Sales tax delegation and constitutional restriction: amended rate provisions became effective once Article 286(3) constraints were removed.

Unamended section 5 of the East Punjab General Sales Tax Act, 1948 was treated as invalid for excessive delegation, but that defect did not invalidate the remainder of the Act. The 1952 amended section 5 was upheld as a valid rate-fixing provision and as a law authorising imposition of tax for Article 286(3) purposes, though it could not operate on essential goods until the constitutional restriction ceased. The Sixth Amendment and repeal of the Central goods declaration regime removed that embargo, making the levy effective on essential goods from 11 September 1956. The 5 August 1954 notification and the earlier rate notifications were held effective, with tax liability depending on the date of sale.

---

---

Issues: (i) Whether the unamended section 5 of the East Punjab General Sales Tax Act, 1948 was void for excessive delegation and, if so, whether that invalidity affected the remaining provisions of the Act. (ii) Whether the amended section 5 inserted by the East Punjab General Sales Tax (Second Amendment) Act, 1952 was valid and whether it amounted to a law authorising the imposition of tax within Article 286(3) of the Constitution as it then stood. (iii) Whether the amendment of Article 286(3) by the Constitution (Sixth Amendment) Act, 1956 and the repeal of the Central Goods declaration law removed the restriction on the operation of the amended section 5. (iv) Whether the notification dated 5 August 1954 under section 6(2) was valid and whether the pre-1952 rate-fixing notifications under section 5 were valid. (v) Whether tax was effectively imposed on sales of edible oil produced in ghanis run by mechanical power during the relevant assessment years.

Issue (i): Whether the unamended section 5 of the East Punjab General Sales Tax Act, 1948 was void for excessive delegation and, if so, whether that invalidity affected the remaining provisions of the Act.

Analysis: The rate-making power conferred on the executive by the original section 5 was too wide and therefore invalid. The invalidity of section 5 did not destroy the whole enactment; sections 4, 6 and the rest of the Act remained on the statute book, though unenforceable to the extent that a valid rate provision was absent.

Conclusion: The unamended section 5 was void, but the remaining provisions of the Act were not invalidated.

Issue (ii): Whether the amended section 5 inserted by the East Punjab General Sales Tax (Second Amendment) Act, 1952 was valid and whether it amounted to a law authorising the imposition of tax within Article 286(3) of the Constitution as it then stood.

Analysis: The amendment inserted a new valid rate provision and was not open to the objection that it amended a still-born section. By fixing the machinery for levy through governmental notification, it formed part of a law authorising the imposition of tax. Since edible oils had been declared essential goods, the amended provision could not operate against such goods without presidential assent while the unamended Article 286(3) continued to apply.

Conclusion: The amended section 5 was valid and was a law authorising the imposition of tax within Article 286(3), but it could not operate against essential goods until the constitutional restriction ceased.

Issue (iii): Whether the amendment of Article 286(3) by the Constitution (Sixth Amendment) Act, 1956 and the repeal of the Central Goods declaration law removed the restriction on the operation of the amended section 5.

Analysis: The constitutional amendment removed the embargo that had previously prevented the amended section 5 from operating on essential goods. The provision was not void from inception; it had always operated on non-essential goods and became fully effective once the constitutional restriction was lifted. The repeal of the Central declaration law did not prevent the state levy from operating thereafter.

Conclusion: The amended section 5 took effect on essential goods from 11 September 1956 onwards.

Issue (iv): Whether the notification dated 5 August 1954 under section 6(2) was valid and whether the pre-1952 rate-fixing notifications under section 5 were valid.

Analysis: The 5 August 1954 notification was issued under a pre-Constitution power and was not itself a law made by the Legislature of a State for purposes of the unamended Article 286(3). It therefore did not require presidential assent and validly altered the tax-free schedule. The earlier notifications fixing rates were initially unauthorised because the original section 5 was invalid, but the 1952 amendment operated retrospectively and cured that defect, so those notifications were deemed valid.

Conclusion: The 5 August 1954 notification was valid, and the pre-1952 rate-fixing notifications were also valid by retrospective operation of the amended section 5.

Issue (v): Whether tax was effectively imposed on sales of edible oil produced in ghanis run by mechanical power during the relevant assessment years.

Analysis: Although the 1954 notification removed the tax-free character of the goods, the amended levy could not operate on essential goods while the unamended Article 286(3) remained in force. Once that restriction was removed on 11 September 1956, the levy and the notifications became fully effective against edible oil sales. Liability therefore depended on the date of sale.

Conclusion: Tax was effectively imposed only from 11 September 1956, and not before.

Final Conclusion: The assessees succeeded for sales made before 11 September 1956 and failed for sales made after that date; the appeals were therefore allowed only to that extent.

Ratio Decidendi: A post-Constitution sales tax provision fixing or authorising the rate of tax is a law authorising the imposition of tax, and where a constitutional restriction temporarily prevents its operation on essential goods, the provision becomes effective automatically once that restriction is removed if the law itself is otherwise valid.

---