M/S. Mangalore Ganesh Bedi Works Vs.
The State of Mysore & ANR  INSC 261 (25 September 1962)
CITATION: 1963 AIR 589 1963 SCR Supl. (1) 275
E&D 1965 SC 560 (13,14,21) RF 1969 SC 903
Indian Coinage-Enactment levying tax in terms
of naya paisa, if a taxing measure-Constitutional validity-Amendment
Effect-lndian Coinage Act, (Act 3 of 1906), as amended by Indian coinage
(Amendment) Act, (31 of 1955), s. 14-Constitution of India, Arts. 255, 197,
198, 199, 202.
The appellant was a registered firm under the
Mysore Sales Tax Act on which was imposed a tax of Rs. 1,16,728.44 NPS at the
rate of .02 Nps per rupee on a return of over Rs.58, 36,422-26 Nps . Its
grievance was that according to Mysore Sales Tax Act, it was liable to Sales
Tax at the rate of 3 pies for every rupee but after the amendment of Indian
Coinage Act (Act 30 of 1906) by amending Act 31 of 1955, tax was levied at the
rate of .02 Nps per rupee, which made him liable to pay more than what he would
have paid if charged at the rate of 3 pies per rupee. It was contended that
such enhancement of tax was unconstitutional and illegal being in contravention
of Article 255 of the Constitution.
Objections by the appellant regarding the
validity of tax were (1) that by the substitution of 2 naya paisleys in place
of 3 pies, a change was brought in the tax eligible by the Mysore Sales Tax Act
and since this enactment enhancing the tax was not enacted according to
procedure for money bills not being in accordance with Articles 198, 199 and
207 of the constitution, the tax was illegal and invalid; (2) that the Indian
coinage Act, being a central Act dealing with "coinage and legal-tender"
under item 36 of List 1, could not change the rate of tax under the Mysore
Sales Tax Act.
276 Held, that by substitution of new
coinage, no enhancement of tax was enacted but was merely a substitution of one
coinage by another of equivalent value and even assuming that it was a taxing
measure, its validity could not be challenged on the ground that it offends
Arts. 197 to 199 and the procedure laid down in Art. 202 of the Constitution,
because of Art. 212 which prohibits the validity of any proceedings in a
legislature from being called in question for irregularity of procedure and
formalities of Art. 255 are only matters of procedure.
Held,, further, that if the Indian Coinage
Act had not the effect of changing 3 pies into .02 Nps in the rate of tax
leviable under the Mysore Sales Tax Act, the Mysore Existing Laws (construction
of References to Values) Act, 1957, had made a provision for charging the tax
in terms of naya paisas instead of pies, therefore, the levy of tax in terms of
naya paisas was not unconstitutional, nor was it a taxing measure, but dealt
merely with the canversion of the old coinage into new coinage.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 194 of 1962.
Appeal by special leave from the order dated
July 15, 1960, of the Mysore High Court in Writ Petition No. 719 of 1960.
N.C. Chatterjee and S. S. Shukla, for the
N.S. Bindra and P. D. Men-on, for the
1962. September 25. The Judgment of the Court
was delivered by KAPUR, J.-This is an appeal. by special leave against the
judgment and order of the High Court of Mysore dismissing the assessee's
petition under Art. 226 of the Constitution for quashing the order of
assessment relating to two quarters i. e. from April 1, 1957 to September 30, 1957,
under the Mysore Sales Tax Act, Act VI of 1948.
The appellant is a firm registered under the
Mysore Sales Tax Act and was assessed to sales tax 277 on a return of over Rs.
58,36,422.26 Nps and the tax imposed on that sum at .02 Nps per rupee was Rs. 1,16,728.44
The grievance of the appellant was that
according to the Mysore Sales Tax Act he was liable to sales tax at the rate of
3 pies for every rupee on the turnover and calculated on that basis the amount
of tax would be Rs. 91,690/but after the amendment of the Indian Coinage Act
(Act 3 of 1906) by the Amending Act 31 of 1955 the rate of sales tax which was
levied on the appellant's Beth is was .02 Nps per rupee and thus the appellant
was called upon to pay Rs. 25,038/-more than he would have paid if he had been
charged at the rate of 3 pies per rupee. It was contended on behalf of the
appellant in the High Court and before us that this amounted to enhancement of
tax which was illegal because the tax had not been increased in the manner
provided under the Constitution and thus it was a breach of Art. 265 of the
Constitution and was therefore void and illegal.
Under the amended Indian Coinage Act
provision was made in s. 14 for the substitution of value expressed in annas,
pace and pies by value expressed in naya paisa, which was the new coinage
introduced under the amended Act. Section 14 reads as under:"S.14(1) The
rupee shall be divided into one hundred units and the new coin representing
such unit may be designated by the Central Government, by notification in the
Official Gazette, under such name as it thinks fit, and the rupee, half rupee
and quarter-rupee shall be respectively equivalent to one hundred, fifty and
twenty five such new coins and shall, subject to the provisions of subsection
(1) and sub-section (2) of section 13 and to the extent specified therein, be a
legal tender in payment or on account accordingly.
278 (2) All coins issued under the authority
of this Act in any denomination of annas, pice and pies shall, to the extent
specified in section 13, be a legal tender in payment or on account at the rate
of sixteen annas, sixty four pice or one hundred and ninety two pies to one
hundred new coins referred to in subsection (1), calculated in respect of any
such single coin or number of such coins tendered.
at one transaction, to the nearest new coin,
or where the new coin above and 'the new coin below are equally near, to the
new coin below.
(3) All references in any enactment or in any
notification, rule or order under any enactment or in any contract, deed or
other instrument to any value expressed in annas, pice and pies shall be
construed as references to that value expressed in new coins referred to in
sub-section (1) converted therefore the rate specified in subsection(2)".
By sub-ss. (1) & (2) of s. 14 therefore
one rupee is divided into a hundred naya paisas, the old legal tender of
sixteen annas or sixty four pice or one hundred and ninety two pies to a rupee
remains legal tender which will be equivalent to one hundred naya paisas and
for purposes of calculation and conversion of old coins into new coins, one old
coin or a number of such coins have to be calculated to the nearest new coin or
coins and where the new coin above and the new coin below are equally near then
the calculation is to the new coin below. Sub-s. (3) provides that all
references under any enactment to annas, pice or pies have to be construed as
reference to the new coin referred to in subsection (1). In other words
wherever the old legal tender i.e. annas, pice and pies 279 is mentioned in an
enactment it is to be converted into naya paisas and the naya paisas are to be
substituted in place of the old legal tender calculated in the manner laid down
in sub-s.(2). On March 1, 1957, the Mysore Legislature enacted the Mysore
existing Laws (Construction of References to Values Act, 1957) Act 12 of 1957.
By s.2 of that Act "'existing law"( was defined as an Act, Order, or
regulation having the force of law in Mysore State relating to any matter other
than any enactment, notification, rule or order to which the provisions of
sub-s.(3) of s. 14 of the Indian Coinage Act are applicable. By s. 3 of that'
Act in every such existing law reference to any value expressed in annas pice
or pies shall be construed as reference to that value expressed in new coins
referred to in sub-section (1) of s. 14 of the Indian Coinage Act converted
thereto at the rate specified in sub-s.(2) of s. 14 of that Act.
Two objections were taken to the validity of
the tax :
Firstly it was argued that by the
substitution of 2 naya paisas in place of 3 pies there was it change in the tax
eligible by the Mysore Sales Tax Act and this could only be done if that
enactment had been passed according to the procedure for Money Bills in the
manner provided by Arts.
198, 199 and 207 of the Constitution and as
no such Money Bill was introduced or passed for the enhancement of the tax, the
tax was illegal and invalid. In our opinion by substitution of new coinage i.e.
naya paisas in place of annas, pice and pies no enhancement of tax was enacted
but it was I merely a substitution of one coinage by another of equivalent
value. Even assuming that it is a taxing measure its validity cannot be
challenged on the ground that t offends Arts. 197 to 199 and the procedure laid
down in Art.
202 of the Constitution. Article (21)
prohibits the validity of any proceedings in a legislature of a State from
being called in question on the ground of any alleged irregularity of procedure
and Art. 255 lays down that requirements as to recommendation 280 and previous
sanction are to be regarded as matters of procedure only. It provides Art. 255
"No Act of Parliament or of the Legislature of a State,and no provision in
any such Act, shall be invalid by reason only that some recommendation or
previous sanction required by this Constitution was not given, if assent to
that Act was given(a) where the recommendation required was that of the
Governor either by the Governor or by the President ;
Consequently the tax cannot be challenged on
the ground that it is contrary to the provisions of the Constitution.
Secondly, it was submitted that the Indian Coinage
Act, being a Central Act dealing with " coinage and legal tender"
under item 36 of List I, could not change the rate of tax under the Mysore
Sales Tax Act. It is unnecessary to decide this question because if the Central
Act i.e. the Indian Coinage Act, has not the effect of changing 3 pies into .02
Nps in the rate of tax leviable under the Mysore Sales Tax Act, the Mysore
Existing Laws (Construction of References to Values) Act, 1957, which has been
set out above has made a provision for charging the tax in terms of naya paisas
instead of pies. Therefore the levy of tax in terms of naya paisas is not
unconstitutional nor is it a taxing measure but it deals merely with the
conversion of the old coinage into new coinage.
It was then argued that because of the order
of the High Court in a previous petition, under 281 Art. 226 whereby the
provisional assessment was set aside the principle of res judicata applied and
a different decision could not be given in the present petition which was
subsequently filed after the final assessment. In our opinion there is no merit
in that submission. The previous petition upon which the appellant relies was
to set aside the provisional assessment and it was set aside in the following
"Read Memo dated 7-6-1958 by the
Advocate General and Advocate for respondent, stating that the respondents do
not oppose the writ petition being allowed and that the provisional assessment
may be set aside".
The previous decision setting aside the
provisional assessment does not indicate what issues were raised and decided
and there is no indication that the question now raised before us was before
the Court. That decision cannot therefore operate as res judicata.
In our opinion this appeal is without merit
and is dismissed with costs.