Retrospective validation of sales tax on inter-State sales under comparable local provisions saved the assessment.

Article 286(2) barred levy on inter-State sales during the relevant period, but the validating effect of the Sales Tax Laws Validation Act, 1956 was treated as decisive where the local sales tax provisions were comparable to those covered by the validating legislation. On that basis, provisions in the Travancore-Cochin Sales Tax Act were regarded as equivalent to the corresponding Madras provisions, bringing the assessment within the class of taxes retrospectively saved for 1954-55. The earlier objection that the Travancore-Cochin enactment contained no authorising provision was rejected in light of the validating statute.

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Issues: (i) whether sales tax could be levied on the amount representing inter-State sales in view of Article 286(2) of the Constitution of India; (ii) whether the Sales Tax Laws Validation Act, 1956 validated the levy under the Travancore-Cochin Sales Tax Act.

Issue (i): Whether sales tax could be levied on the amount representing inter-State sales in view of Article 286(2) of the Constitution of India.

Analysis: The amount in dispute represented the price of goods obtained through inter-State sales. The prohibition under Article 286(2) had not been lifted at the relevant time, but the question was whether the levy was nevertheless covered by the validating legislation applicable to the period of assessment.

Conclusion: The levy could not be sustained merely on the basis of the constitutional prohibition, and the question depended on the effect of the validating statute.

Issue (ii): Whether the Sales Tax Laws Validation Act, 1956 validated the levy under the Travancore-Cochin Sales Tax Act.

Analysis: Section 26 of the Travancore-Cochin Sales Tax Act was treated as similar to section 22 of the Madras General Sales Tax Act, and the definition provisions were also regarded as comparable. On that basis, the levy fell within the class of taxes validated for the relevant period by the Sales Tax Laws Validation Act, 1956. The earlier view that there was no authorising provision in the Travancore-Cochin enactment was rejected.

Conclusion: The validating Act applied and the tax on sales during 1954-55 was saved.

Final Conclusion: The dealer's relief was set aside, the original assessment order was restored, and the revision succeeded with costs.

Ratio Decidendi: Where the local sales tax law contains provisions equivalent to those considered in the validating legislation, the Sales Tax Laws Validation Act, 1956 retrospectively saves taxes levied during the specified period notwithstanding the earlier constitutional objection.

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