TaxTMI 
TaxTMI 
1991 (2) TMI 380
X X X X Extracts X X X X
X X X X Extracts X X X X
....g process have been subjected to purchase tax by the impugned provisions. The petitioners contend that the State Legislature has no competence to impose such tax as such tax does not fall within any of the entries of List II of the Seventh Schedule to the Constitution, viz., the State List especially entry 54 thereof. They have joined in these petitions State of Gujarat as respondent No. 1 and the authorities exercising powers under the Act as other respondents. As the petitions involve common questions of law, they were all heard together and are being disposed of by this common judgment. The common grievance of the petitioners is required to be examined in the background of the statutory settings and their historical backdrop. II. Statutory settings: The Act has been enacted by the State Legislature in exercise of its powers under entry 54 of the State List. The said entry reads as under: "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I." The said Act is operative in the State from 6th May, 1970. By section 2 of the Gujarat Sales Tax (Third Amendment) Act, 1986, the Legislature of the first respondent-State h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y be, the purchase tax levied or leviable, under the other provisions of this Act in respect of purchases of such goods, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture, and accordingly, the dealer shall include purchase price of such goods in his turnover of purchases in his return under section 32, which he is to furnish next thereafter." The vires of the aforesaid section 13AA of the Bombay Act came up for consideration before the Supreme Court in the case of Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71. In that case, the Supreme Court considered section 13AA of the Bombay Act as well as identical pari materia provisions in the Haryana Act. Sabyasachi Mukharji, J. (as he then was) sitting with Ranganathan, J., in the aforesaid case took the view that the said provision was ultra vires the State legislation as under the guise of purchase tax, what was sought to be levied was consignment tax which was beyond the competence of the State Legislature and was not covered by entry 54 of the State List. Ranganathan, J., by a separate concurring judgment also endorsed the said view. The result was that such....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the said Act." This provision was challenged by some of the dealers before the Maharashtra High Court. A Division Bench of the Maharashtra High Court consisting of Bharucha and Srikrishna, JJ., by their decision dated 28th August, 1990, rendered in Writ Petition Nos. 477 of 1990 and group (Hindustan Lever Ltd. v. State of Maharashtra [1990] 79 STC 255) struck down the said provision by taking the view that the said provision sought to impose levy in the nature of excise which was beyond the legislative competence of the State Legislature and would not be covered by entry 54 of the State List, meaning thereby, if at all, it would be covered by entry 84 of the Union List. Entry 84 of the Union List reads as under: "Duties of excise on tobacco and other goods manufactured or produced in India except- (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry." So far as Gujarat provision of section 15B was concerned, a number of writ petitions were filed in this Court challenging the vire....
X X X X Extracts X X X X
X X X X Extracts X X X X
....consisting of A.P. Ravani and R.A. Mehta, as infructuous. The aforesaid Gujarat Ordinance was followed by a gazetted notification of the Finance Department of the first respondent dated 1st May, 1990, whereunder, the first respondent amended the Gujarat Sales Tax Rules, 1970 and introduced a new rule being rule 42E after existing rule 42E. The said rule 42E reads as under: "In assessing the purchase tax levied under section 15B and payable by a dealer (hereinafter referred to as 'the assessee') the Commissioner shall subject to conditions of rule 47 in so far as they apply, and further conditions specified below, grant him a drawback, set-off or as the case may be, refund of the whole of the purchase tax paid in respect of any earlier purchase of goods used by him, as raw materials or processing materials, or consumable stores, in the manufacture of taxable goods. Conditions (1) the assessee is a registered dealer, (2) the goods purchased are taxable goods other than declared goods, (3) the said goods have been used by the assessee within the State as raw materials or processing materials or consumable stores in the manufacture of taxable goods, (4) the goods s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tect a well-knit and comprehensive legislative scheme and viewed in that light, the scheme cannot be sustained by entry 54 of the State List and in pith and substance, the legislation falls within entry 92B of the Union List. It was further contended that the decisions of the Kerala High Court in Malabar Fruit Products Company v. Sales Tax Officer [1972] 30 STC 537 and Yusuf Shabeer v. State of Kerala [1973] 32 STC 359 cannot help the respondents as these decisions will have to be read in the light of pronouncement of the Supreme Court about emergence of taxing event as authoritatively laid down in Goodyear's case [1990] 76 STC 71. That in Goodyear's case [1990] 76 STC 71, the Supreme Court has distinguished these judgments on the ground that they had not laid down anything on the question with which the Supreme Court was concerned. It was further submitted that decision of three-member Bench of the Supreme Court reported in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191 will also not be of any avail to the respondents as in that case, the Supreme Court was not concerned with the question which is posed for our consideration. That it was concerned with the question of true con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in Andhra Sugars Ltd. v. State of Andhra Pradesh [1968] 21 STC 212, will be of no assistance to the respondents as in the said case, the Supreme Court was concerned with the provision imposing purchase tax on raw material for use in manufacturing goods; while in the present case, purchase simpliciter of raw materials is not to be taxed but only when they are used in manufacture of taxable goods that levy is imposed, that is, when such purchased raw materials are used and consequently taxing event in the present case becomes complete on such user and has nothing to do with the original intention underlying the purchase. Mr. Pathak alternatively contended that even assuming that it is not a duty in the nature of excise, the said provision when read with rule 42E would clearly project a picture of being consignment tax disguised as purchase tax; and, therefore, the ratio of Goodyear case [1990] 76 STC 71 (SC), would directly get attracted for voiding this provision. It was next contended by Mr. Pathak that in any case, the impugned new Gujarat provision of section 15B is ultra vires and illegal also on the principles laid down by the Supreme Court in D. Cawasji & Co. v. State of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ision would be, the use of purchased raw materials by manufacturer/dealer in manufacturing taxable goods and, therefore, levy would be one on manufacture. Consequently, it would be ultra vires entry 54 of the State List and would be covered by entry 84 of the Union List. In that connection, Mr. Joshi heavily relied on the decision of the Bombay High Court in Writ Petitions Nos. 477 of 1990 and group (Hindustan Lever Ltd. v. State of Maharashtra [1990] 79 STC 255). Analysing the new Gujarat provision of section 15B, Mr. Joshi submitted that it contemplates various contingencies when purchase of raw material simpliciter would not be covered by the said provision. In the following cases, even though raw materials are purchased in the State of Gujarat and are utilised for manufacture of taxable goods out of them, section 15B may not apply: (i) Purchase by manufacturer/dealer of declared goods which are of national importance. (ii) Purchase of raw materials which are for resale. (iii) Purchase of raw materials which are used for manufacture of taxfree goods. (iv) Purchase of tax-free goods. (v) Purchase of raw materials which may be taxable goods outside Gujarat State and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....avily leaned on the decision of the Bombay High Court in Writ Petition No. 477 of 1990 and group (Hindustan Lever Ltd. v. State of Maharashtra [1990] 79 STC 255). Mr. Kaji appearing for some of the petitioners also toed the line of the arguments of Messrs. Pathak and Joshi and further contended that established principles of interpretation would require that newly substituted provision of section 15B should be examined after considering what was the position before the Forty-sixth Amendment, find out what was the mischief that was sought to be remedied, discover true rationale for the remedy, the true ratio of the Supreme Court decision in Goodyear case [1990] 76 STC 71 and the scheme of the new legislation comprised in section 15B and rule 42E which are part and parcel of a single integrated scheme. He submitted that while considering the legislative competence of the State Legislature to enact section 15B, the court must look not to the form but to the substance of the levy and, therefore, the nomenclature given by the Legislature is not decisive. He submitted that in the light of the above position, the impugned new Gujarat provision of section 15B read with rule 42E is li....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of taxable goods. To paraphrase the second stage, it is manufacture of taxable goods by use of such materials. In other words, taxable event or the chargeable event on the ratio of the Supreme Court decision is the manufacture of taxable goods by use of such raw materials. He submitted, taking a clue from the decision of the Supreme Court, that in the present case, chargeable event is not purchase of raw material by a dealer in the State but it occurs when subsequent condition of use of purchased material in the manufacture of taxable goods takes place and it would be the said subsequent condition occurrence of which would attract the charge and is to be treated as taxable event. He submitted that such manufacture of taxable goods out of purchased raw material if brought to tax would amount to tax on manufacture and would be analogous to the taxing measure covered by entry 84 of the Union List and in no case can be covered by entry 54 of the State List. He submitted that taxable event so far as the impugned provision is concerned, is the manufacture of taxable goods by which time Reported as Rasoi Limited v. State of West Bengal [1991] 80 STC 356 (WBTT). the raw materials have alre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....herefore, the only actions carried out after the Ordinance and before the enactment of the Amendment Act would be covered by the fiction at the highest. It was, therefore, submitted that all actions taken and all taxes paid and all assessments made under the old section 15B are null and void and are not saved by mere enactment of a retrospective section. It was lastly submitted that the newly substituted section 15B in any case is unreasonable and violates article 14 of the Constitution as it seeks to rope in all manufacturers big and small who purchase the raw materials in the State and use them in manufacturing taxable goods out of them. Remedy cannot be worse than the disease. The impugned provisions if considered de hors rule 42E would make them per se unreasonable. Mr. Kaji produced on record xerox copies of the relevant provisions of the Calcutta sales tax laws which were dealt with by the Calcutta Tribunal. Mr. S.N. Shelat appearing for the petitioners in Spl. C.A. No. 8690 of 1990 adopted the arguments of Messrs. Pathak, Joshi and Kaji and submitted that when the relevant provisions of the Act and the Rules are read together, it becomes clear that the impugned prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion Act, 1938 [1938] 1 STC 1 (FC); AIR 1939 FC 1, and which is considered by the Supreme Court in Goodyear's case [1990] 76 STC 71 to indicate the nature of State legislative power to impose tax on sales and purchases vis-a-vis powers of the Central Legislature to impose tax of excise. Mr. Bhatt's contention was that the impugned new Gujarat provision seeks to levy, in substance, tax on consignment or alternatively it is tax in the nature of excise. The learned Advocate-General in reply to the various contentions of the learned advocates of the petitioners, at the outset took us to the Constitution scheme envisaged by articles 245, 246, 248 and 254 of the Constitution and the relevant entries in Lists I and II of the Seventh Schedule to the Constitution. He also invited our attention to the Constitution amendment Acts being Sixth Amendment and Forty-sixth Amendment Acts. He submitted that the sales tax on inter-State sales by virtue of the aforesaid Sixth Amendment was confined to legislative powers of the Parliament and that by Forty-sixth Amendment, tax on consignment of goods outside State was also brought within the domain of the legislative powers of the Parliament. He als....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l have to be construed in the light of that aspect of the matter. So far as the present provision is concerned, it was submitted that in pith and substance, the provision imposes purchase tax on raw materials which are used in manufacture of taxable goods. That user is in the manufacture and not for manufacture and consequently, the said provision does not impose any excise tax. Manufacture of taxable goods is not the event but user of raw material in manufacture is relevant for the present purpose. Special emphasis was placed on the observations of the Supreme Court at page 95 wherein it was mentioned that purchase of goods and their use were descriptive terms for identification of the goods and, therefore, user of the raw material would not bring about taxing event. So far as Goodyear case [1990] 76 STC 71 is concerned, the pith and substance of the impugned provision before the Supreme Court was tax on consignment of manufactured goods. So far as the judgment in [1990] 79 STC 255 (Hindustan Lever Ltd. v. State of Maharashtra) was concerned, it was submitted that it was partly right when it held that new Maharashtra provision was not imposing any consignment tax but it was wrong ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....its wisdom thought to reduce the extent of coverage of such levy and for that purpose, made necessary changes in the Act. However because of such changes, the nature of the tax is not the least affected and would remain in pith and substance, a purchase tax on raw material and would be within the competence of the State Legislature as per entry 54 of the State List. The learned Advocate-General next contended that as the impugned provision does not seek to levy any tax on despatch or consignment, the ratio of Goodyear's [1990] 76 STC 71 judgment of the Supreme Court will not apply and that to that extent, the Bombay judgment is correct. However, the Calcutta view reflected by the decision of the Tribunal cannot be applied to the facts of the present case as in Calcutta legislation, the provision for refund was part and parcel of the same statutory scheme and under these circumstances, the Tribunal held that levy was by way of tax on consignment while this is not the position here as rule 42E may be read with the section, still it is not at all integral part of the section and the section can exist independent of the rule. It was submitted that even otherwise, the view of the Cal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f raw material as this was directly related to the user of these goods and it was that purchased commodity which remained the same and which suffered tax burden on its use in manufacturing other taxable goods. The learned Advocate-General next contended that the impugned provision cannot be said to be imposing consignment tax as there is no despatch of the goods manufactured out of raw materials outside the State. It is not excise duty or analogous to excise as it does not impose any tax burden on the manufactured article out of raw materials. He next contended that it is not user tax as it is not directly related to user but it is directly related to purchase of raw materials and subsequent description of the goods would not extend its taxing event and that totally a new commodity is not being taxed. Alternatively, it was contended by the learned Advocate-General that even assuming that there was some trenching on the residuary power of the Parliament under entry 97 of List I, it was incidental and marginal trenching. In pith and substance, the legislation was imposing purchase tax on raw material and if incidentally, its user was taxed, it was a peripheral exercis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pective effect from 1st April, 1986. The effect of such retrospective legislation is as if new provision of section 15B is written by the same pen and ink in the Act as if from the beginning. If new section 15B is valid, all past actions, assessments and orders would be governed by the new provision and would be valid. He next contended that manufacture of taxable goods as mentioned in section 15B would mean goods which are generally taxable under the Act. In this connection, reliance was placed on the decision of the Supreme Court in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191. It was submitted that taxing event under the section does not depend upon actual and complete user of the raw material purchased but their mere use in the manufacture of generally taxable goods would be sufficient to attract taxable event. It is not as if taxable goods must necessarily, emerge, they may not emerge for diverse reasons. Still, once raw materials are used in the manufacturing process, taxable event is complete. Placing reliance on the definition of "taxable goods" in section 2(33) and definition of "goods" in section 2(12) as well as definition of "turnover of sales" under section 2(36....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on in the present case. We have separate rule without which charging provision can exist. In fact, the Calcutta Tribunal itself has held that but for the exemption provision, the main provision would have been within the legislative competence and would have fallen within entry 54 as raw materials were purchased for use in manufacturing process. Mr. Kaji in rejoinder submitted that Goodyear judgment [1990] 76 STC 71 (SC) is Bible or Quran and lays down the ratio about correct connotation of the term "taxable event" and that for deciding the same, three aspects of the matter have to be kept in view: (a) form and substance of rule, (2) pith and substance of the provision and (3) previous legislative history. In the present case, rule 42E when read with section 15B clearly indicates legislative intention of re-enacting consignment tax camouflaged as purchase tax. He questioned that no statutory rule can be ignored while interpreting the section. He referred to decisions of the Supreme Court in J.K. Steel Ltd. v. Union of India AIR 1970 SC 1173, Tata Engineering Locomotive Co. Ltd. v. Gram Panchayat AIR 1976 SC 2463 and Collector of Central Excise v. Parle Exports (P.) Ltd. [1989] 7....
X X X X Extracts X X X X
X X X X Extracts X X X X
....question of excise would arise. But such is not the present case. In this connection, reliance was placed on the case in Jiyajeerao Cotton Mills Ltd. v. State of Madhya Pradesh AIR 1963 SC 414, para 6. He submitted that after manufacture of electricity when tax is levied at the stage of its user or consumption, it would be user tax, permissible under entry 53 of the State List. It was submitted that in the present case, even assuming that section does not impose excise duty, in any case, it imposes user tax which is not within the legislative competence of the State Legislature. Mr. Shelat for some of the petitioners supported the arguments of Mr. Kaji and submitted that in the present case, unlike the decision of the Supreme Court in AIR 1980 SC 286; [1980] 45 STC 36 (Ganga Sugar Corporation Ltd. v. State of Uttar Pradesh) (para 53 at page 298 of AIR; at page 52 of STC) taxable event is not only the purchase of raw material but purchase and their subsequent use and, therefore, the section in substance in any case imposes duty in the nature of user tax which is beyond the legislative competence of the State Legislature. Mr. Joshi in rejoinder submitted that under sections 86 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ead as "if' in the section. Manufacturing process must be complete before it can be said that purchased raw material was used in the manufacture of concerned taxable goods. Referring to [1975] 36 STC 191 (SC) Kandaswami case, it was submitted that in that case, there was no definition of words "taxable goods". Therefore, the Supreme Court treated them as generally taxable. But we are concerned with the definition in section 2(33) of "taxable goods" and that definition has to be given its effect. Mr. Pathak also placed reliance upon the decision of the Supreme Court in [1981] 47 STC 376 (Hindustan Brown Boveri Ltd. v. State of Gujarat) and this Court in [1979] 43 STC 238 (Nowroji N. Vakil & Co. v. State of Gujarat) in this connection. He also invited our attention to entry 118 in the notification issued under section 49(2) relating to industries in backward area and submitted that till the contingency contemplated by the said provision takes place it would not be possible to arrive at any definite taxable event. He also took us to item No. 6 in Schedule I of the Act under section 5 and stated that as conditional exemption is given to manufactured goods till these conditions are s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ses Act, 1904 and referred to the decision in Thakar v. Bhatia [1971] 12 GLR 397 especially para 5 thereof wherein it is held that notification does not become part of the statute itself. Referring to Goodyear case [1990] 76 STC 71 (SC), it was submitted that the ratio of that decision is to be seen in the light of 46th Amendment and entry 92B in the Union List. The observations of the Supreme Court had to be read in that light. The learned Advocate-General then posed a question whether it is permissible to read down the statutory provision in the light of rule with a view to making statutory provision incompetent. He stated that such exercise is not permissible at all. It was submitted that while judging the legislative competence of the provision, there was no question of interpreting the provision or reading it down, in the light of any statutory rule. The learned Advocate-General then took us to the observations of the Supreme Court at page 111 of Goodyear case [1990] 76 STC 71 judgment and submitted that reasoning on that page to the effect that charge under section could be treated to be dormant or not has to be read in the light of the entry 92B of the Union List and t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es even for their past assessments but no occasion would arise for refunding any amount to the assessees only because old assessments under old provision have resulted into payment of tax as such payments can be supported by new provision and rule 42E and if at all, question of further recovery under old assessments would arise if new section 15B is applied to them de hors rule 42E. But such an eventuality may not arise because the Commissioner will exercise power under section 55 in such cases so that old assessees and new assessees alike will be treated at par in the light of the impact of tax as per section 15B read with rule 42E. IV. Points for determination: In the light of the aforesaid rival contentions, the following points arise for our determination: (1) Whether the impugned new provision of section 15B of the Gujarat Sales Tax Act, 1969, is within the legislative competence of the State Legislature? (2) If not, to what reliefs are the petitioners entitled to? (3) If the impugned provision is within the legislative competence, whether the validating provision of section 4(2) of the Gujarat Sales Tax (Amendment) Act, 1990, can sustain all actions taken and all ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cturers in the State who used to purchase raw materials and utilised them in manufacture of goods, used to consign such manufactured goods by despatching them outside the State to their branches. Therefore, it could not be said that they had entered into any transaction of inter-State sale. Mere consignment of the manufactured goods by its owner to his own branches outside the State would obviously be not inter-State sale, which can be taxed by the Parliament by enacting appropriate provisions under entry 92A. Such consignment also could not be brought to tax within the State as there was no sale of such manufactured articles within the State. Consequently, they remained untaxed. To plug this loophole, by the Forty-sixth Constitutional Amendment, entry 92B was inserted in the Union List to clothe the Parliament with the power to tax such consignments outside the State. When the Parliament was clothed with such power to tax consignments, the moot question would naturally arise whether the State Legislature could enter upon this forbidden field and under the guise of purchase tax on raw materials which had ultimately culminated into finished manufactured products which were then cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....three events clubbed together were treated by the Supreme Court to ultimately culminate into the taxable event which took place on the despatch of the manufactured articles outside the State without being subjected to inter-State sale and consequently, such event was treated to be imposing tax on consignment of goods outside the State. Obviously, such taxing measures would be covered by entry 92B of the Union List and could not be covered by entry 54 of the State List. It is precisely for this reason that those two impugned provisions were struck down by the Supreme Court by treating them as beyond the legislative competence of the State Legislatures of Punjab and Haryana and Maharashtra, respectively. While deciding as above, Sabyasachi Mukharji, J., at page 95 of the Report laid down the contours of taxable event while dealing with the Punjab and Haryana provision, as under: "Taxable event is that which on its occurrence creates or attracts the liability to tax. Such liability does not exist or accrue at any earlier or later point of time. The identification of the subject-matter of a tax is to be found in the charging section. In this connection, one has to analyse the provis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....arashtra legislation has to be viewed in the context of Fortysixth Amendment to the Constitution. The Forty-sixth Amendment introduced article 269(1)(h) which lays down that the proceeds of the tax on consignment of goods (whether the consignment is to the person making it or to any other person) where such consignment takes place in the course of inter-State trade or commerce, will be assigned to the States. The said amendment also introduced entry No. 92B in List I of the Seventh Schedule. The said amendment was made on the consideration of the 61st Report of the Law Commission. Entry 92B in List I of the Seventh Schedule and article 269(1)(h) of the Constitution bring within its sweep the consignment of goods by a person either to himself or to any other person in the course of inter-State trade or commerce. Article 269(3) gives the power to Parliament to formulate the principles for determining when a consignment of goods takes place in the course of inter-State trade or commerce. If entry 92B of List I is to be given the widest interpretation, as it should be, it would be clear that, as a result of the constitutional changes introduced by the Forty-sixth Amendment in articl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ning of an event which is unrelated to the act of purchase. The 'taxable event', if one might use the expression often used in the context, is the consignment of the manufactured goods and not the purchase. I also agree with my learned brother that the decision in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191 (SC), though rendered in the context of an analogous provision, does not touch the issue in the present case." In the light of the aforesaid observations of the learned Judges of the Supreme Court made in Goodyear case [1990] 76 STC 71, it becomes at once clear that on the language employed by the impugned provisions before them, especially viewed in the light of the constitutional backdrop, provided by the Forty-sixth Constitutional Amendment, it was obvious that the impugned provisions examined by the Supreme Court squarely fell within the Parliament's exclusive power flowing from entry 92B of the Union List and were clearly beyond entry 54 of the State List. It has to be kept in view that under entry 54 of the State List, the State Legislature has power to impose tax on sale or purchase of goods. The phrase "sale of goods" employed by entry 54 has to be unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovision in substance seeks to tax purchased raw material and stop short by locating them and imposes tax on them, or whether it seeks to tax finished products manufactured out of them and which are sought to be despatched out of the State limits. If the impugned provision seeks to tax in substance the consignment of finished manufactured taxable goods in the manufacturing of which purchased raw materials have gone in as inputs, then only, it can be said on the ratio of Goodyear case [1990] 76 STC 71, that the impugned provision would fall within entry 92B of the Union List and not in entry 54 of the State List. When we scrutinise the provision of section 15B, we do not find even a whisper about consignment of manufactured goods prepared out of utilisation of purchased raw material and their despatch outside State. It may be that, having taken a clue from the Supreme Court decision, the State Legislature might have thought it fit to put its house in order. But if it has retraced its steps from the forbidden field and enacted new provision which does not seek to levy any tax on consignment of finished products outside the State, it would be too much to hold that in substance and in d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tax, and it could not be countenanced. Repelling this contention, Krishna Iyar, J., speaking for the Constitution Bench in this case made the following pertinent observations in para 18 of the Report (at page 42 of STC). "The cess under the 1956 Act was attacked and fell victim to a constitutional challenge and this Court in Diamond Sugar Mills' case AIR 1961 SC 652; [1961] 3 SCR 242, declared the cess Act ultra vires. The consequence of this mortality was the incarnation of the U.P. Sugarcane (Purchase Tax) Act, 1961, which is being impeached as ultra vires in these appeals. When cess failed, the State would have been constrained to refund nearly half a hundred crores of rupees. Validation by Parliamentary legislation in conformity with the Constitution was, therefore, done. Eventually the levy of a purchase tax was enacted into law by the U.P. Sugarcane (Purchase Tax) Act, 1961 (referred to as "the Act"). In a fiscal sense, the Purchase Tax Act is a reincarnation of the cess Act but, in a legislative sense, it is an independent statute with a different source of power, impact and structure. While the appellants have a case that this fiscal history substantiates their thesis th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... legislative competence of the parent Legislature to enact the provision comes up, merely because the delegate has framed a rule in exercise of its delegated legislative function under the Act and which rule may be part of the Act, the rule cannot be pressed in service to denude legislative competence of the parent Legislature to enact statutory provision, if even otherwise, it is within its competence. We find considerable substance in the aforesaid contention of the learned Advocate-General. It has to be kept in view that section 15B seeks to impose additional purchase tax. Gujarat Legislature has now enacted the provision imposing purchase tax as per section 15B of the Act. This is not in dispute. Its legislative competence to impose purchase tax under section 15A is not in dispute. If that is so, it is difficult to visualise how additional purchase tax cannot be imposed under section 15B if it remains otherwise within the compass of entry 54 of the State List. Merely because rule framed by the delegate State of Gujarat in exercise of its delegated legislative function waters down the impact of the section, it cannot be said that the section is not within the legislative compete....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a year: Provided that a dealer (other than a casual trader or agent of a nonresident dealer) purchasing goods [the sale of which is liable to tax under sub-section (1) of section 3] shall not be liable to pay tax under this subsection, if his total turnover for a year is less than twenty-five thousand rupees................" In that case, the Supreme Court took the view that section 7-A was an additional charging section and in this connection, observed that the words "under the Act" will include a charge created by section 7-A also. Taking a clue from the above observations, Mr. Pathak argued that section 6 of the Gujarat Act also employs the words "dealer who is required to pay tax under this Act" and these words themselves would make section 6 charging section. Even accepting this contention we fail to see how rule 42E can be said to be a part of the charging provision envisaged by section 15B. If at all, it whittles down or dilutes the charge envisaged by section 15B, but does not add to it. Even if section 6 is a part of charging provisions, rule referred to by it cannot get such a status. It is not in dispute that section 15B is a charging provision imposing addition....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... out with bath water. On no principle, such argument can be countenanced nor any cannon of construction of statutory provisions and statutory rules can support such an argument. At this stage, we may refer to the judgment of the Division Bench of the Bombay High Court in Hindustan Lever Ltd. v. State of Maharashtra [1990] 79 STC 255. Interpreting the impugned provisions of section 13AA of the Maharashtra Act, the Division Bench of the Bombay High Court speaking through S.P. Bharucha, J., repelled the argument which was submitted on the ground that the said section sought to impose consignment tax. It is pertinent to note that unlike the present provision, the Bombay provision was a composite provision and which created a charge and laid down how it had to be worked out. Therefore, it was an integral scheme and it had provided that in the event of non-sale of manufactured goods in the State, when the goods were manufactured out of purchased raw materials tax was attracted. In the view of the High Court, such provision did not amount to imposing a consignment tax, as event of non-sale would not necessarily mean consignment out of State. At page 267 of the Report, the Division Bench n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cate-General for the respondents that even if rule 42E is repealed by the delegate State of Gujarat exercising delegated legislative function under section 86, even then the section 15B can exist on its own. When the two provisions stem from two different sources and even if these two provisions have to operate in the same field after getting fused subsequent to their birth, existence of one provision and especially paramount provision cannot be voided at its source only because after the subordinate provision gets fused into operation with the parent provision, lesser liability results and the rigour of the parent provision gets diluted. The learned Advocate-General also was right when he contended that if rule 42E is deleted in future, section 15B would operate with greater rigour and its impact would be felt by a larger body of assessees, because of rule 42E, sweep of section 15B gets curtailed and many assessees may go out of its taxing net. But that does not mean that charge which is otherwise validly imposed by section 15B, would get stultified or would cease to be effective at the very source. It is also not possible to agree with the contention of Mr. Pathak that while dele....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vision is leviable if the following events take place: (1) Where a dealer liable to pay tax under this Act purchases either directly or through commission agent any goods; and (2) Uses them as raw material or processing material or consumable stores in the manufacture of taxable goods. For attracting charge under the section no other event is contemplated. Adopting the judicial dictionary employed by the Supreme Court in Goodyear case [1990] 76 STC 71, taxing event is that which attracts tax and that charging event is the event the occurrence of which immediately attracts the charge and that charging event cannot be postponed to the occurrence of the subsequent condition. In that event, it would be the subsequent condition the occurrence of which would attract the charge which will be taxable event. It has to be held that the moment goods are purchased and used by the purchasing dealer as raw or processing material or consumable stores in the manufacture of taxable goods, levy gets immediately attracted under the section. As will be seen while discussing the question of user tax, taxing event is the purchase of raw materials, etc., in the State and which are ultimately use....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tate Legislature. Answering the question in favour of the State Legislature, it was held that levy could squarely fall within entry 54 of the State List and would impose no excise duty as the tax was imposed on purchase of sugarcane which was raw material and which was utilised in the manufacture of sugar. In para 53 of the Report (at page 52 of STC), Krishna Iyer, J., speaking for the Supreme Court made the following pertinent observations: "Nothing in these provisions regulates or controls the industry itself nor exacts any levy on the manufacture of sugar or its wider ramifications. Nothing more than prevention of escapement of purchase tax on cane is done and what is done is legitimately incidental to the taxing power. Peripheral similarity between purchase tax and excise levy, does not spell essential sameness. Sugarcane tax operates in the neighbourhood of sugar excise but proximity is not identity. The tax is only on purchase of cane, not its conversion into sugar. If the miller has his own cane farm and crushes it, he has no purchase tax to pay but cannot escape excise duty, if any." We may also refer to another decision in Tata Iron & Steel Co. Ltd. v. State of Bihar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment of duty is related to the date of removal of such article from the factory." In view of the aforesaid settled legal position, therefore, before any duty can be styled as one imposing excise, it has to be shown that taxing event is manufacture of excisable commodity by a person who is taxed qua such manufacture and not otherwise. As we have seen earlier, on the express language of the section, taxing event does not get extended up to the stage of manufacturing of final product out of purchased raw material and that charge of tax gets settled the moment raw material is purchased and utilised in the manufacturing process of taxable goods. A dealer is being taxed as purchaser of raw material. He is not being taxed as manufacturer of finished product. It is also pertinent to note that charge of tax attached to purchased raw materials and does not attach to the final product produced out of them. Hence, it can never be styled as excise duty on the ultimate manufactured goods. They are entirely of different class. They have nothing to do with purchase of raw materials or inputs. All inputs which get exhausted in the manufacturing process have nothing to do with nor have they nexus....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... tax is payable under section 3, 4 or 5, as the case may be." Analysing these ingredients of section 7-A, the aforesaid observations were made by the Supreme Court. It is true that in the present case, there is a clear definition of taxable goods; while in Tamil Nadu Act, on the ingredients of sub-sections (4) and (5), the Supreme Court held that these sub-sections contained definition of taxable goods. However, the result remains the same. Ingredients of sub-sections (4) and (5) of Tamil Nadu Act are parallel to the provisions found in the definition of taxable goods in section 2(33) of the Gujarat Act. Therefore, it must be held on parity of reasoning, that the phrase "uses them as raw material or processing materials or consumable stores in the manufacture of taxable goods" as employed by section 15B would mean user of such raw material in the manufacturing process for manufacturing generally taxable goods under the Act and ultimately, in given circumstances, such manufactured goods may not attract tax under the charging provision and still they would remain taxable goods. It is, therefore, not possible to agree with the contention of the petitioners that charging even....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Tribunal agreed with the view of the Sales Tax Officer. The High Court also agreed with the view of the Tribunal. It was held that in view of the language used in the certificate as well as in section 16(1) and in the context and collocation, the intention at the time of purchase or the taxable nature of the goods when manufactured are wholly irrelevant factors. If taxable goods were purchased against the certificate in form 19 without payment of tax and if such goods were used contrary to the certificate in the manufacture of goods for sale, which were not exigible to tax at the point of sale, then section 16 would come into the picture and purchase tax would become leviable upon the turnover of purchases of the purchasing dealer. The aforesaid view of this Court is confirmed by the Supreme Court in the later decision reported in [1981] 47 STC 376 (Hindustan Brown Boveri Ltd. v. State of Gujarat). In our view, these decisions cannot be of any avail to the petitioners. If the condition of a certificate issued under section 16 is breached, then on the express language of section 16, liability to pay purchase tax would arise and the section in terms lay down that where any dealer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A of the Maharashtra Act nor in section 15B of the present case levy is imposed on the manufacture of taxable goods. As laid down by the Supreme Court in Goodyear case [1990] 76 STC 71, taxable event is one on the occurrence of which charge gets immediately attracted. In our view, charge gets attracted when the raw materials are purchased and used in the process of manufacture of taxable goods and it has nothing to do with ultimate emergence of taxable goods. They may emerge or may not emerge, they may remain taxable goods or may not remain taxable goods. Charge under the section is not concerned with these eventualities. Under these circumstances, with respect, it is not possible to agree with the view taken by the Bombay High Court in Hindustan Lever case [1990] 79 STC 255. In our view, section 15B does not cover the field envisaged by entry 84 of the Union List, and cannot be termed as imposing any duty in the nature of excise. In this connection Mr. Kaji submitted that the impugned provision can be read as under: A dealer purchases raw material, processing material or consumable stores, etc., and manufactures taxable goods out of them and accordingly, it would amount to imposin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of raw material. In short, that was not the focal point of levy or, in other words, that was not the pith and substance of the levy. The pith and substance of the levy is purchase of raw material, etc., in the State. In this connection, the emphasis put by the learned advocates for the petitioners on the phraseology in the section to the effect "where a dealer purchases any taxable goods and uses them as raw or processing materials or consumable stores in the manufacture of taxable goods then..." for submitting that taxable event occurs when purchased taxable goods are used as raw or processing material or consumable stores in the manufacturing process especially in the light of the word "then" used in the section, also cannot be of any avail. In this connection, the learned Advocate-General rightly invited our attention to the fact that the word "then" is an adverb and it connotes two eventualities-(i) reference to the time and (ii) reference as to the contingency, meaning thereby, it either means at that time or in that case. In the context of the section, it is obvious that the word "then" does not refer to time when use is made in the manufacturing process of such....
X X X X Extracts X X X X
X X X X Extracts X X X X
....this judgment. A conjoint reading of those observations makes it clear that the Supreme Court in that case was concerned with an eventuality wherein tax was imposed on dispatch of entirely different type of goods out of State, and it was held that it was tax in the nature of consignment tax covered by entry 92B of the Union List, and, therefore, tax on such goods would not remain within entry 54 of the State List and that in view of such a texture of the provisions, the argument of the learned advocate for the State authorities that taxing event was to have taken effect at the time of purchase of inputs, raw materials, which remained dormant and would get activised when the input embedded in the ultimately manufactured goods got despatched out of the State, was repelled as such argument could not be countenanced in the fact of the express language of the provisions dealt with by the Supreme Court and which clearly referred to and tried to tax entirely different manufactured commodity which had nothing to do with the original purchase of inputs. Such is not the position in the present case. As seen earlier, the section does not refer to the dispatch of ultimately manufactured goods ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and are subsequently used as such in manufacturing process, it would become obvious that they were purchased only because they were required to be so used and were in fact used. Applying the ratio of the aforesaid decision of the Supreme Court, it must, therefore, be held that in the present case also, taxable event is complete when taxable goods are purchased as raw material, etc., and their subsequent use as such only fortifies such requirement underlying initial purchase. It is also interesting to note that there are two decisions of the Supreme Court, wherein on construction of pari materia provisions, it was held that tax sought to be imposed was purchase tax. One such decision is rendered in connection with Madhya Pradesh legislation in the case of Ganesh Prasad Dixit v. Commissioner of Sales Tax [1969] 24 STC 343 (SC). In that case, section 7 of the Madhya Pradesh General Sales Tax Act, fell for consideration of the Supreme Court. It provided that every dealer who in the course of his business purchases any taxable goods, in circumstances in which no tax under section 6 is payable on the sale price of such goods and either consumes such goods in the manufacture of other goo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nnection with section 5-A of the Kerala General Sales Tax Act, 1963. It provided as under: "Every dealer who in the course of his business purchases from a registered dealer or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under section 5, and either (a) consumes such goods in the manufacture of other goods for sale or otherwise, shall.......pay tax........" The argument that such tax imposed user tax and, therefore, was outside the legislative competence of the State Legislature was repelled by P. Subramonian Poti, J., placing reliance on the Constitution Bench decision of the Supreme Court in [1968] 21 STC 212 (Andhra Sugars Ltd. v. State of Andhra Pradesh). In para 5 of the Report, the learned Judge, interpreting the aforesaid pari materia provision, observed as under: "In the scheme of the section, it goes without saying that the purchase by the dealer who is taxed under the section becomes taxable in his hands only if the goods are consumed or disposed of in any manner other than by way of sale or despatch to places outside the State otherwise than as a result of inter-St....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te of Tamil Nadu v. Kandaswami) wherein also, the pari materia provision of the Tamil Nadu Act was construed by the Supreme Court. In view of this settled legal position and in the light of the express language of section 15B, therefore, it has to be held that the section imposes purchase tax and not user tax as contended by the learned advocates of the petitioners. We may now briefly refer to certain decisions on which reliance was placed by the learned advocates for the petitioners in support of their contentions that section imposes user tax. In Jiyajeerao Cotton Mills Ltd. v. State of Madhya Pradesh AIR 1963 SC 414, the Supreme Court was concerned with the question about tax on consumption of electricity. Such tax would squarely fall under entry 53 of the State List and it was upheld as such. The said decision is of no assistance to the petitioners. Similarly, the decision in Devi Dass Gopal Krishnan v. State of Punjab [1967] 20 STC 430 (SC); AIR 1967 SC 1895 instead of supporting the petitioner goes against them, as in that case, the Supreme Court in terms held that tax on purchase of raw materials for use as inputs in the manufacturing process would be covered by entry 54 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....briefly refer to them. In Federation of Hotel & Restaurant Association of India v. Union of India [1989] 74 STC 102, the Supreme Court was concerned with the question whether the Parliament was competent to impose expenditure tax under entry 97 of the Union List when incidentally the said provision trenched upon the field covered by entry 62 of the List II which was in the exclusive domain of the State Legislature, being tax on luxury. Upholding the legislative competence of the Parliament in enacting Expenditure Tax Act, the Constitution Bench of the Supreme Court speaking through Venkatachaliah, J., laid down the following propositions: "(i) Wherever legislative powers are distributed between the Union and the States, situations may arise where the two legislative fields might apparently overlap. It is the duty of the courts, however difficult it may be, to ascertain to what degree and to what extent, the authority to deal with matters falling within these classes of subjects exists in each Legislature and to define, in the particular case before them, the limits of the respective powers. It could not have been the intention that a conflict should exist; and in order to preven....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Supreme Court was concerned with the Gujarat Sales Tax Act itself. The question was whether sections 37(1)(a) and 46(2) of the Bombay Sales Tax Act, 1959, were ultra vires the power of the State Legislature under entries 54 and 64 of the List II. By the impugned provisions, it was laid down that in a case where a dealer purported to collect sales tax from purchasers when such levy was not legally permissible, the amount so collected shall be forfeited to the State (sic) amount of penalty. It was contended that such type of confiscatory provision was beyond entries 54 and 64 of the State List and it was a colourable legislation. This High Court upheld this contention. Allowing the appeal of the State of Gujarat, the Constitution Bench of the Supreme Court speaking through Krishna Iyer, J., held that in pith and substance, the provisions fell within entries 54 and 64 of the State List and when the State legislation had legislative competence to legislate on the topics, ancillary and incidental powers flowing from such legislative powers inhered in the State Legislature. The following pertinent observations made by Krishna Iyer, J., speaking for the Supreme Court are required to be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es would not survive. This contention was tried to be met by the learned Advocate-General for the respondents by submitting that when old provision was repealed and, new provision was enacted with retrospective effect, necessary legal effect has to be given to such retrospective enactment of the new provision from 1st April, 1986 and consequently, all the earlier Acts would be deemed to have been done under the new provision which is deemed to be existing all throughout from 1st April, 1986, on the statute book and as no judgment of any High Court had struck down old section 15B, there was no occasion to enact any validating provision validating the past acts notwithstanding any judgment or order of any court. It was next submitted, placing reliance on section 9 of the Bombay General Clauses Act, 1904, that when old section 15B was repealed and was re-enacted in modified form by the present section 15B, reference as made to the earlier repealed provision that in any instrument including order of assessment by authorities would be treated to be reference to the present re-enacted provision of section 15B. It was also submitted that in fairness to the assessees, if any more tax is le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t"Where this Act, or any Bombay Act or Gujarat Act made after the commencement of this Act, repeals and re-enacts, with or without modification, any provision of a former enactment, then reference in any other enactment or in any instrument to the provision so repealed, shall, unless a different intention appears be construed as reference to the provision so re-enacted." We do not find any contrary intention in the Amending Act 6 of 1990. Hence, reference made to old section 15B in any assessment order can be said to be reference made to new section 15B in an instrument as it is wellsettled by decision of the Supreme Court that the term "instrument" as employed in the General Clauses Act and even otherwise, can cover in its sweep any written document including even a judicial order (Mohan Chowdhury v. Chief Commissioner AIR 1964 SC 173 and Purushottam H. Judye v. V.B. Potedar AIR 1966 SC 856). Consequently, it must be held that despite non-enactment of any express validating provision, the actions taken and assessments made under the repealed provision of old section 15B will be treated to have been done under the newly enacted section 15B with retrospective effect. As new secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....they would have succeeded on the main challenge while the learned advocates for the petitioners submitted to the contrary and stated that there was no question of unjust enrichment or limitation and they would have been entitled to refund. As this question does not survive for our consideration, we have not heard the parties on this aspects, as on the main contention, the petitioners have failed before us. On point No. IV, therefore, it is held that in view of our finding on point No. III, the petitioners are not entitled to any relief and their petitions are liable to fail. In the result, these petitions fail and are dismissed. Rules issued in these petitions are discharged. There will be no order as to costs in each one of them. Per G.N. RAY, C.J.-I have read the judgment delivered today by my learned brother. He has elaborately dealt with the individual arguments advanced by the learned counsel appearing in these groups of cases, where vires of section 15B of the Gujarat Sales Tax Act, 1969, as amended by the Gujarat Act No. 6 of 1990 [Gujarat Sales Tax (Amendment) Act, 1990] are under challenge; and I concur with the decision of my learned brother. Initially, I had some d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Haryana). The law with respect to a subject might incidentally affect another subject in some way but that is not the same thing as the law being on the latter subject. There might be overlapping. But the overlapping must be ignored. The same thing may involve two or more taxable events in its different aspects, but the fact that there is overlapping does not detract from the distinctiveness of the aspects. The true nature and character of the legislation must be determined with reference to the power of the Legislature. The consequences and effects of the legislation are not the same thing as the legislative subject-matter. It is the true nature and character of the legislation and not its ultimate economic result that matters. Nomenclature of an Act is not conclusive and for determining the true nature and character of a particular tax with reference to the legislative competence, one should look into its pith and substance. It is well-settled that while determining the nature of tax, though the standard or measure on which the tax is levied may be a relevant consideration, it is not a conclusive consideration. Its pith and substance will only determine the category into whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Commissioner]. Ordinarily, subordinate legislation made under the statute cannot be referred to for the purpose of construing a provision in the statute itself unless it is to have the effect as if enacted in the statute. When a statute does not contain such a provision, it is clear that subordinate legislation cannot alter or vary the meaning of the statute even if the meaning is ambiguous. (Halsbury's Laws of England, 3rd Edition, Volume 36, page 401). In determining the limits of the weight and amplitude of the "freedom" guaranteed by article 301, a rational and workable test to apply would be Does the impugned restriction affect directly or indirectly trade on its movement? It is this free movement of trade from one part to another part of the country that is to be saved. [1961] 1 SCR 809; AIR 1961 SC 232 (Atiabari Tea Co. Ltd. v. State of Assam), [1963] 1 SCR 491; AIR 1962 SC 1406 [Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan]. In construing whether a particular tax is a tax on sale or purchase, it is necessary to determine whether the transaction is one of "sale of goods" as known to law and in construing the character of sale or purchase, it is necess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uty at any of these stages. If duty is imposed on the goods manufactured or produced when issued from the manufactory, then the duty becomes leviable independent of the purpose for which they leave it and irrespective of what happens thereafter. [1938] 1 STC 1 (FC) (In re: Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938). Taxable event is that occurrence of which creates or attracts liability to tax. Such liability does not exist or occur at any earlier or later point of time. The identification of the subject-matter of a tax is to be found in the charging section. In appreciating whether the tax is imposed on the purchase or sale, it is to be ascertained the true character of the taxable event. It is one thing to levy a purchase tax where the character of goods in respect of which the tax is levied is described in a particular manner and in a case where tax though described in a particular nomenclature actually becomes effective with reference to a totally different class of goods and that too on happening of an event unrelated to the purchase or sale of the commodity. [1990] 76 STC 71 (Goodyear India Ltd. v. State of Haryana) (emphasis* supp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....neral has very strongly contended that in deciding the question of legislative competence, the section itself should be construed. If the section, on its own without the aid of the rules or notifications is workable and does not go beyond the parameters of entry 54 of List II of the Seventh Schedule, the section does not become ultra vires for want of legislative competence. It is immaterial to consider what should be the effect of the incidence of tax and the burden on the tax-payer because of the additional tax sought to be imposed under section 15B. Such consideration is not at all germane for considering the question of legislative competence vis-a-vis entry 54 of List II of the Seventh Schedule to the Constitution. He has contended that there is no doubt that the liability under the Sales Tax Act should ultimately depend not only on the section itself, but on the cumulative effect of the Act and Rules and notifications issued thereunder, but in deciding the case of legislative competence, the ultimate liability under the Gujarat Sales Tax Act read with the Rules and notifications is not at all a relevant consideration. He has submitted that the rule made under a delegated auth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taxable event under section 15B is not the same taxable event as in section 13AA of the Bombay Sales Tax Act or the West Bengal sales tax statutes referred to by the learned counsel for the petitioners. It may also be noted here that there is a distinction between the impugned provisions in Bombay and West Bengal taxation statutes and section 15B of Gujarat Sales Tax Act. In considering the vires of the impugned provisions of the Bombay Act (section 13AA) and of the West Bengal statutes [section 4(6)(ii) of Bengal Finance (Sales Tax) Act and section 4(1)(i) of West Bengal Sales Tax Act], the impugned sections themselves had been interpreted, but for considering the vires of section 15B of the Gujarat Sales Tax Act on the store of legislative incompetence, attempt has been made to interpret the said section with the aid of rule 42E of the Gujarat Sales Tax Rules. It has already been indicated that such attempt to interpret the section on the scope of legislative competence is not permissible. It, therefore, cannot be argued that section 15B as amended is outside the scope and ambit of entry 54 of List II of the Seventh Schedule to the Constitution. The Legislature has, therefore, th....