Appeals Nos
1182 1184 of 1965
Appeals by special leave from the judgment and order dated August 19 1963 of the Punjab High Court in General Sale s Tax Reference Nos 8 10 and 11 of 1962
R Ganapathy Iyer R N Sachthey for R H Dhebar for the appellant in all the appeals
R K Garg section C Agarwal Shive Pujab Singh and Anil Kumar for the respondent in all the appeals
The Judgment of the Court was delivered by Bachawat J
The respondents are dealers assessable to sales tax under the East Punjab General Sales Tax Act 1948
In their return for the assessment years 1955 56 1956 57 and 1957 58 they 338 claimed exemption from tax in respect of sales of edible oils
It is common case before us that this exemption was claimed in respect of Sales of edible oil produced in ghanis run by mechanical process
By his orders dated March 3 1959 April 9 1959 and July17 1959 the Assessing Authority Jullundur held that exemption from tax was not allowable under item No 57 of the schedule of tax free goods as substituted by the Punjab Government Notification No 3483 E  T 54723CH dated August 5 1954
The appeals from these orders were dismissed by the Deputy Excise and Taxation Commissioner Jullundur Division by his orders dated August 3 1959 and February 16 1960
Revision Petitions from these orders were dismissed by the Excise and Taxation Commissioner Punjab by his orders dated November 24 1961
Revision Petitions from the last orders were dismissed by the Financial Commissioner Revenue Punjab by his orders dated April 27 1962
On the application of the respondents the Financial Commissioner Revenue Punjab by his order dated August 9 1962 referred under section 221 of the Punjab General Sales Tax Act 1948 the following question of law for the decision of the High Court of Punjab at Chandigarh Whether notification No 3483 E  T 54723CH dated the 5th August 1954 whereby exemption from Sales Tax granted by the Government in respect of edible oils was abolished in the case of such edible oils produced in ghanis run by mechanical process was intravires and not the law made by the Legislature of the State which requires  the previous assent of the President of India These References were marked as Sales Tax References Nos 8 10 and 11 of 1962
By its judgment dated August 19 1963 the High Court held following its earlier decision in Ganga Ram Suraj Prakash vs The State of Punjab1 that the notification was a law made by the State Legislature after the enactment of Central Act No 52 of 1952 and since it did not receive the assent of the President it was ultra vires and invalid
In the earlier decision the Punjab High Court held that 1 section 5 of the East Punjab General Sales Tax Act 1948 as it originally stood was invalid on the ground of excessive delegation of legislative power to the executive 2 the remaining sections of the Act including section 6 could not survive the invalidity of section 5 3 the Act did not become valid until the insertion of the new section 5 in the main Act by the East Punjab Act No 19 of 1952 and 4 as the East Punjab Act No 19 of 1952 which alone could sustain the impugned notification dated August 5 1954 was passed after the Central Act No 52 of 1952 the impugned notification could not be justified and was invalid
The High Court observed that it was not impressed with the argu ment that the notification was not a law made by the legislature of the State and therefore the assent of the President could be dispensed with
The present appeals have been preferred from the orders of the High Court dated August 19 1963
1 STC 476
339 To appreciate the points in
controversy it is necessary to refer to the course of legislation
The East Punjab General Sales Tax Act East Punjab Act No 46 of 1948 was enacted on November 15 1948
Section 4 of the Act provided for the incidence of taxation and declared that the classes of dealers specified in sub sections
1 2 3 and 4 would be liabe to pay tax under the Act
Section 51 was in these terms 5
Rate of tax 1 Subject to the provisions of this Act there shall be levied on the taxable turnover every year of a dealer a tax at such rates as the Provincial Government may by notification direct
 Turnover  as defined in section 2i included the aggregate of the amount of sales Taxable turnover  as defined in section 52 was ascertained after deducting from the gross turnover inter alia sales of goods declared tax free under section 6
Section 61 provided that no tax shall be payable under the Act on the sale of goods specified in the first column of the schedule to the Act
Section 62 provided The Provincial Government after giving by notification not less than three months  notice of its intention so to do may by like notification add to or delete from the schedule and thereupon the schedule shall be deemed to be amended accordingly On November 19 1952 the East Punjab General Sales Tax Second Amendment Act 1952 Act No 19 of 1952 was passed amending section 5 of the East Punjab Act No 46 of 1948
Section 2 of the amending Act was in these terms In sub section 1 of section 5 of the East Punjab General Sales Tax Act 1948 after the word rates  the following words shall be inserted namely not exceeding two pice in a rupee 
 It is common ground before us that before the passing of the East Punjab Act No 19 of 1952 the State Government bad issued notifications under section 5 fixing the rates of tax
In exercise of its powers under section 62 of the Act the Punjab Government issued the notification No 3483 E  T 512518 dated May 30 1951 adding item No 57 edible oils to the schedule referred to in section 62
The entry was as follows 57
Edible oils produced from sarson toria and till ghanis but not in hydrogenated from eg vegetable ghee vanaspati etc
 By a later notification No 3483 E  T 54723CH dated August 5 1954 the Punjab Government substituted the following entry No 57 in the schedule 57
Edible oils produced from sarson toria and till indigenous kohlus worked by animal or human agency when sold by the owners of such kohlus only
340 it is common case before us that as a result of this notification sales of edible oil produced by ghanis run by mechanical power ceased to be tax free after August 5 1954
It may be recalled that article 2863 of the Constitution as it stood before the Constitution Sixth Amendment Act 1956 provided No law made by the Legislature of a State imposing or authorising the imposition of a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent On August 9 1952 Parliament passed the Essential Goods De claration and Regulation of Tax on Sale or Purchase Act 1952 Central Act No 52 of 1952
By section 2 of this Act read with item 5 of the schedule edible oils were declared to be essential for the life of the community
Section 3 of this Act was in these terms 3
Regulation of tax on sale or purchase of essential goods
No law made after the commencement of this Act by the legislature of a State imposing or authorising the imposition of a tax on the sale or purchase of any goods declared by this Act to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent
 On September 11 1956 the Constitution Sixth Amendment Act 1956 was passed substituting a new cl
3 in article 286
The amended article 2863 did not put any check on a State law imposing or authorising the imposition of a tax on the sale or purchase of essential goods
The Central Act No 52 of 1952 was repealed by section 16 of the Act No 74 of 1954 passed on December 21 1956
The repealing section came into force on January 5 1957
It is to be noticed that the respondents claimed that they were not liable to pay tax on their sales of edible oil produced in ghanis run by mechanical power
The revenue authorities rejected this claim on the ground that such sales were not exempt from tax in view of the amendment of the schedule of tax free goods by the notification dated August 5 1954
Confronted with this notification the respondents challenged its validity on the ground that it required the assent of the President of India
On the materials and arguments before us we are satisfied that the real dispute between the respondents and the revenue authorities was whether the tax was effectively imposed on those sales so that the respondents may be held
liable to pay tax thereon during the assessment years in question
This dispute was not properly brought out in the question referred to the High Court
We therefore re frame the question thus Was tax effectively imposed on sales of edible oil produced 341 in ghanis run by mechanical power so that the respondents can be held liable to pay tax on such sales during the assessment years 1955 56 1956 57 and 1957 58 This question involves consideration of the validity of section 5 and other sections of the East Punjab Act No 46 of 1948 section 5 as amended by East Punjab Act No 19 of 1952 and the notifications issued under sections 5 and 62 as also the effect of article 2863 of the Constitution its amendment by the Constitution Sixth Amendment Act section 3 of Central Act No 52 of 1952 and its repeal by Central Act No 74 of 1954
On the arguments addressed before us the following ques tions arise for decisions 1 Was section 5 of the East Punjab Act No 46 of 1948 as originally passed in 1948 invalid 2 If so did the invalidity of section 5 invalidate the other provisions of the Act 3 Is section 5 of the East Punjab Act No 46 of 1948 as amended by East Punjab Act No 19 of 1962 invalid 4 Was the amended section 5 a law imposing or authorising the imposition of a tax within the meaning of article 2863 of the Constitution as it stood before the Constitution Sixth Amendment Act If so with what effect 5 What is the effect of the amendment of article 2863 of the Constitution by the Constitution Sixth Amendment Act and the repeal of Central Act No 52 of 1952 by Central Act No 74 of 1954 6 Is the notification dated August 5 1954 issued under section 62 valid 7 Are the notifications issued under section 5 before the passing of the East Punjab Act No 19 of 1952 valid 8 Was tax effectively imposed on sales of the edible oil in question during the relevant assessment years The first three questions are concluded by the decision of this Court in Ms Devi Das Gopal Krishan and others vs State of Punjab and others1
In that decision this Court held that 1 section 5 of East Punjab Act No 46 of 1948 as originally passed in 1948 was void on the ground of excessive delegation of legislative power to the State Government 2 the striking down of section 5 did not render void section 4 and the other sections of the Act though till an appropriate section 5 was inserted section 4 remained unenforceable and 3 section 5 as amended by the East Punjab Act No 19 of 1952 was not invalid on the ground of excessive delegation of legislative authority nor was it invalid on the ground that Act 19 of 1952 purported to amend a stillborn section
The Court held that though in 1  342 terms Act No 19 of 1952 amended section 5 in
substance it inserted a new amended section 5 in Act No 46 of 1948 with retrospective effect
The fourth question is whether the amended section 5 inserted by East Punjab Act No 19 of 1952 levying a tax on the taxable turnover of the dealer at such rates not exceeding 2 pice in a rupee as the State Government by notification may direct was a law imposing or authorising the imposition of a tax on essential goods within the meaning of article 2863 of the Constitution as it stood before the Constitution Sixth Amendment Act and if so what are the consequences
As pointed out by Ramachandra Iyer J in Sreenivas and Co vs Deputy Commercial Tax Officer1 the decisions on the interpretation of section 55 of the Australian Constitution are not a reliable guide to the interpretation of the words imposing or authorising the imposition of a tax in article 2863 of the Constitution and section 3 of Central Act No 52 of 1952
Section 55 which is directed to preserving the privileges of the House of Representatives with respect to finance and providing against their abuse has received a somewhat narrow interpretation from the Australian Courts
See the cases collected in Wynes
Legislative Executive and Judicial Powers 3rd Edn p 240
We may add that the observations of Isaccs J in Federal Commissioner of Taxation vs Munro2 suggest that an Act naming the rate but leaving the persons on whom the tax should fall to be thereafter determined would be a measure imposing taxation even for the purposes of section 55
Nor is much light thrown on the interpretation of those words by the decisions under the Indian Income tax Act
In Messrs Chatturam Horilram Ltd vs Commissioner of Income tax Bihar and Orissa3 this Court held that income was chargeable under section 3 of the Indian Income tax Act though the Finance Act was not extended to the relevant area during the year in question
In Kesoram Industries vs Commissioner of Wealth Tax4 this Court by a majority following the dicta in Wallace Brothers  Co Ltd vs Commissioner of Income tax Bombay5 Chatturam vs Commissioner of Income tax Bihar6 and explaining the dicta in Commissioner of Income tax vs Western India Turf Club Ltd 7  and Maharaja of Pithapuram vs Commissioner of Income tax Madras8 held that there was a liability to pay income tax and a debt owed by the assessee in respect of income tax on the last day of the accounting year within the meaning of section 2m of the Wealth Tax Act 1957
None of these decisions dealt with the construction of the words imposing or authorising the imposition of a tax in article 2863 of the Constitution
It is remarkable however 1 1960 11 STC68 75 77On appeal from 1959 10 STC171
2   189
3   297 300 4  5  244
6  308
7 1927 LR 55 IA 14 17
8  223 24 343 that in the Maharaja of Pithapuram s case1 the language used by Lord Thankerton suggests that the income tax is imposed for a particular fiscal year by a Finance Act and in Chatturam Horilram s case2 Jagannadhadas J said that the Finance Act of each year imposed the obligation for the payment of a determinate sum for each such year
Moreover in Luipaard s Vlei Estate and Gold Mining Co Ltd vs The Commissioner of Inland Revenue3 Rowlatt J said the English Income tax was annually imposed by the Finance Act and in Bowels vs Bank of England4 Parker J held that the Crown could not lawfully levy income tax before the rate of tax was ascertained and the tax was actually imposed by Apt of Parliament
These dicta suggest that an Act fixing the rate of tax is a law imposing a tax
The specification of the class or classes of persons liable to pay the tax and the fixation of the rate of tax are both necessary for the imposition of a tax
Section 4 of the East Punjab Act No 46 of 1948 took the first step for imposing the tax
It declared who were the persons liable to pay tax under the Act
But section 5 of East Punjab Act No 46 of 1948 was invalid and until the passing of the East Punjab Act No 19 of 1952 and the insertion of the amended section 5 there was no provision in the main Act fixing or authorising the fixation of the rate at which the tax was to be levied
In the absence of such a provision there could be no levy assessment and collection of the tax from the dealer and section 4 remained unenforceable
The East Punjab Act No 19 of 1952 by inserting the amended section 5 in the main Act for the first time provided for the levy on the taxable turnover of every dealer a tax at a rate to be fixed by the State Government
The rate of tax could be fixed and the tax could be actually imposed under the amended section 5 only
The East Punjab Act No19 of 1952 therefore belonged to the category of laws authorising the imposition of a tax on the sale of goods
The object of article 2863 of the Constitution was to put a constitutional check on the operation of a State law imposing or authorising the imposition of a tax on the sale or purchase of essential goods
Commerce in such goods was a matter of national concern and no such law could take effect unless it had been reserved for the consideration of the President and had received his assent
An arbitrary or unjust rate of sales tax would unduly hamper dealings in such goods and it is reasonable to think that a measure fixing or authorising the rate of tax would be subject to the salutary check of article 2863
In our opinion the amended section 5 inserted in East Punjab Act No 46 of 1948 by East Punjab Act No 19 of 1952 authorising the fixation of the rate of tax leviable on the taxable turnover was a law authorising the imposition of a tax within the purview of the unamended article 2863 of the Constitution
1 2  3  581
4  87 344 The East Punjab Act No 19 of 1952 was passed after the enactment of article 2863 of the Constitution and after Parliament had by Central Act No 52 of 1952 declared edible oil to be essential for the life of the community
It was not reserved for the consideration of the President and did not receive his assent
It was a law authorising the imposition of a tax on the sale of goods
In so far as it authorised the imposition of a tax on the sales or purchases of edible oil it could not take effect during the currency of article 2863 of the Constitution as it stood before its amendment by the Constitution Sixth Amendment Act
The fact that the amended section 5 inserted by the East Punjab Act No 52 of 1952 was retrospective in operation made no difference
It was still a law made after the Constitution came into force and after Parliament had by law declared edible oil to be essential for the life of the community
As the East Punjab Act No 52 of 1952 did not receive the assent of the President the amended section 5 could not take effect at all either prospectively or retrospectively in respect of sales and purchases of essential goods while the ban of article 2863 continued
But it could take effect in respect of sales and purchases of other goods
The fifth question involves consideration of the effect of the amendment of article 2863 of the Constitution and the repeal of Central Act No 52 of 1952
The Constitution Sixth Amendment Act 1956 passed on September 11 1956 substituted a new cl
3 in article 286
The effect of this amendment was that the restriction put by article 2863 on the operation of the amended section 5 inserted by the East Punjab Act No 19 of 1952 in respect of essential goods was lifted and the section thereafter took effect on such goods also
Counsel for the respondent submitted that in view of the ban imposed by article 2863 the amended section 5 was a stillborn law and the section was not revived by the removal of the ban
In this connection our attention was drawn to the decisions under articles 2862 and 13 of the Constitution
Article 2862 as it stood before the Constitution Sixth Amendment Act provided that Except in so far as Parliament may by law otherwise provide no law of a State shall impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce
In spite of the prohibitory words of article 2862 in M P V Sundararamier  Co vs The State of Andhra Pradesh1 and Messrs Ashok Leyland Ltd vs The State of Madras2 this Court held that a State law imposing a tax on sales of goods in the course of inter State trade and commerce was not void and the effect of the Sales Tax Laws Validation Act 1956 was to liberate State laws from the fetter placed on them by article 2862 and enable such laws to operate on their own terms
In Mahendra Lal Jaini vs State of U P this Court held reviewing the earlier cases that a post Constitution 1   1459
2  3 1953 Supp 1 SCR 912
345 Act taking away or abridging the fundamental rights in contravention of Article 132 was a stillborn law but a pre Constitution Act inconsistent with a fundamental right was in view of article 131 eclipsed for the time being and on the abolition of the fundamental right by a constitutional amendment the pre Constitution Act would begin to operate once again from the date of the amendment
These decisions show that a law made by an incompetent legislature or in contravention of some constitutional limitation is void from its inception
But the amended section 5 inserted by the East Punjab Act No 19 of 1952 was passed by a competent legislature
It always took effect in respect of non essential goods
Article 286 3 did not prohibit its making
While the restriction imposed by article 2863 continued the section could not affect essential goods but as soon as the restriction was removed it became fully effective
The section was not void or stillborn
But the question still remains whether the check on a State law imposing or authorising the imposition of a tax on the sale or purchase of essential goods continued even after September 11 1956 until January 5 1957 when Central Act No 52 of 1952 was repealed
Article 2863 authorised Parliament to declare by law which goods were essential for the life of the community
Accordingly Parliament passed Act No 52 of 1952
The preamable to the Act shows that it was an Act to declare in pursuance of cl3 of article 286 of the Constitution certain goods to be essential for the life of the community
By section 2 the goods specified in the sche dule were declared to be so essential
As soon as this declaration was made article 2863 came into play
Section 3 stated the conjoint effect of article 2863 and section 2 and declared that no law made after the commencement of the Act by the legislature of a State imposing or authorising the imposition of a tax On the sale or purchase of any goods declared by the Act to be essential for the life of the community would have effect unless it had been reserved for the consideration of the President and had received his assent
But section 3 had no independent existence
The subject of a tax on the sale or purchase of goods other than newspapers was exclusively a State subject see List II Entry 54
Article 2863 did not authorise Parliament to legislate on this subject
It only conferredon Parliament the authority to declare that certain goods were essential for the life of the community
On such a declaration being made the check
imposed by article 2863 came into operation
But on the amendment of article 2863 this check was lifted and thereafter
section 3 had no force
It follows that as from September 11 1956 the
amended section 5 inserted by East Punjab Act No 19 of 1952 tookeffect on sales or purchases of edible oil also
The sixth question relating to the validity of the notification dated August 15 1954 involves the interpretation of the expression law made by the legislature of a State in article 2863 as it stood before the Constitution Sixth Amendment Act
We are not con cerned in these appeals with the interpretation of the expression 346 law of a State in the amended article 2863 and other Articles
The notification dated August 5 1954 was authorised by section 62 of East Punjab Act No 46 of 1948
Section 62 being a pre Constitution law was outside the purview of article 2863 of the Constitution and Central Act No 52 of 1952
See Sardar Soma Singh vs The State of Pepsu and Union of India1
Consequently section 62 from its inception affected essential goods
By force of section 62 the notification dated August 5 1954 issued under it took effect immediately in respect of essential goods
The notification issued by the State Government was not a law made by the legislature of a State within the meaning of article 2863
Though issued after the passing of Central Act No 52 of 1952 it did not require the assent Of the President for affecting essential goods
In The Indore Iron  Steel Registered Stockholders  Association vs The State of Madhya Pradesh2 this Court held that a notification dated October 24 1953 specifying the goods whose sales were taxable under section 52 of the Madhya Bharat Sales Tax Act 1950 a pre Constitution Act was outside the purview of article 2863 of the Constitution and section 3 of Central Act No 52 of 1952
Similarly in Sreenivas  Co vs Deputy Commercial Tax Officer3 the Madras High Court held that Rules 15 and 16 of the Madras General Sales Tax Turnover and Assessment Rules specifying the transactions attracting the tax liability and framed under the Madras General Sales Tax Act 1939 a pre Constitution Act did not require the assent of the President for affecting hides and skins which had been declared by Parliament to be essential for the life of the community by Central Act No 52 of 1952
These decisions show that a notification issued under the authority of a pre Constitution Act is not a law made by the legislature of a State within the meaning of the unamended article 2863
It follows that the impugned notification took effect in respect of edible oil as from August 5 1954 and thereafter sales of edible oil produced in ghanis run by mechanical power were taxable
But as the amended section 5 could not then affect edible oil no tax was effectively imposed on it until September 11 1956 during the currency of the unamended article 2863 of the Constitution
The respondents were therefore not liable to pay tax on their sales of such edible oil effected before September 11  1956
It is common case before us that before the insertion of the amended section 5 by East Punjab Act No 19 of 1952 the State Government had issued notifications under section 5 fixing the rate of tax
The seventh question relates to the validity of those notifications
As the unamended section 5 was invalid under the law as it stood before the passing of the East Punjab Act No 19 of 1952 those notifications were not authorised by law and were invalid
The East Punjab Act No 19 of 1952
however inserted section 5 with retrospective effect
The effect of the East Punjab Act No 19 of 1952 was that the amended s 5 was inserted and was deemed to have always been inserted in the main Act
After the passing of 1  2  3 1960 11 STC 68 75 77 on appeal from 1959 10 STC 171
347 the East Punjab Act No 19 of 1952 the result was that from the very commencement of the main Act the amended section 5 was deemed to have authorised the State Government to issue notifications fixing the rate of tax
The notifications issued by the State Government under section 5 before 1952 must therefore be deemed to be and always to have been valid and not stillborn
It was not necessary to pass another Act validating those notifications nor was it necessary for the State Government to issue fresh notifications fixing the rate of tax
In view of article 2863 the amended section 5 and the notifications issued under it before 1952 could not take effect in respect of sales or purchases of essential goods before September 11 1956
But they took effect in respect of such sales after September 11 1956
The validity of the notifications issued after 1952 under he amended section 5 is not challenged before us
It follows that the State law and the notifications issued there under effectively imposed tax on sales of edible oil from September 11 1956 and not before
The respondents are liable to pay tax on all sales of edible oil effected by them after September 11 1956 but they are not liable to pay tax on their sales made before that date
in C M Ps
No 877 to 879 of 1964 the respondents raised several additional contentions
The first contention was that the consideration of the several questions arising in this case is precluded by res judicata in view of the decisions of the Punjab High Court in Sales Tax References Nos 4 and 13 of 1961
But this plea of res judicata has now been abandoned before us by counsel for the respondents
Secondly it was urged that the appeals are infructuous because the respondents had obtained refund of the tax deposited by them in respect of the years 1958 59 and 1959 60
But the present appeals do not relate to those assessment yearsand the fact that the respondents obtained refund of the tax forthose years is irrelevant in these appeals
Thirdly it was pointed out that by an order dated September 23 1963 the Financial Commissioner gave effect to the decision of the High Court under appeal and directed that the assessment cases be disposed of ac cordingly
The contention of the respondents was that in view of this order of the Financial Commissioner the present appeals are not maintainable
There is no substance in this contention
The order of the Financial Commissioner was passed under section 225 of East Punjab Act No 46 of 1948
Section 225 provides that the High Court shall send to the Financial Commissioner a copy of its judgment in a Sales Tax reference under its seal and the signature of the Registrar and the Financial Commissioner shall dispose of the case accordingly
On receipt of the copy of the judgment of the High Court in Sales Tax References Nos 8 1 0 and 11 of 1962 the Financial Commissioner acting under section 225 directed that the cases should be disposed of according to the judgment of the High Court
But those very judgments are under appeal in this Court
In so far as those judgments are varied or reversed in these appeals 348 effect must be given to the order of this Court and the Financial Commissioner must direct the disposal of the cases accordingly
In C M Ps
877 to 879 of 1964 the respondents prayed for revocation of the special leave granted by this Court
There is no ground for revoking the special leave and the petitions must be dismissed
To summarise our conclusions 1 The unamended section 5 of East Punjab Act No 46 of 1948 was void
2 The invalidity of section 5 did not render sections 4 and 6 and other sections of the Act invalid
3 The amended section 5 inserted by East Punjab Act No 19 of 1952 is valid
4 The amended section 5 was a law authorising the imposition of a tax within the meaning of article 2863 of the Constitution as it stood before the Constitution Sixth Amendment Act
5 The amended section 5 and the notifications issued under it did not take effect before September 11 1956 in respect of sales or purchases of goods declared essential to the life of the community by Central Act No 52 of 1952 but they took effect in respect of such sales or purchases after September 11 1956
6 The notification dated August 5 1954 issued under section 62 is valid
7 The notifications issued under section 5 before the passing of the East Punjab Act No 19 of 1952 are valid
8 Tax was effectively imposed on the sales or purchases of edible oil from September II 1956 and not before
We therefore hold that the respondents are not liable to pay tax on sales of edible oil produced in ghanis run by mechanical power effected by them before September 11 1956
But they are liable to pay tax on such sales made after September 11 1956
The Sales Tax References and the appeals are disposed of accordingly
CMPs
877 to 879 of 1964 are dismissed
There will be no order as to costs
RKPS Appeals partly allowed


Summary:
The respondents were dealers assessable to sales tax under the East Punjab General Sales Tax Act 1948 and in respect of the assessment years 1955 56 to 1957 58 they claimed an exemption from tax on sales of edible oil produced by them cal process
The assessing authority rejected this claim on the ground that such sales we re not exempt from tax in view of the amendment of the Schedule to the Act specifying tax free goods by the notification dated August 5 1954
The respondent s appeals to the Excise and Taxation Commissioner
and to the Financial Commissioner were rejected but the High Court upon a reference
held that the notification was a law made by the State legislature after the enactment of Central Act No 52 of 1952 which read with article 2863 of the Constitution  placed a bar on a State by a law imposing or authorising the imposition of a tax on the sale of essential goods unless the law in question had received the assent of the President and since the notification had not received such assent it was ultra vires and invalid the respondents were therefore entitled to exemption under Item No 57 of the Schedule prior to its amendment by the notification of August 5 1954
On appeal to this Court Held The respondents were not liable to pay tax on sales of edible oils produced in ghanis run by mechanical power effected by them before September 11 1956 but they were liable to pay tax on such sales made after September 11 1956 348E i The amended section 5 inserted in East Punjab Act No 46 of 1948 by East Punjab Act No 19 of 1952 authorising the fixation of the rate of tax leviable on the taxable turnover was a law authorising the imposition of a tax within the purview of the unamended article 2863 of the Constitution
As the East Punjab Act No 19 of 1952 was passed after the enactment of Art 2863 of the Constitution and after Parliament had by Central Act 52 of 1952 declared edible oil to be essential for the life of the community and it was not reserved for consideration of the President and did not receive his assent it could not take effect during the currency of article 2863 prior to its amendment in so far as it authorised the imposition of a tax on the sale or purchases of edible oil
It could however take effect in respect of sale and purchases of other goods
344A C 348B C ii The effect of the amendment of article 2863 of the Constitution by the Constitution Sixth Amendment Act with effect from September 11 1956 was that the restriction put by article 2863 on the operation of the amended section 5 in respect of essential goods was 336 337 lifted and the section thereafter took effect on such goods also
There was no force in the contention that the amended section 5 wag a still born Jaw and that the section was not revived by the removal of the ban
It was inserted by the East Punjab Act No 19 of 1952 which was passed by a competent legislature and always took effect in respect of nonessential goods
344D F Section 3 of Central Act 52 of 1952 had no independent existence and after the amendment of article 2863 it had no force from September 11 1956 until its repeal with effect from January 5 1957 by Central Act 74 of 1954
345C DE F iii The notification of August 5 1954 which amended the Schedule of tax free goods was authorised by section 62 which was a pre Constitution law outside the purview of article 2863
The notification did not require the assent of the President for affecting essential goods
The notification was therefore valid and took effect in respect of edible oil as from August 5 1954 and thereafter sales of edible oil produced in ghanis run by mechanical power were taxable
But as the amended section 5 could not then affect edible oil no tax was effectively imposed on it until September 11 1956 during the currency of the unamended article 2863
346A C E F iv Although the notifications issued by the State Government under the unamended section 5 which was invalid were not authorised by law and also invalid after the passing of the East Punjab Act 19 of 1952 the result was that from the very commencement of the main Act the amended section 5 was deemed to have authorised the State Government to issue notifications fixing the rate of tax
The notifications issued under section 5 before 1952 must therefore be deemed to be and always to have been valid and not still born
It was not necessary to pass another Act validating those notifications nor was it necessary for the State Government to issue fresh notifications fixing the rate of tax
Here again such notifications could not take effect in respect of sales or purchases of essential goods before September 11 1956
346H 347C v There was no force in the contention that the present appeals were not maintainable because the Financial Commissioner had already directed disposal of the case under section 225 of the East Punjab Act 46 of 1948 in accordance with the judgment of the High Court
Effect had to be given to the order of this Court and the Financial Commissioner must direct disposal of the cases accordingly
347F 348A Case law reviewed