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TMI Blog1953 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... and medium varieties made in mills or woven on powerlooms. The sales of coarse and medium cotton cloth for the period after 1st August, 1952, are being taxed under the third amend- ment to the Hyderabad General Sales Tax Act, which makes the aforesaid commodity liable to pay the tax, and the common object of the writ applications is to challenge the legality of such taxation on the grounds which are mentioned later in this judgment. The applicants assert that the Sales Tax Officer of Secunderabad had in November, 1952, treated the sale amounts of coarse and medium cloths as assessable turnover and demanded payments of tax; on objections the applicants were advised to file appeals; but as it is more expedient and desirable to invoke the juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t without the assent of the President is contrary to the provisions of the taxing statute itself; for according to Explanation (2) to Section 2(k) of the Hyderabad General Sales Tax Act, notwithstanding anything contrary in any other law for the time being in force a transfer of goods, in respect of which no tax can be imposed by reason of the provisions contained in Article 286 of the Constitution, shall not be deemed to be sale within the meaning of this clause; (iv) The last ground is that the levy and collection of the tax on sales on the ground of a pre-existing law amounts to a denial of equal protection and constitutes unjustifiable and arbitrary discrimination bet- ween subjects of different States. In our opinion, only two question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the word "law" used therein. The other question is whether the guarantee of the equal protection of the laws has been violated by the continuance of the Hyderabad General Sales Tax Act so far as the taxation on the medium cotton cloth is con- cerned, which we will decide next. The Hyderabad General Sales Tax Act came into force on 1st May, 1950, and the coarse and medium cloths were made liable to taxation under the third amendment to the Act which became enforceable from 1st August, 1952. Thus the main Act and its amendment were both existing laws before the Central Act (No. LII of 1952) became operative on 9th August, 1952. It was urged on behalf of the applicants that the object of Article 286 of the Constitution is to discontinue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale transaction takes place outside the State or in the course of export or import of the commodity outside or into the territory of India. Then by clause (2) inter-State trade or commerce cannot be taxed except where Parliament by law otherwise provides. Under clause (3) the assent of the President is sufficient to validate the law. The use of the present perfect tense in the phrase "as have been declared by Parliament by law to be essential for the life of the community" indicates that some sequence of time is intended, and this sequence can only be the passage of law taxing a com- modity after its declaration by the Parliament to be essential for the life of the community; otherwise words such as "existing" would have been used to indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement of the Act by the Legislature of a State imposing a tax on the sale of any goods declared by this Act to be essential for the life of the community, shall have effect unless it has been reserved for the consideration of the Pre- sident and has received his assent. It is inconceivable that Parliament would place limits on a constitutional provision had the provision been as wide as has been urged by the Advocate for the applicants. For these reasons, we are of the opinion that as the applicants are being taxed under an enactment which is earlier to the Central Act, the earlier Act is not covered by clause (3) of Article 286 and therefore the tax is being validly levied. It was also urged before us that the enactment of a statute tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also be disguised, covert and indirect and it is to this latter class of cases that the expression 'colourable legislation' has been applied in certain judicial pronouncements..........." Judged by the aforesaid test, the third amendment of the Hyderabad General Sales Tax Act cannot be held as colourable, as it is covered by Item 54 of the Seventh Schedule of the Constitution, was passed earlier to the Central Act, and is not covered by law as used in Article 286(3). We also think that there is no force in the argument that the enact- ment infringes the guarantee relating to equality before the law. It is well established by authorities both American and Indian that territorial classification is a good classification for purposes of Article ..... X X X X Extracts X X X X X X X X Extracts X X X X
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