Validating legislation preserved State sales tax on inter-State coal sales for the pre-September 1955 period.

A State sales tax levy on inter-State sales of coal for the period up to 4 September 1955 remained enforceable because Parliament had validly validated such State levies through the Sales Tax Laws Validation Act, 1956. The Travancore-Cochin General Sales Tax Act, as amended, had imposed a constitutional restriction on taxing inter-State sales after 31 March 1951, but the validating legislation preserved levies for the period 1 April 1951 to 6 September 1955. The later constitutional amendment and the 1957 State amendment did not undo that completed validation, as the later change operated prospectively only.

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Issues: Whether sales tax was leviable by the State of Kerala on inter-State sales of coal made up to 4 September 1955 in light of the Travancore-Cochin General Sales Tax Act and the Sales Tax Laws Validation Act, 1956.

Analysis: The Travancore-Cochin General Sales Tax Act originally imposed sales tax on turnover, and section 26, as amended in 1951, introduced a ban on taxing inter-State sales after 31 March 1951 except to the extent Parliament otherwise provided. Central Act 7 of 1956 validated State laws imposing or authorising such tax for the period 1 April 1951 to 6 September 1955. The Constitution (Sixth Amendment) Act, 1956 thereafter altered the constitutional scheme, but the Court held that the levy for the period under consideration had already been validated and remained enforceable. The later 1957 amendment was only prospective and did not affect prior levies.

Conclusion: The levy of sales tax on the transactions up to 4 September 1955 was valid and the answer to the revised question was in the affirmative.

Final Conclusion: The appeal succeeded, the Tribunal's view was set aside, and the matter was sent back for further proceedings in accordance with the Court's answer on the legal question.

Ratio Decidendi: A State sales tax levy on inter-State sales for the period covered by the validating legislation remains enforceable where Parliament has validly removed the constitutional ban and the State law operated as conditional legislation.

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