Regulatory registration for hallmarking units upheld as a valid ancillary measure under state sales tax powers.

Registration and account-maintenance requirements for hallmarking units under the KVAT Act were upheld as valid ancillary and regulatory machinery connected to the State's power to tax sales or purchases of goods. The Court applied the settled principle that a taxing statute may include incidental provisions to identify taxable transactions, secure information, maintain accounts, and prevent evasion, even where the regulated person is not itself liable to tax. The challenge based on legislative competence under entry 54 of List II failed because the impugned provision was treated as a constitutionally permissible regulatory measure.

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Issues: Whether section 15(2)(xi) of the KVAT Act, requiring hallmarking units to obtain registration, was unconstitutional for want of legislative competence under entry 54 of List II of the Seventh Schedule to the Constitution.

Analysis: The requirement of registration was examined as an ancillary and regulatory provision connected with the State's power to levy tax on the sale or purchase of goods. The Court relied on the settled principle that a State enactment may validly contain incidental machinery provisions meant to identify taxable transactions, maintain accounts, furnish information, and prevent evasion of tax, even where the person regulated may not itself be liable to tax. The provisions of the KVAT Act requiring registration and maintenance of accounts were treated as analogous to similar provisions upheld in earlier decisions concerning transporters and other persons connected with taxable transactions. The challenge based on the absence of sale or transfer in the process of hallmarking was rejected because the impugned provision was viewed as a valid regulatory measure within the scope of entry 54.

Conclusion: Section 15(2)(xi) of the KVAT Act was held to be constitutionally valid and the challenge to it failed.

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