1978 (10) TMI 132 - SC - VAT and Sales Tax

Whether the amendment of item 30 in Schedule B to the Punjab General Sales Tax Act, 1948, hereinafter referred to as the Act, invalid? Held that - Appeal dismissed. No deeming provision could be brought to our notice, as there is none, to show that the notification issued by the erstwhile State Government of Punjab could be deemed to be one issued by the new Government of the Union Territory. For many other purposes there are deeming provisions in Central Act 31 of 1966, e.g., sections 59(1), 74(1) and 92. But no provision is to be found to show that by a legal fiction the first notification of intention issued by the erstwhile State Government could be deemed to be a notification issued by the new Government. The argument thus presented by Mr. Anand must be rejected.

Summary

Issues:
1. Validity of amending item 30 in Schedule B to the Punjab General Sales Tax Act, 1948.
2. Interpretation of section 6 of the Act regarding the power to amend the schedule.
3. Application of section 88 of the Punjab Reorganisation Act, 1966 in the context of the case.
4. Consideration of whether the notification issued by the erstwhile State Government of Punjab could be deemed to be issued by the new Government of the Union Territory.

Analysis:
The Supreme Court heard an appeal regarding the validity of amending item 30 in Schedule B to the Punjab General Sales Tax Act, 1948. The case involved the Union Territory of Chandigarh and the power to amend the tax schedule. The Court noted that under section 6 of the Act, the State Government could amend the schedule by notification after a specific period. The issue arose when the State Government of Punjab issued a notification to exclude pure silken fabrics from the list of tax-free goods, but before the amendment could take effect, the Union Territory of Chandigarh was established. The Union Territory then issued a notification to amend item 30. The respondent challenged this, arguing the new Government could not rely on the earlier notification. The Court examined section 88 of the Punjab Reorganisation Act, 1966, which clarified that no law in force immediately before the appointed day would apply to the new territories unless specified. The Court held that the erstwhile State Government's notification did not constitute a law in force when the reorganisation occurred, thus the Union Territory could not levy sales tax on silken fabrics based on the prior notification.

The appellant attempted to argue that the notification issued by the erstwhile State Government could be deemed valid for the new Government of the Union Territory. However, the Court found no legal basis or provision to support this argument. The appellant failed to demonstrate any "deeming" provision in the relevant laws that would allow the transfer of authority from the old to the new government. The Court rejected this argument, emphasizing the lack of legal fiction to support such a claim. Additionally, the appellant's reliance on a previous court decision regarding retrospective amendments by new legislatures after state reorganisation was deemed irrelevant and unhelpful in the present case.

In conclusion, the Supreme Court dismissed the appeal, upholding the decision of the High Court. The Court found that the Union Territory of Chandigarh could not levy sales tax on pure silken fabrics based on the notification issued by the erstwhile State Government of Punjab. The judgment clarified the limitations on the applicability of prior notifications and emphasized the absence of legal provisions supporting the appellant's arguments. The dismissal of the appeal was accompanied by a cost order against the appellant.