vil Appeal Nos 207 208 NT of 1979
From the Judgment and Order dated 10th August 1977 of the Kerala High Court in TRC Nos 61 and 62 of 1976
PS Poti and KR Nambiar for the Appellants
TS Krishnamoorthy Iyer SB Sawhney and VB Saharya for the Respondents
The Judgment of the Court was delivered by section RANGANATHAN J
1
A very interesting question as to the principles of interpretation of legislation by incorporation or references arises for consideration in these appeals arising out of certain assessments to sales tax in Kerala
Section 9 of the Kerala General Sales Tax Act 1963 which came into force on 141963 granted exemption from sales tax on goods specified in the third Schedule to the said Act
These included the following 5
Sugar as defined in item 1 of the First Schedule to the  6
Tobacco as defined in item 4 of the First Schedule to the and 7
Cotton fabrics silk fabrics woollen fabrics and rayon or artificial silk fabrics as defined in item Nos
19 20 21 and 22 respectively of the First Schedule to the 
The question before us is whether in respect of the assessment years 1971 72 and 1972 73 with which we are concerned the exemption given to cotton fabrics  under item 7 above should be restricted to cotton fabrics  as defined in the Central Excises  Salt Act 1944 the 1944 Act  as it stood on 141963 or whether it would also cover goods falling under the said definition after its amendment in 1969
Though we are concerned only with the interpretation of the Kerala General Sales Tax Act 1963 it is necessary PG NO 605 to refer back to the earlier history of some Central as well as State legislations i We start with the 1944 Act
By this Act excise duty was levied on the manufacture or production of various types of goods enumerated in the First Schedule to the Act
Item 19 originally item 12 of the First Schedule as it stood on 141963 defined cotton fabrics  thus cotton fabrics Cotton Fabrics  mean all varieties of fabrics manufactured either wholly or partly from cotton and include dhoties sarees chadars bed sheets bed spreads counter panes and table cloths but do not include any such fabric xxx xxx xxx xxx Item 19 was amended by the Finance Act 1969
After amendment it reads thus Cotton Fabrics Cotton Fabrics  means all varieties of fabrics manufactured either wholly or partly from cotton and includes dhoties sarees chaddars bed sheets bed spreads counter panes table cloths embroidery in the piece in strips or in motifs and fabrics impregnated or coated with preparations of cellulose derivatives or of other artificial plastic materials but does not include xxx xxx Underlining ourS  The question set out earlier assumes importance because the respondents assessees deal in PVC Cloth an item of goods which is clearly covered by the amended definition but perhaps not by the original one
ii In 1957 there were certain legislations of Parliament affecting the levy of sales tax and excise duty
The first of these was the CST Act passed in pursuance of Article1e 286 3 of the Constitution of India which reads thus Any law of a State shall in so far as it imposes or authorises the imposition of a tax on the sale or purchase PG NO 606 of goods declared by Parliament by law to be of special importance in inter state trade or commerce be subject to such restrictions and conditions in regard to the system of levy rates and other incidents of the tax as Parliament may by law specify
 The CST Act received the assent of the President on 241256
section 14 of the Act declared certain goods to be goods of special importance in inter state trade or commerce
hereinafter referred to as declared goods  These included as on 141963 the following ii a cotton fabrics as defined in Item No 19 of the First Schedule to the Central Excises and Sait Act 1944 xxx xxx xxx vii rayon or artificial silk fabrics as defined in Item No 22 of the First Schedule to the Central Excises and Salt Act 19441 0f 1944 viii sugar as defined in Item No 1 of the First Schedule to the  1 of 1944 ix tobacco as defined in Item No 4 of the First Schedule to the  1 of 1944 x woollen fabrics as defined in Item No 21 of the First Schedule to the xi silk fabrics as defined in Item No 20 of the First Schedule to the 
The definitions of the above goods were thus related to their definitions under the 1944 Act
section 15 of the Act imposed certain restrictions and conditions in regard to tax on sale or purchase of declared goods within a State
It may be mentioned that this section as originally enacted in 1956 had been amended wef 661957
by Act 16 of 1957 and again by Act 31 of 1956 wef
1101958
iii About the same time as the CST Act Parliament also enacted the Additional Duties of Excise Goods of Special Importance Act 1957 the 1957 Act 
The statement of objects and reasons of this Act reads as follows PG NO 607  The object of this legislation is to impose additional duties of excise in replacement of the sales tax levied by the Union and the States on sugar tobacco and mill made tex tiles and to distribute the net proceeds of these taxes except the proceeds attributable to Union Territories to the States
The distribution of the proceeds of the additional duties broadly followed the pattern recommended by the Second Finance Commission
Provision has been made that the States which levy a tax on the sale or purchase of these commodities after 1st April 1958 to not participate in the distribution of the net proceeds
Provision is made in the Act for including these goods in the category of goods declared to be of special importance in inter state trade or commerce so that following the imposition of uniform duties of excise on them the rates of sales tax if levied by the State are subject from 1st April 1958 to the restrictions in s 15 of the section 3 of this Act originally levied an additional excise duty on sugar tobacco cotton fabrics rayon or artificial silk and woollen fabrics and section 2c defined the above goods as having the meanings respectively assigned to them in item Nos 8 9 12 12A and 12B subsequently changed as item 1 41912 and 22 respectively of the First Schedule to the 1944 Act
It ma be mentioned here that the Finance Act 1961 had amended section 14 of the CST Act by including as item xi silk fabrics as defined in item 20 of the First Schedule of the 1944 Act
It also simultaneously amended the 1957 Act by adding a reference to silk fabrics  in section 3 1 in the definition clause section 2 c as well in the Schedule
However in 1968 when the was amended against by deleting the reference to silk fabrics  there was no corresponding amendment in the 1957 Act
The Finance N0  substituted the word man made fabrics for the words rayon or artificial silk fabrics wef 881977 and included a definition of he new expression in item 22 of the Schedule to the 1944 Act and the 1957 Act
section 7 of the Act as originally enacted declared that the goods declared to by of special importance would from 141968 be subject to the restrictions and conditions specified in section 15 of the 
This section was omitted wef 1101958
by Act 31 of 1958 which also amended section 15 of the iv The levy of sales tax in Kerala was formerly governed by the Act XI of 1125 PG NO 608 Malayalam Era 1125 corresponds to 1950 of the Gregorian Calendar
This Act was amended by the General Sales Tax Amendment Ordinance No 8 of 1957 wef
141257 the Ordinance being replaced by the General Sales Tax Amendment Act VII of 1958 with retrospective effect from the same date
This amendment Act inserted section 5A in the 1125 Act which exempted certain goods from the levy of sales tax
Sub section 1 of this section read thus 5A Exemption of the tax on the sale of mill made textile other than pure silk tobacco and sugar 1 The sale by any dealer of i mill made textile other than pure silk ii tobacco and iii sugar other than stock of such goods in his possession custody or control immediately before the 14th day of December 1957 shall as from that date be exempt from taxation under s  3 sub s 
 Thus Act was replaced by the Kerala General Sales Tax Act 1963 the 1963 Act  as already mentioned wef 1463
v We have already referred to section 9 and item 7 of the Third Schedule to the 1963 Act
The Kerala General Sales Tax Second Amendment Act Act 16 of 1967 amended item 7 of 1963 Act to reads as follow wef 191967 7
Cotton fabrics woollen fabrics and rayon or artificial silk fabrics as defined in item nos
19 21 and 22 respectively of the First Schedule to the Central Excises  Salt Act 1944
In other words the exemption granted to silk fabrics  was taken away mention may also be made that by reason of a later amendment silk fabrics  was included as one of the items on which single point tax was leviable under the 1963 Act
This item in the First Schedule to the Act as it stood on 141980
read PG NO 609 101 Silk fabrics  that is to say all varieties of fabrics manufactured either wholly or partly from silk including embroidery in piece in strips or in mofits but not including such fabrics on which duty of excise is leviable under sub section 1 of Section 3 of the Additional Duties of Excise Goods of Special Importance Act Central Act 58 of 1957
vi Reference may also be made to one more enactment though it has no direct bearing on the issue before us
This is the Central Act 40 of 1978
This Act charged an additional duty of excise in respect of various goods specified in the Schedule to the Act over and above the duty chargeable on them under the 1944 Act
These goods included cotton fabrics silk fabrics woollen fabrics man made fabrics and wool tops as defined in items 193202122 and 43 of the First Schedule to the 1944 Act
These are the relevant statutory provisions
On these the question to be considered is What is the effect of the mention of the definition of cotton fabrics given in the 1944 Act in the Schedule to the 1963 Act Does it attract only the said definition as on 14 1963 or also the subsequent amendments thereto To appreciate the contentions urged it is necessary to make a brief reference to the principles of interpretation of an enactment which for purposes of convenience
refers to or incorporates a provision of another
These have been discussed in various earlier decision viz Secretary of State vs Hindustan Cooperative Insurance Society Ltd 1931 58 I A 259 Collector of Customs vs Nathella Sampathu Chetty  another   Ram Sarup vs State Ram Kirpal vs State
1970 3 SCR New Central Jute Mills Co Ltd vs The Assistant Collector   State of Madhya Pradesh vs Narasimhan  Bhajva vs Gopikabai   Mahindra  Mahindra Ltd vs Union and Western Coal Fields vs Special Area Development Authority  It unnecessary to make a detailed reference to these decisions
It is sufficient to say that they draw a distinction between referential legislation which merely contains a reference to or citation of a provision of another statue and a piece of referential legislation which incorporates within itself a provision of another statute
In the former case the provisions of the second statue along with all its amendments and variations from time to time should be read into the first statute
In the later case the position will be as outlined in Narasimhan 1976 1 SCR where after PG NO 610 referring to Secretary of State vs Hindustan Cooperative Insurance Society Ltd 1931 58 IA 259 this Court summed up the position thus On a consideration of these authorities therefore it seems that the following proposition emerges Where a subsequent Act incorporates provisions of a previous Act then the borrowed provisions become an integral and independent part of the subsequent Act and are totally unaffected by any repeal or amendment in the previous Act
This principle however will not apply in the following cases a where the subsequent Act and the previous Act are supplemental to each other b where the two Acts are in pari materia c where the amendment in the previous Act if not imported into the subsequent Act also would render the subsequent Act wholly unworkable and ineffectual and d where the amendment of the previous Act either expressly or by necessary intendment applies the said provisions to the subsequent Act Applying the above principles to the facts of the present case the High Court in its judgment on a reference made to it under the 1963 Act and reported in 4 1 STC 1 observed In the light of the principles thus formulated it seems unnecessary for us to labour the point whether we are confronted in these cases with a reference or citation on the one hand or an incorporation on the other of the definition of cotton fabrics  in item 19 of the Schedule 1 of the Central Excise and Salt Act into the provisions of Section 9 read with item No 7 of the III Schedule of the General Sales Tax Act 1963
If the definition was merely by way of reference or citation  the referred or cited provision grows and shrinks with the changes in the parent
Even in the case of an incorporated definition while the general principle is that the incorporated definition PG NO 611 remains static and is unaffected by the developments or fluctuations of the parental source from which it was incorporated two of the well recognised exceptions formulated by the Supreme Court in State of MP vs M V Narasimhan  seem to apply here that is exceptions a and c xxx
The concept of cotton fabrics  in the seems to be integrally linked with the provisions of the General Sales Tax Act and we do not think that we would be justified in regarding the latter Act as unaffected by the growing concept of the term cotton fabrics  in the 
We feel too that unless the extended definition of the is imported into the Sales Tax Act the latter Act would become unworkable and ineffectual
Sri Potti learned counsel for the State of Kerala submitted that the PVC cloth manufactured by the respondents in this case was not entitled to exemption from sales tax if the earlier definition of the 1944 Act before the amendment were to apply
He submitted that the 1963 Act has incorporated in its third schedule the definition of the 1944 Act as it stood at the time of its enactment and that this incorporation is unaffected by subsequent changes in the contested the correctness of the High Court s observations that the concept of cotton fabrics in the 1944 and 1963 Acts were integrally linked and that unless the extended definitions of the former were imported into the latter the latter Act would become unworkable and ineffectual
According to him the provisions of the CST Act and the 1957 Act have been unnecessarily brought into the discussion in order to forge a connection between the various enactments and in an attempt to lend strength to an argument that the exemption of an item of goods from the levy of sales tax by the State was correlated to the existence of a levy of additional excise duty in respect of those very goods under the 1957 Act
He submits that this argument is not tenable and that there is no connection between the 1944 Act the CST Act the 1957 Act and the 1963 Act
His submissions are these a When the Kerala Act of 1125 ME was amended by Act VII of 1958 wef 14121957 the Kerala State Legislature was fully alive to the proposals to introduce the CST Act and the 1957 Act nevertheless the description of items granted exemption from sales tax was worded differently and not correlated to the definitions of the 1944 Act PG NO 612 b Silk fabrics were not eligible for exemption under the 1125 Act as amended in 1957 and remained liable to sales tax till 3 131963 though additional excise on them had been introduced wef 141963
The exemption from sales tax was conferred only on 141963 by the 1963 Act
Again this exemption was taken away wef
191967 although such fabrics continued to be subject to additional excise duty
Thus though it is true that between 14121957 and 3131961 there was sales tax but no additional excise duty on pure silk textiles and between 141863 and 3181967 there was additional excise duty but no sales tax on silk fabrics it is equally true that between 141961 and 3131963 and again after 191967 they are liable to both sales tax and additional excise duty
It is thus not possible to view the two levies as supplementary to or inter dependent on each other
c The 1963 Act only incorporates a definition contained in the 1944 Act
The 1957 Act is an independent Act applicable to some of the goods to which the 1944 Act are applicable
It has its own schedule the descriptions in which need not be though they generally are identical with those in the schedule to the 1944 Act
The 1944 and 1957 Acts may be somewhat inter linked but there is no justification to import that connection also for the purposes of the 1963 Act
d The objects and reasons of the 1957 Act explicitly state that the levy of additional excise duty on goods thereunder does not preclude the State legislatures from levying any sales tax on only such levy will be subject to the restrictions contained in the CST Act
e It should not also be overlooked that the 1963 Act is an enactment of a State legislature
To construe entry in its Schedule as authorising the applicability not merely of the then current definition of the 1944 Act but its future amendments as well will render it subject to the vice of excessive delegation
In this context our attention is drawn to the decisions of the Supreme Court in Shama Rao Gwalior Rayon 11974 2 SCR 345 and International Cotton To avoid such an infirmity we are asked to place a restrictive interpretation on the 1963 Act
even assuming for purposes of argument that it may be capable of a wider interpretation 
PG NO 613 5
There is some force in these contentions but after hearing both counsel we are of opinion that the conclusion of the High Court should be upheld
In the first place we think it would be correct to say that the 1963 Act brings in the definitions of the 1944 act by way of reference or citation and not by way of incorporation
For a reading the Act shows that the Act intended to confer exemption on a number of goods set out in the Schedule
Of these since items 5 to 7 are defined in the 1944 Act the Act refers to those definitions to ascertain the scope of these items
There are no express words used by the statute which will justify an inference that the intention was to incorporate those definitions as standing on that date into the 1963 Act
That apart as pointed out by the High Court the question whether it is an instance of reference or citation as contrasted with incorporation pales into significance if all the Central and State enactments referred to at the outset are really part of an integrated scheme evolved to achieve a particular purpose
In this context Sri Krishnamurthy Iyer invited our attention to a passage from Hind Engineering Co vs CST 1973 31 STC 115 dealing with an identical entry in regard to cotton fabrics  in Schedule of the Bombay Sales Tax Act 1959 where a deivision bench of the Gujarat High Court traced the genesis of the exemption of cotton fabrics  from the liability to sales tax
We do not think it necessary to extract the whole of it here particularly as the provisions of the Bombay legislations in this context and their history are not identical with those of the Kerala statute
It is clear however that the provisions of exemption from sales tax on the items with which we are concerned here and certain others cannot be understood in isolation but should be read in the background of certain historical developments pertaining to sales tax levy
These may now be briefly referred to
Article 286 of the Constitution of India imposed certain restrictions on the legislative powers of the States in the matter of levy of sales tax on sales taking place outside the State sales in the course of import or export sales in the course of interstate trade or commerce and sales of declared goods
The Sales Tax Acts in force in several States were not in conformity with the provisions of the Constitution and attempts to bring those laws to be in conformity with these provisions gave rise to a lot of litigation
This led to an amendment of Act
Clause 2 of the article as it stands since 11th September 1956 authorised Parliament to formulate principles for determining when sale or purchase of goods can be said to take place in the course of import or export or in the course of inter State trade or commerce Clause 3 was amended in terms already set out to restrict the powers of PG NO 614 a State to impose sales or purchase tax on declared goods
The CST Act 1956 which came into force on 511957 formulated the principles referred to in Article 2862
As already mentioned this Act was amended alia by Act 16 of 1957 wef
66 1957 and by Act 31 of 1958 wef
110 1958
section 14 listed the goods which are considered to be of special importance in inter state trade or commerce which included the six items set out earlier
section 15 of the Act as originally enacted was brought into force only wef 1101958
It stipulated that levy of sales tax on declared goods should not be at a rate exceeding 2 or be levied at more than one point in a State
Before this section came into force it was amended by Act 16 of 1957 which retained the first restriction and so far as the second is concerned provided that the tax should be levied only on the last sale or purchase inside the State and even that should not be levied when that last sale or purchase is in the course of inter state trade or commerce as defined
Act 31 of 1958 amended section 15 to impose certain modified restrictions and conditions with the details of which we are not here concerned
These restrictions clearly entailed loss of revenue to the States and it was considered expedient and desirable to compensate the State for the proportionate loss of sales tax incurred by them
Thus even before section 15 was brought into force the Central Government decided to pass an Act to provide for the levy and collection of additional duties of excise on certain goods and for the distribution of a part of the net proceeds thereof among the State in pursuance of the principles of distribution recommended by the Second Finance Commission in its report dated 3091957
This proposal to levy additional duties of excise on certain special goods was a part and parcel of an integrated scheme under which sales tax levied at different rates by the States on certain goods was ultimately substituted by the levy of additional duties of excise on such goods and the States were compensated by payment of a part of the net proceeds of the said additional levy on such goods
That this clearly was the genesis and object of the 1957 Act also appears from its objects and reasons set out earlier
Some of the items liable to excise duty were picked out from the Schedule to the 1944 Act
They were listed among the declared goods of section 14 of the CST Act and also made liable to additional excise duty under the 1957 Act
A perusal of the lists under these three enactments show that out of the items listed in the Schedule to the 1944 Act sugar tobacco cotton fabrics rayon or artificial fabrics and woollen fabrics were categorised as declared goods and subjected to additional excise duty
When the numerical order of these items in the 1944 Act originally 8 9 12 12A 12B came to be changed in 1960 as 1 4 19 22 21 a corresponding change was effected in the 1957 Act
PG NO 615 Silk fabrics  as defined in item 20 of the 1944 Act was included in 1961 in the CST Act and the 1957 Act
The fact that cotton fabrics  though listed as item 12 in the Schedule to the 1944 Act was not brought into the list in section 14 till 1101958 or that silk fabrics  was dropped from the list in section 14 wef 1161968 though it continues in the Schedule to the 1944 Act does not alter the position that these three acts are interconnected and that certain goods taken out from the Schedule to the 1944 Act were to be subjected to the special treatment outlined in the CST Act and the 1957 Act
This may be so says Sri Potti but there is no justification to bring the 1963 Act into this group
His short point is that the State legislature is completely free within its domain
Its power to levy sales tax includes a power to levy a tax on sales of declared goods as well
Nor is such power inhibited by the levy of an additional excise duty on certain goods
The 1957 amendment to the 1125 Act made no reference even to the 1944 Act
The 1963 Act makes no reference either to the CST Act or to the 1957 Act
Sri Potti emphasises pointing out to the practical effects of the two legislations the 1963 Act and the 1957 Act to which attention has been invited already that it was not the policy of the Kerala State legislature to exempt from sales tax goods which suffered additional excise duty
The sales tax exemption is conferred on a totally independent basis
It is not linked to the fluctuations in or variation of the treatment under the CST Act and the 1957 Act
The description of items 5 7 and 8 by simply incorporating the definitions then readily available in the 1944 Act not the CST Act or the 1957 Act was not intended to bring about the result that these definitions should be read in the light of the changes that they may undergo for the purposes of the 1944 Act
Sri Potti is certainly correct in saying that the wordings of the Acts do not show an exact correlation between the liability to pay additional excise duty and the exemption from the levy of sales tax under the 1963 Act
But it would not be correct to say that the provisions of the latter can be interpreted without reference to the other two legislations
The CST Act has a definite impact on the manner and extent of sales tax levy in so far as declared goods are concerned for such levy cannot transgress the limitations and restrictions of section 15 thereof
section 15 applies in respect of goods listed in section 14 which in turn is linked to the list in the 1944 Act
The 1957 Act also has a bearing on the sales tax levy of various States
By levying sales tax on an item covered by the Schedule to the 1957 Act the State will have to forego its share on distribution of the proceeds of the additional excise duty levied
Whether it PG NO 616 should impose sales tax on an item of declared goods limited by the restrictions in section 15 of the CST Act and at the risk of losing a share in the additional excise duty levied in respect of those very items is for the State to determine
As pointed out by Sri Potti it was open to the Kerala Legislature to decide and it did so also that on some items there should be one or other of the levies or both of them and to modify these levies depending upon its own financial exigencies
But these factual or periodical variations do not detract from the basic reality that the policy of sales tax levy on declared goods has to keep in view and be influenced by the provisions of the CST Act and the 1957 Act
The reference to the 1957 Act definitions for purposes of grant of exemption in the 1963 Act as enacted originally as well as when the latter was amended in 1967 and the specific reference to the 1957 Act when the First Schedule to the 1963 Act was amended in 1980 are quite significant in this context
We therefore think that though the 1963 Act referred only to the definitions in the 1944 Act the entries in the Schedule have to be juxtaposed into the broad pattern or scheme evolved by the 1956 57 enactments set out earlier in the judgment
Doing so and even assuming that the reference in the items of the Schedule to the definitions in the 1944 Act is by way of incorporation and not reference one cannot escape the conclusion that the circumstances are covered by the exceptions outlined in Narasimhan  They certainly fall within the scope of exception a mentioned therein and also fall within exception c if we read unworkable and ineffectual to take in also unrealistic and impractical
We do not find much substance in arguments of Shri POtti based on Shama Rao This devision really concerned a delegation of power to the executive Government to decide contents of a legislation by allowing it a latitude in fixing a date for its commencement
It cannot be understood as an authority for the proposition that a State legislature can adopt only the existing provisions of a statutes passed by another legislature but not is future amendments and modifications
In the first place such a proposition will strike at the very root of the concept of referential legislation as explained in the decisions referred to above and the distinction drawn by them between cases of mere reference or citation on the one hand and of incorporation on the other
Secondly in Shama Rao only three of the five Judges expressed an opinion about this aspect of the case
Their view point was presented by Shelat J in the following words The question then is whether in extending the Madras Act in the manner and to the extent it did under sec
21 PG NO 617 of the Principal Act the Pondicherry legislature abdicated its legislative power in favour of the Madras legislature
It is manifest that the Assembly refused to perform its legislative functions entrusted under the Act constituting it
It may be that a mere refusal may not amount to abdication if the legislature instead of going through the full formality of legislation applies its mind to an existing statute enacted by another legislature for another jurisdiction adopts such an Act and enacts to extend it to the territory under its jurisdiction
In doing so it may perhaps be said that it has laid down a policy to extend such an Act and directs the executive to apply and implement such an Act
But when it not only adopts such an Act but also provides that the Act applicable to its territory shall be the Act amended in future by the other legislature there is nothing for it to predicate what the amended Act would be
Such a case would be clearly one of non application of mind and one of refusal to discharge the function entrusted to it by the Instrument constituting it
It is difficult to see how such a case is not one of abdication or effacement in favour of another legislature at least in regard to that particular matter
 This conclusion has been explained and distinguished in the Gwalior Rayon case  in which Khanna J and Mathew J delivered separate but concurring judgments
Khanna J said It would appear from the above that the reason which prevailed with the majority in striking down the Pondicherry Act was the total surrender in the matter of sales tax legislation by the Pondicherry Legislature in favour of the Madras Legislature
No such surrender is involved in the present case because of the Parliament having adopted in one particular respect the rate of local sales tax for the purpose of central sales tax
Indeed as mentioned earlier the adoption of the local sales tax is in pursuance of a legislative policy induced by the desire to prevent evasion of the payment of central sales tax by discouraging inter State sales to unregistered dealers No such policy could be discerned in the Pondicherry Act which was struck down by this Court
PG NO 618 Another distinction though not very material is that in the Pondicherry case the provisions of the Madras Act along with the subsequent amendments were made applicable to an area which was within the Union Territory of Pondicherry and not in Madras State
As against that in the present case we find that the Parliament has adopted the rate of local sales tax for certain purposes of the only for the territory of the State for which the Legislature of that State had prescribed the rate of sales tax
The central sales tax in respect of the territory of a State is ultimately assigned to that State under artcle 269 of the Constitution and is imposed for the benefit of that State
We would therefore hold that the appellants cannot derive much assistance from the above mentioned decision of this Court
 Methew J observed We think that the principle of the ruling in Shama Rao vs Pondicherry supra must be confined to the facts of the case
It is doubtful whether there is any general principle which precludes either Parliament or a State legislature from adopting a law and the future amendments to the law passed respectively by a State legislature or Parliament and incorporating them in its legislation
At any rate there can be no such prohibition when the adoption is not of the entire corpus of law on a subject but only of a provision and its future amendments and that for a special reason or purpose 
 We think that the principle of the ruling in Shama Rao vs Pondicherry supra must be confined to the facts of the case
It is doubtful whether there is any general principle which precludes either Parliament or a State legislature from adopting a law and the future amendments to the law passed respectively by a State legislature or Parliament and incorporating them in its legislation
At any rate there can be no such prohibition when the adoption is not of the entire corpus of law on a subject but only of a provision and its future amendments and that for a special reason or purpose 
We have attempted to show that the 1963 Act on a proper construction does indicate a policy that certain items which are subject to additional excise duty should be left out of sales tax levy except in cases where there is a specific indication or provision of the Act to the contrary
The Kerala State legislature cannot be said to have attracted the 1944 Act definitions with their future amendments blindly and without application of mind
On the other hand
it has been done in pursuance of a scheme a purpose and a policy
It cannot therefore be said that there has been any abdication of its legislative functions by the Kerala legislature
For the above reasons we are of opinion that the High Court was right in the view it took viz that the scope of the exemption available under item 7 of the third PG NO 619 Schedule to the 1963 Act will vary according to the scope of the corresponding entry in the Schedule to the 1944 Act as it stands at the relevant time
So far as assessment years 1971 72 and 1972 73 are concerned the definition of cotton fabrics  in item 19 of the Schedule to the 1944 Act as amended by the Finance Act 1969 wef 141969 will apply
Sri Krishnamurthy Iyyer for the assessees contended that it is possible to spell out from certain passages in the judgment of the High Court where judicial decisions are discussed an inference that the High Court was inclined to the view that PVC Cloth would be covered even by the previous unamended definition in the 1944 Act
He also attempted to support this view by citing certain cases
Sri Potti contested the correctness of both these arguments
In the view we have taken on the main issue we consider it unnecessary to go into this question
In any event the High Court has returned no specific answer to this issue which was clearly an aspect of the questions posed for its consideration by the Tribunal at page 42 of the paper book and even if we had accepted the contention of Sri Potti that only the definition as on 141964 works apply we would have perhaps only left it to the High Court to consider this aspect of the matter afresh
Sri Krishnamurthy Iyer also submitted that the certificate of fitness of appeal granted by the High Court page l15 of the paper book is defective inasmuch as it does not specify the substantial questions of law which in the view of the High Court needed consideration by this Court
But we do not think we need go into this aspect or reject the appeal as defective
Since the appeal does involve a substantial question of law of great importance which we have discussed above we have proceeded to dispose of the appeal on merits
In the result the appeal fails and is dismissed
We however make no order as to costs
RPD Appeal dismissed


Summary:
The appellant who belongs to the Scheduled Castes community joined service as a clerk on February 20 1954 in the Electricity Branch of the Punjab Public Works Department
In February 1959 the Punjab State Electricity Board was constituted and the employees of the Electricity Branch were transferred to the said Board
The conditions of service of the employees were governed by the existing terms and conditions
as well as the existing service rules
In 1967 the Haryana State Electricity Board was constituted and the appellant was allocated to the said Board
The Electricity Board by its resolution dated March 16
1976 adopted the circular letter dated December 18 1972 providing for reservation of 22 of Vacancies both for initial recruitment as well as for promotion to the Scheduled Castes and Scheduled Tribes as well as to members of the backward classes
The appellant was promoted on September 25 1973 as Deputy Superintendent
The respondent No 2 was also promoted by the same order as Deputy Superintendent
However in the said order it was made clear by a note appended thereto that the earlier promotion of the officials will not confer on them any right to claim seniority over others
On April 27 1972 a circular was issued by the Chief Secretary Government of Haryana to all the Departments regarding the criteria for reservation for members of Scheduled Castes and Scheduled Tribes in the service and fixation of their seniority
As the seniority of the appellant was not determined from the date of his appointment to the post of Deputy Superintendent he made a representation to the Board requesting for its determination
This representation was however rejected on the ground that seniority in the promoted rank would be accorded only with reference to the inter se seniority in the previous post and on January 21 1977 the appellant was finally informed that his seniority will not be computed PG NO 702 PG NO 703 from the date of his promotion to the post of Deputy Superintendent
On January 12 1977 respondents 2 and 3 who were junior to the appellant as Deputy Superintendent were promoted as Superintendent superseding the claim of the appellant
Aggrieved by the aforesaid action of the first respondent in promoting respondents 2 and 3 the appellant filed a writ petition in the High Court for a mandamus directing respondent 1 to consider his case for promotion for the post of Superintendent on the basis of his being the senior most Deputy Superintendent
The writ petition was contested on behalf of the respondent l who stated in its counter affidavit that the petitioner could not claim seniority above the respondents 2 and 3 in the rank of Deputy Superintendent on the ground that his seniority had already been fixed in accordance with the exception below rule 9 of the 1952 Service Rules
A Single Judge of the High Court dismissed the writ petition on the ground that the instructions governing the matter of promotion in favour of Scheduled Castes candidate had nothing to do with the determination of the seniority of these candidates and that the letter promoting the petitioner had specifically mentioned that the earlier promotion would not confer on him any right of claim to seniority over and above those who are otherwise senior to him in the cadre from which he was promoted and that in the light of the exception to rule 9 of the 1952 Service Rules the petitioner being promoted temporarily his seniority cannot be counted from the date of his appointment in the higher post and that respondents 2 and 3 who could be treated senior to him in the rank of Deputy Superintendent as the were senior to the petitioner in the grade of assistants
The Letters Patent Appeal filed by the appellant having been dismissed summarily the appellant appealed to this Court by special leave
Allowing the Appeal HELD 1
On a plain reading of Rule 9 it appears that the seniority of the members of the service serving in an officiating capacity shall be determined prior to confirmation in the order of the dates of their appointment  and after confirmation by their respective dates of confirmation
The exception to this Rule is that if a member of the is promoted temporarily to a post earlier than his senior for reasons other than inefficiency of the senior person they will take rank inter se according to PG NO 704 their relative seniority in the class from which they were promoted and the Junior person so promoted shall not be confirmed from a date earlier than the date of confirmation of the senior
709F G In the Instant case the appellant has been promoted to the post of Deputy Superintendent which was reserved under the block system for members of the Scheduled Castes
The appointment to the said reserved post on promotion is a regular one
The appointment letter does not that the promotion of the appellant to the post of Deputy Superintendent was purely temporary
This being the position the exception to Rule 911 cannot be applied to determine the seniority of the appellant in the post of Deputy Superintendent and his seniority cannot be based in accordance with the inter se seniority of respondent Nos 2 and 3 wee promoted to he post of Deputy Superintendent
710A D 2
The appellant is thus senior to respondent Nos 2 and 3 in the rank of Deputy Superintendent the was promoted to the said post earlier them the respondents Nos 2 and 3 and as such his claim for promotion to the post of Superintendent on the dates when the respondent Nos 2 and 3 were promoted to such post is legal and valid
710E 3 Respondent No 1 is directed to treat the appellant promoted to the post of Superintendent from the date respondent Nos 2 and 3 were promoted to the said post and to pay him the emoluments attached to the said post of Superintendent minus the emoluments paid us Deputy Superintendent from that date till May 29 1981 date of actual appointment is Superintendent
711A B