Retrospective validation of State sales tax levies upheld where the pre-Constitution taxing law remained dormant, not extinguished.

Parliament was competent under Article 286(2) read with Entry 42 of the Union List to enact a retrospective validating law that preserved State sales tax levies on inter-State sales for the specified period; the enactment merely validated existing State laws and prior levies, and its retrospective operation was not excluded by the phrase "may by law otherwise provide." The pre-Constitution Madras sales tax law, as adapted, was not obliterated by the temporary constitutional prohibition and remained dormant but subsisting; once the ban was retrospectively removed, it revived in enforceable form and supported assessments. The constitutional challenge failed, the validating legislation was upheld, and the assessments were sustained.

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Issues: (i) Whether Parliament was competent under Article 286(2) read with Entry 42 of the Union List to enact a retrospective validation law saving State sales tax levies on inter-State sales during the specified period; (ii) Whether the pre-Constitution Madras sales tax law, as adapted, could be treated as a dormant but subsisting law so that assessments could proceed after the constitutional ban was lifted.

Issue (i): Whether Parliament was competent under Article 286(2) read with Entry 42 of the Union List to enact a retrospective validation law saving State sales tax levies on inter-State sales during the specified period.

Analysis: The power conferred by Article 286(2) was treated as legislative power, comparable to other constitutional formulations permitting Parliamentary law-making. The impugned enactment did not itself impose a sales tax; it validated existing State laws and the levies already made under them for the specified period. The Court held that retrospective operation was not excluded by the phrase "may by law otherwise provide", and that the enactment was within Parliamentary competence when read with Entry 42 of the Union List.

Conclusion: The validation Act was held to be within legislative competence and not unconstitutional on the ground of retrospectivity.

Issue (ii): Whether the pre-Constitution Madras sales tax law, as adapted, could be treated as a dormant but subsisting law so that assessments could proceed after the constitutional ban was lifted.

Analysis: The Court held that the sales tax law was not obliterated merely because Article 286(2) temporarily prevented its operation as to inter-State sales. It remained a valid pre-Constitution enactment, unenforceable only to the extent of the constitutional prohibition. Once Parliament retrospectively removed the ban, the law revived in its enforceable form. On that basis, the validating enactment supported assessments for transactions within the protected period.

Conclusion: The objection that no valid State law survived to support assessment was rejected, and the taxing authorities were entitled to proceed.

Final Conclusion: The constitutional challenge failed, the validating legislation was upheld, and the assessments were sustained, resulting in dismissal of the writ petitions with costs.

Ratio Decidendi: A pre-Constitution taxing law that is merely unenforceable because of a constitutional prohibition is not obliterated from existence, and Parliament may retrospectively validate State levies by removing the ban under its constitutional power where the legislation does not itself impose the tax.

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