Validating statute cannot cure an unauthorised inter-State sales tax levy under the parent State law.

A validating statute cannot retrospectively support a sales tax levy unless the parent State law had already authorised tax on the relevant inter-State transaction. Section 22 of the Madras General Sales Tax Act, 1939 was treated as a restriction on taxing power and as reflecting the constitutional bars in Article 286, with its clauses operating independently. Delivery of goods in the State for consumption did not remove the prohibition on taxing inter-State sales, and the Explanation to section 22 could not expand the charging provision. The validating Act therefore could not cure the levy, and the assessee was treated as liable as the first dealer on the relevant turnover.

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Issues: Whether the Sales Tax Laws Validation Act, 1956 validated levy of sales tax on transactions of inter-State sale or purchase under the Madras General Sales Tax Act, 1939, and whether the assessee was liable to be treated as the first dealer for such turnover.

Analysis: The validating Act could operate only if, during the relevant period, there existed a pre-existing State law imposing or authorising tax on sales or purchases in the course of inter-State trade or commerce. Section 22 of the Madras General Sales Tax Act, 1939, when read as a whole, was treated as a restriction on the State's taxing power and as a reproduction of the constitutional bans in Article 286 of the Constitution of India. Its clauses were held to be separate and independent, so that the fact that goods were delivered in the State for consumption did not remove the constitutional prohibition against taxing inter-State sales. The Explanation to section 22 could not be transplanted to enlarge the charging provision. The validating Act therefore did not save a levy which the State Act itself did not authorise.

Conclusion: The validating Act was inapplicable, and the assessee remained liable as the first dealer in the State on the relevant turnover.

Final Conclusion: The Tribunal's view was reversed, and the revision succeeded in favour of the revenue.

Ratio Decidendi: A validating statute cannot cure a levy unless the underlying State law, as properly construed, had already authorised the tax on the relevant inter-State transaction.

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