Appeals Nos 509 and 510 of 1960
Appeals by special leave from the judgment and order dated October 26 1956 of the former Madhya Bharat High Court Indore
in Civil Misc
Cases Nos 26 of 54 and 48 of 55
A V Viswanatha Sastri C B Agarwala and A G Ratna parkhi for the appellants
RJ Bhave and 1
N Shroff for the respon
dents
July 26
The Judgment of the Court was delivered by GAJENDRAGADKAR J
The appellant the Indore Iron and Steel Registered Stock holders  Association Private Ltd is a registered Association whose constituent members carry on business generally in fabricated iron and steel material and more particularly in iron sheets plain or corrugated bars rods light and heavy structurals nails joints wire nails and all kinds and varieties of wirer and 926 pipes
This business is carried on by the constituent members of the appellant at Indore and Ratlam at which places they have their registered offices
The State of Madhya Bharat by its Act No 30 of 1950 imposed sales tax in the territory of Madhya Bharat on the sales of goods therein specified with effect from May 1 1950 and under the provisions of the said Act the Commissioner of Sales Tax Madhya Bharat and the Sales Tax Officer Indore who are respondents 2 and 3 were appointed authorities for the assessment of tax leviable under the Act and for its recovery in their respective areas
Section 3 of the Act is the charging section and it provides for the incidence of taxation Section 4 which deals with the application of the Act exemption and exclusion provides by Sub section
2 that no tax shall be payable under the Act on the sale of goods specified in the second column of Sch 1 on conditions mentioned in column 3 of the Schedule
 Iron and steel appears in Sch 1 as item 39
Section 5 prescribes the rate of tax and it provides that the tax will be recoverable as notified from time to time by the Government by publication in the official gazette subject to the condition that it shall not be less than Rs 1 9 0 per cent or more than 61 per cent
Section 43 authorises the Government by notification to modify Sch 1 from time to time
Similarly section 52 authorises the Government while notifying the tax payable by a dealer to notify the goods and the point of their sale at which the tax is payable
It is by virtue of this delegated power that the State Of Madhya Bharat respondent 1 purported to issue notifications to which we will presently refer
On May 22 1950
a notification was issued under section 52 specifying serially the articles taxed the stage of sale by traders in Madhya Bharat on which the tax is levied and the rate of sales tax per cent
Item 27 in the list dealt with goods manu 927 factured from things wastu except gold and silver or goods manufactured from more than one metal except circles and sheets of copper brass and aluminium
The notifications provided that the tax had to be paid by the producer or importer at that rate of Rs 3 2 0 per cent
Meanwhile article 2863 of the Constitution had come into force
This Article as it then stood provided that 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
Thereafter Parliament by law proceeded to make the declaration as contemplated by this Article by section 2 of Act 52 of 1952 Essential Goods Declaration and Regulation of Tax on sale or purchase Act hereafter called the Act which was passed on August 9 1952
Section 2 of the Act provides that the goods specified in the Schedule are hereby declared to be essential for the life of the community
Item 14 in the Schedule refers to iron and steel 
Thus as a result of these provisions in on and steel came to be declared as essential for the life of the community within the meaning of article 2863 as from August 9 1952
Respondent 1 thereupon purported to give effect to the provisions of article 2863 and section 2 of the Act by issuing two notifications on October 24 1953
By the first notification it was provided that no tax shall be payable enter alia on the sale of iron and steel Iron and steel  was placed at item 39 in the said Schedule
The other notification issued on the same day by item 9 in the list provided for the sale of the articles specified in the said item
This item reads thus 928 Every kind of metal including copper brass manganese zinc lead mercury bronze nickel aluminium tin and their ore form ex cluding iron steel gold and silver and goods prepared any metal other than gold and silver utensils and wires goods prepared from one ore more than one metal utensils and wires which also includes mangars metal pieces and scraps cutting and lantern gas stove and type letters excluding circles and sheets of copper bra and aluminium
 It is common ground that under this notification the articles in which the constituents of the appellant deal would be liable to pay the sales
tax in question
After this notification was issued the appellant wrote to respondent 3 claiming exemption from payment of sales tax for the goods and articles in which its constituent members are dealing but this plea was rejected by the said respondent and the constituent members of the appellant were called upon to pay sales tax each in respect of their individual turnover
It was under these circumstances that the appellant filed two writ petitions under article 226 of the Constitution in the High Court of Madhva Bharat at Indore in which it challenged the validity of the assessment orders passed for the two years 1953 54 and 1954 55 respectively Petitions Nos 26 of 1954 and 48 of 1955
The appellant s case was that the articles in which the constituent members of the appellant dealt were covered by the parliamentary declaration contained in section 2 of the Act and as such were no longer liable to pay sales tax
This plea was resisted by the respondents
It was urged on their behalf that the notification issued by respondent 1 on October 24 1953 was valid and item 27 in the list notified brought the articles in question within the mischief of the Sales Tax Act and so the petitioners were not entitled to any writ as claimed by them
The High Court has upheld the plea 929 raised by the respondents rejected the contentions urged by the appellant and has dismissed the  writ petitions filed by it
It is against these orders of dismissal passed by the High Court in the two writ petitions filed by the appellant that the present appeals No 509 and 510 of 1960 have been brought to this Court by special leave granted by this Court
Two points have been urged before us by Mr Viswanatha Sastri on behalf of the appellant in support of these appeals
It is urged that section 2 of the Act which contains the parliamentary declaration as contemplated by article 2863 covers iron and steel as understood in their commercial sense
The words iron and steel should not be interpreted in their narrow dictionary meaning
They do not mean iron and steel as they come out after smelting but they mean articles exclusively made from iron and steel in which the identity of iron and steel has not been lost
In other words iron and steel in the context mean all articles made exclusively of iron and steel in which steel merchants normally and generally trade
It is further argued that in construing the words  iron and steel we must bear in mind the fact that the object of article 2863 is to safeguard the interest of the consumer in regard to the articles which Parliament may declare to be essential for the life of the community and it is suggested that if the narrow dictionary meaning of the words is adopted it would not serve the said object and purpose of the constitutional provision
Mr Sastri has also relied on what he has described as the legislative history which indicates that the said words should receive a broad and wide construction in the context
In that connection he has invited our attention to the provisions of  section 2d section 3
and the categories specified in the Second Schedule to the Iron and Steel 930 Control of Production and Distribution Order 1941
 These categories according to Mr Sastri unmistakably support his argument that the expression iron and steel as used in the order was obviously used in a very wide and broad sense
Similarly he has referred to the provisions of section 2avii of Act XXIV of 1946 The Essential Supplies Temporary Powers Act 1946 and section 2avi of Act 10 of 1955 The 
His contention is that it would be legitimate for the Court to consider the legislative history in the matter of the use of these words and their denotation and that the legislative history to which he has referred supports his argument that the words iron and steel should receive a very liberal interpretation in determining the effect of the provisions of section 2 of the Act
The High Court Was not impressed by this argument
It has held that the words iron and steel as used in Entry 14 to Sch
1 of the Act do not include within their ambit articles made of iron and steel such as those with which we are concerned in the present proceedings
Mr Sastri seriously questions the correctness of this conclusion
It is clear that even if we were to accept Mr Sastri s contention in regard to the denotation of the words iron and steel as used by the relevant provisions of the Act it would still have to be shown by the appellant that the impugned notification is invalid because it contravenes the provisions of article 2863
In other words in order to succeed in the present appeals the appellant has to prove two facts 1 that the words iron and steel in respect of which the requisite parliamentary declaration has been made by section 2 of the Act include commodities like those with which we are concerned and 2 that the impugned notification contravenes article 2863
It would thus be seen that unless the appellant succeeds in both these contentions the appeals are bound to fail
Since 931 we have reached the conclusion that even on the assumption that the parliamentary declaration made by the relevant provision of the Act includes commodities with which we are concerned is correct it does not follow that the impugned notification contravened article 2863 we do not propose to deal with the first point raised by Mr Sastri
In dealing with these appeals we would assume in hip favour that the words iron and steel should receive the broad and wide interpretation for which he contends
Assuming then that the articles in which the constituents of the appellant deal are covered by the parliamentary declaration made by the Act does it follow that the impugned notification contravenes article 2863  That takes us to the provisions of article 2863 which we have already cited
This provision can be successfully invoked only if three conditions are satisfied
The first condition is that the impugned law must be one which is made by the Legislature of a State which obviously means a State which came into existence under and after the Constitution  and that shows that the impugned law must be a law made by the Legislature of a State subsequent to the Constitution
This condition is satisfied in the present case because the impugned notification has been issued by virtue of the authority delegated to respondent 1 by Act 30 of 1950 and this Act was passed after the Constitution was adopted
Let us then consider the second condition which is also in the nature of a condition precedent
This condition requires that the impugned law must impose or authorise 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
There can be little doubt that this condition postulates that at the time when the impugned law is passed there is a 1962 preexisting declaration made by Parliament in regard to the essential character of a commodity
The material words in respect of this condition are that 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
Therefore if the parliamentary declaration follows the impugned enactment it cannot retrospectively affect the validity of the said enactment
Article 2863 contemplates that if in the face of an existing parliamentary declaration about the essential character of a commodity the Legislature of a State purports to impose or authorise the imposition of a tax on such commodity the enactment would be invalid unless the law made by the Legislature has been reserved for the consideration of the President and has received his assent
The third condition emphasises that the impugned law must have been passed subsequent to the Constitution because unless the relevant provision of the Constitution for the reservation of the law for the consideration of the President has come into force this condition cannot apply
This requirement obviously means that the office of the President must have come into existence and so this condition can become operative only after the Constitution has come into force
Therefore the third condition supports the conclusion which arises from the words used in the first condition itself
Thus the position is that Act 30 of 1950 satisfies the first condition but not the second
It is conceded that the relevant provisions of the M B Act of 1950 authorise the imposition of tax on the commodities in question and that the impugned notification is otherwise consistent with and justified by the said provision of the Act
Now if the said M B Act authorises the imposition of tax on the goods in question and the said goods were not declared by Parliament by law to be 933 essential for the life of the community before the date of the said Act its validity cannot be challenged on the ground that it was not reserved for the consideration of the President and ha not received his assent
It is only when all the conditions prescribed by article 2863 are present that the validity of the impugned law can be successfully challenged
The question about the construction of article 2863 has been considered by this Court on two occasions
In Sardar Soma Singh vs The State of Pepsu and Union of India section R Das J as he then was who spoke for the Court has observed that it is quite clear that section 3 of Act 52 of 1952 does not affect the Ordinance there challenged for the said Ordinance was not made after the commencement of the Act and that article 2863 contemplates a law which can be but has not been reserved for the consideration of the  President and has not received his assent
This position clearly points to post constitutional law for there can be no question of an existing law continued by article 372 being reserved for the consideration of the President for receiving his assent
This decision supports the conclusion that the law contemplated by the first condition specified in article 2863 must be post constitutional law
To the same effect are the observations made in the majority judgment of this Court in Firm of A Gowrishankar vs Sales Tax Officer Secunderabad 2
In this connection it would be relevant to refer to section 3 of the Act itself
It provides that no law made after the commencement of this Act by Legislature of a State imposing or authorising the imposition of t 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 1  2 AIR 1958 SC 883
934 assent
This provision also shows that the declaration made by the Act was intended to be prospective in operation and it would affect laws made after the commencement of the Act and that clearly must mean that if a law had been passed prior to the commencement of the Act and it authorised the imposition of a tax on the sale or purchase of certain commodities its validity cannot be challenged on the ground that the said commodities have been subsequently declared by the Act to be essential for the life of the community
The impugned notification with which we are concerned and the Act under which it has been issued are thus outside the purview of section 3 of the Act
That in substance is the finding made by the High Court on the second contention raised before it by the appellant
In our opinion the conclusion of the High Court on t is point is right
In the result the appeals fail and are dismissed with costs
Appeals dismissed


Summary:
The constituent members of the appellant Association who carried on business in iron and steel articles were assessed to sales tax for the years 1953 54 and 1954 55 under a notification dated October 24 1953 issued by the State of Madhya Bharat under section 52 of the Madhya Bharat Sales Tax Act Samvat 2007 Act No 30 of 1950
The appellant moved the High Court under article 226 of the Constitution challenging the validity of the assessment on the ground that the said articles were covered by the declaration made by Parliament by section 2 of the Essential Goods Declaration and Regulation of Tax on Sale or Purchase Act 1952 that iron and steel were essential commodities within the meaning of article 2863 of the Constitution which was operative from August 9 1952
The High Court found against the appellant
Held that even assuming that the words iron and steel in Entry 14 of the Schedule to the Act were comprehensive enough to include articles made of iron and steel that would not necessarily render the notification invalid under article 2863 of the Constitution
Article 2863 as it stood before the Constitution Sixth Amendment Act 1956 could be successfully invoked only if three conditions were satisfied 1 that the impugned legisla
tion was one by the Legislature of a State constituted under the Constitution 2 that it was subsequent to the declaration made by the Parliament as to the essential character of the commodity and 3 that it could be but was not reserved for the President s consideration and assent
It was obvious therefore that a subsequent Parliamentary 925 declaration could not affect the validity of an enactment retrospectively
Sardar Soma Singh vs The State of Pepsu and Union of India  and Firm of A Gowrishankar vs Sales Tax Officer Secunderabad A I R  referred to
Although the Art tinder which the impugned notification was made satisfied the first condition it did not satisfy the second or the third and consequently its validity could not be questioned under article 2863 of the Constitution
Held further that it was apparent from section 3 of the Essential Goods Declaration and Regulation of Tax on Sale or Purchase Act 1952 that if a law had been passed prior to the commencement of the Act authorising the imposition of a tax its validity could not be challenged on the ground that the said commodity was subsequently declared by the Act to be essential for the life of the community
The impugned notification and the State Act under which it was made were therefore outside the purview of section 3 of the Act