Territorial operation of tax law governs sales tax liability in Fort Cochin before the later statute commenced.

Sales tax under the General Sales Tax Act, 1125 was not leviable on sales in Fort Cochin before 1 October 1957 because that Act came into operation there only from that date under the 1957 amendment. For the earlier period, 1 April 1957 to 30 September 1957, the applicable law in Fort Cochin was the Madras General Sales Tax Act, 1939. Section 119 of the States Reorganisation Act, 1956 preserved the territorial operation of existing laws and did not automatically extend the later State taxing law to the area before its commencement.

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Issues: Whether sales tax was leviable under the General Sales Tax Act, 1125, on sales effected in Fort Cochin before 1 October 1957.

Analysis: The sales were treated as having taken place in Fort Cochin, but the General Sales Tax Act, 1125 came into operation there only on 1 October 1957 by reason of the Travancore-Cochin General Sales Tax (Amendment) Act, 1957. Liability depended on the date of sale. The law in force in Fort Cochin during the earlier period, 1 April 1957 to 30 September 1957, was the Madras General Sales Tax Act, 1939. Section 119 of the States Reorganisation Act, 1956 preserved the territorial reach of laws in force immediately before the appointed day and did not automatically extend the later State law to the whole territory.

Conclusion: Sales tax under the General Sales Tax Act, 1125 could not be levied on sales in Fort Cochin before 1 October 1957, but was leviable on sales effected on and from that date.

Ratio Decidendi: In fiscal legislation, tax liability is determined by the date and territorial operation of the taxing law, and a reorganisation statute preserving existing laws does not automatically extend a later-enacted tax statute to an before its commencement there.

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