from               outside, Uttar  Pradesh  at the point of  sale               by importer; and               (b)   in  the  case of goods  manufactured  in               Uttar  Pradesh,  at the point of sale  by  the               manufacturer;               and  the   Governor  is  further  pleased   to               declare  that such turnover shall with  effect               from the said date be taxed at the rate of one               anna per rupee.               List               18.   Jute goods" 6 In due course, the U. P. Sales Tax Ordinance No. IX of  1956 was  replaced by the U. P. Sales Tax (Amendment) Act XIX  of 1956,  and that came into force on May 28, 1956.  It  merely reproduces  the terms of the Ordinance No. IX of  1956  with this  modification which is consequential, that the  amended section including s. 3-A shall "be deemed to have effect  on

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and from the first day of April, 1956".  If notification No. ST. 905/X dated March 31,1956, is valid there is no question that the petitioner would be liable to pay sales tax for the period in question at the rate of one anna per rupee on  the sale proceeds. One  of  the dealers who had been assessed to sales  tax  in accordance with this notification filed an application under Art. 226 in the High Court of Allahabad calling in  question its  validity and this proved successful, the court  holding that  there was no power in the State to issue the  impugned notification under s. 3-A on March 31, 1956, as that section was  itself to come into force only on April 1,  1956,  vide Adarsh Bhandar v. Sales Tax Officer (1).  The correctness of this  decision is not under challenge in these  proceedings. We do not therefore desire to express any opinion on it. With  a  view  to remove the defect pointed  out  in  Adarsh Bhandar  v.  Sales Tax Officer (1),  the  State  legislature passed  the  U. P. Sales Tax (Amendment) Act XXIV  of  1957. That Act received the assent of the President on August  31, 1957,  and was published on September 3, 1957.  It runs,  so far as is material, as follows:-               "For sub-section (2) of Section I of the U. P.               Sales Tax (Amendment) Act, 1956, the following               shall  be  and be deemed to have  always  been               substituted:-               ’This  Section,  so  much  of  Section  3,  as               relates  to  the substitution  of  the  second               proviso to sub-section (1)     of Section 3 of               the  U.  P. Sales Tax Act,  1948  (hereinafter               called the principal Act) and section 4  shall               have effect on and from the 31st day of March,               1956’."                (1)  A.I.R. 1957 All. 475.               7 The  result  of  this amendment was that s.  3-A  was  given retrospectively  operation from March 31, 1956,  instead  of April 1, 1956, as originally enacted.  The intention  behind the  legislation is obvious.  If the  impugned  notification was,  as  held in Adarsh Bhandar v. Sales Tax  Officer  (1), invalid,  because  it  was  issued  before  s.  3-A  was  in operation, that objection could no longer hold good as  that section  would now operate from a point of time anterior  to the  issue of the notification.  If the State  thought  that this  legislation would give a quietus to  the  controversy, they  were sadly mistaken.  After the Amendment Act of  1957 came  into  force,  another  dealer who  was  sought  to  be assessed pursuant to the notification dated March 31,  1956, filed  a petition under Art. 226 before the  Allahabad  High Court  and raised the contention that as the  Amendment  Act merely  amended  s. 3-A and did not in  terms  validate  the impugned notification, no proceedings could validly be taken under that notification and that therefore the proposed levy was  illegal.   This contention was again upheld by  a  Full Bench  in Firm Bangali Mal v. Sales Tax Officer  (2),  which held that there was a difference between the existence of  a power  and its actual exercise, that while by reason of  Act XXIV  of 1957, a power had been conferred on  Government  to issue  a  notification on March 31, 1956,  the  notification actually  issued on that date could not be referred to  that power, that it was in exercise of the power supposed to have been conferred by s. 3-A as it stood on March 31, 1956,  and that in consequence the impugned notification was not  saved by the new Act. This decision set the legislature again on the move and that brings  us to what may be said to be the final round in  the

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game.  The State legislature enacted a fresh legislation for the purpose of effectuating the impugned notification.  That was U. P. Sales Tax Validation Act XV of 1958.  It  received the  assent  of  the  President on  May  3,  1958,  and  was published  in  the  Official Gazette on May  6,  1958.   The preamble to the Act states that "it is expedient to  provide for (1) A.I.R. 1957 All. 475. (2) A.I.R. 1958 All, 478. 8 the validation of certain notifications issued under the  U. P.  Sales  Tax Act, 1948, (U.  P. Act XV of  1948)  and  any action  taken in pursuance thereof".  Section 3 of  the  Act which deals with the present matter runs as follows:- "3.  Validation of certain notifications and action taken in pursuance thereof.-               (1)   Notwithstanding any judgment, decree  or               order   of   any  court,   the   notifications               specified in Part A, Part B and Part C of  the               Schedule  shall be deemed to have been  issued               in   exercise   of   the   powers    conferred               respectively  by section 3, section 3  -A  and               section 4 of the U. P. Sales Tax Act, 1948, as               if the said sections were in force on the date               on which the notifications were issued in  the               form  in which they were in force  immediately               before  the commencement of this Act  and  all               the  said  notifications shall  be  valid  and               shall be deemed always to have been valid  and               shall continue in force until amended,  varied               or rescinded by any notification issued  under               any of the said section.               (2)   Anything   done  or  any  action   taken               (including  any order made, proceeding  taken,               direction   issued,  jurisdiction   exercised,               assessment  made or tax levied  or  collected)               purporting  to  have  been done  or  taken  in               pursuance   of   any  of   the   notifications               specified  in the Schedule shall be deemed  to               be and to have been validly and lawfully  done               or taken." In  Part B are set out the notifications issued in  exercise of the powers conferred by s. 3A of the U.P. Sales Tax  Act, 1948,  and one of them is the impugned notification No.  ST. 905/X.    If  this  legislation  is  valid,   the   impugned notification  stands validated and the petitioner  would  be liable to pay tax in accordance therewith. But the petitioner contends that the Validation Act has  not brought  about  any  change in the situation  and  that  the notification dated March 31, 1956, continues to be null  and void now as before the Act.  Two grounds have been urged  in support  of this contention that on its  true  construction the Act does not in fact validate the impugned  notification and that it is not a 9 law  which the State legislature was competent to enact  and it  is  therefore  a nullity.  We  must  now  examine  these contentions.  As regards the first contention, the  argument in  support of it is that the words, "in the form  in  which they  were in force immediately before the  commencement  of this  Act"  in  s.  3 must, in their  setting,  be  read  as qualifying  the  word,  "notifications"  and  not  the  word "sections", and in that view the notification in question is subject  to the same infirmity which attached to it when  it was  published on March 31., 1956.  We are wholly unable  to

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appreciate  this contention.  The object of the  legislation as  stated in the long title and in the preamble to the  Act was to validate the impugned notification in relation to the amended  section.  Schedule B to the Act expressly  mentions that  notification.   And  if we are now to  accede  to  the contention  of the petitioner, we must hold that though  the legislature set about avowedly to validate the  notification dated  March 31, 1956, it failed to achieve that object.   A construction which will lead to such a result must, if  that is  possible, be avoided.  The words, "in the form in  which they  were in force immediately before the commencement  of this  Act", no doubt occur after the word,  "notifications". But  then the words, "in the form" can have no reference  to the  impugned  notification, because it  had  never  changed form, whereas they were quite appropriate to s. 3A,  because it  had been amended.  It should further be noted  that  the Validation  Act was published both in Hindi and in  English, and both of them were authorised versions.  The words in the Hindi version make it clear beyond all doubt that the words, "in the form in which they were in force immediately  before the  commencement of this Act" qualify the  word  "sections" and  not  the  word  "notifications".   That  is  the   view expressed by a Bench of the Allahabad High Court in H. L. M. Biri Works v. Sales Tax Officer (1), on a comparison of  the two versions, and we are in agreement with it.  There  would have  been  no scope for this argument  if  transposing  the ’words, the section read, "as if the said (1)  A.I.R. 1959 All. 208. 2 10 sections  were,  in  the form in which they  were  in  force immediately before the commencement of this Act, in force on the  date on which the notifications were issued." But  even in  its present setting that is the meaning of the  section, and the impugned notification must be-held to be within  the saving of the Validation Act. We  now  proceed  to examine the second  contention  of  the petitioner  that  the validation Act is  itself  invalid  as being ultra vires the powers of the State legislature  under the  Constitution.   The argument of the  learned  Attorney- General  in support of this contention may thus  be  stated. The  State legislature derives its authority to enact a  law with  respect to tax on the sale of goods under entry 54  in List II of the Seventh Schedule to the Constitution.  It has been  held that a sale for the purpose of the entry must  be what in law is recognised as sale.  Likewise, a law imposing tax  on  sales  of goods must, to be  intra  vires,  possess certain  well-defined characteristics associated  with  such laws.  In The Province of Madras v. Boddu Paidanna and  Sons (1) it has been held that sales tax is a tax on the occasion of sale.  In the present case, the sales sought to be  taxed took place between April 1, 1956 and July 31, 1956,  whereas the  Validation  Act,  by force of  which  the  tax  becomes payable, came into force in 1958.  It is therefore not a tax on  the  occasion  of  sale.  Moreover a  sales  tax  is  an indirect  tax  which can be passed on by the seller  to  the purchaser.  The Sales Tax Acts passed by the legislatures of several  States  provide for the seller collecting  the  tax from  the  purchaser as does the U. P. Sales Tax Act  XV  of 1948,  vide s. 8A.  That could be done only if the  tax  was levied  before the sale took place.  Therefore by  the  very nature of it there could be no retrospective legislation  in respect  of  sales tax.  And finally it is argued  that  the imposition  of a tax retrospectively would  be  inconsistent with  the  provisions of the U.P. Sales Tax Act,  1948,  and

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could  not  have been contemplated by that  Act.   Such  for example are the provisions of S.   8A which provide for  the registration of dealers for (1) [1942] F.C.R. 90. 11 the assessment years, the deposit into Treasury of sales tax collected  from the purchasers in certain contingencies,  S. 14  of  the Act which imposes penalty  for  non-registration under  s. 8A, and rule 63 which provides for the deposit  of the sales tax collected under s. 8A(4) within thirty days of the expiry of the month in which the amount is charged.   It is accordingly contended that whether we have regard to  the true features of the sales tax legislation or the provisions of  the U.P. Sales Tax Act, the Validation Act could not  be held  to  be  one  with respect to sales  tax,  that  it  is therefore  not  within entry 54, and as there  is  no  other entry in List II or List III of the Seventh Schedule to  the Constitution,   under   which  the  legislation   could   be justified,  it must be held to be ultra vires.  So  ran  the argument. The  point for decision., stating it succinctly, is  whether the  Validation Act is within the ambit of entry 54 in  List II of the Seventh Schedule to the Constitution.  That  entry confers on the States authority to enact a law with  respect to  tax on sales of goods.  Now what is the extent  of  that authority?   There must be in fact a sale as  recognised  by law.   It is only then that a tax could be imposed.  But  if the  transaction  sought to be taxed is not a  sale,  a  law which  seeks  to tax it, treating it as a,  sale,  would  be ultra vires.  Thus in The Sales Tax Officer v. Messrs.  Budh Prakash Jai Prakash (1) a tax on agreement to sell was  held to  be  not  authorised by the entry, and in  The  State  of Madras  v. Gannon Dunkerley & Co., (Madras) Ltd. (2), a  tax on   the  supply  of  materials  in  a  contract   for   the construction of works simpliciter, on the footing of a  sale was held to be outside the entry, and the legislation  which imposed  such  a tax was struck down as  ultra  vires.   But where  the transaction is one of sale of goods as  known  to law,  the  power  of the State to impose a  tax  thereon  is plenary  and  unrestricted subject only  to  any  limitation which the Constitution might impose, and in the exercise  of that  power,  it  will be competent to  the  legislature  to impose a tax (1) [1955] 1 S.C.R. 243.         (2) [1959] S.C.R. 379. 12 on  sales,which had taken, place prior to the  enactment  of the legislation. But  it is urged on the strength of certain observations  in The Province of Madras v. Boddu Paidanna and Sons (1) that a sales  tax  is  a  tax on the occasion  of  sale,  and  that therefore  it  could  not  be  imposed  with   retrospective operation.   This  contention is, in  our  judgment,  wholly without substance.  Now, the point for decision in that case was whether a tax imposed by a Provincial legislature on the sale  of oil by a person who manufactured it was bad on  the ground that it was in essence an excise duty.  While a sales tax could be imposed by a Provincial legislature, an  excise duty  could be imposed only by the Federal legislature.   In holding that the tax in question was a sales tax and not  an excise duty, the court observed as follows:-               "The  duties of excise which the  Constitution               Act   assigns  exclusively  to   the   Central               Legislature  are,  according  to  the  Central               Provinces   Case,  duties  levied   upon   the               manufacturer  or  producer in respect  of  the

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             manufacture  or  production of  the  commodity               taxed.   The tax on the sale of  goods,  which               the Act assigns exclusively to the  Provincial               Legislatures, is a tax levied on the  occasion               of  the  sale  of the goods.   Plainly  a  tax               levied on the first sale must in the nature of               things  be  a  tax on the sale  by  the  manu-               facturer  or producer; but it is  levied  upon               him  qua  seller and not qua  manufacturer  or               producer." (P. 101). In  the  context, the words, "on the occasion of  the  sale" have  reference to the character of the transaction and  not to the point of time at which the duty becomes leviable, and they  have no bearing on the question as to when such a  tax could be imposed. And  then  it is argued that a sales tax being  an  indirect tax,  the seller who pays that tax has the right to pass  it on  to  the consumer, that a law which imposes a  sales  tax long  after the sales had taken place deprives him  of  that right,  that retrospective operation is, in consequence,  an incident inconsistent with the true character of a sales tax law,  and that the Validation Act is therefore not a law  in respect of tax on the (1)  [1942] F.C.R. 90. 13 sale  of goods, as recognised, and it is ultra  vires  entry 54. We see no force in this contention.  It is no doubt true that a sales tax is, according to accepted notions, intended to be passed on to the buyer, and provisions authorising and regulating  the collection of sales tax by the  seller  from the purchaser are a usual feature of sales tax  legislation. But  it  is not an essential characteristic of a  sales  tax that  the  seller must have the right to pass it on  to  the consumer,  nor is the power of the legislature to  impose  a tax  on  sales  conditional on its making  a  provision  for sellers  to collect the tax from the purchasers.  Whether  a law  should be enacted, imposing a sales tax, or  validating the  imposition  of sales tax, when the seller is not  in  a position  to  pass  it on to the consumer, is  a  matter  of policy   and   does  not  affect  the  competence   of   the legislature.  This question is concluded by the decision  of this  Court in The Tata Iron & Steel Co., Ltd. v. The  State of  Bihar  (1).  The following observations of Das,  C.  J., bearing on this question might be quoted:-               " Under the 1947 Act the primary liability  to               pay  the  sales tax, so far as  the  State  is               concerned,  is on the seller.   Indeed  before               the amendment of the 1947 Act by the  amending               Act  the sellers had no authority  to  collect               the sales tax as such from the purchaser.  The               seller could undoubtedly have put up the price               so as to include the sales tax, which he would               have to pay but he could not realise any sales               tax as such from the purchaser.  That  circum-               stance could not prevent the sales tax imposed               on the seller to be any the less sales tax  on               the sale of goods.  The circumstance that  the               1947  Act, after the amendment, permitted  the               seller who was a registered dealer to  collect               the sales tax as a tax from the purchaser does               not do away with the primary liability of  the               seller to pay the sales tax.  This is  further               made  clear  by the fact that  the  registered               dealer need not, if he so pleases or  chooses,               collect  the tax from the purchaser and  some-

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             times  by  reason of  competition  with  other               registered  dealers he may find it  profitable               to sell his goods               (1)   [1958] S.C.R: 1355.               14               and  to retain his old customers even  at  the               sacrifice  of the sales tax.  This also  makes               it clear that the sales tax need not be passed               on  to the purchasers and this fact  does  not               alter the real nature of the tax which, by the               express  provisions of the law, is  cast  upon               the  seller.  The buyer is under no  liability               to  pay  sales tax in addition to  the  agreed               sale  price unless the  contract  specifically               provides otherwise.  See Love v. Norman Wright               (Builders)  Ltd.  If that be the true view  of               sales  tax then the Bihar  Legislature  acting               within  its  own  legislative  field  had  the               powers  of a sovereign legislature  and  could               make   its  law  prospectively  as   well   as               retrospectively." (pp. 1378-1379). The  decision of this Court in Buchirajalingam v.  State  of Hyderabad (1) is also to the same effect. The power of a legislature to enact a law with reference  to a topic entrusted to it, is, as already stated,  unqualified subject only to any limitation imposed by the  Constitution. In  the exercise of such a power, it will be  competent  for the legislature to enact a law, which is either  prospective or  retrospective.  In The Union of India v. Madan  Gopal(2) it  was held by this Court that the power to impose  tax  on income  under  entry  82 of List I in Schedule  VII  to  the Constitution,  comprehended the power to  impose  income-tax with retrospective operation even for a period prior to  the Constitution.  The position will be the same as regards laws imposing tax on sale of goods.  In M. P. V. Sundararamier  & Co.  v.  The  State of Andhra Pradesh (3),  this  Court  had occasion  to  consider  the validity of  a  law  enacted  by Parliament giving retrospective operation to laws passed  by the  State legislatures imposing a tax on certain  sales  in the  course  of inter-State trade.  One of  the  contentions raised  against the validity of this legislation  was  that, having regard to the terms of Art. 286(2), the retrospective legislation was not within the competence of Parliament.  In rejecting this contention, the Court observed: (1) A.I. R. 1958 S.C. 756, 759-60.  (2) [1954] S.C.R. 541. (3) [1958]     S.C.R. 1422. 15               "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 on 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." (p. 1460). And  it was held that the law was within the  competence  of the legislature.  We must therefore hold that the Validation

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Act  is not ultra vires the powers of the legislature  under entry 54, for the reason that it operates retrospectively. It was finally urged on the basis of ss. 8-A, 14 and rule 23 of  the  U. P. Sales Tax Act that they contemplated  only  a prospective  legislation  and that those sections  would  be impossible  of  compliance under  the  present  legislation. This  is  a  consideration which is wholly  foreign  to  the present question.  The point which we have got to decide  is whether  the Validation Act is ultra vires.  That has to  be determined solely on the construction of entry 54 in List II in  the  Seventh Schedule, and any other provisions  of  the Constitution  bearing on the question.  Even  assuming  that the  provisions  of  the  U. P. Sales Tax  Act  XV  of  1948 contemplate  a levy of tax in future, that does  not  affect the  power of the legislature under entry 54 to enact a  law with  retrospective operation.  It can only result in  those provisions being unenforceable as regards the levy under the impugned notification.  Dealing with a similar contention in M. P. V. Sundararamier & Co. v. The State of Andhra  Pradesh (1), this Court observed:               "It is also contended that under the Sales Tax               (1)   [1958] S.C.R. 1422.               16               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  fururo   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 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 realising the tax which becomes  now               payable is not a ground for holding that there               is, in fact, no imposition of tax." (p. 1454). None  of the grounds urged by the petitioner in  support  of the contention that the Validation Act is ultra vires can be sustained.   In the result we must hold that the  Validation Act  is  intra vires, and the  impugned  notification  dated March 31, 1956, stands validated by it.  This petition  must therefore be dismissed with costs. Petition dismissed.                              17