Rattan Lal & Co. & ANR Vs. The
Assessing Authority & ANR  INSC 262 (29 October 1968)
29/10/1968 HIDAYATULLAH, M. (CJ)
HIDAYATULLAH, M. (CJ) SHAH, J.C.
CITATION: 1970 AIR 1742 1969 SCR (2) 544
CITATOR INFO :
F 1972 SC1458 (32,37,38) F 1974 SC1111 (7) RF
1976 SC 769 (3) D 1979 SC 435 (6) R 1985 SC1041 (11) F 1987 SC1922 (7,11,12,18)
RF 1990 SC 820 (17,25)
Punjab General Sales Tax Act, 1948 as amended
by Punjab Act 7 of 1967 and Haryana Act 14 of 1967, ss. 5, 11A--Fixation of
stage of tax--Amendments if contravene s. 15 Central Sales Tax Act. 1955--If
discriminatory--Constitution of India, Art. 304.
In Bhawani Cotton Mills v. Stale of Punjab
119671 3 S C R 577 this Court struck down s. 5(1) second proviso and ss.
5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948 as contravening s. 15 of
the Central Sales Tax Act, 1955. because, neither the Punjab Act nor the rules
made there under indicated, as required by the Central Act the stage at which
tax was to be levied. After the formation of the new States of Punjab and
Haryana, the Act was amended by the legislatures of the two States by Act 7 of
1967 and 14 of 1967 respectively. The amendments fixed it at the stage of sale
or purchase of respectively, goods by the last dealer liable to pay tax. In a
writ petition before this Court the petitioners contended that (i) the position
had not altered at all even after the amendments and the liability to taxation
at different stages still remained and therefore the Act continned to be in
conflict with the Central Sales Tax Act; (ii) the legislatures of the two
States were not competent to amend retrospectively an act passed by the
composite State; (iii) by leaving it free to the executive to impose the tax
within the maximum fixed there was excessive delegation of legislative
(iv) there was discrimination in the new s.
11AA and the opportunity given to a dealer to ask for reassessment or to submit
to the old assessment and (v) the Act discriminated between imported goods and
local goods and therefore contravened the equality clause and Art. 30. of the
HELD: Dismissing, the petition.
(1) The Act by specifying the stage its the
last purchase or sale a dealer liable It) pay the tax makes the stage quite
clear. The matter now in the hands of the dealer and he has to find out for
himself whether he is liable to pay the tax or not. A dealer knows what he has
done with his goods or is going to do with them. By providing that he need not
include in his turnover any transaction except when he is the last dealer, the
position is now made clear. [553 F. G] (2) The competency of the Icgislatures
of Punjab and Haryana to amend an Act passed the composite State cannot be
questioned. After reorganisation the Act applied as an independent Act to each
of the areas and is subject to the legislative competence of the legislature in
[556 B] (3) There is no abdication of
legislative functions in favour of the administrative authoritv as the Central
Act itself gives power to the legislature to choose a rate of tax at not more
than 3% of the taxable turnover. The tax levied is well within that limit and
therefore the legislature has chosen the maximum and has left it free to the
545 authorities to impose the tax within that maximum regard being had to the
requirements of revenue and the expenditure necessary for the State. [555 G]
(4) The opportunity given to a dealer in s. 11AA to ask for reassessment or to
submit to the old assessment does not result in discrimination. This is open to
every dealer and the intention is to give an opportunity to the dealer himself
leaving it to his own will whether to ask for a refund or not. [555 E-F] (5)
When a taxing State is not imposing rates of tax on imported goods different
from rates of tax on goods manufactured or produced. Article 304 has no
So long as the rate is the same Art. 304 is
satisfied. In the instant case the tax is at the same rate and therefore tax
cannot be said to be higher in the case of imported goods. When the rate is
applied the resulting tax may be somewhat higher but that does not contravene
the equality contemplated by Art. 304. [557 B. C] State of Madras v.N.K.
Natraja, Mudaliar,  1 S.C.R. referred to
ORIGINAL JURISDICTION: Writ Petitions Nos.
133, 165, 169-172, 185, 218, 219, 227, 228, 230,239, 252, 253, 248 and 249
Petition under Art. 32 of the Constitution of
India for the enforcement of the fundamental rights.
S.V. Gupte, S.K. Mehta and K.L. Mehta, for
the petitioners (in W.P. No. 133 of 1968).
C.D. Garg, S.K. Mehta and K.L. Mehta, for the
petitioners (in W.P. No. 165 of 1968).
Harder Singh, for the petitioners (in W.Ps.
Nos. 169 and 170 of 1968).
V.C. Mahajan, S.K. Mehta and K.L. Mehta, for
the petitioners (in W.Ps. Nos. 171,172, 218, 219, 227, 228, 230, 239, 248, 249,
252 and 253 of 1968).
M.C. Chagla, A.N. Sinha and B.P. Jha, for the
petitioners (in W.P. No. 185 of 1968).
Niren De, Solicitor-General, O.P. Malhotra
and R.N. Sachthey, for the respondents (in W.P. Nos. 133 and 165 of 1968).
A nand Saroop, Advocate-General for the State
of Haryana and R.N. Sachthey, for the respondents (in W.P. Nos. 218, 219, 227
& 228 of 1968).
O.P. Malhotra and R.N. Sachthey, for the
respondents (in W.P. Nos. 169 to 172 of 1968).
R.N. Sachthey,, for the respondents (in W.P.
Nos. 185, 230, 239, 248, 249, 252 and 253 of 1968).
B. Datta and P.C. Bharatari, for the
interveners (in W.P. No. 165 of 1968).
546 The Judgment of the Court was delivered
by Hidayatullah, C.J. These are 17 petitions challenging the validity of the
Punjab General Sales Tax (Amendment and Validation) Act, 1967 (Act No. 7 of
1967) by the Punjab Legislature and the Punjab Sales Tax (Haryana Amendment and
Validation)Act, 1967. Thirteen of these petitions challenge the Punjab
Amendment Act and four challenge the Haryana Amendment Act.
The petitioners are firms or companies
dealing in cotton or oil seeds. Their business is to purchase ginned and
unginned cotton for manufacturing yarn and selling the said cotton also to
registered and unregistered dealers both inside and outside the State. The
petitioners of the second category purchase oil seeds for use in manufacture of
edible oils. The surplus oil-seeds are sold to other dealers, registered or unregistered,
inside and outside the State of Punjab. Both these commodities are essential
commodities to which the Central Sales Tax Act applies. Certain provisions of
these Amending Acts are challenged on the ground that they offend s. 15 of the
Central Act and are also unconstitutional being in violation of Articles 14 and
The Punjab General Sales Tax Act was passed
in 1948. It was amended from time to time. The Act as it stood on April 1,
1960, was challenged in Bhawani Cotton Mills Ltd. v. State of Punjab and
anr.(1). On April 10, 1967 this Court by majority struck down certain portions
of the Act on the ground that they were in conflict with the provision of s. 15
of the Central Act. On November 1, 1966 .the former State of Punjab bifurcated
and the States of Punjab and Haryana came into existence. On December 29, 1967,
the Punjab Legislature enacted Act 7 of 1967 amending the original Act, and the
following day the President's Act intituled the Punjab General Sales Tax
(Haryana Amendment and Validation) Act, 1967 (Act No. 14 of 1967) was passed
for Haryana. Both the Acts were preceded by Ordinances which they replaced. It
is not necessary to refer to the Ordinances.
Section 15 of the Central Sales Tax Act, 1956
(54 of 1956) provided as follows:
"15. Restrictions and conditions in
regard to tax on sale or purchase of declared goods within a State. 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 :-- (1)  3 S.C.R. 577.
547 (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
leviable at more than one stage;
(b) where a tax has been levied =under that
law in respect of the sale or purchase inside the State of any declared goods
and such goods are sold in the course of inter- State trade or commerce, the
tax so levied shall be refunded to such person in such manner and subject to
such conditions as may be provided in any law in force in that State." The
section provides that in respect of declared goods the tax (sales or purchase)
shall not exceed the prescribed limit and shall not be levied at more than one
stage and shall be refunded to persons from whom it is collected if the goods
are sold in the course of inter-state trade or commerce. The original Punjab
General Sales Tax Act, 1948 was challenged before this Court in Bhawani Cotton
Mills Ltd.'s case(1). The Act in defining the tax-able turnover in s. 5 (2)
allowed certain deductions and one such deduction in cl. (vi) was:
" ........ turnover during that period
on the purchase of goods which are sold not later than six months after the
close of the year, to a registered dealer, or in the course of inter-State
trade or commerce, or in the course of export out of the territory of India:
Provided that in the case of such a sale to a
registered dealer, a declaration, in the prescribed form and duly filled and
signed by the registered dealer to whom the goods are sold, is furnished by the
dealer claiming deduction." The original section, as it stood on April 1,
1960, read as follows:
"5. Rate of tax.
(1) Subject to the provisions of this Act,
there shall be levied on the taxable turnover every year of a dealer a tax at
such rates not exceeding four naye paise in a rupee as the State Government may
by notification direct:
Provided .. ... .. .. .. ..
... ... .. .. .. .. ..
(1)  3 S.C.R. 577.
548 Provided ,further that the rate of tax
shall not exceed two naye paise in a rupee in respect of any declared goods as
defined in clause (c) of section 2 of the Central Sales Tax Act, 1956, and such
tax shall not be levied on the purchase or sale of such goods at more than one
(2) In this Act the expression "taxable
turnover" means that part of a dealer's gross turnover during any period
which remains after deducting there from-- (a) his turnover during that period
on-- (i) ......................
(ii) sales to a registered dealer of goods
declared by him in a prescribed form ........
(vi) the purchase of goods which are sold not
later than six months after the close of the year, to a registered dealer, or
in the course of inter-State trade or commerce, or in the course of export out
of the territory of India:
Provided that in the case of such a sale to a
registered dealer a declaration in the prescribed form and duly filled and
signed by the registered dealer to whom the goods are sold, is furnished by the
dealer claiming deduction.
It was contended in that case that s. 2(ff),
5 (1) second proviso and 5(2)(a)(vi) were in conflict with section 15 of the
Central Act. Bhawani Mills were dealers registered under the Punjab General
Sales Tax Act, 1948 and for the assessment years 1960-61 1961-62 and 1962-63
the Mills denied their liability to the Central Sales Tax on the purchase of
cotton in the accounting year.
The scheme of the Act then in force put the
tax on purchase of cotton (which was a declared commodity) 'at the rate of 2
naye paise in a rupee. By the second proviso to s. 5 (1) it was further
provided that such tax shall not be levied on the purchase or sale of such
goods at more than one stage. The word 'dealer' at that time was defined as
549 Dealer means any person including a
Department of Government who in the normal course of trade sells or purchases
any goods that are actually delivered for the purpose of consumption in the
State of Punjab.
irrespective of the fact that the main place
of business of such person is outside the said State and where the main place
of business of' any such person is not in the said State, 'dealer' includes the
local manager or agent of such person in Punjab in respect of such
business." The provisions for taxing purchases of cotton were challenged
on the ground that there was a possibility of the tax being levied at more than
one stage, the provisions of the second proviso notwithstanding. The argument
was summarized by our brother Vaidialingam thus:
"In this case, according to the appellant,
it has to send quarterly returns, even during the accounting year and, as per
s. 10(4) of the Act, it has to pay also tax. in accordance with the returns
submitted by it for every quarter. In the returns that are being sent, the
dealer will have to include all purchases of cotton, effected by him during the
quarter for which the return is sent. There is no indication, either in the
Act. or in the rules or ,the forms prescribed, as to whether the persons from
whom the appellant purchased cotton, have paid tax or not. Section 15 of the
Central Act is not restricted only to registered dealers. There will also be
nothing to guide the appellant to know as to whether the goods, purchased by
it, have 'been sold to it by its vendor within the period mentioned in cl.
(vi) of s. 5(2)(a) of the Act. Under those
circumstances, there is always a possibility, or even a certainty, of more
persons than one having paid tax or being made liable to pay tax in respect of
the same goods at different stages. That is quite opposed to the provisions of
s. 15 (a) of the Central Act. Even otherwise, it is pointed out that if a
person has purchased cotton and sells it after the period provided for in s. 5
(2)(a) (vi), that party is liable to pay sales tax and would have also paid the
same. Another purchaser from the said party will also be liable to pay tax. on
the same commodity, if he sells the goods, after 'the period mentioned in cl.
(vi). That is, two persons are made liable for payment of tax in respect of the
same commodity. In other words the purchases of the same item of declared
goods, by the persons indicated above, are made liable for tax, whereas under
the Central Act. there can be only one levy and collection of tax at one stage,
either on sale or on purchase." 550 Learned counsel in that case showed by
way of contrast how the Madras, Mysore, Andhra Pradesh and U.P. had avoided
such a consequence. In answer, it was pointed out by the State that since the
tax was levied, whether on sale or purchase, at the very first transaction, the
stage was fixed and that the dealer could always claim exemption under s.
5(2)(a)(vi) or a refund under s. 12 of the Act.
This Court in its majority judgment did not
consider that the second proviso to s. 5 (1) by its mere declaration prevented
the levy of tax at more than one stage. The difficulty however, remained that
the Act itself did not indicate the stage at which the tax was to be levied and
because under s. 15(1) of the Central Act there could be no liability for
payment of tax unless this stage was so stated in the Act or the rules there under.
It was pointed out that a dealer would have to show in his return all purchases
of cotton and pay the tax with his return. There was nothing which would have
enabled the dealer to know whether the tax had already been paid by another
dealer and to exclude from his return those transactions. The dealer could not
take a chance as heavy penalties were provided. This was particularly so where
the goods passed through an unregistered dealer's hands at an intermediate
stage. In dealing with the latter part of the reasons this Court gave an
example which may be quoted here:
" .... if a dealer, 'A' sells the
declared foods to 'B', six months after the close of the year (B being a
registered dealer), A becomes liable to purchase tax. But, if B sells the
identical declared goods, again, after the period mentioned in sub-el.-(vi), he
will also be liable to pay purchase tax. That means, in respect of. the same
item of declared goods, more than one person is made liable to pay tax and the
tax is also levied at more than one stage.
That is not permissible under s. 15(a) of the
If goods are resold to a nonregistered
dealer, within the period, sub-el. (vi), will not help the original purchaser.
We may also point out, at this stage, that
sub-cl. (vi) of s. 5(2)(a), negatives the assumption that the normal rule,
under the Act, in respect of declared goods, is to levy the tax on the first
purchaser." This Court then referred to s. 12 where there is a provision
for refund which taken with rules 48-58 allowed for refund to be claimed, and
found the provisions insufficient to get over the difficulty. This Court
"Even in the matter of obtaining
refunds, there can be no controversy, that the appellant will have to place,
before the officer concerned, particulars of transactions connected with the
commodity, in question and also the 551 basis on which it claims the relief. It
will be absolutely difficult, if not impossible, for persons like the appellant,
to collect materials in this behalf, because, there is no provision, contained
either in the Act or the rules, on the basis of which it will be entitled to be
supplied with all the material information, relevant, for sustaining a request
for refund. If the Central Act makes it mandatory that the tax can be collected
only at one stage, in our opinion, it is not enough for the State to say that a
person, who is not liable to pay tax, must nevertheless, pay it in the first
instance, and then claim refund, at a later stage. We may state that the
question as to how far a party can ask for refund, without the order of
assessment being set aside, by appropriate proceedings, is highly doubtful;
because at the time when the actual order of assessment is passed, in certain cases,
it may not be possible for a party to say whether he is entitled to exemption,
or not, under sub-cl. (vi) of s. 5(2) of the Act.
If a person is not liable for payment of tax
at all, at any time, the collection of a tax from him, with a possible
contingency, of refund at a later stage, will not make the original levy valid;
because, if particular sales or purchase are exempt from taxation altogether,
they can never be taken into account, at any stage, for the purpose of
calculating or arriving at the taxable turnover and for levying tax."
Relying upon the observations in .4. V. Fernandez v. State of Kerala (1) this
" ...... the provisions contained in a
statute with .respect to exemptions of tax or refund or rebate, on the one
hand, must be distinguished from the total nonliability or non-imposition of
tax, on the other. These observations, also, in our opinion, effectively
provide an answer to the stand taken by the State, in this ease that s. 12 of
the Act provides an adequate relief, by way of refund, even if tax is collected
at an earlier stage." The Amending Acts which are now challenged set about
removing these difficulties. These amendments are again challenged on the same
lines. It is convenient to take the two Amending Acts separately. First we
shall take up for consideration the Punjab amendments. Here, we are concerned
only with a few of the amendments made by the Amending Act 7 of 1967. Section 5
was amended retrospectively from different dates. In subsection (1), in the
second proviso, the words "as defined in el.  S.C.R, 837.
552 of s. 2 of the Central Sales Tax Act,
1956, and such tax shall not be levied on the purchase of sale of such goods at
more than one stage" are now omitted. After the second proviso another
proviso is introduced: In sub-s. 1 A, the words "in respect of such goods
other than declared goods" are substituted retrospectively from 16th
December, 1965 for the words "in respect of such goods.' After sub-s. (2)
a new sub-section (3) from October 1,1958. We may now set out the 5th
sub-section as it emerges from the amendment before we deal with the
"Section 5--Rate of tax (1) Subject to
the provisions of this Act, there shall be levied on the taxable turnover of a
dealer a tax at such rates not exceeding six naye paise in a rupee as the State
Government may by notification direct." (2) In this Act the expression
'taxable turnover means that part of a dealer's gross turnover during any
period which remains after deducting there from (a) his turnover during that
period on-- (i) . . . .
. . . .
(vi) the purchase of' goods which are sold
not later than six months after the close of the year, to a registered dealer,
or in the course of inter-State trade or commerce, or in the course of export
out of the territory of India;
Provided that in the case of such sale to a
registered dealer, a declaration, in the prescribed front and duly filled and
signed by the registered dealer to whom the goods are sold, is furnished by the
dealer claiming deduction.
(3) Notwithstanding anything contained in
this Act- (a) in respect of declared goods tax shall be levied at one stage and
that stage shall be -- (i) in the case of goods liable to sales tax, the stage
of sale of such goods by the last dealer liable to pay tax under this Act;
(ii) in the case of goods liable to purchase
tax, the stage of purchase of such goods by the last dealer liable to pay tax
under this Act;
(b) the taxable turnover of any dealer for
any period shall not include his turnover during that period 553 on any sale or
purchase of declared goods at stage other than the stage referred to in
subclause (i). or as the case may be, sub-clause (ii) of clause (a)." In
addition, a new section, s. 11 AA was added to the following effect:
"11 AA. Review of certain assessments,
etc. of tax on declared goods :-- (1) Notwithstanding anything contained in
this Act. the Assessing Authority shall (whether or not an application is made
to him in this behalf), review all assessments and reassessments made before
the commencement of the Punjab GeneraI Sales Tax Amendment and Validation Act,
1967, in respect of declared goods and make such order varying or revising the
order previously made as may be necessary for bringing the order previously
made into conformity with the provisions of this Act as amended by the Punjab
General Sales Tax (Amendment and Validation) Act.1967:
Provided that no proceeding for review shall
be initiated without giving the dealer concerned a notice in writing of not
less than thirty days.
(2) Any dealer on whom a notice is served
under sub-section (1) may within thirty days from the date of receipt of such
notice intimate in writing the assessing authority of his intention to abide by
the assessment or reassessment sought to be reviewed and if he does so. the
assessing authority shall not review such assessment or reassessment under this
(3) No order shall be made under this section
against any dealer without giving such dealer a reasonable opportunity of being
(4) Notwithstanding anything contained in any
judgment, decree or order of any court or other authority to the contrary but
subject to the provisions of the foregoing sub- sections any assessment.
reassessment. levy or collection of any tax in respect of declared goods made
or purporting to have been made, and any' action or thing taken or done or
purporting to have done in relation to such assessment.
are-assessment. levy or collection under the
provision of this Act before the commencement of the Punjab General 554 Sales
Tax (Amendment and Validation) Act, 1967, shall be as valid and effective as if
such assessment, reassessment, levy or collection or action or thing had been
made, taken or done under this Act as amended by the Punjab General Sales Tax
(Amendment and Validation)Act, 1967." The argument is that the position
has not altered at all even after the amendments and the liability to taxation
at different stages remains still and the Act continues to be in conflict with
the Central Act on the same reasons on which Bhawani Mills case(1) proceeded.
It is argued that the amendments have been made retrospective but no machinery
is provided to enable the dealer to discover that the goods had been taxed
before and the single stage at which the tax is to be levied is still not
clearly discernible. This is the main argument but there are many supplementary
arguments which we shall notice later. For the present we confine our attention
to the main point.
The stage of tax is now stated in s. 5(3)(i)
In the case of sales-tax, the stage of tax is
the sale of such goods by the last dealer liable to pay the tax and in the case
of purchase tax the stage is purchase by the last dealer liable to pay the tax.
It is also provided that the turnover of any dealer for any period shall not
include his turnover during that period of any sale or purchase of declared
goods at any other stage than the stage so mentioned.
It will be seen that the matter is now in the
hands of the dealer. He has to find out for himself whether he is liable to pay
the tax or not. A dealer knows what he has done with his goods or is going to
do with them. If he knows that he is not the last dealer having parted with the
goods to another dealer or he knows that he is going to use the goods or sell
them to consumers, he knows when' he is not liable to tax and when he is.
Therefore, he will not include the transaction in his taxable turnover in the
first case but include it in the second. Goods in the hands of a dealer are not
taxed. They are only taxed on the last purchase or sales. This information is
always possessed by a dealer and by providing that he need not include in his
turnover any transaction except when he is the last dealer, the position is now
It is contended that even so the dealer may
not know that he is the last dealer and may make some mistake. The law does not
take .into account the actions of persons who are negligent or mistaken but only
of persons who act correctly, according to law. If the dealer is clear 'about
his own position he is now quite able see whether he is the last purchaser
liable to pay the tax or the last seller liable to pay the tax. The Act by
Specifying the stage  3 S.C.R. 577.
555 as the last purchase or sale by a dealer
liable to pay the tax makes the stage quite clear and by giving an option to
him not to include such transactions in his return saves him from the liability
to pay the tax till he is the dealer liable to pay the tax. In our opinion,
therefore, the present provisions of the Act are quite clear and are quite
sufficient to make the amended Act accord with the Central Act. The arguments
noted in the earlier case of this Court do not therefore arise.
It will thus be seen that the present Act
does not suffer from any of the defects from which the un-amended Act had
suffered. It is, however, contended that the Act has been made retrospective
but no machinery is provided to discover if the declared goods were assessed to
tax more than once. As we have already pointed out, the matter is within the
ken of the dealer himself and it is ,for him to decide whether he would not
claim the benefit of s. 11AA and ask for a refund or in future transactions
delete the sales from his taxable turnover when he is not the last dealer
liable to pay the tax. Therefore the retrospectivity of the Act does not make
any difference. It is not contended before us that it was not within the
competence of the Punjab Legislature to pass such an Act retrospectively.
The defect pointed out is the self same
defect which was noticed in Bhawani Mills case(1). But that defect no longer
It is argued further that there is a
discrimination between the two kinds of manufacturers. In the definition of
'dealer' in s. (2)(d) and in the proviso to s. 1 IAA it is submitted
discrimination arises because of the opportunity given to a dealer to ask for
reassessment or to submit to the old assessment. This is open to every dealer
and the intention is to give ,an opportunity to the dealer himself leaving it
to his own will whether to ask for a refund or not. This hardly can be said to
create a discrimination.
Lastly it is contended that there is a
delegated legislation in that the maximum has been provided without indication
of the circumstances under which the tax is to be levied. This, it is said,
creates unguided delegation to administrative authority, the function of the
It is to be noticed that the Central Act
itself gives power to the legislature to choose a rate of tax at not more than
3 per cent of the taxable turnover. The tax levied is well within that limit
and therefore the legislature has chosen the maximum and has left it free to
the authorities to impose the tax within that maximum regard being had to the
requirements of revenue and the expenditure necessary for the State.
We may now deal with some arguments which are
common both sets of cases before considering the case of the Haryana amendment.
It is ,argued that the organisation of the State (1)  3 S.C.R. 577.
556 took place on November 1, 1966 and the
amendment in some of its parts seeks to amend the original Act from a date
anterior to this date. In other words, the legislature of one of the States
seeks to amend a law passed by the composite State. This argument entirely
misunderstands the position of the original Act after the reorganisation. That
Act applied now as an independent Act to each of the areas and is subject to
the legislative competence of the legislature in that area. The Act has been
amended in the new States in relation to the area of that State and it is
inconceivable that this could not be within the competence.
If the argument were accepted then the Act
would remain unamendable unless the composite State came into existence once
more. The scheme of the States Reorganization Acts makes the laws applicable to
the new areas until superseded, amended or altered by the appropriate
legislature in the new States. This is what the legislature has done and there
is nothing that can be said against such amendment.
In regard to Haryana cases also the same
arguments are urged. It is contended that the amended Act there also offends s.
15 for the reasons which we have given. Neither the amendment of s. 55 in this
area nor the introduction of s. 11AA for refund offends against s. 15 of the
Central Act or the equality clause of the Constitution. It is said that pending
cases will always be reconsidered whether or not an application in that behalf
is made but in the case of disposed of cases it depends upon the party to
intimate in writing that he has no objection to the assessment or reassessment
already made. If any objection can be taken it will 'be by those whose cases
are pending and not by those whose cases have been closed. The option to submit
to the assessment is open to every one alike and there is no discrimination if
a party wants that his case need not be reconsidered. He has only to state that
in writing and that would be the end of the matter. If he wants his case to be
reconsidered then he can go before the Tribunal and get his case reconsidered.
It is also urged in this connection that
there is a discrimination between the imported goods and local goods. .
It is said that the discrimination is also
between the first purchase in the case of imported goods and last sale in the
case of local goods. Since the imported goods might be more expensive by reason
of freight etc. or intermediary sales having taken place, it is said. that the
burden of tax will be heavier and therefore this will offend against the
equality clause and Art. 304 of the Constitution. In our opinion this argument
is without any substance. The rate of tax same in every case. In State of
Madras v.N.K. Nataraja Mudaliar(1). this Court stated that the essence of Arts.
301 and 303 is to enable the State by a law "to impose on goods imported
(1)  S.C.R.
557 from other States or the Union
territories any tax to which similar goods manufactured or produced in the
State are subject, so, however as not to discriminate between goods so imported
and goods so manufactured or produced." It was pointed out by this Court
that "imposition of differential rates of tax by the same State on goods
manufactured or produced in the State and similar goods imported in the State
is prohibited by that clause. But where the taxing State is not imposing rates
of tax on imported goods different from rates of tax on goods manufactured or
produced,Art. 304 has no application".
Here also the tax is at the same rate and
therefore the tax cannot be said to be higher in the case of imported goods.
It may be that when the rate is applied the
resulting tax is somewhat higher but that does not offend against the equality
contemplated by Art. 304. That is the consequence of ad valorem tax being
levied at a particular rate. So long as the rate is the same Art.304 is
satisfied. Even in the case of local manufactures if their cost of production
varies, the net tax collected will be more or less in some cases but that does
not create any inequality because inequality is not the result of the tax but
results from the cost of production of the goods or the 'cost of their
importation. This ground, therefore, has also no substance.
We do not think it necessary to set down here
the provisions of the Haryana Amendment Act because they follow the scheme of
the Punjab Amendment Act in substance and what we have said in regard to the
Punjab Amending Act applies mutatis mutandis to Haryana Amendment Act also.
In the result these petitions have no
substance. They are dismissed with costs. One set of hearing fee.
Y.P. Petitions dismissed.