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TMI Blog1963 (2) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... d through its commission agents, though the transaction between the dealers of oil seeds and the petitioner's commission agents has been stated to be independent sales and the supply by the commission agents to the petitioner in pursuance of the commission agency agreement has also been described not to amount to sale. The petition then proceeds to trace the history of the sales tax legislation and recites that the Punjab Legislature in exercise of its legislative power under entry No. 48, List II, of Schedule VII read with section 100, Government of India Act, 1935, enacted the East Punjab General Sales Tax Act in 1948 for the purpose of imposing sales tax on sales as defined by the said Act. In 1958, the State Legislature purported to impose a tax described as purchase tax on certain manufacturers alone by enacting the East Punjab General Sales Tax (Amendment) Act, 1958 (Act No. 7 of 1958). This Amending Act amended section 4 of the Principal Act and also introduced the definition of "purchase" by inserting section 2(ff). The definitions of the term "turnover" in section 2(i) and "dealer" in section 2(d) of the Principal Act were also suitably amended. In 1959, certain other amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds by using oil for the said manufacture are liable to pay purchase tax at 2 per cent. on the oil purchased and also sales tax at 4 per cent. on the soap or other goods sold by them. Both these categories of taxation, according to the petition, are beyond the legislative competence of the State Legislature because entry No. 54 of List II of Schedule VII of the Constitution empowers the State Legislature only to impose a tax either on sale or on purchase and not on both. The Punjab Act as amended in 1958 is stated also to violate section 15 of the Central Act because it imposes on oil seeds and oils declared to be of special importance to inter-State trade and commerce a tax in excess of 2 per cent. leviable at more than one stage. The definition of the word "purchase" also, according to the petitioner, creates arbitrary discrimination between manufacturers using oil seeds as a raw material and manufacturers so using other raw material, there being no rational basis for this distinction. The petitioner claims to have been submitting returns to the Assessing Authority regularly and paying the tax assessed. The petitioner paid the sales tax on its taxable turnover but did not deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference has also been made to the Amending Act No. 17 of 1960 whereby the words "for use in the manufacture of goods for sale" were omitted from the definition of the word "purchase", an amendment which, according to the averments in this application, was not known to the petitioner at the time of filing the writ petition initially. Additional grounds were thus sought to be raised urging the East Punjab General Sales Tax Act (Act No. 46 of 1948) to be void ab initio being an incomepetent piece of legislation in view of the Bench decision just mentioned. The provisions of the Punjab General Sales Tax Act of 1948, according to the plea in the application for amendment can have no legal force until re-enacted by competent Legislature and neither the Legislature of the East Punjab nor its successor the State Legislature of the Punjab having re-enacted the invalid piece of legislation the Amending Acts subsequently passed are inoperative and of no consequence. This application for seeking permission repeats all the legal arguments in support of the contention that the East Punjab General Sales Tax Act is a void piece of legislation and, therefore, an absolute nullity. Notice of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the taxpayer in Canada who has to pay income-tax levied by the Province for Provincial purposes and also income-tax levied by the Dominion for Dominion purposes: see Caron v. The King [1924] A.C. 999. ; Forbes v. A. G. for Manitoba[1937] A.C. 260." The counsel deduces from this passage that in the present case the tax must be considered to have been imposed qua a manufacturer or producer and, therefore, the tax is, in essence or pith and substance, an excise duty and the Punjab State Legislature has under the cloak of purchase tax usurped the power of the Central Legislature and imposed an excise duty. The counsel as a matter of fact took us through the whole of the judgment of the Federal Court in order to seek support for this contention. The other cases through which we were taken by the counsel are Governor-General in Council v. Province of MadrasA.I.R. 1945 P.C. 98; 1 S.T.C. 135. and Tata Iron Steel Co. Ltd. v. State of BiharA.I.R. 1958 S.C. 452; 9 S.T.C. 267. I have, however, considered it unnecessary to deal with these decisions because the matter has very recently been discussed by the Supreme Court in Chhotabhai Jethabhai Patel and Co. v. Union of IndiaA.I.R. 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case before us the base on which the tax operates is not the manufacture but the commercial transaction of sale and purchase of the commodity which has to be used in future in a manufacturing process, with the result that by no stretch can the impugned tax be considered to be an excise duty. Not only is it not possible to describe the tax in question to be "unrelated to and not dependent on any commercial transaction" of the goods taxed, but, on the contrary, the tax is essentially and in pith and substance imposed on the basis of the commercial transaction itself, though the purchased goods are intended to be used later for manufacturing some other goods. Without the sale and purchase of the goods taxed the impugned tax is not intended to operate, and the event of manufacture or production which alone attracts excise duty has not yet occurred with the result that the manufactured goods have not yet even come into existence. In these circumstances, can it be said that the tax in question is a duty of excise on goods manufactured or produced and the impugned legislative measure is, therefore, a colourable piece of legislation? In my opinion, the only possible answer can be in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enacted as if it is a fresh legislation. A statute which has been declared void in its entirety, so proceeds the contention, must be (1) Sales Tax Reference No. 4 of 1962; since reported at [1963] 14 S.T.C. 476. considered never to have come into existence and, therefore, any amendment of a section in a non-existent statute is meaningless because it would be required to operate in vacuum and, therefore, would be wholly ineffectual; it cannot have the effect of enacting a non-existent statute. The sole basis of this argument is that in the Bench decision of this Court already cited the entire Act was held to be void. In that judgment, an argument was raised on behalf of the State that even before the Amending Act (Punjab Act No. 19 of 1952) which amended section 5 of the Punjab Act and removed the infirmity of excessive delegation the impugned notification in that case could be issued under section 6 of the Punjab Act which section was capable of enforcement. This argument was repelled by the Bench on the ground that section 5 was not severable from the other provisions of the statute and this section being the charging section, if it was void, then the other provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort the wide proposition canvassed. Be that as it may, a Bench of this Court having held the delegation in question to be excessive and section 5 of the Punjab Act to be void on this account, it is not open to us in the circumstances of this case to reopen that question. We are, therefore, only concerned with the question of the effect of the amendment of section 5 by Punjab Act No. 19 of 1952. It may also be observed that in view of our decision on the second point it seems to be unnecessary to deal with the first point. According to the respondents' counsel it is not section 5 but section 4 which is the charging section. Section 5, according to Shri Kaushal, is only concerned with the rate of tax, section 4 being the provision dealing with the incidents of taxation. The petitioner's counsel has in support of the contention that section 5 alone is the charging section solely relied on the observations in the case of Ganga Ram Suraj Parkash [1963] 14 S.T.C. 476. Section 4 of the Punjab Act as originally enacted is headed as "Incidence of taxation" and it proceeds to lay down that subject to the provisions of sections 5 and 6 every dealer whose gross turnover during the year imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 and, therefore, this section cannot be considered to be the charging section. The contention is uasustainable, for, the real liability to pay tax arises by reason of section 4, and sections 5 and 6 provide for rate of tax and goods on which tax may not be payable under the Act. In my opinion, the judgment in Ganga Ram Suraj Parkash case(2) does not lay down that section 5 is the only charging section, as indeed this question did not directly arise there. It appears to me that sections 4, 5 and 6 read together constitute the charging legislative provision and the argument that section 5 is the sole authority of law on the basis of which tax can be levied must be repelled. Now, if this be the correct legal position, the whole argument of the petitioner's counsel that the Punjab Act as originally passed must, in its entirety, be held to be void collapses and, in my opinion, it becomes wholly unnecessary to refer to the mass of decisions cited at the Bar in support of this contention. It would, therefore, appear to me that by suitably amending section 5 so as to remove the vice of excessive delegation the tax as contemplated by the impugned Act can lawfully be levied and collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statute in question had no application. The Court does not annul or repeal the statute which conflicts with the Constitution. The Court may, and perhaps does, give reasons for ignoring and disregarding such a statute, but its decision affects only the parties and the judgment cannot be considered to be against the statute. The reasons of the Court or the judgment or the opinion given by it operates as a precedent to be considered in other similar cases and that is all. It is true that in some decisions an unconstitutional statute has been described as though it had never been enacted but this statement seems to me to have many qualifications and, as at present advised, I am unable to persuade myself to hold that by reason of mere excessive delegation contained in section 5 the impugned Punjab Act in its entirety should be held never to have been enacted. In this view of the matter, it is difficult to understand why by amending section 5 the Punjab Act should not be considered to have become operative and effective. On behalf of the petitioners, Punjab Province v. Daulat Singh A.I.R. 1946 P.C. 66. has been cited but here again I do not quite understand how the ratio of this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Act. This section prescribes restrictions and conditions in regard to tax on sale or purchase of declared goods within a State. According to this provision tax payable in respect of any sale or purchase of declared goods inside a State is not to exceed two per cent. of the sale or purchase price and is not to be levied at more than one stage; where such a tax has been levied and the goods are sold in the course of inter-State trade or commerce the tax so levied must be refunded in such manner and subject to such conditions as may be provided by any law in force in the State concerned. On the facts and circumstances of the cases before us, the counsel for the various petitioners have not been able to point out how this section adversely affected the validity of section 5 in so far as they are concerned. Neither has the tax been shown to be more than two per cent. on the goods taxed nor has it been shown that such sale or purchase tax has been levied at more than one stage. The fallacy that underlies the contention based on section 15 perhaps is that it is assumed that the purchase tax imposed on the goods purchased before their use in manufacture and the sales tax imposed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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