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TMI Blog1961 (12) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 6 of the Central Sales Tax Act which imposes a liability to tax under that Act was brought into operation by a notification of the Central Government issued on 26th March, 1957, the levy itself was to take effect from 1st July, 1957. All the sections of the Central Sales Tax Act were not brought into operation at the same time. Section 15 in particular, which imposed certain restrictions and conditions in regard to tax on sales and purchases of declared goods, was brought into force with effect from 1st October, 1958, that is, on a date outside the assessment year in question. Chapter IV of the Central Sales Tax Act deals with goods of special importance to inter-State trade or commerce. Section 14 of the Acts sets out the classes of such goods. Section 15, as indicated already, imposed certain restrictions upon the State sales tax law in so far as it purported to levy any tax under that law in respect of the sales or purchases of declared goods set out in section 14. Broadly stated, the contention is that sections 6, 14 and 15 form as it were a composite group and that having regard to the scheme and object of the Act, enforcement of the levy of the Central sales tax under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ...be liable to pay tax under this Act on all sales effected by him in the course of inter-State trade or commerce during any year on and from the date so notified. " The argument is that since the liability created by section 6 of the Act is subject to the other provisions contained in the Act, notwithstanding that section 15 was not brought into force till 1st October, 1958, the impact of section 15 upon section 6 cannot be ignored. The result, according to the learned counsel, is that the levy under section 6 is ineffective till such date as section 15 comes into force, that is to say, the notification bringing section 6 into force is inoperative. We find it exceedingly difficult to follow this argument. On and after the amendment of the Constitution amending entry 54 in List II of the Seventh Schedule and introducing a new entry 92-A in List I, power is conferred upon the Parliament to legislate in respect of taxes on the sale or purchase of goods, where such sale or purchase takes place in the course of inter-State trade or commerce. Under Article 286, as it stood, there was a prohibition upon the State imposing or authorising the imposition of any tax on the sale or purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the community. This sub-clause of Article 286 was altered in form and it stands thus: "Any law of a State shall, in so far as it imposes, or authorises the imposition of, a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify." The above provision of the Constitution along with the entries in the two lists establish that Parliament has three distinct powers: firstly, to formulate principles for determining in what manner for the purpose of the various prohibitions, a sale or purchase of goods takes place; secondly, it has the exclusive power of levying a tax on sales or purchases taking place in the course of the inter-State trade; and thirdly, it has the power to impose restrictions and conditions in respect of any State law levying tax on the purchase and sale of declared goods. It has the incidental power to declare any goods to be of special importance in inter-State trade or commerce. The Central Sales Tax Act of 1956 is undoubtedly a composite p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy by a State upon the sale or purchase of declared goods, and the extent of the restriction is set out in section 15 of the Act. The State cannot impose a tax on the sale or purchase of any such goods taking place inside the State at a rate higher than two per cent. of the sate or purchase price thereof and such tax shall not be levied at more than one stage inside the State. The section also provides that where a tax has been levied under the local law in respect of the sale or purchase inside the State of any declared goods, and such goods are sold in the course of inter-State trade, the tax levied by the State shall be refunded. It is true that till section 15 is brought into force, these restrictions upon the local sales tax Act will not be operative. A person dealing in declared goods by way of purchase or sale inside the State will be liable to the local sales tax law at whatever rate such law might prescribe. A subsequent inter-State sale of these same goods would also invite the inter-State levy of tax. That would be the position so long as Parliament did not exercise the power conferred upon it by Article 286(3) of the Act. It is no doubt true that section 15 has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght into play. If Parliament designedly postponed the conferment of the privileges contemplated by section 15 of the Act to a later date, it was undoubtedly within its powers in doing so, in the absence of any constitutional requirement that such relief as is contemplated by section 15 should be granted at the same time as the levy of tax on inter-State sales is brought into force. We are unable to see any substance in the argument advanced that the notification under section 6 is invalid for any reason whatsoever. It has further been urged that the levy of tax at two per cent. on a part of the turnover of each of these dealers under section 8(2) of the Act is improper. What is contended is that though the necessary declaration contemplated by section 8(4) of the Act in respect of the part of the turnover referred to was not furnished by the assessee and the levy of inter-State sales tax is made under section 8(2) as a consequence thereof, the tax under that section has to be levied "in the same manner" as would have been done if the sale had in fact taken place inside the appropriate State; it is argued that the expression "in the same manner" takes in all incidents of levy of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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