TaxTMI 
TaxTMI 
1961 (8) TMI 29
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....mber 1952 by the Bombay Act 30 of 1952. In December 1952 and January 1953 petitions under Article 226 were filed in the High Court of Bombay challenging the Bombay Act. On January 12, 1955 the Bombay High Court held that the provisions of the Bombay Amendment Act above referred to were unconstitutional and that the taxes imposed under the provisions of that Act were hit by Article 301 of the Constitution. The result of that judgment was that though prize competitions could be controlled by the States within their respective borders, their ramifications beyond those borders could only be dealt with by action under Article 252(1) of the Constitution. It was for that reason that the States of Andhra, Bombay, Madras, U. P. Hyderabad, Madhya Bharat, Pepsu and Saurashtra passed resolutions under Article 252(1) of the Constitution authorising Parliament to legislate for the control and regulation of prize competitions and in pursuance thereof Parliament passed the Prize Competitions Act (Act 42 of 1955) hereinafter called the "Central Act" which received the assent of the President on October 22, 1955, and came into force on April 1, 1956. On February 24, 1956, the Mysore Legislature pass....
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....rn. They filed their return but under protest. The gross collections were of a sum of Rs. 26, 47, 147-5-9 and on that the appellants were "called upon to pay up provisionally" a sum of Rs. 3, 30, 893-7-0. As the money was not paid within the time specified proceedings were taken under section 6(1) of the Revenue Recovery Act, 1890 (Central Act 1 of 1890), and certain properties moveable and immovable were attached and one of the properties was sold and the price so realised was deposited in the Government treasury.The Mysore amending Act was challenged in the High Court of Mysore by a petition under Article 226 which was dismissed on November 20, 1958 and against that judgment and order this appeal has been brought pursuant to a certificate of the High Court under Article 132(1) of the Constitution. The Certificate was confined to the interpretation of Article 252 of the Constitution. The respondent in the present appeal is the State of Mysore. The challenge to the constitutionality of the Mysore Act was on the ground that (1) the Mysore Legislature by adopting the Central Act was no longer competent to pass any law in regard to prize competitions because the whole matter includin....
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....tion of prize puzzle competitions and all other matters consequential and incidental thereto and had thus no legislative power left in regard to that matter including the power to tax. Article 252 provides :- Article 252(1)" If it appears to the legislature of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State.(2) Any Act so passed by Parliament may be amended or repealed by an Act of Parliament passed or adopted in like manner but shall not, as respects any State to which it applies, be amended or repealed by an Act of the Legislature of that State. "The result of the passing ....
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....f colorable exercise of legislative power. Under the Child Labour Tax Law a tax of 10% of the net profits of the year could be imposed upon an employer and knowingly during any portion of the taxable period employed children within certain age limits irrespective of whether only one child was employed or several. This was held not to be a valid exercise by Congress of power of taxation but an unconstitutional regulation by the use of the tax as a penalty for the employment of child labour in the States which was exclusively a State function. That case was one in which the Congress exercised its power of regulation by imposing a tax by way of penalty in order to prevent the employment of child labour and thus by the exercise of the power which it possessed i. e. of taxation it tried to regulate a subject over which it had no jurisdiction and that really was the matter which was decided by the American Supreme Court. The next case relied upon was Gloucester Ferry Company v. Commonwealth of Pennsylvania ( 1885 (114) US 196 : 29 L. Ed. 158). That was a case of interstate commerce and it was held that no State could impose a tax on that portion of interstate commerce which is involved ....
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....ent along with the powers incidental and ancillary thereto which must include taxation. It was further argued that as Parliament had failed to impose any tax it implied that it had refused to do so. In support of this argument reliance was placed on Sabine Robbins v. Taxing District of Shelby County, Tennessee (39 L. Ed. 694). It was there held that where the power of the Legislature is exclusive its failure to make express regulation indicated its will that the subject shall be left free from any restriction or imposition. The pivot of the appellants' argument is that the words "control and regulation" and "incidental and ancillary thereto" included power of taxation but this argument is not well founded. The power in regard to betting and gambling is contained in entry 34 of the State List which is as follows :Entry 34 : "Betting and gambling". The power of taxation is contained in entry 62 which is as under :- Entry 62 :" Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling. "In the Indian Constitution as it was in the Government of India Act the power of legislation is distributed between the Union and the States and the subjects on whi....
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.... surrendered to Parliament by the resolutions above quoted the power to tax under entry 62 of List II, which is a separate head, cannot be said to have been surrendered. See the observations of Das, C. J., in State of Bombay v. R. M. D. Chamarbaugwala quoted a little later in this judgment. The scheme of the Indian Constitution and distribution of powers under it are entirely different from what it is in America and therefore the construction of the entries in the manner contended for by the appellants would be erroneous. It was then contended that a tax must be levied for the purpose of revenue and cannot be for purpose of control and that in the Mysore Act was really colourable legislation in that the impugned tax had been levied for the purpose of controlling prize competitions although it was given the form of a tax. It may be remarked that the Court in construing and interpreting the Constitution or provisions of an enactment has to ascertain the meaning and intention of Parliament from the language used in the statute itself and it is not concerned with the motives of Parliament. To use the language of Gwyer, C. J., in re The Central Provinces and Berar Act No. XIV of 1938 ....
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.... It is also instructive to note that Venkatarama Ayyar, J., in R. M. D. Chamarbaugwala v. The Union of India ( 1957 SCR 930, 939) in construing the language of the resolution was of the opinion that the use of the word "control and regulation" was requisite in the case of gambling and as regards regulation of competitions involving skill mere regulation would have been sufficient. In view of our finding that by passing the resolution the States did not surrender their power of taxation it cannot be said that clause (2) of Article 252 of the Constitution was violated by the amendment of the Mysore Act; nor can it be said that in reality to was a piece of colourable legislation by an indirect attempt to amend the Central Act and a new method of control was devised by imposing a penalty under the name of tax. We have already held that the tax imposed under the Mysore Act was not by way of penalty but was the exercise of the power which the legislature possessed of imposing tax under entry 62. The next contention raised was that after the passing of the Central Act, Section 12(1) (b) of the Mysore Act became void because of the provisions of Article 254(1) of the Constitution which p....
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..... At the time when the Mysore Act was passed it was within the legislative power of the Mysore Legislature and it may be that it was rendered unconstitutional by reason of sections 4 and 5 in the Central Act but that portion which deals with taxation cannot be held to be void because as a result of the Amending Act the words which were repugnant to the provisions of the Central Act were subsequently declared by the Mysore Legislature to be deemed to have been omitted as from April 1, 1956, the day when the Central Act came into force. This is in accord with the view taken in Deep Chand v. The State of Uttar Pradesh and Others ( 1959 (S2) SCR 8, 24, 42), i. e. the doctrine of eclipse could be invoked in the case of a law which was valid when made but was rendered invalid by a supervening constitutional inconsistency. This disposes of the challenge to the constitutionality of the Mysore Act on the five points set out above. Therefore the law may be summed up as follows: (1) By passing the resolutions as to control and regulation the power to tax had not been surrendered to Parliament. (2) The amending Act was not a new method of controlling prize competitions nor was it a piece of ....