Continuity of pre-existing law after state reorganisation must follow new territorial boundaries, not the old State identity.

Section 119 of the States Reorganisation Act, 1956 preserves pre-existing laws in merged territories, but only consistently with the reorganised State boundaries and without deeming the former State to continue as a constitutional unit. Territorial references in a surviving taxing statute must therefore be read in the context of the reconstituted State structure, not as if the old State had remained unchanged. On that basis, the transfer of the Kanyakumari area altered the territorial setting of the Travancore-Cochin General Sales Tax Act, and the petitioner was treated as the last purchaser liable to assessment; the assessment was upheld.

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Issues: Whether, on the reorganisation of States and the transfer of territory under the States Reorganisation Act, 1956, the petitioner was liable to be assessed as the last purchaser under the Travancore-Cochin General Sales Tax Act on the footing that the relevant words in the taxing statute should be read as referring to the erstwhile Travancore-Cochin State rather than the reconstituted State boundaries.

Analysis: Section 119 of the States Reorganisation Act, 1956 preserves the operation of pre-existing laws in the merged territories, but it does not create a fiction that the old State continues to exist for all purposes. The old law remains in force only consistently with the new territorial arrangement brought about by the Act. The territorial references in the surviving law must therefore be understood in the context of the reorganised States and not as if the former constitutional unit had not ceased to exist. The transfer of the Kanyakumari area to Madras altered the territorial setting in which the Travancore-Cochin sales tax law operated, and the fiction of continuity could not be stretched to preserve the pre-reorganisation identity of Travancore-Cochin as a State.

Conclusion: The petitioner was the last purchaser liable to assessment under the Travancore-Cochin General Sales Tax Act, and the assessment was upheld.

Ratio Decidendi: Section 119 of the States Reorganisation Act, 1956 continues pre-existing laws in merged territories, but only in a manner consistent with the reconstituted State boundaries and without deeming the former State to continue as a constitutional unit.

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