Case: Chandrana &amp; Co Vs. State Of Mysore

have power on the date of the enactment and that its competency at some anterior time is immaterial. In other words, the contention was that if the Mysore Legislature had no power on February 27, 1964 to impose tax on sales of declared goods at a rate in excess of that specified in Section 15 of the Central Sales Tax as it stood then, namely 2%, it was not competent to the Legislature to give retrospective effect to Section 5-A covering the period of assessment here even if during that period it had the power to do so. Counsel submitted that even though textiles were not declared goods during the assessment period namely from October 1, 1957 to March 31, 1958 and the State Legislature was competent to levy sales tax at a rate higher than that specified in Section 15 of the Central Sales Tax Act as it then stood, the legislature lost that power the moment textiles became declared goods and that its power to tax sales of textiles became restricted to 2% at the time of the enactment of Act No.9 of 1964 and therefore even for the assessment period it could not have passed a law imposing tax at a rate in excess of two per cent. In support of this proposition, counsel relied upon certain observations in A.Hajee Abdul Shakoor and Company v. State of Madras, (1964) 8 SCR 217 at p 231 = p 231 = (AIR 1964 SC 1729); one of the questions which this Court had to consider in that case was whether the Madras Legislature was competent to enact the provisions of sub-section (1) of Section 2 of the Madras General Sales Tax (Special Provisions) Act, 1963. Hides and skins had been declared under Act LII of 1952 to be essential for the life of the community. Article 286 (3) of the Constitution as it stood before its amendment by the Constitution VI Amendment Act of 1956, on September 11, 1956 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. By August 28, 1963, when the Act was enacted by the Madras Legislature, Article 286 (3) had been amended and Act LII of 1952 had also been repealed. Consequently there was no Constitutional requirement for the Act being reserved for the assent of the President before it could be enforced. But it was contended for the petitioner there that the Act was really enacted for a period, when if passed, it had to receive the Presidents assent for its enforcement and that therefore the State Legislature could not even in 1963 enact this provision affecting the taxation law in respect of the sale or purchase of goods which were goods declared essential for the life of the community. It was in repelling this contention that this Court said that the State Legislature was free to enact laws which would have retrospective operation and "its competence to make a law for a certain past period, depends on its present legislative power and not on what it possessed at the period of time when its enactment is to have operation."19. We do not think that the above proposition has any application to the case in hand. The question here is whether Mysore Legislature was competent in 1964 to impose tax on sales of textiles during the assessment period namely from October 1, 1957 to March 31, 1958 at a rate in excess of that specified in Section 15 of the Central Sales Tax Act as it stood then, when textiles were not declared goods. We think that imposition of sales tax on textiles at the rate specified in the Second Schedule to the Act before they became declared goods was permissible for the Legislature of Mysore. The power of the Legislature to retrospectively levy tax has not been controverted.20. There was no fetter on the power of the Legislature of Mysore on February 27, 1964 in enacting a measure imposing sales tax on the turnover of undeclared goods during the assessment period at the rate specified in the 2nd Schedule to the Act. It was because textiles became declared goods from April 1, 1958 that the Mysore Legislature lost its power to tax the sales of textiles at a rate higher than that specified in Section 15 of the Central Sales Tax Act, as it stood at the relevant time. Though the goods on the sales of which tax was imposed remained the same in substance, their legal quality became different. As textiles were not declared goods before April 1, 1958, there was no inhibition on the part of the Mysore Legislature in subjecting the turnover of sales of textiles before that period to a tax higher than that specified in Section 15 of the Central Sales Tax Act.21. The matter can be looked at from a different angle. As we have already indicated, by virtue of Section 5 (5) of the Act No.9 of 1964, the substituted sub-section (5-A) was deemed to have been in the Mysore General Sales Tax Act always. The only limit on the power of a legislature to create a fiction is that is should not transcend its power by its creation. The limitation on the power of the Legislature of Mysore in 1964 when it enacted Act No.9 of 1964 was that on the sale of declared goods it could not have imposed sales tax at a rate higher than that specified in Section 15 of the Central Sales Tax Act as it stood then. There was no limitation on its power to impose tax on the turnover of sales of textiles before April 1, 1958, when they were not declared goods.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]19. We do not think that the above proposition has any application to the case in hand. The question here is whether Mysore Legislature was competent in 1964 to impose tax on sales of textiles during the assessment period namely from October 1, 1957 to March 31, 1958 at a rate in excess of that specified in Section 15 of the Central Sales Tax Act as it stood then, when textiles were not declared goods. We think that imposition of sales tax on textiles at the rate specified in the Second Schedule to the Act before they became declared goods was permissible for the Legislature of Mysore. The power of the Legislature to retrospectively levy tax has not been controverted.20. There was no fetter on the power of the Legislature of Mysore on February 27, 1964 in enacting a measure imposing sales tax on the turnover of undeclared goods during the assessment period at the rate specified in the 2nd Schedule to the Act. It was because textiles became declared goods from April 1, 1958 that the Mysore Legislature lost its power to tax the sales of textiles at a rate higher than that specified in Section 15 of the Central Sales Tax Act, as it stood at the relevant time. Though the goods on the sales of which tax was imposed remained the same in substance, their legal quality became different. As textiles were not declared goods before April 1, 1958, there was no inhibition on the part of the Mysore Legislature in subjecting the turnover of sales of textiles before that period to a tax higher than that specified in Section 15 of the Central Sales Tax Act.21. The matter can be looked at from a different angle. As we have already indicated, by virtue of Section 5 (5) of the Act No.9 of 1964, the substituted sub-section (5-A) was deemed to have been in the Mysore General Sales Tax Act always. The only limit on the power of a legislature to create a fiction is that is should not transcend its power by its creation. The limitation on the power of the Legislature of Mysore in 1964 when it enacted Act No.9 of 1964 was that on the sale of declared goods it could not have imposed sales tax at a rate higher than that specified in Section 15 of the Central Sales Tax Act as it stood then. There was no limitation on its power to impose tax on the turnover of sales of textiles before April 1, 1958, when they were not declareda pure question of law, we permitted the Appellant to urge the ground in support of the appeals and allowed the said application.