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TMI Blog1971 (11) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... to be the value of the stock of mill cloth held by the appellant on December 14, 1957, was exigible to tax. The contention of the appellant before the assessing authority was that the turnover related to mill cloth on which the additional excise duty was not payable and therefore not paid and so the turnover was exempt from sales tax. The contention was rejected. The appellant appealed to the Deputy Commissioner of Commercial Taxes. The appeal was dismissed. Its further appeal to the Sales Tax Appellate Tribunal also proved unsuccessful. The appellant took the matter in revision to the Mysore High Court and it also filed a writ petition. Its contention in the writ petition was that sub-section (5A) introduced in section 5 of the Mysore General Sales Tax Act, 1957, by Act No. 9 of 1964, under which the levy was made, was ultra vires the powers of Mysore Legislature and therefore void. A Division Bench of the High Court by a common judgment dismissed the petitions. The Mysore Sales Tax Act, 1957, hereinafter referred to as "the Act", came into force on October 1, 1957. Section 5 of the Act is the principal charging section. Under the Act, as it stood originally promulgated, clot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer on or after the fourteenth day of December, 1957, on which the said excise duty is not payable shall be exempt from the tax payable under this Act." Entry No. 8A in the Fifth Schedule in the Amending Act No. 9 of 1958 was to have effect from April 1, 1958. The entry reads: "8A. All varieties of textiles, namely, cotton, woollen or silken including rayon, art silk or nylon whether manufactured by handloom, power- loom or otherwise but exclusive of pure silk." In Writ Petition No. 368 of 1961, the Mysore High Court considered the effect of these amendments. Applying the principle enunciated by this court in Innamuri Gopalam v. State of Andhra Pradesh [1963] 14 S.T.C. 742 (S.C.)., the court held that before the charge created by section 5(5A)(a) can come into operation excise duty or additional excise duty should have been levied and the same not paid by the assessee. And as it could not have been levied if it was not leviable under law, section 5(5A)(a) was inapplicable. The court said that admittedly additional excise duty was not leviable on the stock of cloth in question. The court further held that entry 8A of the Fifth Schedule completely exempted the stock of cloth fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted when by the subsequent amendment a new text was substituted for sub-section (5A). Another important circumstance is that, whereas sub-section (5A) as originally introduced contained the words 'on which excise duty or additional excise duty levied by the Central Government with effect from the fourteenth day of December, 1957, has not been paid', no such words are found in the text of the substituted sub- section (5A). On the contrary, the position was simplified by stating that tax will be levied in respect of sales or purchases, as the case may be, relatable to the stock held by the dealer on 14th December, 1957, and the possibility of taking a case beyond the purview of the sub-section was limited to manufacturers by stating the idea separately in a proviso." Before us, counsel for the appellant did not attack the reasoning of the High Court on any of the grounds taken in the special leave petition. The appellant, however, sought permission by C.M.P. No. 4827 of 1970 to raise an additional ground, namely, that on February 27, 1964, the date on which the Mysore Act No. 9 of 1964 came into force, textiles having become declared goods, the Mysore State Legislature was compete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the enactment of Act No. 9 of 1964 and therefore even for the assessment period it could not have passed a law imposing tax at a rate in excess of two per cent. In support of this proposition, counsel relied upon certain observations in A. Hajee Abdul Shukoor and Company v. State of Madras [1964] 15 S.T.C. 719 (S.C.); (1964) 8 S.C.R. 217 at 231. One of the questions which this court had to consider in that case was whether the Madras Legislature was competent to enact the provisions of sub-section (1) of section 2 of the Madras General Sales Tax (Special Provisions) Act, 1963. Hides and skins had been declared under Act No. 52 of 1952 to be essential for the life of the community. Article 286(3) of the Constitution as it stood before its amendment by the Constitution (Sixth Amendment) Act of 1956, on September 11, 1956, provided that no law made by the Legislature of a State imposing or authorising the imposition of a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential 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. By August 28, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the part of the Mysore Legislature in subjecting the turnover of sales of textiles before that period to a tax higher than that specified in section 15 of the Central Sales Tax Act. The matter can be looked at from a different angle. As we have already indicated, by virtue of section 5(5) of Act No. 9 of 1964, the substituted sub-section (5A) was deemed to have been in the Mysore General Sales Tax Act always. The only limit on the power of a Legislature to create a fiction is that it should not transcend its power by its creation. The limitation on the power of the Legislature of Mysore in 1964 when it enacted Act No. 9 of 1964 was that on the sale of declared goods it could not have imposed sales tax at a rate higher than that specified in section 15 of the Central Sales Tax Act as it stood then. There was no limitation on its power to impose tax on the turnover of sales of textiles before April 1, 1958, when they were not declared goods. The question whether after April 1, 1958, when textiles became declared goods, the rate of tax as provided in the Second Schedule to the Mysore General Sales Tax Act, 1957, as amended, would stand modified in view of section 15 of the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X
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