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1967 (8) TMI 99 - SC - VAT and Sales TaxWhether this statutory provision served to lift the ban imposed by section 26 of the General Sales Tax Act? Held that - Appeal allowed. Whether in the light of the Sales Tax Laws Validation Act, 1956 (Central Act 7 of 1956), read with the Travancore-Cochin General Sales Tax Act as amended up to 1956, the finding of the Tribunal is correct? We amend the question accordingly. We allow the appeal and answer the question in the affirmative. The matter must now go back to the High Court and the High Court should remit the matter to the Appellate Tribunal with our opinion on the question as reframed. In the circumstances of this case, we make no order as to costs.
Issues Involved:
1. Taxability of inter-State sales under the Travancore-Cochin General Sales Tax Act. 2. Validity of the Sales Tax Laws Validation Act, 1956. 3. Competence of the State Legislature to enact laws post-Constitution (Sixth Amendment) Act, 1956. 4. Construction and application of section 26 of the Travancore-Cochin General Sales Tax Act. Detailed Analysis: 1. Taxability of Inter-State Sales under the Travancore-Cochin General Sales Tax Act: The respondent, a non-resident dealer, supplied coal to consumers in Travancore-Cochin, which later became Kerala. For the assessment year 1955-56, the respondent was assessed on a turnover of Rs. 1,29,352. The respondent contended that sales of coal to steamers berthed in Travancore-Cochin State waters were not taxable as the goods were stored for consumption on the high seas. However, the respondent did not dispute its liability for supplies made to other consumers in Kerala. The Sales Tax Officer assessed the turnover, which was partially reduced by the Assistant Commissioner and further reduced by the Sales Tax Appellate Tribunal, holding that the sales were inter-State and not taxable. 2. Validity of the Sales Tax Laws Validation Act, 1956: The Tribunal's decision was based on the Kerala High Court's ruling in Union Carbide India Ltd. v. Sales Tax Officer, which held that inter-State sales after March 31, 1951, were not taxable. The High Court reasoned that Central Act 7 of 1956 validated State laws imposing taxes on inter-State sales between April 1, 1951, and September 6, 1955. The Supreme Court upheld this view, referencing the decision in The State of Kerala and Others v. The Cochin Coal Co. Ltd., which confirmed the validity of taxes imposed during this period. 3. Competence of the State Legislature to Enact Laws Post-Constitution (Sixth Amendment) Act, 1956: The Constitution (Sixth Amendment) Act, 1956, made significant changes regarding the levy of tax on inter-State sales. The amendment of Article 269 assigned the levy and collection of such taxes to the Government of India, with Parliament formulating principles for determining inter-State sales. The Validating Act of 1962, enacted post-amendment, was argued to be beyond the competence of the Kerala Legislature. The Supreme Court noted that the State Legislature could not legislate on inter-State sales post-amendment, rendering the 1962 Act ineffective for such purposes. 4. Construction and Application of Section 26 of the Travancore-Cochin General Sales Tax Act: Section 26, as amended in 1951, imposed a ban on taxing inter-State sales after March 31, 1951, unless Parliament provided otherwise. The Supreme Court highlighted the decision in Sundararamier & Co. v. The State of Andhra Pradesh, which held that section 22 of the Madras General Sales Tax Act (similar to section 26) imposed a tax subject to Parliamentary authorization. The Court also referenced the decision in The State of Kerala and Others v. The Cochin Coal Co. Ltd., which overruled the Kerala High Court's interpretation of section 26 and confirmed the validity of taxes imposed up to September 4, 1955. Conclusion: The Supreme Court concluded that the levy of sales tax up to September 4, 1955, was valid under the Travancore-Cochin General Sales Tax Act, as validated by Central Act 7 of 1956. The Court reframed the question for revision as: "Whether in the light of the Sales Tax Laws Validation Act, 1956 (Central Act 7 of 1956), read with the Travancore-Cochin General Sales Tax Act as amended up to 1956, the finding of the Tribunal is correct?" The appeal was allowed, and the matter was remitted to the High Court for further proceedings consistent with this opinion. No order as to costs was made.
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