Central sales tax may validly adopt State law for rates and procedure when Parliament has set the policy and standards.

Parliament's adoption, in the Central Sales Tax Act, of the appropriate State sales tax law for rates, exemptions, assessment, collection and penalty was held to be within legislative competence because the Act itself laid down the governing policy and standards. The challenge that sections 8 and 9 involved unconstitutional abdication of essential legislative power failed. Section 2(i) was construed to adopt the State sales tax law in force from time to time, not only the law as it stood on 21 December 1956, so the then existing State procedural machinery for assessment and collection validly applied. The writ petition was rejected and the impugned notice and levy were upheld.

---

---

Issues: (i) Whether sections 8 and 9 of the Central Sales Tax Act, 1956 were unconstitutional on the ground that Parliament had abdicated its essential legislative function by adopting the future sales tax laws of the States for fixation of tax rates, exemptions, assessment, collection and penalty. (ii) Whether section 2(i) of the Central Sales Tax Act, 1956 adopted only the State sales tax law in force on 21 December 1956, or the law for the time being in force from time to time, so as to authorise assessment under the then existing procedural law of the appropriate State.

Issue (i): Whether sections 8 and 9 of the Central Sales Tax Act, 1956 were unconstitutional on the ground that Parliament had abdicated its essential legislative function by adopting the future sales tax laws of the States for fixation of tax rates, exemptions, assessment, collection and penalty.

Analysis: The Act was enacted in the background of constitutional amendments intended to regulate inter-State sales and avoid multiple taxation. The scheme of the Act laid down the policy itself, classified inter-State sales into distinct categories, fixed the applicable rates by reference to the appropriate State law in order to serve the legislative object, and adopted the procedural machinery of the appropriate State law for assessment and collection. The adoption of State law for rate and procedure did not amount to surrender of legislative power, since the legislature had already formulated the policy and the details were left to an external legal standard for effective working of the statute. The principle that rate-fixing may be delegated was treated as supporting, not defeating, the validity of the scheme.

Conclusion: The challenge to the constitutional validity of sections 8 and 9 failed; there was no unconstitutional abdication of legislative power.

Issue (ii): Whether section 2(i) of the Central Sales Tax Act, 1956 adopted only the State sales tax law in force on 21 December 1956, or the law for the time being in force from time to time, so as to authorise assessment under the then existing procedural law of the appropriate State.

Analysis: The expression "sales tax law" and "general sales tax law" was defined to mean the law for the time being in force in any State. That language showed a clear legislative intention to adopt not merely the State law as it stood when the Central Act was enacted, but the State law as it existed from time to time, including subsequent amendments. The adoption extended to the procedural provisions for assessment, reassessment, collection and enforcement under the appropriate State law, and such adoption was held to be within parliamentary competence.

Conclusion: Section 2(i) embraced the State sales tax law in force from time to time, and the provisional assessment machinery under the appropriate State law was validly attracted.

Final Conclusion: The writ petition was rejected in its entirety and the impugned notice and levy were upheld, with costs awarded against the petitioner.

Ratio Decidendi: Parliament may validly adopt, for a Central fiscal enactment, the rate and procedural machinery of the appropriate State law as it exists from time to time when the statute itself has laid down the governing policy and standards.

---