Declared goods tax restriction invalidated a review notice where State law still breached the one-stage levy rule.

Groundnuts, being declared goods under the Central Sales Tax Act, could not be subjected to purchase tax at more than one stage under the State law during the relevant assessment period. Because the Punjab General Sales Tax Act had not yet been brought into full conformity with section 15(a) for 1 April 1959 to 31 March 1960, the defect identified by the Supreme Court continued to apply. The later insertion of section 4(2-A) operated only from 1 April 1960 and did not validate the earlier levy. The proposed review notice for the 1959-60 assessment was therefore unsustainable and was quashed.

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Issues: Whether the notice to review the assessment for 1959-60, relating to levy of purchase tax on groundnuts under the Punjab General Sales Tax Act, 1948, was sustainable in view of section 15(a) of the Central Sales Tax Act, 1956.

Analysis: Groundnuts were declared goods under section 14 of the Central Sales Tax Act, 1956, and the State law, as it stood during the relevant assessment period, had not yet been brought into full conformity with the restriction in section 15(a) that tax on declared goods shall not be levied at more than one stage. The later insertion of section 4(2-A) of the Punjab General Sales Tax Act, 1948, with effect from 1 April 1960 removed the defect only from that date onward. For the period 1 April 1959 to 31 March 1960, the same infirmity identified earlier by the Supreme Court continued to exist, so the proposed review of the assessment could not be sustained.

Conclusion: The impugned notice for review of the assessment was invalid and liable to be quashed, and the petition was allowed.

Ratio Decidendi: A State levy on declared goods is unenforceable for any period during which the State law does not comply with the statutory restriction that such tax shall not be levied at more than one stage.

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