1954 (3) TMI 35 - SC - VAT and Sales Tax

SCOPE OF SECTION 3 ESSENTIAL GOODS (DECLARATION AND REGULATION OF TAX ON SALE OR PURCHASE) ACT 1952 AND ARTICLE 286(3) CONSTITUTION OF INDIA

Summary

Issues:
Validity of the Patiala and East Punjab States Union General Sales Tax Ordinance, 2006 under Article 32 of the Constitution and its compliance with Article 286(3). Interpretation of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952 in relation to the sales tax on coarse and medium cloth. Examination of the consistency between Section 3 of Act LII of 1952 and Article 286(3) of the Constitution. Assessment of the applicability of Article 372 in relation to the Ordinance XXXIII of 2006 and its compliance with Article 286(3) of the Constitution.

Analysis:
The Supreme Court of India deliberated on a petition filed under Article 32 of the Constitution challenging the validity of the Patiala and East Punjab States Union General Sales Tax Ordinance, 2006. The central issue revolved around whether the Ordinance, promulgated in 1949, had become void post the commencement of the Constitution. The petitioners contended that as dealers in coarse and medium cloth, declared essential goods under the Essential Goods Act of 1952, they should be exempt from sales tax. The petition alleged that Section 3 of the Act conflicted with Article 286(3) of the Constitution. However, the Court found no merit in this argument, stating that Section 3 was in harmony with Article 286(3) and did not present any inconsistency.

The Court further analyzed the interplay between the Essential Goods Act of 1952 and the Patiala and East Punjab States Union General Sales Tax Ordinance, 2006. It clarified that as the Ordinance was an existing law continued by Article 372, the key question was whether it violated Article 286(3) or had been altered, repealed, or amended by a competent legislative body. The Court emphasized that the provisions of Article 286(3) pertained to post-Constitution laws made by the Legislature of a State, necessitating reservation for the President's consideration and assent. Since the Ordinance predated the Essential Goods Act of 1952, it did not fall under the purview of Article 286(3) as it was a pre-Constitution law.

Consequently, the Court dismissed the petition, ruling that there was no substance in the challenge raised by the petitioners. The judgment underscored the distinction between pre and post-Constitution laws concerning the application of Article 286(3) and upheld the validity of the Patiala and East Punjab States Union General Sales Tax Ordinance, 2006 in light of the constitutional provisions. The dismissal of the petition marked the conclusion of the legal proceedings, with costs imposed on the petitioners.

Judgment:
The Supreme Court dismissed the petition challenging the validity of the Patiala and East Punjab States Union General Sales Tax Ordinance, 2006, affirming its compliance with the Constitution and rejecting the contentions raised by the petitioners regarding the applicability of Article 286(3) and the Essential Goods Act of 1952.