Case: B. Shama Rao Vs. The Union Territory Of Pondicherry

1. On August 16, 1962 the administration of Pondicherry, became vested in the Government of India by virtue of de jure transfer. The Pondicherry Administration Act, XLII of 1962 constituted that territory as a separate centrally-administered unit and under the Union Territories Act, XX of 1963 a legislative assembly was set up for that area. The assembly under that Act acquired the power of enacting laws in respect of items in Lists II and III of the Seventh Schedule to the Constitution. The assembly thereafter passed the Pondicherry General Sales Tax Act, X of 1965 (hereinafter referred to as the Principal Act) which was published on June 3, 1965 after receiving the Presidents assent on May 25, 1965. Section 1(2)of that Act provided that the Act would come into force on such date as the Government may by notification appoint. Section 2 (1) provided that:-"The Madras General Sales Tax Act 1959 (No. 1 of 1959) (hereinafter referred to as the Act) as in force in the State of Madras immediately before the commencement of this Act shall extend to and come into force in the Union Territory of Pondicherry subject to the following modifications and adaptations."Then follow certain modifications and adaptations which are not relevant for our purposes except that Cl. (ix) of S. 2 (1) substituted S. 30 of the Madras Act and provided for an Appellate Tribunal. The substituted section laid down that the Government shall appoint a Judicial Officer who is otherwise qualified to he appointed as a Judge of the Tribunal Superieur d. Appeal to be the Appellate Tribunal and to exercise the functions conferred under the Act. The Act also enacted a Schedule with description of goods, the point of levy and the rates at which the tax was to be levied. Section 2 (2) provided that the Madras General Sales Tax Rules, 1959 and any other Rules made or issued under the said Act and similarly in force were to apply to Pondicherry. As provided by S. 1 (2) the Pondicherry Government issued a notification, dated March 1, 1966 bringing into force the Madras Act as extended by the Act to Pondicherry as from April 1, 1966. In the meantime the Madras legislature had amended the Madras Act and consequently it was the Madras Act as amended upto April 1, 1966 which was brought into force under the said notification2. The petitioner is a merchant carrying on business in liquor and would be a dealer within the meaning of the Madras Act. Upto March 1966 he was liable and was paying certain taxes similar to the sales tax under the French regulations till then in force in Pondicherry. With the coming into force of the Principal Act he was served with a notice to register himself as a dealer. Thereupon he filed this petition challenging the validity of the Principal Act.

Reasoning:
It is manifest that the Assembly refused to perform its legislative function 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 matter10. In the present case it is clear that the Pondicherry legislature not only adopted the Madras Act as it stood at the date when it passed the Principal Act but also enacted that if the Madras legislature were to amend its Act prior to the date when the Pondicherry Government would issue its notification it would be the amended Act which would apply. The legislature at that stage could not anticipate that the Madras Act would not be amended nor could it predicate what amendment or amendments would be carried out or whether they would be of a sweeping character or whether they would be suitable in Pondicherry. In point of fact the Madras Act was amended and by reason of S. 2 (1) read with S. 1 (2) of the Principal Act it was the amended Act which was brought into operation in Pondicherry. The result was that the Pondicherry legislature accepted the amended Act though it was not and could not be aware what the provision of the amended Act would be. There was in these circumstances a total surrender in the matter of sales tax legislation by the Pondicherry Assembly in favour of the Madras legislature and for that reason we must agree with Mr. Desai that the Act was void or as is often said still-bornBut the core of a taxing statute is in the charging section and the provisions levying such a tax and defining persons who are liable to pay such tax. If that core disappears the remaining provisions have no efficacy. In our view, Act X of 1965 was for, reasons aforesaid void and still-bornIf that was what the legislature intended to do it would have either repealed the Principal Act or even without repealing it on the footing that it was void enacted the Amendment Act as an independent legislation extending the Madras Act retrospectively as from April 1, 1966. The Amendment Act, as is clear from its long title was passed to amend the Principal Act. That can only be on the footing that it was a valid Act and still on the statute book. Under S. 2 what the legislature purports to do is to amend S. 1 (2) of the Principal Act by substituting the words "It shall come into force on the 1st day of April 1966" in place of the words "It shall come into force on such date as the Government may by notification in the Official Gazette appoint". The only result is that instead of the Principal Act having been brought into force under the said notification, it is deemed to have come into force on April 1, 1966. This is done by a deeming provision as if the new clause was there from the beginning when the Act was passed. That being so, it is as if the Pondicherry legislature had extended the Madras Act together with such amendments which might be made into that Act upto April 1, 1966. Since the Amendment Act was thus passed on the footing that there was in existence a valid Act, viz., the said Principal Act, it is impossible to conceive that it was or intended to be an independent legislation extending thereunder the Madras Act. The Amendment Act was and was intended to be an amendment of the Principal Act and it would be stretching the language of the Amendment Act to a breaking point to construe it as an independent legislation whereby the Madras Act was retrospectively brought into operation as from April 1, 1966. That being so, and on the view that the Principal Act was still-born, the attempt to revive that which was void ab initio was frustrated and such an Act could have no efficacyIn our opinion it is not at all necessary for us to enter into this controversy in the present case, because of our view that, even if it he held that the Principal Act was bad for excessive delegation of powers when it was enacted and published, the subsequent Amending Act passed by the Pondicherry Legislature had the effect of bringing into force in Pondicherry a valid Act, under which proceedings sought to be taken against the petitioner were fully justified. We proceed to give our reasons for this viewWhen the amended sub-s. (2) of S. 2 of the Principal Act refers to the Madras Act by using the expression "said Act" at the end of that provision, it is clear that the reference is to the Madras General Sales Act, 1959 as extended to the territory of Pondicherry, and, under S. 2 (1) (ii), the reference in the Madras Act as extended to Pondicherry to "Government" has to be construed as a reference to the Administrator appointed by the President under Art. 239 of the Constitution of India for Pondicherry. The result is that under the amended provisions of the Principal Act, the Rules are to be framed by the Administrator of the Territory of Pondicherry and not by the Madras Government. No such defect, as urged by learned counsel, thus remains after the enforcement of the Amending Act.