Case: M/S. Krishnamurthi &amp; Co. Etc Vs. State Of Madras &amp; Anr

2. According to entry 47 of First Schedule to the Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959) (hereinafter referred to as the principal Act), the sale of "lubricating oils and greases" was liable to sales tax at the point of first sale in the State at 6 per cent. With effect from April 1, 1964 entry 47 was amended by Madras Act 7 of 1964 and instead of the words "lubricating oil and greases" in that entry the following words wereoils, all kinds of mineral oils (not otherwise provided for in this Act) quenching oils andSeptember 30, 1965, it is stated, the assessments were made on the assumption that the amendment of entry 47 had made no difference to sales of furnance oil and they were liable to multipoint tax at 2 per cent. The dealers paid and collected tax on that basis and the department accepted it. The Boards of Revenue, on being moved by a dealer, passed a resolution on August 28, 1965 wherein it expressed the view that entry 47, as amended, included furnance oil and transformer oil. The dealers thereafter from September 14, 1965 started charging tax on furnace oils at the rate of 6 per cent on the first sale of those oils and the assessment orders were made accordingly. Furnance oil, it my be stated, is a non-lubricating mineral oil. The view expressed by the Board of Revenue that entry 47 as amended included furnance oil was challenged in a writ petition before the Madras High Court. The High Court gave its decision on August 2, 1967. The title of the case is Burmah Shell Oil Storage and Distributing Co. of India Ltd. Madras v. State of Madras, and it is reported in (1968) 21 S.T.C. 227 (Mad). The High Court held that having regard to the objects and reasons appended to Madras Act 7 of 1964 and the association of words which preceded and followed the words "all kinds of mineral oils" the words "all kinds of mineral oils" had only a limited meaning namely, mineral oils which were lubricants. Entry 47 as amended was, therefore, held not to include furnace oil. Appeal against the said judgment, we have been told, is pending in this Court.

Court's reasoning:
14. In the case of Jaora Sugar Mills (P) Ltd. v. State of Madhya Pradesh, (1966) 1 SCR 523   = (AIR 196 SC 416) this Court dealt with the validity of S. 3 of the Sugar Cane Cess (Validation ) Act, 1961 (Central Act 38 of 1961). The said section concerned the levy of sugar cane cess and provided that "all cesses imposed, assessed or collected under any State Act before the commencement of this Act, shall be deemed to have been validly imposed, assessed or collected in accordance with law as if the provisions of the said Act and of notifications, orders and rules issued or made thereunder in so far as such provisions relate to the imposition, assessment and collection of such cess had been included in and formed part of the section and this section had been enforced at all material times when such cess was imposed, assessed or collected. Earlier the State Act under which the sugar cane cess had been levied was found to be invalid on the ground of want of legislative competence to deal with topics covered by it. The attack on the validity of Section 3 of that Act was repelled and it was held that the Parliament could, in exercise of its legislative competence, pass a law retrospectively validating the collections made under the State statutes. The present case is on a stronger footing from the point of view of the respondents because we are dealing in this case with retrospective legislation made by the same legislature which had enacted the earlier law. We are, therefore, of the opinion that the impugned provisions are a valid piece of legislation and do not contravene article 19 of the Constitution.