Declared goods sales tax upheld where the statute fixes a single taxable stage and cures prior invalidity.

Section 5(3) of the Punjab General Sales Tax Act, as amended, was upheld for declared goods because it fixed a single taxable stage at purchase by the last dealer liable to pay tax, did not directly or immediately restrict trade, and did not offend Article 303. The alleged Article 14 discrimination failed because the levy operated uniformly on declared goods whether consumed within Punjab or moved in inter-State trade. The amendment also removed the earlier defect under section 15 of the Central Sales Tax Act by preventing multiple levy, and market fee could not be counted as tax for the statutory ceiling. The Legislature was competent to validate the quashed assessments.

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Issues: (i) whether section 5(3) of the Punjab General Sales Tax Act, 1948, as amended, violated Article 303 of the Constitution of India by creating discrimination in relation to trade and commerce; (ii) whether the provision offended Article 14 of the Constitution of India; (iii) whether the provision was repugnant to section 15 of the Central Sales Tax Act, 1956, or remained vulnerable after the earlier striking down of the unamended levy; and (iv) whether the Legislature could validly validate the assessments that had been quashed.

Issue (i): whether section 5(3) of the Punjab General Sales Tax Act, 1948, as amended, violated Article 303 of the Constitution of India by creating discrimination in relation to trade and commerce.

Analysis: Article 303 was held to be confined to legislative preference or discrimination in the field of trade and commerce, and not to taxation as such. The amended provision imposed purchase tax only at a single stage on declared goods, namely at the stage of purchase by the last dealer liable to pay tax. The Court further held that the provision did not directly or immediately impede the free flow of trade or movement of goods, and no factual foundation had been laid to show such a restrictive effect.

Conclusion: The challenge under Article 303 failed and the provision was upheld.

Issue (ii): whether the provision offended Article 14 of the Constitution of India.

Analysis: The alleged discrimination between consumers within the State and those outside it was negatived on the ground that, in relation to declared goods, the levy operated uniformly. The tax was attracted in the State whether the goods were consumed within Punjab or moved out in the course of inter-State trade, so the asserted classification had no real basis.

Conclusion: The challenge under Article 14 failed.

Issue (iii): whether the provision was repugnant to section 15 of the Central Sales Tax Act, 1956, or remained vulnerable after the earlier striking down of the unamended levy.

Analysis: The earlier defect lay in the absence of a fixed taxing stage and the possibility of multiple levy on declared goods. The amendment cured that defect by expressly providing a single stage of levy at the purchase of such goods by the last dealer liable to pay tax. The Court also held that market fee was not a tax, so it could not be added to exceed the statutory ceiling. Section 5(3) therefore supplied the necessary machinery and removed the infirmity previously noticed.

Conclusion: The amended provision was not hit by section 15 of the Central Sales Tax Act, 1956, and the earlier invalidity did not survive.

Issue (iv): whether the Legislature could validly validate the assessments that had been quashed.

Analysis: The power of the Legislature to enact validating legislation and to remove the basis of judicial invalidation was treated as settled law. On that principle, the Legislature could cure the defect and give effect to the amended scheme notwithstanding the earlier quashing of assessments.

Conclusion: The validation challenge failed.

Final Conclusion: The amended sales tax scheme on declared goods was sustained in all material respects, and the writ petition was rejected.

Ratio Decidendi: A sales tax on declared goods is constitutionally valid where the statute fixes a single taxable stage at the last purchase by the dealer liable to pay tax, does not directly and immediately impede trade, and cures the defect that had previously rendered the levy invalid.

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