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Rallis India Ltd. Vs. R.S. Joshi, Sales Tax Officer, City Division Ii, Ahmedabad - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtGujarat High Court
Decided On
Judge
Reported in[1973]31STC302(Guj)
ActsBombay Sales Tax Act, 1959 - Sections 75; Central Sales Tax Act, 1956 - Sections 2, 3, 4, 5, 6, 7, 8, 8(1), 8(2), 8(2A), 8(3), 8(4), 8(5), 9, 9(1), 9(2), 10, 10A, 11, 12, 13, 14 and 15
AppellantRallis India Ltd.
RespondentR.S. Joshi, Sales Tax Officer, City Division Ii, Ahmedabad
Appellant Advocate K.H. Kaji, Adv.; B.R. Shah, Adv.
Respondent Advocate G.N. Desai, Government Pleader; H.V. Chhatrapati, of Bhaishanker Kanga and Girdharlal, Additional Gov
Cases Referred and British India Steam Navigation Co. Ltd. v. Jasjit Singh
Excerpt:
(i) sales tax - validity of section 8 - section 75 of bombay sales tax act, 1959, sections 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, and 15 of central sales tax act, 1956 - transactions of sale in course of inter-state trade or commerce classified by section 8 into four broad categories - sales to government falling within section 8 (1) (a) - transactions falling within section 8 (1) (b) that is sales to registered dealer other than government of goods referred in section 8 (3) - sales of goods declared under section 14 to be of special importance in inter-state trade or commerce falling within section 8 (2) (a) - sales not falling under section 8 (2) (b) - rates of tax in respect of each four categories of transactions prescribed by parliament in section 9 with intelligent care and.....bhagwati, c.j.1. this petition raises a short but interesting question relating to the constitutional validity of the central sales tax act, 1956 (hereinafter referred to as 'the central act'). the petitioner is a limited company carrying on business, inter alia, as a dealer in cotton. the petitioner buys cotton from dealers as well as agriculturists and sells it inside the state of gujarat as also in the course of inter-state trade or commerce. the petitioner is a registered dealer under the bombay sales tax act, 1959 (hereinafter referred to as 'the local act') and also holds an authorization and a licence granted under the provisions of that act. the petitioner is also registered under section 7 of the central act. during the accounting period 1st january, 1960, to 31st march, 1963,.....
Judgment:

Bhagwati, C.J.

1. This petition raises a short but interesting question relating to the constitutional validity of the Central Sales Tax Act, 1956 (hereinafter referred to as 'the Central Act'). The petitioner is a limited company carrying on business, inter alia, as a dealer in cotton. The petitioner buys cotton from dealers as well as agriculturists and sells it inside the State of Gujarat as also in the course of inter-State trade or commerce. The petitioner is a registered dealer under the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the local Act') and also holds an authorization and a licence granted under the provisions of that Act. The petitioner is also registered under section 7 of the Central Act. During the accounting period 1st January, 1960, to 31st March, 1963, and 1st April, 1963, to 31st March, 1964, the petitioner as authorized dealer purchased cotton from registered dealers in the State of Gujarat against the issue of certificates in form No. XIV and resold the same in the State of Gujarat in the course of inter-State trade or commerce. The turnover of such sales aggregated to Rs. 27,00,834 in the accounting period 1st January, 1960, to 31st March, 1963, and Rs. 53,36,451 in the accounting period 1st April, 1963, to 31st March, 1964. The Sales Tax Officer, who is the first respondent in the petition, while assessing the petitioner to sales tax under the local Act treated these sales as exempt from tax as they were sales in the course of inter-State trade or commerce and hence not subject to the taxing provisions contained in the local Act by reason of section 75, which provided in so many terms that nothing in the local Act shall be deemed to impose or authorize the imposition of tax on any sale of goods which takes place in the course of inter-State trade or commerce. The Sales Tax Officer, however, proceeded to assess the petitioner to sales tax in respect of these sales under the Central Act and passed two separate orders of assessment, one in respect of the accounting period 1st January, 1960, to 31st March, 1963, assessing sales tax on a turnover of Rs. 27,00,834 at the rate of one per cent. and the other in respect of the accounting period 1st April, 1963, to 31st March, 1964, assessing the sales tax on a turnover of Rs. 53,36,451 at the rate of one per cent. for a part of the period up to 16th April, 1963, and at the rate of two per cent. for the remaining period. The petitioner did not challenge these orders of assessment by preferring appeals to the higher revenue authorities and paid up the amounts of tax assessed by the Sales Tax Officer as the petitioner believed that the orders of assessment were proper and valid. Some time in January or February, 1968, however, the petitioner learnt as a result of a decision given by the Sales Tax Tribunal in M/s. Niranjan Thread Works v. State of Gujarat, that the inter-State sales effected by the petitioner were not assessable to sales tax under the Central Act and the orders of assessment assessing them to sales tax suffered from an error of law apparent on the face of the record. The petitioner, therefore, preferred the present petition challenging the validity of the orders of assessment and claiming refund of the amounts of tax paid by the petitioner.

2. The only ground taken in the petition as originally framed for challenging the validity of the assessment made by the Sales Tax Officer was that on a proper construction of sections 8(2) and 9(1) of the Central Act as it stood prior to its amendment by the Central Sales Tax (Amendment) Ordinance, 1969, sales tax under the Central Act was leviable in the same manner as tax on the sale of goods under the general sales tax law of the State, that is, the Bombay Act so far as the State of Gujarat is concerned and, therefore, any exemption from tax under the Bombay Act applied also to assessment under the Central Act and, consequently, the inter-State sales effected by the petitioner during the relevant accounting periods were not liable to be taxed under the Central Act as they would have been exempt from tax under section 7(2)(ii) of the Bombay Act, if they had been intra-State transactions. This ground was irrefutable particularly since it was supported by a decision of the highest court in the land, namely, the decision of the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons ([1965] 16 S.T.C. 231 (S.C.)). That was a case where an assessee, a dealer in powerloom and handloom textiles, was assessed to tax for the year 1957-58 under section 9 of the Central Act, as it stood prior to its amendment by the Central Sales Tax (Second Amendment) Act, 1958. The assessee contended that as he was not the first or the earliest of successive dealers in respect of the turnover, he would not have been liable to be taxed under the Mysore Sales Tax Act, 1957, if the transactions of sale had been intra-State transactions and hence he could not be taxed in respect of the turnover under the Central Act. This contention was upheld by the High Court of Mysore which took the view that by virtue of section 8(2) of the Central Act, any exemption given by a State Act or the point determined by it at which a sale was to be taxed, applied also to assessments under the Central Act. The State of Mysore carried the matter in appeal to the Supreme Court but the view taken by the Mysore High Court was upheld by a majority of Judges in the Supreme Court. Mr. Justice Sikri, as he then was, speaking on behalf of the majority Judges, pointed out that when section 9(1) of the Central Act says that tax shall be levied in the same manner as tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected, it is reasonable to hold that the expression 'levied' in section 9(1) of the Central Act refers to the expression 'levied' in section 5(3)(a) of the State Act, and, therefore, the Central Act must be held not to have intended to make a departure in the manner of levy of tax on the specified goods which were taxed only at a single point under the State Act. The majority decision of the Supreme Court thus held that on a proper construction of sections 8(2) and 9(1) of the Central Act not only the procedural provisions but also the substantive provisions of the local sales tax laws were incorporated in the Central Act. Now, as pointed out above, this decision was given by the Supreme Court in relation to a factual situation which had arisen prior to the amendment of the Central Act by the Central Sales Tax (Second Amendment) Act, 1958. But even after the amendment, the consistent view taken by the Supreme Court in a series of cases decided in 1968 was that the decision in Yaddalam's case ([1965] 16 S.T.C. 231 (S.C.)) continued to apply with equal force. The Supreme Court, in fact, extended the scope of its decision in Yaddalam's case ([1965] 16 S.T.C. 231 (S.C.)) by holding that the provisions of the local sales tax law would apply not only in respect of point of levy of Central sales tax but also in respect of deductions to be made in the determination of turnover for the purposes of calculating the tax payable under the Central Act. If this position of law had remained unaltered, it is quite possible that the inter-State sales effected by the petitioner during the relevant accounting periods would have been exempt from tax under the Central Act since they were resales of goods purchased from registered dealers on or after the appointed day by the petitioner as authorized dealer and had they been intra-State transactions, they would have been free from tax under section 7(2)(ii) of the Bombay Act. But the Central Government took the view that these decisions of the Supreme Court went against the scheme of the Central Act as originally intended, and moreover, the effect of these decisions would be that the State Government would be required to refund a substantial portion of the taxes levied and collected under the Central Act. The President, therefore, promulgated the Central Sales Tax (Amendment) Ordinance, 1969, on 9th June, 1969, introducing certain amendments in the Central Act with retrospective effect. The amending Ordinance was replaced by the Central Sales Tax (Amendment) Act, 1959, which came into force from 30th August, 1969. The amendments made by the amending Ordinance and the amending Act were fairly extensive and since they were given retrospective operation, the Central Act as amended, governed the assessments for the relevant accounting periods. The effect of the amendments was to supersede the view taken by the Supreme Court in Yaddalam's case ([1965] 16 S.T.C. 231 (S.C.); [1965] 2 S.C.R. 129) and other similar decisions. The amendment of section 2, clause (j), made it clear that the turnover for the purpose of assessment under the Central Act would have to be determined in accordance with the provisions of the Central Act and the Rules made thereunder and sub-section (1-A) introduced after sub-section (1) in section 6 provided that a dealer shall be liable to pay tax under the Central Act on inter-State sale notwithstanding that no tax would have been leviable on it under the sales tax law of the appropriate State if such sale had taken place inside the State. Section 9 was substituted by a new section with retrospective effect and the new section 9 made it clear that the levy of the tax was under the Central Act and it was merely assessment, reassessment, collection and enforcement of payment of tax that was to be done according to the machinery provided in the general sales tax law of the State. The amending Act by section 9 also validated the taxes imposed, assessed or collected by the State Governments up to 9th June, 1969, being the date of commencement of the amending Ordinance and made suitable provision in section 10 to safeguard the interests of dealers who, relying upon the Supreme Court judgment in Yaddalam's case ([1965] 16 S.T.C. 231 (S.C.); [1965] 2 S.C.R. 129), did not collect tax from their customers. The result of these amendments was that the law as stated in the majority decision in Yaddalam's case ([1965] 16 S.T.C. 231 (S.C.); [1965] 2 S.C.R. 129) and other subsequent cases stood superseded and it could no longer be successfully contended by a dealer that merely because his sales would have been exempt from tax under the local sales tax law, had they been intra-State sales, they must be held to be so exempted as held by the Supreme Court in two decided cases, namely, Deputy Commissioner v. Aluminium Industries Ltd. ([1970] 25 S.T.C. 476 (S.C.)) and State of Kerala v. Joseph and Company ([1970] 25 S.T.C. 483 (S.C.)). Shah, Acting C.J., speaking on behalf of the Supreme Court, pointed out in the latter case :

'The effect of the Ordinance is to supersede the judgment of this court in Yaddalam Lakshminarasimhiah Setty's case ([1965] 16 S.T.C. 231 (S.C.); [1965] 2 S.C.R. 129). It is now made clear that even if no tax was leviable under the general sales tax law of the State in respect of intra-State transactions of sale, tax will be leviable on sale of goods effected by a dealer in the course of inter-State trade according to the sales tax law of the appropriate State.'

3. The ground taken in the petition as originally framed for challenging the validity of the assessments, therefore, stood negatived by the amendments made by the Central Sales Tax (Amendment) Act, 1969, and if the matter had stood there, the petition would have been liable to be dismissed straightway. But the petitioner amended the petition with leave of the court and by the amendment introduced a challenge to the constitutional validity of the Central Act as amended by the Central Sales Tax (Amendment) Act, 1969. It is this constitutional challenge which formed the real subject-matter of controversy between the parties and which we must now proceed to consider.

4. To appreciate the competing arguments which have been advanced before us at the Bar, it is necessary to refer briefly to the history of the legislation relating to imposition of tax on transactions of sale and its inter-relation with the constitutional provisions. The Government of India Act, 1935, by List II, entry 48, of the Seventh Schedule, conferred exclusive power on the Provincial Legislatures to legislate on the subject of 'taxes on the sale of goods and on advertisements'. The Provincial Legislatures in exercise of this legislative power enacted sales tax laws for their respective Provinces acting on the principle of territorial nexus, that is to say, they picked out one or more of the ingredients constituting a sale and made them the basis of their sales tax legislation. Whether the territorial nexus, put forward as the basis of the taxing power, would be sustained as sufficient was a matter of doubt not having been tested in a court of law but the fact remains that this exercise of taxing power led to multiple taxation of the same transaction by many Provinces and cumulation of the burden falling ultimately on the consuming public. The result was that there was chaos and confusion in inter-State trade or commerce by indiscriminate exercise of taxing power by different Provincial Legislatures. It was to cure this mischief of multiple taxation and to preserve the free flow of inter-State trade or commerce in the Union of India regarded as one economic unit without any provincial barrier that the constitution-makers adopted article 286 in the Constitution. The object of the Constitution-makers in enacting article 286 was to impose restrictions on the taxing power of the State, inter alia, in relation to transactions involving inter-State elements. The provisions of article 286 came up for construction before the Supreme Court in State of Bombay v. United Motors (India) Ltd. ([1953] 4 S.T.C. 133 (S.C.)). The Supreme Court held that article 286(1)(a) read with the explanation prohibited the taxation of sales and purchases involving inter-State elements by all States except the State in which the goods were actually delivered for the purpose of consumption therein and that clause (2) of article 286 did not affect the power of the State in which delivery of the goods was so made to tax the sales or purchases of the kind mentioned in the explanation, the effect of which was to convert such inter-State transactions into intra-State transactions and to take them out of the operation of clause (2) of that article. The effect of this decision of the Supreme Court was that the State Governments claimed to exercise jurisdiction over dealers resident in other States on the ground that sales by such dealers have resulted in actual delivery for consumption within the respective territories of those States. This created difficulties for the trade and industry as it meant that as exporting dealer had to register himself and be liable to tax not only of his own State but also of all the States to which he exported his goods. The question, however, again came to be considered by the Supreme Court in Bengal Immunity Company Ltd. v. State of Bihar ([1955] 6 S.T.C. 446 (S.C.)). The Supreme Court by its decision in this case overruled its earlier decision in the United Motors case ([1953] 4 S.T.C. 133 (S.C.)), and held that sales or purchases made by a dealer in the course of inter-State trade or commerce could not be taxed by any State, not even the State in which the goods were actually delivered for the purpose of consumption, until by law it was otherwise provided by Parliament. The decision in Bengal Immunity Company's case ([1955] 6 S.T.C. 446 (S.C.)) removed, by making inter-State sales immune from taxation, the difficulties experienced by the trading community as a result of the judgment in United Motors case ([1953] 4 S.T.C. 133 (S.C.)), but the importing States which had imposed tax on inter-State sales by non-resident dealers, relying on the principle of the judgment in United Motors case ([1953] 4 S.T.C. 133 (S.C.)), were faced with innumerable claims for restitution of the tax realised. The President had, therefore, to promulgate Ordinance No. 3 of 1956, which was later replaced by the Sales Tax Laws Validation Act (7 of 1956), with the object of restoring for the period specified in the Act the decision in the United Motors case ([1953] 4 S.T.C. 133 (S.C.).

5. The problem of tax on inter-State sales was in the meanwhile examined by the Taxation Enquiry Commission and after examining the problem in depth and analysing its various aspects, the Taxation Enquiry Commission made certain recommendations to the Central Government. These recommendations led to the enactment of the Constitution (Sixth Amendment) Act, 1956. A new entry was added in the Union List in the Seventh Schedule to the Constitution, namely, entry 92-A, conferring power on the Union to legislate in respect of 'taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce' and for entry 54 in the State List, the following entry was substituted, namely, 'Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92-A of List I'. Article 286 was also amended fairly extensively, explanation to clause (1) was omitted and clauses (2) and (3) were substituted by fresh clauses. The amended article 286 read as follows :

'286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place :

(a) outside the State; or

(b) in the course of the import of the goods into, or export of the goods out of, the territory of India.

(2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1).

(3) Any law of a State shall, in so far as it imposes, or authorises the imposition of, a tax on the sale or purchase 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.'

6. There were also amendments made in article 269; sub-clause (g) was added in clause (1) and a new clause (3) was introduced so that the relevant part of article 269 stood in the following terms :

'269. (1) The following duties and taxes shall be levied and collected by the Government of India but shall be assigned to the States in the manner provided in clause (2), namely .........

(g) taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce.

(2) The net proceeds in any financial year of any such duty or tax, except in so far as those proceeds represent proceeds attributable to Union territories, shall not form part of the Consolidated Fund of India, but shall be assigned to the States within which that duty or tax is leviable in that year, and shall be distributed among those States in accordance with such principles of distribution as may be formulated by Parliament by law.

(3) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce.'

7. The Parliament also with a view to giving effect to the recommendations of the Taxation Enquiry Commission enacted the Central Act on 21st December, 1956, in exercise of the legislative authority conferred by the Constitution (Sixth Amendment) Act, 1956. As the long title shows, the Central Act is divided into three parts : The first part is enacted to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India; the second part, to provide for the levy, collection and distribution of taxes on sales of goods in the course of inter-State trade or commerce, and the third part, to declare certain goods to be of special importance in inter-State trade or commerce and specify the restrictions and conditions to which State laws imposing taxes on the sale or purchase of such goods of special importance shall be subject. The first part consists of sections 3 to 5; the second part, of sections 6 to 13 and the third part, of sections 14 and 15. Section 2 is the definition section. Clause (i) of section 2 defines 'sales tax law' to mean any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf, and 'general sales tax law' to mean the law for the time being in force in any State or part thereof, which provides for the levy of tax on the sale or purchase of goods generally. 'Turnover' is defined in section 2, clause (j), to mean the aggregate of the sale prices received and receivable by him in respect of sales of any goods in the course of inter-State trade or commerce made during the prescribed period and determined in accordance with the provisions of the Central Act and the Rules made thereunder. These last-mentioned words, which we have underlined, were substituted for the original words with retrospective effect by the Central Sales Tax (Amendment) Act, 1969. Section 3 formulates the principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce as contemplated by clause (3) of article 269. It says, omitting portions immaterial :

'3. A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase -

(a) occasions the movement of goods from one State to another; or

(b) is effected by a transfer of documents of title to the goods during their movement from one State to another ......'

8. Section 6 is the charging section. It imposes the liability to tax on inter-State sales by sub-section (1) :

'6. (1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales effected by him in the course of inter-State trade or commerce during any year on and from the date so notified.

(1-A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.

(2) Notwithstanding anything contained in sub-section (1) or sub-section (1-A), where a sale in the course of inter-State trade or commerce of goods of the description referred to in sub-section (3) of section 8 -

(a) has occasioned the movement of such goods from one State to another; or

(b) has been effected by a transfer of documents of title to such goods during their movement from one State to another;

any subsequent sale to a registered dealer during such movement effected by a transfer of documents of title to such goods shall not be subject to tax under this Act :

Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased, containing the prescribed particulars.'

9. Sub-section (1-A) has been introduced with retrospective effect by the Central Sales Tax (Amendment) Act, 1969, with a view to superseding the effect of the decision in Yaddalam's case ([1965] 16 S.T.C. 231 (S.C.); [1965] 2 S.C.R. 129). We have already referred to it and we need not dwell on it any longer. Sub-section (2) excepts a certain category of sales from chargeability under sub-section (1). Section 7 makes provision for registration of dealers under the Central Act. Section 8 lays down the rate structures of tax on inter-State sales and in so far as is material provides as follows :

'8. (1) Every dealer, who in the course of inter-State trade or commerce -

(a) sells to the Government any goods; or

(b) sells to a registered dealer other than the Government goods of the description referred to in sub-section (3);

shall be liable to pay tax under this Act, which shall be three per cent. of his turnover.

(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1) -

(a) in the case of declared goods, shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State; and

(b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent. or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.

(2-A) Notwithstanding anything contained in sub-section (1-A) of section 6 or in sub-section (1) or sub-section (2) of this section, if under the sales tax law of the appropriate State, the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent. (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate.

Explanations. - for the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which tax is levied at specified stages or otherwise than with reference to the turnover of the goods.

* * * (5) Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the official Gazette, direct that in respect of such goods or classes of goods as may be mentioned in the notification and subject to such conditions as it may think fit to impose, no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sale by him from any such place of business of any such goods in the course of inter-State trade or commerce or that the tax on such sales shall be calculated at such lower rates than those specified in sub-section (1) or sub-section (2) as may be mentioned in the notification.'

The machinery for assessment and collection of tax and penalty is set out in section 9, which reads :

'9. (1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub-section (2), in the State from which the movement of the goods commenced :

Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within sub-section (2) of section 6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods.

(2) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, reassess, collect and enforce payment of tax, including any penalty, payable by a dealer under this Act as if the tax or penalty payable by such a dealer under this Act is a tax or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, penalties, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly :

Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf, make necessary provision for all or any of the matters specified in this sub-section.

(3) The proceeds in any financial year of any tax, including any penalty, levied and collected under this Act in any State (other than a Union territory) on behalf of the Government of India shall be assigned to that State and shall be retained by it, and the proceeds attributable to Union territories shall form part of the Consolidated Fund of India.'

10. Section 10 creates offences and section 10-A provides for imposition of penalty in lieu of prosecution. Section 14 declares certain specified goods to be of special importance in inter-State trade or commerce and section 15 lays down restrictions and conditions in regard to tax on sale or purchase of declared goods. The material part of section 15 reads as follows :

'15. Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely :

(a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent. of the sale or purchase price thereof, and such tax shall not be levied at more than one stage .........'

11. These are the relevant provisions of the Central Act as amended, which have a bearing on the determination of the controversy between the parties.

12. The relevant contentions of the petitioners relating to the constitutional validity of the Central Act may now be stated. The petitioners contended that section 6 no doubt imposes charge of sales tax on sales effected by a dealer in the course of inter-State trade or commerce but by the very words of the section, the charge is not absolute and unqualified. It is expressly made 'subject to the other provisions contained in this Act'. Section 8, sub-sections (2-A) and (5), therefore, prevail over section 6 and negative the charge in cases covered by those sub-sections; they operate as limitations on chargeability enacted in section 6. Now, sub-section (2-A) of section 8 provides that if under the sale tax law of the appropriate State the sale or purchase of any goods by a dealer is exempt from tax generally, the tax payable under the Central Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil. If, therefore, the sales tax law of the appropriate State exempts from tax generally the sale or purchase of any goods, no tax would be payable on the sale of such goods under the Central Act. The charge under section 6 would, therefore, be liable to be declared by the sales tax law made by the State Legislature. So also, if the State Government in public interest directs under sub-section (5) of section 8 that in respect of specified goods or classes of goods no tax under the Central Act shall be payable by any dealer having his place of business in the State in respect of the sale of any such goods, in the course of inter-State trade or commerce, the charge imposed under section 6 would give way. The chargeability under section 6, therefore, depends not upon the will of the Parliament which has enacted the Central Act, but upon the will of the State Legislature or the State Government. There is no charge under section 6 except to the extent that the State Legislature and the State Government will it to be an effective charge. They can displace the charge; the State Legislature can do it by its 'sales tax law', which according to the definition in section 2, clause (i), would mean not the sales tax law in force at the date of enactment of section 8, sub-section (2-A), but the sales tax law 'for the time being in force', that is, the sales tax law in force at the relevant time when the taxable event under the Central Act occurs and it would, therefore, include future sales tax law of the State; the State Government can do it by issuing a notification from time to time under section 8. sub-section (5). The chargeability having been thus left to the State Legislature and the State Government, there is complete abdication of its legislative function in regard to levy of tax on inter-State sales by the Parliament in favour of the State Legislature and the State Government, and section 6, which is the charging section, is, therefore, void and since the charging section constitutes the core of the taxing statute, the whole of the Central Act must be held to be void. This was one branch of the argument of the petitioners.

13. The second branch of the argument was that even in fixation of rates of tax, which is an essential legislative function, the Parliament has effaced itself and abdicated in favour of the State Legislature. The rate of tax in respect of the transactions of sale falling within section 8(2)(a) is not determined by the Parliament but is left to be fixed by the sales tax law of the appropriate State. So also in the case of transactions of sale falling within section 8(2)(b), the rate fixed by the sales tax law of the appropriate State is adopted in case it is higher than ten per cent. Then again, by reason of section 8(2-A) in the case of all transactions of sale, whether falling within sub-section (1) or sub-section (2) of section 8, the rate of tax is to be nil if the sale or purchase of such goods is exempt from tax generally under the sales tax law of the appropriate State and if the rate fixed by the sales tax law of the appropriate State for intra-State sale or purchase of such goods is lower than three per cent., such lower rate is to apply for the purpose of the Central tax irrespective of the rate fixed by the Central Act under sub-section (1) or sub-section (2). The Parliament has, therefore, not really in effect and substance fixed the rates of tax but let them to be fixed by the State Legislature. Now having regard to the decision of the Supreme Court in Pandit Banarsi Das v. State of Madhya Pradesh ([1958] 9 S.T.C. 388 (S.C.); A.I.R. 1958 S.C. 909), and Corporation of Calcutta v. Liberty Cinema (A.I.R. 1965 S.C. 1107), the power to fix rate of tax is not an essential legislative function and it can be delegated to a subordinate authority provided the legislature has laid down the policy or principle to guide the subordinate authority to exercise the delegated power. But when the State Legislature makes its sales tax law or amends or alters it from time to time, it does not act as delegate of the Parliament. It acts as an independent and sovereign legislature with plenary powers of legislation within its allotted field and while legislating in its own exclusive sphere, it is not subject to any guidance or control from any outside authority including the Parliament. The rates of tax which may be fixed by the State Legislature from time to time would, therefore, be its own rates having nothing to do with any policy formulation of the Parliament and the effect of the relevant provisions of section 8 would be that the Parliament would be adopting those rates for the Central tax without even knowing what those rates might be when fixed in future. This, according to the petitioners, would be clear abdication of its legislative function by the Parliament and section 8 must, therefore, be held to be ultra vires and void.

14. The last branch of the argument was directed against the constitutional validity of section 9. Sub-section (1) of section 9 provides that tax on inter-State sales under the Central Act shall be levied by the Government of India and the tax so levied shall be collected by the Government of India in accordance with the provisions of sub-section (2). Sub-section (2) enacts a fiction that the authorities for the purpose of assessment, reassessment, collection and enforcement of payment of tax and penalty under the sales tax law of the appropriate State shall, on behalf of the Government of India, assess, reassess, collect and enforce payment of tax and penalty payable under the Central Act as if such tax or penalty were a tax or penalty payable under the general sales tax law of the State and provides that for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State. It also specifically makes applicable the provisions of the general sales tax law of the State in respect of various matters enumerated there. These matters include not only procedural matters but also matters affecting substantive rights and liabilities such as period beyond which assessment cannot be made, conditions subject to which escaped turnover may be assessed or reassessed, liability for payment of advance tax, imposition of liability on third parties to be assessed and to pay tax and penalties. The Parliament has not legislated on these matters but left them to be governed by the general sales tax law of the State which, as pointed out above, would mean sales tax law for the time being in force. Whatever sales tax law is made by the State Legislature from time to time in exercise of its plenary power of legislation, would govern these matters in relation to tax under the Central Act. If the Parliament had incorporated the provisions of the existing sales tax law of the appropriate State and made them applicable for the purpose of assessment, reassessment, collection and enforcement of payment of Central tax and penalty, there would have been no objection, for it is competent to a legislature to apply its mind to an existing statute enacted by another legislature for another jurisdiction and as a matter of legislative policy adopt it as its own and extend it to the territory under its jurisdiction without going through the formality of reproducing its provisions in extenso in its own legislation. But here the Parliament has said that the sales tax law of the appropriate State which may be in force from time to time with amendments which may be made in future by the State Legislature, which is a legislature with plenary powers in its own field, would govern the assessment, reassessment, collection and enforcement of payment of Central tax and penalty including various matters specifically enumerated in section 9, sub-section (2). The Parliament has thus adopted the future law which may be made by the State Legislature without there being anything for it to predicate what such law would be. This is nothing but surrender of its legislative judgment in favour of another legislature. It is a clear case of abdication or effacement in regard to the matters dealt with in section 9, sub-section (2), and section 9 must, therefore, be held to be void. This was the argument advanced on behalf of the petitioners and it was sought to be supported by the decision of the Supreme Court in B. Shama Rao v. Union Territory of Pondicherry ([1967] 20 S.T.C. 215 (S.C.)).

15. The main question which arises for consideration on these arguments is as to whether the Parliament has abdicated its legislative function in favour of another legislature in enacting sections 6, 8 and 9. Now the law is well-settled that where the constitution has entrusted the task of law-making to a legislature, the duty of law-making must be performed by the legislature itself and the legislature cannot abdicate or efface itself. The legislature alone must perform the essential legislative function and the essential power of legislation cannot be renounced by it in favour of any other body. It is not necessary to constitute abdication or self-effacement that the legislature should extinguish itself completely and efface itself out of the pages of the Constitution bequeathing all its rights to another authority which is to step into its shoes and succeed to its rights. It is sufficient to attract the constitutional inhibition if there is surrender by the legislature of essential legislative authority even in respect of a particular subject-matter of legislation in favour of another person or authority which is not empowered by the Constitution to exercise this function. To quote the words of Street on 'Doctrine of ultra vires', a legislature cannot be permitted 'to shift the onus of legislation'. The reason is that this high prerogative of legislation has been entrusted to the wisdom, judgment and patriotism of the legislature and not to those of other persons and the legislature will act ultra vires if it undertakes to renounce the trust in favour of another body instead of executing it. The legislature cannot shirk its duty by making a law that it shall not operate on its allotted field but somebody else will operate on its behalf : Vide B. Shama Rao v. Union Territory of Pondicherry ([1967] 20 S.T.C. 215 (S.C.)).

16. Now, at this stage it is necessary to make a distinction between abdication and delegation. Excessive delegation of legislative power may amount to abdication of its essential legislative function by the legislature but there is a vital and fundamental distinction between the two concepts which must be noticed and constantly kept in mind. We have already pointed out that the Constitution having conferred a power and imposed a duty on the legislature to make laws, the essential legislative function must be performed by the legislature itself. But what is essential legislative function The classic definition of its meaning is to be found in the oft-repeated words of Mukherjee, J., in In re The Delhi Laws Act, 1912 ([1951] S.C.R. 747), where the learned Judge said :

'The essential legislative function consists in the determination or choosing of the legislative policy and of formally enacting that policy into a binding rule of conduct.'

17. It would, therefore, seem that the legislature cannot renounce in favour of another its essential function of laying down legislative policy in respect of a measure and of formally enacting that policy into a binding rule of conduct. That must be done by the legislature itself. Now, though the aim of the legislature be to project its mind as far as possible into the future and to provide in terms as generally as possible for all contingencies that are likely to arise in the application of the law, it may not be possible to provide specifically for all cases and the application of the law in many cases may depend on ascertainment of facts and circumstances which must necessarily be a 'subject of inquiry and determination outside the halls of the legislature'. The legislature must, therefore, necessarily delegate subsidiary or ancillary powers of legislation to delegates of its choice for carrying out the policy laid down in the enactment and leave such delegates to work out the details within the frame-work of the policy to suit the varying aspects and needs of a complex situation. This would be all the more necessary in modern times when the legislature is called upon to enact laws to meet the challenge of complex socio-economic problems. But the power conferred on the delegate must not be unrestrained or unfettered. It must not be, to use the words of Cardozo, J., 'unconfined and vagrant'; it must be 'confined within banks that keep it from overflowing'. The legislature must lay down the legislative policy and the legal principles which are to control in given cases and provide a standard to guide the delegate in exercise of the power delegated to him. The exercise of the delegated power must be controlled and guided by the policy or principle laid down by the legislature so that the delegate is not free to depart from the legislative policy or principle and lay down a policy or principle of its own, which is an essential legislative function. If the legislature does not lay down any policy at all or declares its policy in vague and general terms or fails to set down any standard for the guidance of the delegate or confers an arbitrary power on the delegate to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation, the delegate would be uncontrolled and would be able to lay down legislative mandate. Such a delegation would be constitutionally impermissible as it would involve self-effacement of legislative power in favour of another agency in whole or in part. The essential legislative function which consists in declaring its policy and making it a binding rule of conduct cannot be left by the legislature to a delegate, whether expressly or by omission or failure to provide a policy or principle, which would guide and control the exercise of delegated power. If that is done, it would be excessive delegation amounting to abdication or self-effacement. But, there may be abdication of essential legislative power even without delegation. The distinctive features of delegation are that a delegate has no inherent power to act, but he derives his authority from the principal who has delegated the power to him and he has to act within the limits circumscribed by the delegation so that if any act of his falls outside those limits, it would be ultra vires and void. These features would be absent where essential legislative function in regard to a particular subject-matter is renounced by a legislature like Parliament in favour of another legislature such as the State Legislature, which has plenary power of legislation within its allotted field. When the State Legislature enacts any legislation it does so not by virtue of any authority derived from Parliament but in exercise of plenary power of legislation conferred upon it by the Constitution and the validity of such legislation has to be tested by reference to the provisions of the Constitution and not by reference to any process of delegation. The State Legislature is an independent legislature with plenary power of legislation within the field assigned to it and while legislating in its own exclusive sphere, it is not subject to any guidance or control from any outside authority including Parliament. It is, therefore, evident that the State Legislature does not act as delegate of Parliament and consequently, there is no question of excessive delegation of legislative power. The only question in such a case would be whether the Parliament has abdicated its essential legislative function in favour of the State Legislature; has the Parliament said that within its allotted field, which is here tax on inter-State sales, what will operate is not its own legislative policy determined and chosen by it but legislative policy enunciated by the State Legislature, which has plenary power of legislation within its own field and which is not subject to any guidance or control from Parliament If it has, it will be a clear case of abdication or self-effacement.

18. With these prefatory observations, we may now proceed to consider whether in enacting sections 6, 8 and 9, the Parliament has abdicated or effaced itself. So far as section 6 is concerned, it is difficult to see how it can be said to be affected by the vice of abdication. Section 6 in terms clear and explicit imposes charge of tax on inter-State sales. It is, no doubt, true that the opening words of section 6 make it subject to the other provisions of the Central Act and, therefore, as pointed out by Sikri, J., as he then was, in Yaddalam's case ([1965] 16 S.T.C. 231 (S.C.)), 'the liability is not absolute but subject to the other provisions of the Act' and, consequently, 'if the effect of another provision is to take away the liability, effect will have to be given to it'. But it is not possible to say that section 8, sub-section (2-A), takes away the liability imposed under section 6. Section 8 merely lays down the rate structure of tax under the Central Act and has nothing to do with chargeability. Sub-section (2-A) of section 8 does not exempt any category of inter-State sales from chargeability to tax. What it says is that if under the sales tax law of the appropriate State, the sale or purchase of any goods is exempt from tax generally, the tax payable under the Central Act on inter-State sales of such goods shall be nil. The chargeability to tax remains, but the rate shall be nil. We may in this connection notice the difference in language in the sub-section itself. Where the legislature wanted to refer to exemption from chargeability, the legislature used the expression 'exemption from tax generally', but in connection with the tax payable under the Central Act, the legislature did not say that inter-State sales shall not be chargeable to tax or shall be exempt from tax and instead provided that the tax payable shall be nil. The result is that even where under the State law the sale or purchase of any goods is exempt from tax generally, inter-State sales of such goods are chargeable to tax under section 6 of the Central Act though the rate of tax payable on them is nil. Inter-State sales of such goods are not taken out of the purview of the Central Act. They would have to be included in the turnover of the dealer and shown as part of the turnover in the returns. It is only at the time of assessment and quantification of tax liability that sub-section (2-A) of section 8 comes into operation and directs that the tax to be calculated on inter-State sales of such goods shall be at nil rate. It will, therefore, 'be seen that sub-section (2-A) of section 8 does not carve out an exception from chargeability imposed under section 6. It will be profitable in this connection to compare the language of section 6, sub-section (2), which provides that a certain category of sales 'shall not be subject to tax under this Act' or 'shall be exempt from tax'. This sub-section clearly and in so many words cuts into the liability imposed under section 6. The language used in sub-section (2-A) of section 8 is, however, significantly different and it affects quantum of tax and not chargeability. It is, therefore, not correct to say that the chargeability under section 6 can be set at naught by the State Legislature or that the effectiveness of the charge under section 6 is dependent on the will of the State Legislature.

19. Section 8, sub-section (5), also likewise does not make chargeability dependent on the will of the State Government. It merely empowers the State Government in public interest to direct that in respect of certain goods or class of goods no tax under the Central Act shall be payable on inter-State sales or that tax on such sales shall be calculated at lower rates than those specified in sub-section (1) or sub-section (2). The condition for exercise of this power is that the State Government should be satisfied that it is necessary in public interest to direct that no tax shall be payable or that tax shall be payable at lower rates in respect of inter-State sales of certain class of goods. This power is a necessary power which must find place in all taxation measures. It is a power intended to provide for unforeseen contingencies. Take for examble a case where there is flood in Bihar and a dealer in Gujarat agrees to sell goods to a charitable society in Bihar at a reasonable price for distribution amongst those who are afflicted by the flood. It would be in public interest in such a case if the Government of Gujarat directs that no tax shall be payable on such sales or that tax shall be payable on such sales at a lower rate. The conferment of such a power would be in the nature of conditional legislation which has been recognized as long back as 1879 when Queen v. Burah ([1878] 3 A.C. 889) was decided. Vide also paragraph 20 of the judgment of Shah, J., in Jalan Trading Company v. Mill Mazdoor Sabha (A.I.R 1967 S.C. 691; (1967) 1 S.C.R. 15). Even if this provision were regarded as an instance of delegated legislation, it would be valid because, the Parliament has clearly laid down the policy or principle which is to guide the State Government in the exercise of the power, namely, that it should be necessary in the public interest. We cannot, therefore, accept the contention of the petitioners that the chargeability under section 6 is dependent on the unfettered and uncontrolled will of the State Government. The Parliament has determined and chosen its legislative policy by imposing charge of tax on all sales effected by a dealer in the course of inter-State trade or commerce and there is no abdication of its legislative function by Parliament in favour of the State Legislature or the State Government so far as levy of tax on inter-State sales is concerned and section 6 cannot, therefore, be held to be void.

20. That takes us to the next question as to the constitutional validity of section 8. This section, as the marginal note indicates, prescribes the rate structure of the tax payable under the Central Act. We shall presently examine the rate structure but before we do so, we may briefly recapitulate the background of the enactment of the Central Act as that is necessary for a proper appreciation of the reasons why the rate structure is as set out in section 8. The history of the legislation which we have discussed shows that the subject of taxing inter-State sales is a complicated process. It has various aspects which require to be taken into account. Sales tax has always been one of the most important sources of revenue for the States. It was so even under the Government of India Act, 1935. But it was found that this power of taxation was exercised by the States indiscriminately in a manner prejudicial to the free flow of trade and commerce in the country. There was multiple taxation on inter-State sales by different States, each State relying upon some territorial nexus with one or the other ingredient of the sales. This multiple taxation increased the burden on the consuming public and prejudicially affected the free flow of inter-State trade and commerce. The Constitution-makers, therefore, while retaining sales tax as a source of revenue for the States, introduced restrictions on the taxing power of the State and one of the restrictions was that enacted in the original clause (2) of article 286. That provided that except in so far as Parliament may by law otherwise provide, no law of a State shall impose or authorize the imposition of a tax on inter-State sale or purchase. The object of enacting this provision was to remove inter-State sales from the taxing power of the States unless Parliament by law permitted them to be taxed. But article 286, clauses (1) and (2), were interpreted by the Supreme Court in United Motors case ([1953] 4. S.T.C. 133 (S.C.)) to mean that the State in which the goods were actually delivered for the purpose of consumption therein was entitled to tax the sale even though it might be inter-State. The effect of this decision was to render inter-State sales taxable by the State in which the goods would be actually delivered for the purpose of consumption and that led to great hardship as it required exporting dealers to register themselves and be liable to the tax of all the different States to which they exported their goods. The Bengal Immunity Company's case ([1955] 6 S.T.C. 446 (S.C.)) relieved this hardship and took the view that on a proper interpretation of clauses (1) and (2) of article 286, inter-State sales were not taxable by any State unless Parliament by law otherwise provided. But this removed the whole segment of inter-State sales which constituted a not inconsiderable portion of sales from the ambit of the taxing power of the States and deprived the States of a large part of the revenue. The Parliament could, of course, lift the ban and restore the taxing power of the States by enacting a law under article 286, clause (2), but instead the Parliament preferred to adopt the recommendations of the Taxation Enquiry Commission, which had been set up in the meantime to examine, inter alia, the question of imposition of tax on inter-State sales, and on the basis of these recommendations, amended articles 269 and 286 and enacted the Central Act. It will, therefore, be seen that the Central Act is not a piece of haphazard legislation but is a product of deep thinking and clear analysis of the various aspects of the matter. Vide the judgment of Hegde, J., in State of Madras v. N. K. Nataraja Mudaliar ([1968] 22 S.T.C. 376 (S.C.)). It is difficult to appreciate how in these circumstances the Parliament could be said to have abdicated or effaced itself in enacting the provisions of the Central Act including section 8 when it applied its mind to the views of an expert committee like the Taxation Enquiry Commission and in the exercise of its legislative judgment decided to adopt the recommendations of the Taxation Enquiry Commission.

21. Turning to a more specific consideration of the question, it is apparent from the legislative history that the amendment of articles 269 and 286 and the enactment of the Central Act were intended to serve a dual purpose; to maintain the source of revenue at the same time to prevent the States from bringing trade or commerce to tax so as to obstruct the free flow of trade by making commodities unduly expensive. Inter-State sales constitute a fairly large section of sales and tax on inter-State sales would, therefore, mean quite a sizable amount of revenue for the States. It was not the intention of the Parliament to dry up this source or to divert the same. It wanted to retain this source for the States and at the same time guard against the States levying sales tax on inter-State sales in a manner likely to be prejudicial to the free flow of trade and commerce in the country. The Parliament, therefore, amended the legislative entries and brought tax on inter-State sales within its exclusive legislative sphere so that the States could no longer levy tax on inter-State sales and added sub-clause (g) in article 269, clause (1), providing that the net proceeds of tax on inter-State sales shall be assigned to the States within which the tax is leviable under the law made by Parliament. The Central Act was also enacted by the Parliament with the same purpose. Section 9, sub-section (1), provided that tax on inter-State sales shall be levied by the Government of India and the tax so levied shall be collected by the Government of India in the State from which the movement of the goods commences and sub-section (3) of section 9 reiterated the constitutional provision that the proceeds of any tax including any penalty levied and collected under the Central Act in any State on behalf of the Government of India shall be assigned to that State and shall be retained by it. It will thus be seen that though tax on inter-State sales is levied and collected by the Government of India, it is for the benefit of the State in which the movement of the goods commences and is statutorily assigned to that State. It is in effect and substance a part of the sales tax levy imposed for the benefit of the State. It is against this background that we must now proceed to examine the rate structure prescribed by section 8.

22. Transactions of sale in the course of inter-State trade or commerce are classified by section 8 into four broad categories, namely : (i) sales to Government falling within section 8(1)(a)(ii) transactions falling within section 8(1)(b), that is, sales to a registered dealer other than Government, of goods referred to in sub-section (3) of section 8(iii) transactions falling within section 8(2)(a), that is, sales of goods which are declared under section 14 to be of special importance in inter-State trade or commerce; and (iv) transactions falling within section 8(2)(b), that is, sales not falling within section 8(1) in respect of goods other than declared goods. The rates of tax in respect of each of these four categories of transactions are prescribed by the Parliament in section 8 with intelligent care and purpose which clearly reveal deliberate and careful choice of legislative policy.

23. So far as sales to Government are concerned, they constitute a large bulk of sales in the course of inter-State trade or commerce. Today 'in a welfare State like ours', as pointed out by Hegde, J., in State of Madras v. N. K. Nataraja Mudaliar ([1968] 22 S.T.C. 376 (S.C.)). 'public sector is in charge of various industries, which require raw material from different parts of the country. The Governments also require consumer goods of various types for its governmental functions as well as commercial activities'. For these inter-State sales, a uniform rate of tax is fixed under section 8(1)(a). The same is the position in regard to inter-State sales falling within section 8(1)(b), that is, inter-State sales to a registered dealer of goods described in section 8(3). There also a uniform rate of tax is prescribed. The rate of tax in respect of both these categories of inter-State sales was originally two per cent., but since 1st July, 1966, it has been raised to three per cent. The Parliament has thus prescribed a definite rate of tax in both cases and there is clearly no abdication or self-effacement on the part of the Parliament.

24. Turning to sales of declared goods, we find that in case of these sales too, there is no abdication of its essential legislative function by the Parliament. By virtue of the definition clause in section 2(c) declared goods are goods enumerated in section 14 and declared by that section to be of special importance in inter-State trade or commerce. Manifestly, declared goods constitute a large bulk of the goods sold in inter-State trade or commerce. Section 15 prescribes the restrictions and conditions which must be complied with by every sales tax law of a State in so far as it imposes or authorises the imposition of a tax on sales of declared goods inside the State. These restrictions and conditions are : (i) the tax payable shall not exceed a certain percentage of the sale price which was originally two per cent., but which has now been raised to three per cent. since 1st July, 1966, and (ii) there shall be only single point taxation. Now, the rate of tax prescribed by section 8(2)(a) for inter-State sales of declared goods is the rate applicable to the sale or purchase of such goods inside the appropriate State and it might, therefore, appear at first blush that the Parliament has not applied its own mind and determined the rate of tax but left it to be governed by the State legislation enacted by an independent legislature supreme within its allotted field and free from control or guidance by the Parliament and, consequently, there is abdication or self-effacement on the part of the Parliament. But this is far from correct. The rate applicable to the sale or purchase of declared goods inside the appropriate State could not, as already pointed out, exceed two per cent. prior to 1st July, 1966, and since then, three per cent. by reason of section 15 and the Parliament having laid down this maximum limit for the rate of tax in respect of intra-State sales - reasonably low not leaving scope for much area of discretion - the Parliament could not be said to have abdicated its essential legislative function in providing that the rate of tax in respect of inter-State sales shall be the same as that in respect of intra-State sales. This view derives considerable support from the decision of the Supreme Court in Devi Dass Gopal Krishnan v. State of Punjab ([1967] 20 S.T.C. 430 (S.C.)). The question which arose for decision in this case was whether delegation of power to the State Government to fix a rate of tax not exceeding two pies in a rupee was valid. The Supreme Court upheld the conferment of such power on the ground that the maximum limit within which the State Government could exercise the delegated power was prescribed by the legislature and it was a fairly low limit so as to exclude scope for arbitrariness. This was, of course, a case of delegated legislation but the principle enunciated by the Supreme Court in that case must apply equally in determining whether there was abdication or self-effacement in the present case because, as pointed out earlier, excessive delegation of legislative power is but an instance of abdication or self-effacement. Moreover, it is obvious that the Parliament prescribed the same rate for inter-State sales as prevailed for intra-State sales in order that the States may not place the local consumers in a better position than the consumers outside by prescribing a low rate of tax for intra-State sales than what may be prescribed by the Parliament for inter-State sales. It was in pursuance of a definite legislative policy and with a view to achieving a definite legislative end that the Parliament assimilated the rate of tax in respect of inter-State sales of declared goods to the rate applicable to intra-State sales of such goods in the appropriate State and there was no abdication of its essential legislative function by the Parliament in doing so.

25. That takes us to transactions of sale falling within section 8(2)(b). That provision deals with goods other than declared goods and provides for the rate of tax in respect of inter-State sales of such goods to unregistered dealers. The rate of tax prescribed is 10 per cent. or the rate applicable to the sale or purchase of such goods inside the appropriate State whichever is higher. It is evident from the report of the Taxation Enquiry Commission that the main reason for this provision was to prevent as far as possible evasion of sales tax. The Parliament was anxious that inter-State trade should be canalised through registered dealers over whom the appropriate Government has a great deal of control. It is not very easy for them to evade tax. The Parliament, therefore, with a view to discouraging inter-state trade through unregistered dealers provided a very high rate of tax in section 8(2)(b), the intention being that if sales tax payable in respect of inter-State sales to unregistered dealers was as high as ten per cent., dealers needing to buy goods other than declared goods would be constrained to get themselves registered and it would be easier for the States to check and control evasion of tax. The rate of tax fixed by the Parliament was ten per cent., which is quite a high rate but even that might not serve the purpose if the rate applicable to intra-State sales of such goods were more than ten per cent. The rate of ten per cent. would then be favourable to the unregistered dealers and they would be at an advantage compared to the local consumers. The legislature, therefore, provided as a matter of legislative policy that the rate of tax shall be ten per cent. or the rate applicable to intra-State sales whichever is higher. No abdication of essential legislative function can be said to be involved in the prescription of this rate of tax.

26. Then, we come to sub-section (2-A) of section 8 which formed the real subject-matter of attack on the part of the petitioner. The contention of the petitioners was that whatever might be said in justification of the other provisions of section 8, so far as the provision contained in sub-section (2-A) was concerned, it was a clear case of abdication or self-effacement in favour of the State Legislatures. The Parliament, it was said, had completely surrendered its legislative judgment in blindly accepting whatever exceptions might be given from time to time by the sales tax law of the appropriate State as also the rate of tax provided under it if it was lower than three per cent. We do not think this criticism is justified. There is a very good reason why the Parliament chose to enact this provision and it clearly discloses a deliberate and careful choice of legislative policy. It is obvious that this provision is enacted with a view to ensuring that the consumers in the States to which the goods are imported are not placed at a disadvantage as compared to the consumers in the State from which the goods are imported. The purpose behind the provision is to see that the States do not place the local consumers in a better position than the consumers outside by exempting intra-State sales of certain goods from tax when inter-State sales of those goods are taxable or by prescribing a lower rate of tax for intra-State sales than what is prescribed by the Parliament for inter-state sales.

27. Now, the Parliament could have achieved this purpose by one of the three methods :

(i) The Parliament could have prescribed a separate schedule of rates for each State showing the rates of tax chargeable on inter-State sales in cases where the movement of goods begins in that particular State, such rates of tax being fixed giving effect to the principle set out in section 8, sub-section (2-A), and then, whenever a change takes place in future in the rates prescribed by the sales tax law of any State, the Parliament could have amended the relevant schedule with a view to bringing the rates of tax chargeable on inter-State sales in accordance with the principle set out in section 8, sub-section (2-A).

(ii) The Parliament could have prescribed a separate schedule of rates for each State showing the rates of tax chargeable on inter-State sales in cases where the movement of goods begins in that particular State on the same basis as in the preceding clause and conferred power on a delegate providing that whenever a change takes place in the rates prescribed by the sales tax law of any State, the delegate shall amend the relevant schedule with a view to bringing the rates of tax chargeable on inter-State sales in conformity with the principle set out in section 8, sub-section (2-A).

(iii) The Parliament could have provided the rate structure in the manner as it has done by sub-sections (1), (2) and (2-A) of section 8.

28. Any one of these three methods could have been adopted by the Parliament, but the Parliament chose the last. Can it be said that the Parliament was not competent to do so The first method was obviously impracticable. It could be resorted to only by a legislature which had little or no business and which wanted some occupation to engage its time. The Parliament with its multitudinous activities and stupendously large legislative and other businesses could not be expected to keep a constant watch over the sales tax legislations of different States and to find time to amend the schedules to the Central Act every now and then for the purpose of bringing the rate structure of the Central Act for a particular State in line with the rate structure provided by the local sales tax law of that State. The second method was, if not impracticable, at least cumbrous. It would have required the delegate to remain in constant touch with the changing rate structure of the different States and to go on issuing orders from time to time re-fixing the rates at which tax should be levied on inter-State sales in different States. Moreover, a successful and efficient working of this method would have involved an elaborate administrative organization. These two methods were, therefore, wisely discarded by the Parliament and the last was adopted. This last method provided a self-operating machinery whereby the rate structure of the Central Act would be adjusted to the rate structures of the sales tax laws of the different States according to the formula provided in section 8, sub-section (2-A). It was a simple yet efficient legislative device intended to achieve adjustment of rates of Central tax according to a legislative policy determined and chosen by the Parliament. It avoids the disadvantages of the first two methods and yet achieves the same result. There can be no doubt that if the first method had been adopted, there could have been no complaint of constitutional failure in the exercise of legislative power. Equally, there could have been no such complaint if the second method had been followed. The delegation of the power to alter the rates of Central tax would have been valid since the exercise of the delegated power could have been guided and controlled by the principle formulated in section 8, sub-section (2-A). Then why should it make any difference if the third method is adopted It is intended to give effect to the same legislative policy as the first two methods. Each of these represents a mode of execution or implementation of the same legislative policy and it is for the legislature in the exercise of its legislative discretion to decide how and in what manner its legislative policy shall be effectuated. The court cannot sit in judgment over the expressed will of the elected representatives of the people and say that out of several modes of carrying out a legislative policy, the legislature should have chosen one and not the other. That is the function which belongs wholly and exclusively to the legislature. Here, the Parliament has chosen the last method which is in fact a highly efficient method of carrying out the legislative policy and it is impossible to see how it can be regarded as legislatively incompetent. None of the provisions of section 8 can, therefore, be held to be bad on the ground of abdication of legislative power.

29. That takes us to the question of constitutional validity of section 9. Having imposed the charge of tax on inter-State sales and provided the rate structure, the legislature has proceeded to lay down in section 9 the machinery for assessment, reassessment, collection and enforcement of payment of tax and penalty under the Central Act. Section 9 consists of three sub-sections. Sub-section (1) provided that tax on inter State sale or purchase shall be levied and collected by the Government of India in the State from which the movement of the goods commences. No exception could possibly be taken against this sub-section. But the question is : how is the tax to be levied and collected by the Government of India in the appropriate State The Parliament could have, of course, set up its own machinery in each State for assessment, reassessment, collection and enforcement of payment of tax but that would have required considerable administrative and organisational set up and entailed a huge amount of expenditure and that would have resulted in diminution in the net proceeds of the tax with consequent detriment to the States. The Parliament, therefore, decided to avail of the existing machinery in each State for assessment, reassessment, collection and enforcement of payment of tax on inter-State sales, particularly having regard to the fact that the tax was being levied by the Government of India not for its own benefit but for the benefit of the State from which the movement of the goods commences. The legislative policy adopted by the Parliament was that tax on inter-State sales levied for the benefit of a particular State should be assessed, reassessed and collected and its payment enforced by recourse to the existing machinery set up in that State for assessment, reassessment, collection and enforcement of payment of tax under the local sales tax law of the State. This legislative policy was articulated in sub-section (2). That sub-section consists of three parts. The first part says that the authorities for the time being empowered to assess, reassess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, reassess, collect and enforce payment of tax including any penalty payable by a dealer under the Central Act. The same authorities which assess, reassess, collect and enforce payment of tax under the general sales tax laws of the appropriate State are entrusted with the task of assessing, reassessing, collecting and enforcing payment of tax and penalty under the Central Act. The second part of sub-section (2) then proceeds to say how these authorities shall proceed to assess, reassess, collect and enforce payment of tax and penalty under the Central Act and what procedure they shall device of a fiction for attracting the procedural provisions of the general sales tax law of the appropriate State for assessment, reassessment, collection and enforcement of payment of tax and penalty under the Central Act. It provides that the authorities shall assess, reassess, collect and enforce payment of tax and penalty under the Central Act as if the tax or penalty were a tax or penalty payable under the general sales tax law of the appropriate State. Therefore, when the authorities proceed to assess, reassess, collect or enforce payment of tax or penalty under the Central Act, they have to deem it to be a tax or penalty under the general sales tax law of the appropriate State and in view of this legal fiction, they have to assess, reassess, collect or enforce payment of tax or penalty under the Central Act by applying the procedural provisions laid down in the general sales tax law of the appropriate State. The entire procedural machinery for assessment, reassessment, collection and enforcement of payment of tax or penalty under the general sales tax law of the appropriate State is thus made applicable for the purpose of assessment, reassessment, collection and enforcement of payment of tax and penalty under the Central Act and a fortiori, the authorities would be entitled to exercise all the powers which they have under the general sales tax law of the appropriate State for assessment, reassessment, collection and enforcement of payment of tax or penalty under the State law. This consequence which necessarily flows from the creation of the legal fiction is elaborated in the third part of sub-section (2), which provides that for the purpose of assessment, reassessment, collection and enforcement of tax and penalty under the Central Act, the authorities may exercise all or any of the powers they have under the general sales tax law of the State and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, penalties, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly. It will, therefore, be seen that the procedural provisions of the general sales tax law of the appropriate State are in their entirety made applicable for the purpose of assessment, reassessment, collection and enforcement of payment of tax and penalty under the Central Act. The effect of sub-section (2), is to quote the words of Shah, Actg. C.J., in State of Kerala v. Joseph and Company ([1970] 25 S.T.C. 483 (S.C.)), that 'the procedural law prescribed by the general sales tax law of the appropriate State applies in the matter of assessment, re-assessment, collection and enforcement of payment of tax under the Central Sales Tax Act'. There can be no doubt that this was the most convenient course to adopt but the question is, whether the Parliament could legitimately do so, without incurring the reproach of having abdicated its legislative function in doing so.

30. Now, Mr. Kaji, the learned Advocate appearing on behalf of the petitioner, could not find fault with sub-section (2) of section 9 in so far as it has adopted the machinery provided by the general sales tax law of the appropriate State for assessment, reassessment, collection and enforcement of payment of tax or penalty under the Central Act. There can be no question of abdication of legislative power when the Parliament, having expressed its legislative policy on substantive matters such as the incidence of tax, the point of levy, the rate structure, the determination of turnover for purposes of calculation of tax and exemption, which may be allowed in determining such turnover, provides that procedural matters such as the procedure for assessment or reassessment and the machinery for collection and enforcement of payment of tax shall be regulated by the general sales tax law of the appropriate State. The Parliament, instead of providing its own machinery for assessment, reassessment, collection and enforcement of payment of tax under the Central Act in each State, can conveniently, and with advantage not only to itself but also to each concerned State, adopt the existing machinery set up in each concerned State for assessment, reassessment, collection and enforcement of payment of tax under the general sales tax law of such State. But the complaint of Mr. Kaji on behalf of the petitioner was, that by enacting sub-section (2) of section 9, the Parliament had adopted not only the procedural provisions in the general sales tax law of the appropriate state, which would certainly be unexceptionable, but also the provisions in the general sales tax law of the appropriate State relating to advance payment of tax, levy of penalty, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business and recovery of tax from third parties which would be clearly matters of a substantive nature requiring exercise of legislative judgment on the part of the Parliament. The Parliament had, in the submission of Mr. Kaji on behalf of the petitioner, abdicated its legislative function in providing that in matters relating to advance payment of tax, levy of penalty, imposition of tax liability on transferee of, or successor to, a business and recovery of tax from third parties, the law applicable shall be that laid down in the general sales tax law of the appropriate State as may be in force at the relevant time. Mr. Kaji on behalf of the petitioner, contended that the Parliament should have applied its own mind and laid down its own legislative policy in regard to these matters which were not really procedural in character and which substantially affect the rights and liabilities of parties and since the Parliament failed to do so, it was guilty of abdication of legislative power. Now, so far as advance payment of tax is concerned, we fail to see how it can be regarded as a substantive matter requiring exercise of legislative judgment on the part of the Parliament. So long as the incidence of tax liability and the rate structure are laid down by the Parliament in the exercise of its legislative judgment, the question as to when and where the tax shall be payable can always be left by the Parliament to be determined by the general sales tax law of the appropriate State, particularly since the tax is being levied for the benefit of that State. We do not think that any abdication of legislative power on the part of the Parliament can be said to be involved in adopting the general sales tax law of the appropriate State in the matter of advance payment of tax. But the position may not quite be the same so far as provisions relating to levy of penalty, imposition of tax liability on transferee of, or successor to, a business and recovery of tax from third parties are concerned. There was considerable debate before us on the question whether the provisions in the general sales tax law of the appropriate State relating to levy of penalty were adopted by the use of the language employed in section 9, sub-section (2), and even if they were adopted, whether such adoption was abdication of legislative power on the part of the Parliament. The question was also seriously argued before us, whether the Parliament could be said to have abdicated its legislative power in adopting the provisions of the general sales tax law of the appropriate State in regard to imposition of tax liability on transferee of, or successor to, a business and recovery of tax from third parties. These are highly debatable questions and we do not propose to decide them, since, on the facts of the case before us, it is unnecessary to do so. Here, no penalty is sought to be levied against the petitioner nor is the petitioner transferee of, or successor to, a business in respect of which the tax is payable nor is any tax claimed to be recovered from the petitioner as a third party. This is a fiscal statute and it is a salutary principle which the courts always follow in construing any fiscal statute that they should say no more than what is absolutely necessary for the decision of the case. Even if the adoption of the provisions of the general sales tax law of the appropriate State in regard to levy of penalty, imposition of tax liability on transferee of, or successor to, a business and recovery of tax from third parties, were bad as involving abdication of legislative power - a question on which we do not express any opinion one way or the other - it would be clearly severable and would not affect the validity of section 9, sub-section (2), in so far as it adopts what are admittedly procedural provisions in the general sales tax law of the appropriate State. It is not possible to say in such a case that the legislature would not have enacted the valid part of section 9, sub-section (2), if it had known that this particular part of the sub-section were invalid. The essential fabric and texture of section 9, sub-section (2), would not be affected if the invalid part were struck out and excised; the rest would still contain a complete and effective machinery for assessment, reassessment, collection and enforcement of payment of tax. We do not, therefore, think it necessary to consider and decide the question whether section 9, sub-section (2), suffers from the vice of abdication of legislative power in so far as it has adopted the future as well as existing provisions of the general sales tax law of the appropriate State, regarding levy of penalty, imposition of tax liability on transferee of, or successor to, a business and recovery of tax from third parties.

31. Before we leave this point we may refer to the decision of the Supreme Court in B. Shama Rao v. The Union Territory of Pondicherry ([1967] 20 S.T.C. 215 (S.C.)), on which great reliance was placed on behalf of the petitioners. We fail to see how the ratio of this decision has any application to the facts of the present case. There the question which arose for determination was whether the Pondicherry General Sales Tax Act (10 of 1965) was a valid piece of legislation. The Legislative Assembly of Pondicherry passed this Act in exercise of the legislative power conferred upon it under the Union Territories Act (20 of 1963), and it became law on receiving the assent of the President on 25th May, 1965. Section 1, sub-section (2), of the Pondicherry Act provided that the Act shall come into force on such date as the Government may by notification appoint and pursuant to this provision the Pondicherry Government issued a notification dated 1st March, 1966, bringing the Pondicherry Act into force from 1st April, 1965. Section 2, sub-section (1), of the Pondicherry Act provided that the Madras General Sales Tax Act, 1959, as in force in the State of Madras immediately before the commencement of the Pondicherry Act shall extend to and be in force in the Union Territory of Pondicherry subject to certain modifications and adaptations and section 2, sub-section (2), of the Pondicherry Act enacted that the Madras General Sales Tax Rules, 1959, or any other rules made or issued under the Madras Act and in force in the State of Madras immediately before the coming into force of the Pondicherry Act shall apply to the Union Territory of Pondicherry. Now, between the date on which the Pondicherry Act was enacted and the date on which it came into force, the Madras Act was amended with the result that on 1st April, 1966, when the Pondicherry Act came into force, the Madras Act was different from what it was when the Pondicherry Legislature enacted the Pondicherry Act on 25th May, 1966. It was, therefore, contended on behalf of the petitioners before the Supreme Court that the Pondicherry Legislature had wholly abdicated its legislative function and effaced itself by adopting whatever might be the general sales tax law of the Madras State in force at a future date when the Pondicherry Act came into force and the Pondicherry Act was, therefore, null and void. This contention found favour with the majority Judges of the Supreme Court and the majority Judges speaking through J. M. Shelat, J., gave the following reasons for accepting this contention :

'The question then is whether in extending the Madras Act in the manner and to the extent it did under section 2(1) 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 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 matter.'

32. It is difficult to see how these observations of the Supreme Court can be applied in the context of the Central Act. Here, so far as the Central Act is concerned, there is, as pointed above, no abdication by the Parliament of its legislative function. The Parliament has applied its mind and made a deliberate choice of legislative policy. Every provision made in the Central Act is inspired by a definite legislative policy and calculated to achieve a definite legislative end. There is no refusal on the part of the Parliament to discharge its legislative function. There is no surrender of its legislative will to the judgment of another legislature. Whatever it has done is the result of deliberate and careful exercise of legislative judgment. We do not see any parallel between the present case and the decision in B. Shama Rao v. Union Territory of Pondicherry ([1967] 20 S.T.C. 215 (S.C.)). That decision has no application to the facts of the present case and no reliance can be placed on it on behalf of the petitioners.

33. That leaves only one short ground based on infraction of article 19(1)(f). The argument of the petitioner was that the amendment of section 2, clause (j), and introduction of sub-section (1-A) in section 6 with retrospective operation was violative of the fundamental rights guaranteed under article 19(1)(f) since they had the effect of superseding the view taken by the Supreme Court in Yaddalam's case ([1965] 16 S.T.C. 231 (S.C.)), and bringing to tax with retrospective effect inter-State sales which were exempt under the law as it stood prior to the amendment. It was quite possible that many dealers who had entered into such inter-State sales prior to 9th June, 1969, when the amendment was effected might not have recovered from their purchasers, the amount of sales tax payable by them on such inter-State sales under the belief which was then justified, that no sales tax was payable on such inter-State sales, but now, by reason of the retrospective amendment of section 2, clause (j), and addition of sub-section (1-A) in section 6, they would be liable to pay sales tax on such inter-State sales which they would no longer, in view of the long lapse of time, be able to recover from their purchasers. The result would be that they would have to bear the loss arising from retrospective imposition of tax liability on such inter-State sales and that would be clearly violative of article 19(1)(f). Now, this argument, plausible though it may seem, is clearly displaced by section 10 of the Central Sales Tax (Amendment) Act, 1969, which replaced the Central Sales Tax (Amendment) Ordinance, 1969. That section provides that where any sale of goods in the course of inter-State trade or commerce has been effected during the period between the 10th day of November, 1964, and the 9th day of June, 1969, and the dealer effecting such sale has not collected any tax under the principal Act on the ground that no such tax could be levied or collected in respect of such sale or any portion of the turnover relating to such sale and no such tax could be levied or collected if the amendments made in the principal Act had not been made, then the dealer shall not be liable to pay any tax under the principal Act, as amended by the amending Act, in respect of such sale or such part of the turnover relating to such sale. The date 10th November, 1964, is taken because Yaddalam's case ([1965] 16 S.T.C. 231 (S.C.)) was decided on that date and 9th June, 1969, is taken, for that is the date when the Central Sales Tax (Amendment) Ordinance, 1969, was promulgated. It will, therefore, be seen that if a dealer effected any inter-State sale between 10th November, 1964, and 9th June, 1969, and under the belief that it did not attract tax under the Central Act, he did not recover the amount of tax from the purchaser, he would not be liable to pay tax on it even though by reason of the retrospective amendment of section 2, clause (j), and introduction of sub-section (1-A) in section 6, such tax would otherwise be payable. There would, therefore, be no loss caused to the dealer so far as the period from 10th November, 1964, to 9th June, 1969, is concerned. There would also be no loss suffered by a dealer in respect of inter-State sales effected during the earlier period from the commencement of the Central Act up to 10th November, 1964, since the general sales tax laws in almost all States provide a period of limitation not exceeding four years for initiating proceedings for reassessment and there would hardly be any case where tax would be reassessed on a dealer in respect of inter-State sales effected by him during the period prior to 10th November, 1964. There is, therefore, no substance in the challenge to the validity of section 2, clause (j), and sub-section (1-A) of section 6 on the ground of infraction of article 19(1)(f). Moreover, it is not the case of the petitioner that it effected any inter-State sales during the period prior to 10th November, 1964, and did not collect the amount of tax from the purchasers in respect of such inter-State sales under the belief that it was not liable to pay tax on such inter-State sales and now, as a result of the amendment, tax is payable by it on such inter-State sales and is sought to be recovered from it under the Central Act. The difficulty of the petitioner, if at all, can be only in regard to the period between 10th November, 1964, and 9th June, 1969, but so far as that is concerned, the petitioner is amply protected by section 10 of the Central Sales Tax (Amendment) Act, 1969. But apart altogether from this answer on merits, it is difficult to see how the petitioner which is a limited company and hence a non-citizen can challenge the constitutionality of any statutory provision on the ground of infraction of article 19(1)(f). Vide the decisions of the Supreme Court in Indo-China Steam Navigation Co. Ltd. v. Jasjit Singh (A.I.R 1964 S.C. 1140) and British India Steam Navigation Co. Ltd. v. Jasjit Singh (A.I.R 1964 S.C. 1451).

34. These were all the contentions urged before us in support of the petition and since there is no substance in them, the petition fails and the rule is discharged with costs.

35. Petition dismissed.


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