Residuary sales tax levy on sweetmeats was valid before the exemption date; later exemption applied only prospectively.

Sweetmeats were held taxable under the residuary sales tax provision before 1 June 1987 because they were not shown to fall within any exemption entry, so the levy was authorised by law and did not violate Article 265. The later Schedule I exemption for sweetmeats operated only prospectively from 1 June 1987; the Statement of Objects and Reasons could not alter the clear text of the amendment, and prior tax payment did not bar the challenge. The earlier demand for the pre-exemption period therefore remained enforceable.

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Issues: (i) Whether sweetmeats were liable to sales tax prior to 1 June 1987 under the residuary rate provision and whether the demand was unauthorised under Article 265 of the Constitution of India. (ii) Whether the subsequent exemption entry in Schedule I could be read as showing that sweetmeats were always exempt, and whether prior payment of tax or earlier proceedings prevented the present challenge.

Issue (i): Whether sweetmeats were liable to sales tax prior to 1 June 1987 under the residuary rate provision and whether the demand was unauthorised under Article 265 of the Constitution of India.

Analysis: The statutory scheme prescribed specific rates for enumerated goods and a general rate under the residuary clause for all other goods not covered by the specified categories or the exemption entries. Sweetmeats were not shown to fall within the exempted category before 1 June 1987. The residuary levy was therefore a levy authorised by law and did not offend Article 265 merely because the goods were not separately specified in the special rate clauses.

Conclusion: The demand for the period prior to 1 June 1987 was valid and was not hit by Article 265.

Issue (ii): Whether the subsequent exemption entry in Schedule I could be read as showing that sweetmeats were always exempt, and whether prior payment of tax or earlier proceedings prevented the present challenge.

Analysis: The later amendment making sweetmeats tax-free operated only from 1 June 1987, and its language controlled the position. The Statement of Objects and Reasons could not override the clear text of the amended entry or be used to rewrite the pre-amendment position. Prior payment of tax did not create estoppel or waiver, but the record did not support the claim that the earlier levy had been unauthorised.

Conclusion: The exemption operated only prospectively from 1 June 1987, and the earlier demand remained enforceable.

Final Conclusion: The applications failed because sales of sweetmeats were taxable before 1 June 1987, while only later sales enjoyed exemption, so the impugned notices for the earlier period were not liable to be quashed.

Ratio Decidendi: A residuary sales tax levy is valid where the statute expressly provides a general rate for goods not covered by specific entries, and a later exemption entry operates prospectively in accordance with its text.

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