Constitutional validation of hotel sales tax is effective for past levies, but future taxation needs State law amendment.

A constitutional amendment may validly expand legislative competence and validate past sales tax collections on supply of food and beverages in hotels, restaurants and bars, even where earlier decisions treated such supply as service, and that validation does not by itself offend the basic structure or fundamental rights. However, the amendment does not create a fresh charging provision under the State sales tax law: future levy and collection depend on amendment of the relevant State Act, including its definitions of sale and turnover. Past collections were validated subject to the stated exemption, but future provisional assessments were unsustainable until the State statute was amended.

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Issues: (i) Whether section 6 of the Constitution (Forty-sixth Amendment) Act, 1982 was within the amending power under article 368 of the Constitution and was invalid for affecting the basic structure or fundamental rights; (ii) Whether section 6, without amendment of the Andhra Pradesh General Sales Tax Act, 1957, authorised levy and collection of sales tax on supply of foodstuffs and beverages in hotels, restaurants and bars from the date of commencement of the constitutional amendment.

Issue (i): Whether section 6 of the Constitution (Forty-sixth Amendment) Act, 1982 was within the amending power under article 368 of the Constitution and was invalid for affecting the basic structure or fundamental rights.

Analysis: The amendment was enacted by the constitutional amending procedure and was intended to remove the basis of earlier judicial decisions which had treated supply of food and drinks in hotels and restaurants as service rather than sale. The Court held that Parliament, acting in its constituent capacity, could validly validate State sales tax laws by constitutional amendment, and that such a validating amendment did not amount to an impermissible exercise of ordinary legislative power. It further held that the amendment did not amount to an inroad into judicial power and did not destroy or damage the basic features of the Constitution, including the federal structure or the limited nature of the amending power.

Conclusion: Section 6 was held to be valid, within the scope of article 368, and not violative of articles 14, 19(1)(g) or 21.

Issue (ii): Whether section 6, without amendment of the Andhra Pradesh General Sales Tax Act, 1957, authorised levy and collection of sales tax on supply of foodstuffs and beverages in hotels, restaurants and bars from the date of commencement of the constitutional amendment.

Analysis: The Court distinguished between conferring legislative competence by constitutional amendment and the actual exercise of taxing power under the State sales tax law. It held that section 6 was designed to validate past levies and collections and to neutralise the effect of prior decisions, but it did not itself amend the State Act or provide an independent charging provision for future levy. Since the definitions of sale and turnover in the State Act remained unamended, future assessment and collection of tax on such supplies could be made only after the State Legislature amended the relevant provisions of the sales tax law.

Conclusion: Section 6 did not authorise future levy and collection of sales tax on such supplies without amendment of the State sales tax statute, though it validated past collections subject to the stated exemption.

Final Conclusion: The constitutional amendment was upheld, but the impugned provisional assessments for the future period were quashed because the State taxing statute had not yet been amended to implement the enlarged constitutional entry.

Ratio Decidendi: A constitutional amendment may validly confer legislative competence and validate past tax levies, but it does not by itself create a charging provision for future taxation under a State enactment unless the State law is correspondingly amended.

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