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TMI Blog1958 (3) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... ax is illegal on the ground that successive sales of yarn are subject under the law to be taxed at only one point, and as the State of Madras has already taxed the present sales, the State of Andhra cannot again levy a tax on them? Whether the proposed imposition of tax on yarn by the Andhra State is hit by the Essential Commodities Act (LII of 1952) read with Article 286(3) and is illegal? Held that:- The contention urged on behalf of the States that the Explanation to Article 286(1)(a), being a provision of the Constitution, operated by its own force to impose a tax on the sales covered by it, and did not require to be sup- plemented by any State legislation to become effective, does not call for any detailed consideration. Suffice it to say that it cannot be maintained if the true scope of Article 286 is to define and limit the powers of State Legislatures with reference to imposition of sales tax and not to itself impose it. If conditional legislation is valid, as we have held it is, then section 22 is clearly intra vires, and the foundation on which this contention of the petitioners rests, disappears and it must fall to the ground. In the result, we are of opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Andhra should continue to operate as before. In fact, by an Adaptation Order issued on November 12, 1953, even the name of Andhra was substituted for Madras in the Madras General Sales Tax Act. There is no substance in this contention. The Madras Act was in force in the territories which now form part of the Andhra State until October 1, 1953, and thereafter that Act continues to be in operation by force of section 53 of the Andhra State Act. Moreover, the Madras Act became operative in the new State of Andhra not under any law passed by the Legislature of the State of Andhra but under section 53 of a law enacted by Parliament and therefore Article 286(3) has no application. We should add that the Essential Commodities Act (LII of 1952) has itself been repealed and is no longer in operation. This contention of the petitioners also should be rejected. Appeal dismissed. - Petition No. 220, 222, 240, 380, 381, 382, 383, 384, 385, 386, 387, 388, 389, 390, 391, 392, 393, 394, & 395 of 1955 - - - Dated:- 11-3-1958 - DAS S.R. J. AND VENKATARAMA AIYAR T.L. AND DAS S.K. AND SARKAR A.K. AND VIVIAN BOSE JJ. D. Narasaraju, Advocate-Generala of Andhra Pradesh, T.M. Sen, Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the purchasers either by lorries or by rail as might be directed by them, that when the goods were sent by rail, the railway receipts would be taken either in the name of the consignees, and sent to them by post or in the name of the consignor and endorsed to the purchasers and delivered to them in Madras or sent to them by post endorsed in favour of a bank and the purchasers would take delivery of those receipts after payment to the bank. It is said that in all cases price of the goods was paid in Madras. On the above allegations, it is manifest that the sales mentioned therein are not all of the same kind, and in point of law, the incidents attaching to them might be different. A consideration of the validity of the imposition with reference to the several classes of sales mentioned above would be wholly airy and pointless without a determination of the facts relating to them, which, however, have not been investigated. Counsel for the petitioners, however, concedes that the dispute in these proceedings is confined to the proposed imposition of tax, in so far as it relates to sales of the character mentioned in the Explanation to Article 286(1)(a), that is to say, sales in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h year tax on his total turnover for such year. By the Madras General Sales Tax (Amendment) Act (No. XXV of 1947), a new Explanation was added to the definition of "sale", and it is as follows: Explanation 2: "Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this Province, wherever the contract of sale or purchase might have been made- (a) if the goods were actually in this Province at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the contract of sale or purchase in respect thereof was made." This amendment came into force on January 1, 1948. In Poppatlal Shah v. The State of Madras [1953] S.C.R. 677; 4 S.T.C. 188., this Court had to consider the scope of the definition of "sale" in section 2(h) and of Explanation 2, and it was therein held that though the power to tax a sale was really a power to tax a transaction of sale and a law impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent." Article 372(2) enacts that, "For the purpose of bringing the provisions of any law in force in the territory of India into accord with the provisions of this Constitution, the President may by order make such adaptations and modifications of such law, whether by way of repeal or amendment, as may be necessary or expedient, and provide that the law shall, as from such date as may be specified in the order, have effect subject to the adaptations and modifications so made, and any such adaptation or modification shall not be questioned in any court of law." In exercise of the power conferred by this provision, the President made Adaptation Orders with reference to the Sales Tax Laws of all the States, and as regards the Madras Act, he issued on July 2, 1952, the Fourth Amendment inserting a new section, section 22, in that Act. It runs as follows: "Nothing contained in this Act shall be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place- (a) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenging the validity of the demand made by the Andhra State on the ground, inter alia, that the sales proposed to be taxed were inter-State sales, and that they were immune from taxation under Article 286(2). These petitions were filed on various dates in July and August, 1955. While they were pending, the question of the true scope of the Explanation to Article 286(1)(a) came up again for consideration before this Court in The Bengal Immunity Company Ltd. v. The State of Bihar and Others(2). By its judgment dated September 6, 1955, this Court held, again by a majority, that the sales falling within the Explanation being inter-State in character, could not be taxed by reason of Article 286(2), unless Parliament lifted the ban, that the Explanation to Article 286 (1)(a) controlled only that clause and did not limit the operation of Article 286(2), and that the law had not been correctly laid down in The United Motors case(1). On the decision in The Bengal Immunity Company case [1955] 2 S.C.R. 603; 6 S.T.C. 446., it cannot be doubted that the claim of the Andhra State to tax Explanation sales would be unconstitutional, and indeed, that was admitted by the State in a statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no action could be taken on the basis of section 22 of the Andhra (Madras) Act, as, being unconstitutional when enacted, it was for all purposes non est; that tax on the sale of yarn could under the Act be levied only at a single point and the State of Madras having imposed a tax on the sale of goods now proposed to be taxed, the Andhra State could not impose a tax once again on the sale of the self-same goods, and that, further, the tax on yarn would, so far as the Andhra State is concerned, be bad as being hit by the Essential Commodities Act (LII of 1952), read with Article 286(3). It must be mentioned that similar to the Adaptation Order which enacted section 22 in the Madras Act, there were Adaptation Orders by the President with reference to the Sales Tax Laws in all the States, and provisions similar to section 22 were enacted therein. As any decision by this Court on the questions raised in the petitions must conclude similar questions under the laws of other States, those States applied for and obtained permission to intervene in these proceedings, and we have heard the Advocates-General of Madras, Uttar Pradesh and Bihar on the questions. As the main point for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of yarn are subject under the law to be taxed at only one point, and as the State of Madras has already taxed the present sales, the State of Andhra cannot again levy a tax on them; and (VII) Whether the proposed imposition of tax on yarn by the Andhra State is hit by the Essential Commodities Act (LII of 1952) read with Article 286(3) and is illegal. (I) The first question that falls to be determined is whether the Andhra (Madras) Act, in fact, imposes a tax on the Explanation sales. Only if it does that, would the further questions as to the vires and the operation of the impugned Act arise for consideration. We have already referred to the relevant provisions of the Madras Act and to the decision of this Court in Poppatlal Shah v. The State of Madras [1953] S.C.R. 677; 4 S.T.C. 188., wherein it was held that under the definition of "sale" in section 2(h) of that Act and apart from the Explanations to it which are not material for the present discussion, power had been taken by the Province of Madras to tax only sales in which property in the goods passed inside the State. It must, therefore, be taken that under the Act, as it stood prior to the Constitution, the State o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods are delivered? These questions are answered by the Explanation. That Explanation is 'for the purposes of sub-clause (a)', i.e., for the purpose of explaining which sale or purchase is to be regarded as having taken place outside a State. By saying that a particular sale or purchase is to be deemed to take place in a particular State the Explanation only indicates that such sale or purchase has taken place outside all other States. The Explanation is neither an exception nor a proviso but only explains what is an outside sale referred to in sub-clause (a). This it does by creating a fiction. That fiction is only for the purposes of sub-clause (a) and cannot be extended to any other purpose. It should be limited to its avowed purpose. To say that this Explanation confers legislative power on what, for the sake of brevity, has been called the delivery State is to use it for a collateral purpose which is not permissible. Further, it is utterly illogical and untenable to say that Article 286 which was introduced in the Constitution to place restrictions on the legislative powers of the States, by a side wind, as it were, gave enlarged legislative powers to the State of delivery by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wallace Brothers Co., Ltd. v. Income-tax Commissioner [1948] L.R. 75 I.A. 86; 16 I.T.R. 240., the question arose as to the validity of certain provisions of the Indian Income-tax Act, which sought to tax non-resident foreigners in respect of their foreign income. The Indian Legislature had under Entry 54 in List I of the Government of India Act power to enact laws imposing tax on income other than agricultural income, and under section 99(1) the law could be made "for the whole of British India or for any part thereof". It was held by the Privy Council that the requirements of section 99 were satisfied if there was sufficient territorial connection between the State imposing the tax and the person who was sought to be taxed, and the receipt of income by the assessees in British India furnished sufficient nexus to give validity to the legislation imposing tax on their foreign income. If this doctrine of nexus is applicable to laws imposing tax on sales- and it was applied by this Court to those laws in the United Motors case at page 1079 and in Poppatlal Shah's case at pp. 682-683- then it would be competent to the State to enact a law imposing a tax on sales not merely when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That being the position, what purpose would the Explanation serve in section 22 of the Madras Act, if it merely meant that when goods are delivered under a contract of sale for consumption in the State of Madras, the outside State in which property in the goods passes has no power to tax the sale. That is not the concern of the State of Madras, and, indeed, the Legislature of Madras would be incompetent to enact such a law. In its context and setting, therefore, the Explanation to section 22 must mean that it authorises the State of Madras to impose a tax on sales falling within its purview. Thus, while in the context of Article 286(1)(a) the Ex- planation thereto could be construed as purely negative in character though positive in form, it cannot be so construed in its setting in section 22 of the Madras Act, where it must have a positive content. Nor is there much force in the contention that the non-obstante clause in section 22 has only the effect of subtracting something from the power to tax conferred on the State by the charging section, section 3, read with section 2(h) and not of adding to it. In Aswini Kumar Ghosh and Another v. Arabinda Bose and Another [1953] S.C.R. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e position here. Section 22 opens with the words "Nothing contained in this Act", and that means that that section is to be read as controlling, inter alia, the definition of sale in section 2(h). Otherwise, sales in which property passes in Madras but delivery is outside that State would be taxable under section 2(h) and under section 3, even though they are within the prohibition enacted in section 22. If the provisions of section 22 are effective for the purpose of limiting the operation of section 2(h), we do not see any difficulty in construing the Explanation therein as equally effective for the purpose of enlarging it. Again, it is a rule of construction well-established that the several sections forming part of a statute should be read, unless there are compelling reasons contra, as constituting a single scheme and construed in such manner as would give effect to all of them. On this principle, section 2(h) and section 22 must be read together as defining what are sales, which are taxable under the Act and what are not, and so read, the Explanation really means that in sales in which goods are delivered for consumption in the State of Madras, the property therein shall be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s when goods are delivered outside, we fail to see why it should not operate to give effect to the other aspect of the concept which is so integrally connected with it, viz., taxing of sales in which goods are delivered for consumption in the State of Madras, if its language is comprehensive and wide enough to include such sales. We find it difficult to hold that the self-same Explanation is intra vires the powers of the President in so far as it prohibits the State from taxing sales in which goods are delivered outside the State but is ultra vires in so far as it authorises that State to tax sales in which goods are delivered inside it. It should be remembered in this connection that the power which the President has under Article 372(2) to adapt is the legislative power of the State whose law is adapted, and that includes the power to repeal and amend any provision. Provided that the law as adapted is within the legislative competence of the State and its enactment is in the process of bringing the State law into conformity with Article 286, it seems to us that it is within the ambit of the power conferred by Article 372 (2). The question, however, is of academic interest, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Expla- nation itself to discover its true scope. If, in enacting the Explanation, the Adaptation Order merely intended to prohibit the State of Madras from imposing tax on sales under which goods are delivered for con- sumption outside that State even though property therein passed inside that State, it would clearly have expressed that intention in words to the following effect: "For the purpose of clause (a)(i), a sale under which goods are delivered for consumption outside the State of Madras shall be deemed to have taken place outside that State, notwithstanding that property in those goods passed inside that State". But the language of the Explanation is general, and fixes the situs of sales of an inter- State character in the State in which goods are actually delivered for consumption. Under this Explanation, a sale under which goods are delivered outside the State of Madras will be an outside sale for that State even though property in the goods passed inside that State, and likewise, a sale under which goods are delivered inside the State of Madras will be an inside sale for that State, even though property in the goods passed outside that State. As the language of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 I.A. 178., it was held by the Privy Council that a Legislature acting within the ambit of authority conferred on it by the Constitution has the power to enact a law either absolutely or conditionally, and that position has been repeatedly affirmed in this Court. Vide In re The Delhi Laws Act, 1912 [1951] S.C.R. 747, and Sardar Inder Singh v. State of Rajasthan [1957] S.C.J. 376. It would clearly be within the competence of the Madras Legislature to enact a law imposing a tax on sales conditional on the ban enacted in Article 286(2) being lifted by Parliamentary legislation, and that, in our opinion, is all that has been done in section 22. The Madras Act defines the event on which the tax becomes payable and the person from whom and the rate at which it has to be levied, and forms a complete code on the topic under consideration. It could have no immediate operation by reason of the bar imposed by Article 286(2), but when once that is removed by a law of Parliament, there is no impediment to its being enforced. That satisfies all the requirements of a conditional legislation. But it was argued that section 22 of the Madras Act could not be so construed, because it was not open t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposition of tax on Explanation sales but that it could be enforced only when Parliament so provides. We have so far considered the question on principle and on the language of the statute. We may now refer to the decisions of the High Courts, wherein this question has been considered. In Mettur Industries Ltd. v. State of Madras [1956] 7 S.T.C. 691; A.I.R. 1957 Mad. 362., the point directly arose for decision as to whether section 22 of the Madras Act did, in fact, levy a tax on the Explanation sales so as to fall within the protection of the Sales Tax Laws Validation Act (VII of 1956). It was held that the Explanation to section 22 had the effect of rendering the sale one inside the State so as to fall within the definition of that word in section 2(h), and that it was taxable. Next in point of time is the decision of the Bombay High Court in Dialdas v. P.S. Talwalkar [1956] 7 S.T.C. 675; A.I.R. 1957 Bom. 71., in which the question arose with reference to section 46 of the Bombay Sales Tax Act (Bom. III of 1953), corresponding to section 22 of the Madras Act. It was held that it did impose a tax, though it was to operate only if Parliament so provided. Then, there are two dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be maintained if the true scope of Article 286 is to define and limit the powers of State Legislatures with reference to imposition of sales tax and not to itself impose it. (II) That brings us on to the next question which is whether the impugned Act, Sales Tax Laws Validation Act, is ultra vires on the ground that it is not authorised by the terms of Article 286(2). Now, it is a well-known rule of interpretation that in order to understand the true nature and scope of an Act it is necessary to ascertain what the evils were which were intended to be redressed by it. The starting point of the trouble which ultimately led to the enactment of the impugned Act is the Explanation to Article 286(1)(a), which came into force on January 26, 1950. The terms in which it is worded undoubtedly suggest that sales of the description mentioned therein are to be treated as sales inside the delivery State for purposes of taxation. That is how it would seem to have been understood in the Adaptation Order under which section 22 was inserted in the Madras Sales Tax Act and in the Adaptation Orders relating to the Sales Tax Laws of other States; for, as already stated, in a taxing statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o remedy them that Parliament enacted the Sales Tax Validation Ordinance No. III of 1956, and eventually replaced it by the impugned Act. Section 2 of the Act provides that no law of a State imposing a tax on sales which took place in the course of inter-State trade or commerce between April 1, 1951, and September 6, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sales were in the course of inter-State trade. The section further provides that all taxes levied or collected under such a law during the specified period shall be deemed to have been validly levied or collected. The policy behind the Act is obviously to declare the law as interpreted in The United Motors case [1953] S.C.R. 1069; 4 S.T.C. 133, as the law governing sales falling within the Explanation up to the date of the judgment in The Bengal Immunity Company case [1955] 2 S.C.R. 603; 6 S.T.C. 446, and to give effect to the law as laid down in that decision for the sales effected subsequent thereto. The question is whether this Act is unconstitutional as being ultra vires the powers of Parliament under Article 286(2). The petitioners maintain that it is, and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntendment of Article 286(2), outside its terms. It is argued that this Article, to start with, enacts a restriction on the power of the State to impose taxes on inter-State sales and then vests in Parliament a power to remove that restriction, and that in logical sequence therefore, there should first be a legislation by Parliament authorising the States to impose a tax on inter-State sales and then a law of the State made in accordance therewith, and that that order having been reversed in the present case, the impugned Act is unconstitutional. We do not agree with this contention. Article 286(2) merely provides that no law of a State shall impose tax on inter-State sales "except in so far as Parliament may by law otherwise provide." It places no restrictions on the nature of the law to be passed by Parliament. On the other hand, the words "in so far as" clearly leave it to Parliament to decide on the form and nature of the law to be enacted by it. What is material to observe is that the power conferred on Parliament under Article 286(2) is a legislative power, and such a power conferred on a Sovereign Legislature carries with it authority to enact a law either prospectively or re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the word "prohibits" in section 298(2) of the Government of India Act, and can be of no assistance in the construction of Article 286(2), wherein that word does not occur. And even on the substance of it, we see no real analogy between the case in Punjab Province v. Daulat Singh [1946] L.R. 73 I.A. 59, and the present. There, the law which was authorised by section 298(2) was one prohibiting certain transfers; here the law which Parliament is authorised to make is one not prohibiting the States from imposing tax on inter- State sales, but permitting them to do so. While a law prohibiting transfers must be prospective, a law authorising imposition of tax need not be. It can be both prospective and retrospective. A decision more directly in point is the one in The United Provinces v. Atiqa Begam [1940] F.C.R. 110. There, the question arose on the construction of section 292 of the Government of India Act, 1935, which enacted that, "Notwithstanding the repeal by this Act of The Government of India Act, but subject to the other provisions of this Act, all the law in force in British India immediately before the commencement of Part III of this Act shall continue in force in B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred by it. It is also argued that even if the power to make a law conferred on Parliament under Article 286(2) comprehends a power to enact a law with retrospective operation, that power cannot extend to authorising what is unconstitutional, and that as section 22 of the Madras Act and the corresponding provisions in the statutes of other States were unconstitutional and illegal when made as contravening the prohibition enacted in Article 286(2), the impugned Act must be held to be unauthorised and bad in that it seeks to give effect to those provisions. But this is to beg the very question which we have to decide. If it is competent to the legislatures of the States to enact a law imposing a tax on inter-State sales to take effect when Parliament so provides, there is nothing unconstitutional or illegal either in section 22 of the Madras Act or in the corresponding provisions in the Acts of other States. If conditional legislation is valid, as we have held it is, then section 22 is clearly intra vires, and the foundation on which this contention of the petitioners rests, disappears and it must fall to the ground. In the result, we are of opinion that the impugned Act is int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res of those States? We entertain no doubt that by the expression "law of a State" in Article 286(2) and section 2 of the impugned Act is meant whatever operates as law in the State, and that section 22 of the Madras Act is a law within those enactments. Nor does it affect this conclusion that that law may not be open to challenge in a court of law. A right to challenge a law must depend on the provisions of the Constitution governing the matter, and if those provisions enact that it is not open to question in a court of law or that it is liable to be questioned only on certain specified grounds, that will not have the effect of depriving a statute duly enacted of its character as law. We are also not satisfied that a law as adapted under Article 372(2) is not open to attack on the ground that it contravenes some Constitutional provision. We are disposed to think that the concluding words of Article 372(2) preclude an attack on the Adaptation Order only on the ground that it does more than merely bringing the State law into conformity with the Constitution and is, in consequence, ultra vires the powers conferred by that Article. In the result, we must hold that section 22 of the Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndependent operation the second clause would be unnecessary, as even without it, the result sought to be achieved by it must follow on the first clause itself. But it is to be noted that the first clause has reference to the exercise of the legislative power while the second is concerned with administrative action, and it is possible that the second clause might have been enacted by way of abundant caution. It is nothing strange or unusual for a Legislature to insert a provision ex abundanti cautela, so as to disarm possible objection; but it is inconceivable that it should enact a provision which is wholly inoperative. Of two alternative constructions of which one leads to the former and the other involves the latter result, there cannot be any question that it is the former that is to be preferred. Nor is it permissible to cut down the plain meaning of the terms of the statute on considerations of policy behind the legislation. But even from that point of view, there was the fact that there were dealers who had collected taxes from their purchasers for payment to the State, but were relieved of that obligation by the judgment in The Bengal Immunity case [1955] 2 S.C.R. 603; 6 S.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation as provided in the impugned Act, but in the absence of such a legislation, the provisions of the Act as they stood prior to the impugned Act are incapable of enforcement. It would be sufficient answer to this contention that section 22 of the Madras Act is only a piece of conditional legislation, imposing tax on inter-State sales when Parliament should enact a law lifting the ban, and if such legislation is competent as we have held it is, then no question of unconstitutionality of the section when it was enacted could arise. But it would be more satisfactory to decide the point on its own merits, as the question raised has been, of late, the subject of considerable discussion in this Court. Now, in considering the question as to the effect of unconstitutionality of a statute, it is necessary to remember that unconstitutionality might arise either because the law is in respect of a matter not within the competence of the Legislature, or because the matter itself being within its competence, its provisions offend some Constitutional restrictions. In a Federal Constitution where legislative powers are distributed between different bodies, the competence of the Legislature t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been held that where an Act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as for example, when a State Legislature is prevented from regulating a matter by reason of the fact that the Federal Congress has already legislated upon that matter, or by reason of its silence is to be construed as indicating that there should be no regulation, the Act does not need to be re-enacted in order to be enforced, if this cause of its unconstitutionality is removed." In Cooley on Constitutional Law at page 201, it is stated that "a finding of unconstitutionality does not destroy the statute but merely involves a refusal to enforce it." In Wilkerson v. Rahrer (1891) 140 U.S. 545; 35 L. Ed. 572, the State of Kansas had enacted a law in 1889 forbidding the sale of intoxicating liquor. This was bad in so far as it related to sales in the course of inter-State trade, as it was in contravention of the Commerce Clause. But in 1890, the Congress passed a law conferring authority on the States to enact prohibition laws. The question was whether a prosecution under the law of 1889 in respect of a breach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat this decision also deals with a statute which was in part unconstitutional. Coming to the authorities of this Court where this question has been considered: In Behram Khurshed Pesikaka v. The State of Bombay [1955] 1 S.C.R. 613, 654., the question arose with reference to the Bombay Prohibition Act of 1949 which, subject to certain exceptions provided therein, prohibited the consumption of liquor. In The State of Bombay and Another v. F.N. Balsara [1951] S.C.R. 682., this Court had held that this provision was obnoxious to Article 19(1)(g) of the Constitution in so far as it related to medicinal and toilet preparations containing alcohol. The appellant was prosecuted for the offence of consuming liquor, and his defence was that he had taken medicine containing alcohol. The point in dispute was whether the burden was upon the appellant to prove that he had taken such a medicine or for the prosecution to show that he had not. This Court held that the onus was on the prosecution, and the same not having been discharged, the appellant was entitled to be acquitted. In the course of the judgment, Mahajan, C.J., made the following observations, which are relied on by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved: "In our opinion, section 26 of the Act, in cases falling within the categories specified under Article 286 of the Constitution has the effect of setting at ought and of obliterating in regard thereto the provisions contained in the Act relating to the imposition of tax on the sale or purchase of such goods and in particular the provisions contained in the charging section and the provisions contained in rule 20(2) and other provisions which are incidental to the process of levying such tax. So far as sales falling within the categories specified in Article 286 of the Constitution and the corresponding section 26 of the Act are concerned, they are, as it were, taken out of the purview of the Act and no effect is to be given to those provisions which would otherwise have been applicable if section 26 had not been added to the Act." On the strength of the above observations, the petitioners contend that the provisions relating to inter-State sales must be treated as non- existent, and that, therefore, a fresh enactment of the statute would be necessary to bring them into operation. Here again, the point for decision was only as to the effect of the ban under Article 286 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and enforceable. The result of the authorities may thus be summed up: Where an enactment is unconstitutional in part but valid as to the rest, assuming of course that the two portions are severable, it cannot be held to have been wiped out of the statute book as it admittedly must remain there for the purpose of enforcement of the valid portion thereof, and being on the statute book, even that portion which is unenforceable on the ground that it is unconstitutional will operate proprio vigore when the Constitutional bar is removed, and there is no need for a fresh legislation to give effect thereto. On this view, the contention of the petitioners with reference to the Explanation in section 22 of the Madras Act must fail. That Explanation operates, as already stated, on two classes of transactions. It renders taxation of sales in which the property in the goods passes in Madras but delivery takes place outside Madras illegal on the ground that they are outside sales falling within Article 286(1)(a). It also authorises the imposition of tax on the sales in which the property in the goods passes outside Madras but goods are delivered for consumption within Madras. It is valid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the effect of unconstitutionality of a statute or on the language of Article 286(2), the conclusion is inescapable that section 22 of the Madras Act and the corresponding provisions in the other statutes cannot be held to be null and void and non est by reason of their being repugnant to Article 286(2) and the bar under that Article having been now removed, there is no legal impediment to effect being given to them. (V) We shall now deal with the contention of the learned counsel for the Madura Mills Ltd., who struck a new path cutting across the lines on which the petitioners and the other interveners proceeded. He contended that the decisive factor in the determination of the question was Entry 42 in List 1 of the Seventh Schedule, "Inter- State trade and commerce", that under that entry, Parliament had the exclusive power to enact laws in respect of inter-State trade and commerce and that included power to impose a tax on inter-State sales, that the States had therefore no competence under the Constitution to enact a law imposing tax on such sales, that the laws passed by the States after the Constitution imposing such a tax were ultra vires and void, that the impugned Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them would also be unconstitutional and void. This contention suffers, in our opinion, from serious infirmities. It overlooks that our Constitution was not written on a tabula rasa, that a Federal Constitution had been established under the Government of India Act, 1935, and though that has undergone considerable change by way of repeal, modification and addition, it still remains the frame- work on which the present Constitution is built, and that the provisions of the Constitution must accordingly be read in the light of the provisions of the Government of India Act. It fails to give due weight to the setting of the relevant provisions of the Constitution and the interpretation which is to be put upon them in their context. In the Government of India Act, 1935, there was no entry corresponding to Entry 42 in List I of the Constitution. But there was in List II, Entry 48, which corresponds to Entry 54 in the Constitution. It is not in dispute that under Entry 48 the States had power to pass a law imposing a tax on inter-State sales, because the terms of the entry are wide and would include inter-State as well as intra-State sales. It was on this view that the Provinces had ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of customs including export duties" would be wholly redundant. Entries 43 and 44 relate to incorporation, regulation and winding up of corporations. Entry 85 provides separately for corporation tax. Turning to List II, Entries 1 to 44 form one group mentioning the subjects on which the States could legislate. Entries 45 to 63 in that List form another group, and they deal with taxes. Entry 18, for example, is "Land" and Entry 45 is "Land revenue". Entry 23 is "Regulation of mines" and Entry 50 is "Taxes on mineral rights". The above analysis-and it is not exhaustive of the entries in the Lists-leads to the inference that taxation is not intended to be comprised in the main subject in which it might on an extended construction be regarded as included, but is treated as a distinct matter for purposes of legislative competence. And this distinction is also manifest in the language of Article 248, clauses (1) and (2), and of Entry 97 in List I of the Constitution. Construing Entry 42 in the light of the above scheme, it is difficult to resist the conclusion that the power of Parliament to legislate on inter-State trade and commerce under Entry 42 does not include a power to impose a ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent to the Constitution imposing such a tax would be incompetent. This, however, is petitio principii. The point for decision is whether tax on inter-State sales is included within Entry 42. The inference to be drawn from the plain language of Article 286(2) is that it is not. It is no answer to this to say that Entry 42 includes it, and that, therefore, the meaning of Article 286(2) should be cut down. We cannot accede to such a contention. To sum up: (1) Entry 54 is successor to Entry 48 in the Government of India Act, and it would be legitimate to construe it as including tax on inter-State sales, unless there is anything repugnant to it in the Constitution, and there is none such. (2) Under the scheme of the entries in the Lists, taxation is regarded as a distinct matter and is separately set out. (3) Article 286(2) proceeds on the basis that it is the States that have the power to enact laws imposing tax on inter- State sales. It is fair inference to draw from these considerations that under Entry 54 in List II the States are competent to enact laws imposing tax on inter-State sales. We must now consider the arguments that have been put forward as supporting the opposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer, in the context of Entry 48 in List II it should be held not to include it, and that therefore the Province had the right to tax the first sales. This view was approved by the Privy Council in Governor-General in Council v. Province of Madras (1945) L.R. 72 I.A. 91; 1 S.T.C. 135 If it is possible therefore to construe Entry 42 as not including tax on inter-State sales, then on the principle enunciated in Province of Madras v. Boddu Paidanna and Sons [1942] F.C.R. 90; 1 S.T.C. 104, and Governor-General in Council v. Province of Madras [1889] App. Cas. 580, we should so construe it, as that will avoid a conflict between the two entries. It was also argued in support of the contention that Entry 42 in List I must be held to include the power to tax, that that was the interpretation put by the American authorities on the Commerce Clause, and that there was no reason why a different construction should be put on Entry 42 in List I of our Constitution. It is true that our Constitution-makers had before them the Commerce Clause and the authorities thereon, but it is a mistake to suppose that they intended to bodily transplant that clause in Entry 42. We had in the Government of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax proposed to be made by the Andhra State on the sale of yarn by them to dealers in the State of Andhra is illegal, because under the Madras Act and the Rules made thereunder, where there are successive sales of yarn the tax can be imposed at only one point, and as the Government of Madras had already imposed a tax on the sale within that State, a second levy on the selfsame goods by the State of Andhra is unauthorised, and that therefore the threatened proceedings for assessment are incompetent. This contention is clearly untenable. When the Madras Act provides for a single levy on successive sales of yarn, it can have only application to sales in the State of Madras, as it would be incompetent to the Legislature of Madras to enact a law to operate in another State. But it is argued that section 53 of the Andhra State Act, 1953, on its true interpretation enacts that though for political purposes Andhra is to be regarded as a separate State, for the enforcement of laws as they stood on that date it should be deemed to be a part of the State of Madras. We do not agree with this interpretation. In our opinion, section 53 merely provides that the laws in existence in the territ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is State, the respondent in these petitions, demanded taxes on these sales under the provisions of the Sales Tax Act applying to its territories. The petitioners challenged the respondent's right to tax the sales, and filed these petitions for writs of prohibition or other suitable writs restraining the respondent from levying and collecting the tax. The Act mentioned various kinds of sales which could be taxed under it. The procedures followed by the petitioners in effecting the sales were diverse and have not yet been ascertained, and it is not possible without such ascertainment to decide whether they are or are not taxable under the provisions of the Act read with other relevant laws. To avoid this difficulty it has been agreed between the parties that the only question that will be decided on these petitions is whether the respondent can tax a sale under which the property in the goods sold passed outside the State of Andhra but the goods were delivered in that State for consumption there. Before proceeding to discuss this question it is necessary to refer to certain antecedent events. On January 26, 1950, the Constitution of India was promulgated. It continued the laws pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were delivered within its territories for consumption there though the property in the goods passed beyond its territories and a provision in a State statute purporting to levy such a tax did not contravene Article 286. Andhra is a new State which came into existence on October 1, 1953. It was created by the Andhra State Act, 1953, largely out of territories previously belonging to the State of Madras. Later, the new State came to be designated as the State of Andhra Pradesh but I will refer to it as the State of Andhra or simply Andhra. Section 53 of the Andhra State Act provided that the laws in force prior to the Constitution of the State of Andhra in the territories included in it were thereafter to continue in force there. The Madras General Sales Tax Act therefore became applicable to the State of Andhra and it became so applicable with the new section 22 previously added to it. Subsequently, the Madras Act as applying in the State of Andhra was, to suit the latter State, adapted by substituting for the name Madras the name Andhra wherever it occurred in that Act. I will hereafter call this Act the Sales Tax Act. Sometime in the year 1954 the respondent, the State o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took place in the course of inter-State trade or commerce; and all such taxes levied or collected or purporting to have been levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law." The respondent was advised that the Validation Act had changed the situation and in view of it the petitions could no longer succeed. Thereupon, the respondent on February 19, 1957, filed fresh statements submitting that the petitions should be dismissed. The petitions have now come up for hearing in these circumstances. The validity of the Validation Act itself has been challenged. But I do not think it necessary to decide that question. I will assume that that Act is perfectly valid. It does not however itself levy any tax. Its only effect, so far as these cases are concerned, is to permit the Sales Tax Act to operate to tax sales which took place in the course of trade between Andhra and any other State between certain dates. I will not refer to these dates hereafter for what I have to say applies to sales between them only. As has been agreed between the parties, as mentioned at the commencement of this judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ? It no doubt says, without specifying any particular State, that a sale shall be deemed to have taken place in the State in which the goods were delivered under it though the property in them has passed in another State. But it seems to me impossible from the language used to say that it contemplated a case in which the goods were delivered in Andhra though property in them passed in another State. For the sake of clarity I have left out in what I have just said the term as to consumption in the State in which the goods were delivered and no question as to such consumption is in dispute in these cases. The Explanation opens with the words "For the purposes of clause (a)(i)". What then is that clause? It only contains the words "outside the State of Andhra". It completes the sentence part of which has preceded it. The complete sentence says, "Nothing in this Act shall be deemed to impose, or authorise the imposition of, a tax on the sale or purchase of any goods, where such sale or purchase takes place (a)(i) outside the State of Andhra." It then says that no tax shall be levied under the Act on a sale which takes place outside Andhra. It is after this that the Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in what an outside sale referred to in sub-clause (a) is". The language of the Explanations and the setting of each in its respective provision are identical. That language must therefore have the same meaning. It is said that the consideration that prevailed with the Court in The Bengal Immunity Company case[1955] 2 S.C.R. 603; 6 S.T.C. 446. in dealing with Article 286 cannot apply in dealing with section 22 for the latter is a provision in a taxing statute which the former is not. But I do not see that this comment, even if justified, would lead to a different meaning being put on words used when they occur in a taxing statute from that when they occur in a statute which does not purport to levy a tax. As a matter of language only, words must have the same meaning. The words "for the purpose of clause (a)(i)" must therefore have the same meaning in the Explanation in Article 286(1)(a) as in the Explanation in section 22. I am unable to distinguish the present case from The Bengal Immunity Company case [1955] 2 S.C.R. 603; 6 S.T.C. 446. for the purpose of determining the meaning of the words used. It is then said that the Explanation in section 22 has two facets; that when ..... X X X X Extracts X X X X X X X X Extracts X X X X
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