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TMI Blog1991 (2) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... the State Legislature has no competence to impose such tax as such tax does not fall within any of the entries of List II of the Seventh Schedule to the Constitution, viz., the State List especially entry 54 thereof. They have joined in these petitions State of Gujarat as respondent No. 1 and the authorities exercising powers under the Act as other respondents. As the petitions involve common questions of law, they were all heard together and are being disposed of by this common judgment. The common grievance of the petitioners is required to be examined in the background of the statutory settings and their historical backdrop. II. Statutory settings: The Act has been enacted by the State Legislature in exercise of its powers under entry 54 of the State List. The said entry reads as under: "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I." The said Act is operative in the State from 6th May, 1970. By section 2 of the Gujarat Sales Tax (Third Amendment) Act, 1986, the Legislature of the first respondent-State had inserted sections 15B and 15C from 1st April, 1986, in the Act providing in substance levy of tax on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture, and accordingly, the dealer shall include purchase price of such goods in his turnover of purchases in his return under section 32, which he is to furnish next thereafter." The vires of the aforesaid section 13AA of the Bombay Act came up for consideration before the Supreme Court in the case of Goodyear India Ltd. v. State of Haryana [1990] 76 STC 71. In that case, the Supreme Court considered section 13AA of the Bombay Act as well as identical pari materia provisions in the Haryana Act. Sabyasachi Mukharji, J. (as he then was) sitting with Ranganathan, J., in the aforesaid case took the view that the said provision was ultra vires the State legislation as under the guise of purchase tax, what was sought to be levied was consignment tax which was beyond the competence of the State Legislature and was not covered by entry 54 of the State List. Ranganathan, J., by a separate concurring judgment also endorsed the said view. The result was that such a provision was treated to be beyond entry 54 of the State List and would be covered only by entry 92B of the Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of the Maharashtra High Court consisting of Bharucha and Srikrishna, JJ., by their decision dated 28th August, 1990, rendered in Writ Petition Nos. 477 of 1990 and group (Hindustan Lever Ltd. v. State of Maharashtra [1990] 79 STC 255) struck down the said provision by taking the view that the said provision sought to impose levy in the nature of excise which was beyond the legislative competence of the State Legislature and would not be covered by entry 54 of the State List, meaning thereby, if at all, it would be covered by entry 84 of the Union List. Entry 84 of the Union List reads as under: "Duties of excise on tobacco and other goods manufactured or produced in India except- (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry." So far as Gujarat provision of section 15B was concerned, a number of writ petitions were filed in this Court challenging the vires of this provision on the basis of the Supreme Court decision in Goodyear's case [1990] 76 STC 71. It was contended that Gujara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Finance Department of the first respondent dated 1st May, 1990, whereunder, the first respondent amended the Gujarat Sales Tax Rules, 1970 and introduced a new rule being rule 42E after existing rule 42E. The said rule 42E reads as under: "In assessing the purchase tax levied under section 15B and payable by a dealer (hereinafter referred to as 'the assessee') the Commissioner shall subject to conditions of rule 47 in so far as they apply, and further conditions specified below, grant him a drawback, set-off or as the case may be, refund of the whole of the purchase tax paid in respect of any earlier purchase of goods used by him, as raw materials or processing materials, or consumable stores, in the manufacture of taxable goods. Conditions (1) the assessee is a registered dealer, (2) the goods purchased are taxable goods other than declared goods, (3) the said goods have been used by the assessee within the State as raw materials or processing materials or consumable stores in the manufacture of taxable goods, (4) the goods so manufactured have been sold by the assessee in the State of Gujarat." The aforesaid Gujarat Ordinance was repealed by Gujarat Act 6 of 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd substance, the legislation falls within entry 92B of the Union List. It was further contended that the decisions of the Kerala High Court in Malabar Fruit Products Company v. Sales Tax Officer [1972] 30 STC 537 and Yusuf Shabeer v. State of Kerala [1973] 32 STC 359 cannot help the respondents as these decisions will have to be read in the light of pronouncement of the Supreme Court about emergence of taxing event as authoritatively laid down in Goodyear's case [1990] 76 STC 71. That in Goodyear's case [1990] 76 STC 71, the Supreme Court has distinguished these judgments on the ground that they had not laid down anything on the question with which the Supreme Court was concerned. It was further submitted that decision of three-member Bench of the Supreme Court reported in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191 will also not be of any avail to the respondents as in that case, the Supreme Court was not concerned with the question which is posed for our consideration. That it was concerned with the question of true construction of the Tamil Nadu General Sales Tax Act. That decision in [1975] 36 STC 191 (State of Tamil Nadu v. Kandaswami) is considered by the later decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned with the provision imposing purchase tax on raw material for use in manufacturing goods; while in the present case, purchase simpliciter of raw materials is not to be taxed but only when they are used in manufacture of taxable goods that levy is imposed, that is, when such purchased raw materials are used and consequently taxing event in the present case becomes complete on such user and has nothing to do with the original intention underlying the purchase. Mr. Pathak alternatively contended that even assuming that it is not a duty in the nature of excise, the said provision when read with rule 42E would clearly project a picture of being consignment tax disguised as purchase tax; and, therefore, the ratio of Goodyear case [1990] 76 STC 71 (SC), would directly get attracted for voiding this provision. It was next contended by Mr. Pathak that in any case, the impugned new Gujarat provision of section 15B is ultra vires and illegal also on the principles laid down by the Supreme Court in D. Cawasji Co. v. State of Mysore [1985] 58 STC 1. He also submitted that in view of the facts stated in paragraph 9 of the said judgment and the principles laid down by the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently, it would be ultra vires entry 54 of the State List and would be covered by entry 84 of the Union List. In that connection, Mr. Joshi heavily relied on the decision of the Bombay High Court in Writ Petitions Nos. 477 of 1990 and group (Hindustan Lever Ltd. v. State of Maharashtra [1990] 79 STC 255). Analysing the new Gujarat provision of section 15B, Mr. Joshi submitted that it contemplates various contingencies when purchase of raw material simpliciter would not be covered by the said provision. In the following cases, even though raw materials are purchased in the State of Gujarat and are utilised for manufacture of taxable goods out of them, section 15B may not apply: (i) Purchase by manufacturer/dealer of declared goods which are of national importance. (ii) Purchase of raw materials which are for resale. (iii) Purchase of raw materials which are used for manufacture of taxfree goods. (iv) Purchase of tax-free goods. (v) Purchase of raw materials which may be taxable goods outside Gujarat State and then their import in the Gujarat State. Mr. Joshi submitted that in the old section also, this was the position. He further submitted that on proper analysis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Kaji appearing for some of the petitioners also toed the line of the arguments of Messrs. Pathak and Joshi and further contended that established principles of interpretation would require that newly substituted provision of section 15B should be examined after considering what was the position before the Forty-sixth Amendment, find out what was the mischief that was sought to be remedied, discover true rationale for the remedy, the true ratio of the Supreme Court decision in Goodyear case [1990] 76 STC 71 and the scheme of the new legislation comprised in section 15B and rule 42E which are part and parcel of a single integrated scheme. He submitted that while considering the legislative competence of the State Legislature to enact section 15B, the court must look not to the form but to the substance of the levy and, therefore, the nomenclature given by the Legislature is not decisive. He submitted that in the light of the above position, the impugned new Gujarat provision of section 15B read with rule 42E is liable to be struck down as it is a mere device or an attempt to get over the ratio of the Supreme Court decision in Goodyear case [1990] 76 STC 71 and is a colourable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of the Supreme Court decision is the manufacture of taxable goods by use of such raw materials. He submitted, taking a clue from the decision of the Supreme Court, that in the present case, chargeable event is not purchase of raw material by a dealer in the State but it occurs when subsequent condition of use of purchased material in the manufacture of taxable goods takes place and it would be the said subsequent condition occurrence of which would attract the charge and is to be treated as taxable event. He submitted that such manufacture of taxable goods out of purchased raw material if brought to tax would amount to tax on manufacture and would be analogous to the taxing measure covered by entry 84 of the Union List and in no case can be covered by entry 54 of the State List. He submitted that taxable event so far as the impugned provision is concerned, is the manufacture of taxable goods by which time Reported as Rasoi Limited v. State of West Bengal [1991] 80 STC 356 (WBTT). the raw materials have already merged in the taxable goods and different articles have come into being. The nexus, therefore, between the levy thus interpreted or analysed is too remote from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, submitted that all actions taken and all taxes paid and all assessments made under the old section 15B are null and void and are not saved by mere enactment of a retrospective section. It was lastly submitted that the newly substituted section 15B in any case is unreasonable and violates article 14 of the Constitution as it seeks to rope in all manufacturers big and small who purchase the raw materials in the State and use them in manufacturing taxable goods out of them. Remedy cannot be worse than the disease. The impugned provisions if considered de hors rule 42E would make them per se unreasonable. Mr. Kaji produced on record xerox copies of the relevant provisions of the Calcutta sales tax laws which were dealt with by the Calcutta Tribunal. Mr. S.N. Shelat appearing for the petitioners in Spl. C.A. No. 8690 of 1990 adopted the arguments of Messrs. Pathak, Joshi and Kaji and submitted that when the relevant provisions of the Act and the Rules are read together, it becomes clear that the impugned provision imposes tax on consignment. In order to support his contention that the statutory Rules are part of the Act and represents a composite scheme, he placed reliance on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve power to impose tax on sales and purchases vis-a-vis powers of the Central Legislature to impose tax of excise. Mr. Bhatt's contention was that the impugned new Gujarat provision seeks to levy, in substance, tax on consignment or alternatively it is tax in the nature of excise. The learned Advocate-General in reply to the various contentions of the learned advocates of the petitioners, at the outset took us to the Constitution scheme envisaged by articles 245, 246, 248 and 254 of the Constitution and the relevant entries in Lists I and II of the Seventh Schedule to the Constitution. He also invited our attention to the Constitution amendment Acts being Sixth Amendment and Forty-sixth Amendment Acts. He submitted that the sales tax on inter-State sales by virtue of the aforesaid Sixth Amendment was confined to legislative powers of the Parliament and that by Forty-sixth Amendment, tax on consignment of goods outside State was also brought within the domain of the legislative powers of the Parliament. He also took us to the consequential amendments made by the aforesaid Constitution Amendment Acts to articles 269, 286 and 366 of the Constitution. He then submitted that under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses purchase tax on raw materials which are used in manufacture of taxable goods. That user is in the manufacture and not for manufacture and consequently, the said provision does not impose any excise tax. Manufacture of taxable goods is not the event but user of raw material in manufacture is relevant for the present purpose. Special emphasis was placed on the observations of the Supreme Court at page 95 wherein it was mentioned that purchase of goods and their use were descriptive terms for identification of the goods and, therefore, user of the raw material would not bring about taxing event. So far as Goodyear case [1990] 76 STC 71 is concerned, the pith and substance of the impugned provision before the Supreme Court was tax on consignment of manufactured goods. So far as the judgment in [1990] 79 STC 255 (Hindustan Lever Ltd. v. State of Maharashtra) was concerned, it was submitted that it was partly right when it held that new Maharashtra provision was not imposing any consignment tax but it was wrong when it was held that it imposes tax like excise tax. It was submitted that rule 42E can exist independent of the impugned provision and, therefore it cannot be treated to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not the least affected and would remain in pith and substance, a purchase tax on raw material and would be within the competence of the State Legislature as per entry 54 of the State List. The learned Advocate-General next contended that as the impugned provision does not seek to levy any tax on despatch or consignment, the ratio of Goodyear's [1990] 76 STC 71 judgment of the Supreme Court will not apply and that to that extent, the Bombay judgment is correct. However, the Calcutta view reflected by the decision of the Tribunal cannot be applied to the facts of the present case as in Calcutta legislation, the provision for refund was part and parcel of the same statutory scheme and under these circumstances, the Tribunal held that levy was by way of tax on consignment while this is not the position here as rule 42E may be read with the section, still it is not at all integral part of the section and the section can exist independent of the rule. It was submitted that even otherwise, the view of the Calcutta Tribunal is not correct and the view of the Bombay High Court to the contrary on this point is more acceptable. He next submitted that there is no question of levying any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other taxable goods. The learned Advocate-General next contended that the impugned provision cannot be said to be imposing consignment tax as there is no despatch of the goods manufactured out of raw materials outside the State. It is not excise duty or analogous to excise as it does not impose any tax burden on the manufactured article out of raw materials. He next contended that it is not user tax as it is not directly related to user but it is directly related to purchase of raw materials and subsequent description of the goods would not extend its taxing event and that totally a new commodity is not being taxed. Alternatively, it was contended by the learned Advocate-General that even assuming that there was some trenching on the residuary power of the Parliament under entry 97 of List I, it was incidental and marginal trenching. In pith and substance, the legislation was imposing purchase tax on raw material and if incidentally, its user was taxed, it was a peripheral exercise and such incidental trenching on entry 97 would not impinge upon the legislative competence of the State under entry 54 to enact such legislation. Reliance was placed in this connection in Ganga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 15B is valid, all past actions, assessments and orders would be governed by the new provision and would be valid. He next contended that manufacture of taxable goods as mentioned in section 15B would mean goods which are generally taxable under the Act. In this connection, reliance was placed on the decision of the Supreme Court in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191. It was submitted that taxing event under the section does not depend upon actual and complete user of the raw material purchased but their mere use in the manufacture of generally taxable goods would be sufficient to attract taxable event. It is not as if taxable goods must necessarily, emerge, they may not emerge for diverse reasons. Still, once raw materials are used in the manufacturing process, taxable event is complete. Placing reliance on the definition of "taxable goods" in section 2(33) and definition of "goods" in section 2(12) as well as definition of "turnover of sales" under section 2(36) and "turnover of purchases" in section 2(35), it was submitted that the dealer who is manufacturing taxable goods and for that purpose purchasing raw material in the State does know for which manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been within the legislative competence and would have fallen within entry 54 as raw materials were purchased for use in manufacturing process. Mr. Kaji in rejoinder submitted that Goodyear judgment [1990] 76 STC 71 (SC) is Bible or Quran and lays down the ratio about correct connotation of the term "taxable event" and that for deciding the same, three aspects of the matter have to be kept in view: (a) form and substance of rule, (2) pith and substance of the provision and (3) previous legislative history. In the present case, rule 42E when read with section 15B clearly indicates legislative intention of re-enacting consignment tax camouflaged as purchase tax. He questioned that no statutory rule can be ignored while interpreting the section. He referred to decisions of the Supreme Court in J.K. Steel Ltd. v. Union of India AIR 1970 SC 1173, Tata Engineering Locomotive Co. Ltd. v. Gram Panchayat AIR 1976 SC 2463 and Collector of Central Excise v. Parle Exports (P.) Ltd. [1989] 75 STC 105 (SC); AIR 1989 SC 644 in this connection and submitted that contemporaneous exposition of legislative intention flowing from the statutory rule cannot be ignored and the rule is to be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted that after manufacture of electricity when tax is levied at the stage of its user or consumption, it would be user tax, permissible under entry 53 of the State List. It was submitted that in the present case, even assuming that section does not impose excise duty, in any case, it imposes user tax which is not within the legislative competence of the State Legislature. Mr. Shelat for some of the petitioners supported the arguments of Mr. Kaji and submitted that in the present case, unlike the decision of the Supreme Court in AIR 1980 SC 286; [1980] 45 STC 36 (Ganga Sugar Corporation Ltd. v. State of Uttar Pradesh) (para 53 at page 298 of AIR; at page 52 of STC) taxable event is not only the purchase of raw material but purchase and their subsequent use and, therefore, the section in substance in any case imposes duty in the nature of user tax which is beyond the legislative competence of the State Legislature. Mr. Joshi in rejoinder submitted that under sections 86 and 87 of the Act, there is clear distribution of powers between the Union and the State as in article 246(3) and that rules framed under section 86 are for the purpose of the Act and, therefore, they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) Kandaswami case, it was submitted that in that case, there was no definition of words "taxable goods". Therefore, the Supreme Court treated them as generally taxable. But we are concerned with the definition in section 2(33) of "taxable goods" and that definition has to be given its effect. Mr. Pathak also placed reliance upon the decision of the Supreme Court in [1981] 47 STC 376 (Hindustan Brown Boveri Ltd. v. State of Gujarat) and this Court in [1979] 43 STC 238 (Nowroji N. Vakil Co. v. State of Gujarat) in this connection. He also invited our attention to entry 118 in the notification issued under section 49(2) relating to industries in backward area and submitted that till the contingency contemplated by the said provision takes place it would not be possible to arrive at any definite taxable event. He also took us to item No. 6 in Schedule I of the Act under section 5 and stated that as conditional exemption is given to manufactured goods till these conditions are satisfied, it would not be possible to decide whether taxable goods have emerged or not. That mere user of purchased raw material in manufacturing process would not be a taxable event. Therefore, the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r case [1990] 76 STC 71 (SC), it was submitted that the ratio of that decision is to be seen in the light of 46th Amendment and entry 92B in the Union List. The observations of the Supreme Court had to be read in that light. The learned Advocate-General then posed a question whether it is permissible to read down the statutory provision in the light of rule with a view to making statutory provision incompetent. He stated that such exercise is not permissible at all. It was submitted that while judging the legislative competence of the provision, there was no question of interpreting the provision or reading it down, in the light of any statutory rule. The learned Advocate-General then took us to the observations of the Supreme Court at page 111 of Goodyear case [1990] 76 STC 71 judgment and submitted that reasoning on that page to the effect that charge under section could be treated to be dormant or not has to be read in the light of the entry 92B of the Union List and the nature of the provision which fell for consideration of the Supreme Court. That the present provision is not of that type. Interpreting the present provision, it was submitted that the word "then" is adverb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upported by new provision and rule 42E and if at all, question of further recovery under old assessments would arise if new section 15B is applied to them de hors rule 42E. But such an eventuality may not arise because the Commissioner will exercise power under section 55 in such cases so that old assessees and new assessees alike will be treated at par in the light of the impact of tax as per section 15B read with rule 42E. IV. Points for determination: In the light of the aforesaid rival contentions, the following points arise for our determination: (1) Whether the impugned new provision of section 15B of the Gujarat Sales Tax Act, 1969, is within the legislative competence of the State Legislature? (2) If not, to what reliefs are the petitioners entitled to? (3) If the impugned provision is within the legislative competence, whether the validating provision of section 4(2) of the Gujarat Sales Tax (Amendment) Act, 1990, can sustain all actions taken and all taxes paid and all assessments made under old section 15B which is replaced by the impugned new Gujarat provision and whether even independently of the said section 4(2), the aforesaid actions can be sustained? (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they had entered into any transaction of inter-State sale. Mere consignment of the manufactured goods by its owner to his own branches outside the State would obviously be not inter-State sale, which can be taxed by the Parliament by enacting appropriate provisions under entry 92A. Such consignment also could not be brought to tax within the State as there was no sale of such manufactured articles within the State. Consequently, they remained untaxed. To plug this loophole, by the Forty-sixth Constitutional Amendment, entry 92B was inserted in the Union List to clothe the Parliament with the power to tax such consignments outside the State. When the Parliament was clothed with such power to tax consignments, the moot question would naturally arise whether the State Legislature could enter upon this forbidden field and under the guise of purchase tax on raw materials which had ultimately culminated into finished manufactured products which were then consigned to outside branches by the manufacturer/dealer in the State, could bring to tax such consignment. The answer would obviously be in the negative and such provision could not be sustained under entry 54 of the State List as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd consequently, such event was treated to be imposing tax on consignment of goods outside the State. Obviously, such taxing measures would be covered by entry 92B of the Union List and could not be covered by entry 54 of the State List. It is precisely for this reason that those two impugned provisions were struck down by the Supreme Court by treating them as beyond the legislative competence of the State Legislatures of Punjab and Haryana and Maharashtra, respectively. While deciding as above, Sabyasachi Mukharji, J., at page 95 of the Report laid down the contours of taxable event while dealing with the Punjab and Haryana provision, as under: "Taxable event is that which on its occurrence creates or attracts the liability to tax. Such liability does not exist or accrue at any earlier or later point of time. The identification of the subject-matter of a tax is to be found in the charging section. In this connection, one has to analyse the provisions of section 9(2)(b) as well as section 9(1)(b) and 9(1)(c). Analysing the section, it appears to us that the two conditions specified, before the event of despatch outside the State as mentioned in section 9(1)(b), namely (i) purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignment is to the person making it or to any other person) where such consignment takes place in the course of inter-State trade or commerce, will be assigned to the States. The said amendment also introduced entry No. 92B in List I of the Seventh Schedule. The said amendment was made on the consideration of the 61st Report of the Law Commission. Entry 92B in List I of the Seventh Schedule and article 269(1)(h) of the Constitution bring within its sweep the consignment of goods by a person either to himself or to any other person in the course of inter-State trade or commerce. Article 269(3) gives the power to Parliament to formulate the principles for determining when a consignment of goods takes place in the course of inter-State trade or commerce. If entry 92B of List I is to be given the widest interpretation, as it should be, it would be clear that, as a result of the constitutional changes introduced by the Forty-sixth Amendment in article 269 read with the entry, the tax on consignment of goods now comes within the exclusive legislative field of Parliament. The true test to find out what is the pith and substance of the legislation is to ascertain the true intent of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the decision in State of Tamil Nadu v. Kandaswami [1975] 36 STC 191 (SC), though rendered in the context of an analogous provision, does not touch the issue in the present case." In the light of the aforesaid observations of the learned Judges of the Supreme Court made in Goodyear case [1990] 76 STC 71, it becomes at once clear that on the language employed by the impugned provisions before them, especially viewed in the light of the constitutional backdrop, provided by the Forty-sixth Constitutional Amendment, it was obvious that the impugned provisions examined by the Supreme Court squarely fell within the Parliament's exclusive power flowing from entry 92B of the Union List and were clearly beyond entry 54 of the State List. It has to be kept in view that under entry 54 of the State List, the State Legislature has power to impose tax on sale or purchase of goods. The phrase "sale of goods" employed by entry 54 has to be understood in the light of its meaning flowing from the provisions of the Sale of Goods Act, 1930. This aspect of the matter is well-settled by a series of judgments of the Supreme Court. We may refer to one such decision of the Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned provision seeks to tax in substance the consignment of finished manufactured taxable goods in the manufacturing of which purchased raw materials have gone in as inputs, then only, it can be said on the ratio of Goodyear case [1990] 76 STC 71, that the impugned provision would fall within entry 92B of the Union List and not in entry 54 of the State List. When we scrutinise the provision of section 15B, we do not find even a whisper about consignment of manufactured goods prepared out of utilisation of purchased raw material and their despatch outside State. It may be that, having taken a clue from the Supreme Court decision, the State Legislature might have thought it fit to put its house in order. But if it has retraced its steps from the forbidden field and enacted new provision which does not seek to levy any tax on consignment of finished products outside the State, it would be too much to hold that in substance and in disguised form, the said provision still amounts to tax on consignment of finished products. It has to be visualised that as clearly observed by Ranganathan, J., at page 114 of the Report and Sabyasachi Mukharji, J., at page 111 of the Report in Goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was attacked and fell victim to a constitutional challenge and this Court in Diamond Sugar Mills' case AIR 1961 SC 652; [1961] 3 SCR 242, declared the cess Act ultra vires. The consequence of this mortality was the incarnation of the U.P. Sugarcane (Purchase Tax) Act, 1961, which is being impeached as ultra vires in these appeals. When cess failed, the State would have been constrained to refund nearly half a hundred crores of rupees. Validation by Parliamentary legislation in conformity with the Constitution was, therefore, done. Eventually the levy of a purchase tax was enacted into law by the U.P. Sugarcane (Purchase Tax) Act, 1961 (referred to as "the Act"). In a fiscal sense, the Purchase Tax Act is a reincarnation of the cess Act but, in a legislative sense, it is an independent statute with a different source of power, impact and structure. While the appellants have a case that this fiscal history substantiates their thesis that the present purchase tax is a disingenuous disguise, the State contends that its power to impose a purchase tax is well within List II, entry 54. An appeal to history cannot impeach power. Plainly read, the Act, architectures a typical tax scheme, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed in service to denude legislative competence of the parent Legislature to enact statutory provision, if even otherwise, it is within its competence. We find considerable substance in the aforesaid contention of the learned Advocate-General. It has to be kept in view that section 15B seeks to impose additional purchase tax. Gujarat Legislature has now enacted the provision imposing purchase tax as per section 15B of the Act. This is not in dispute. Its legislative competence to impose purchase tax under section 15A is not in dispute. If that is so, it is difficult to visualise how additional purchase tax cannot be imposed under section 15B if it remains otherwise within the compass of entry 54 of the State List. Merely because rule framed by the delegate State of Gujarat in exercise of its delegated legislative function waters down the impact of the section, it cannot be said that the section is not within the legislative competence of the State Legislature which is the paramount legislative body. It was further submitted by the learned advocates for the petitioners that section 6 of the Act makes even the rules framed by the delegated legislative functionary a part of the char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for a year is less than twenty-five thousand rupees................" In that case, the Supreme Court took the view that section 7-A was an additional charging section and in this connection, observed that the words "under the Act" will include a charge created by section 7-A also. Taking a clue from the above observations, Mr. Pathak argued that section 6 of the Gujarat Act also employs the words "dealer who is required to pay tax under this Act" and these words themselves would make section 6 charging section. Even accepting this contention we fail to see how rule 42E can be said to be a part of the charging provision envisaged by section 15B. If at all, it whittles down or dilutes the charge envisaged by section 15B, but does not add to it. Even if section 6 is a part of charging provisions, rule referred to by it cannot get such a status. It is not in dispute that section 15B is a charging provision imposing additional purchase tax. Section 3 is another such charging provision. This provision created a charge and liability to pay tax. How payment in discharge of this liability is to be made will be regulated by the rules made under the Act. If we turn to rule 42E, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in Hindustan Lever Ltd. v. State of Maharashtra [1990] 79 STC 255. Interpreting the impugned provisions of section 13AA of the Maharashtra Act, the Division Bench of the Bombay High Court speaking through S.P. Bharucha, J., repelled the argument which was submitted on the ground that the said section sought to impose consignment tax. It is pertinent to note that unlike the present provision, the Bombay provision was a composite provision and which created a charge and laid down how it had to be worked out. Therefore, it was an integral scheme and it had provided that in the event of non-sale of manufactured goods in the State, when the goods were manufactured out of purchased raw materials tax was attracted. In the view of the High Court, such provision did not amount to imposing a consignment tax, as event of non-sale would not necessarily mean consignment out of State. At page 267 of the Report, the Division Bench noted the argument of the learned advocate for the petitioners to the effect that "A dealer, they said, manufactured goods so as to sell them. What he did not sell within the State he sent for sale outside the State. The tax under the new section 13AA was, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and even if these two provisions have to operate in the same field after getting fused subsequent to their birth, existence of one provision and especially paramount provision cannot be voided at its source only because after the subordinate provision gets fused into operation with the parent provision, lesser liability results and the rigour of the parent provision gets diluted. The learned Advocate-General also was right when he contended that if rule 42E is deleted in future, section 15B would operate with greater rigour and its impact would be felt by a larger body of assessees, because of rule 42E, sweep of section 15B gets curtailed and many assessees may go out of its taxing net. But that does not mean that charge which is otherwise validly imposed by section 15B, would get stultified or would cease to be effective at the very source. It is also not possible to agree with the contention of Mr. Pathak that while deleting the then existing section 15B, and while enacting the present provision of section 15B, the Legislature wanted in substance, to re-enact the old provision by having the same wine in two bottles. It has to be visualised that it is not as if the same Legislatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxable goods. For attracting charge under the section no other event is contemplated. Adopting the judicial dictionary employed by the Supreme Court in Goodyear case [1990] 76 STC 71, taxing event is that which attracts tax and that charging event is the event the occurrence of which immediately attracts the charge and that charging event cannot be postponed to the occurrence of the subsequent condition. In that event, it would be the subsequent condition the occurrence of which would attract the charge which will be taxable event. It has to be held that the moment goods are purchased and used by the purchasing dealer as raw or processing material or consumable stores in the manufacture of taxable goods, levy gets immediately attracted under the section. As will be seen while discussing the question of user tax, taxing event is the purchase of raw materials, etc., in the State and which are ultimately used in manufacture of taxable goods. That charging event centering round purchase of raw materials, etc., remains dormant till the goods are actually put to use in manufacture of taxable goods. It gets activised then. These events have nothing to do with the ultimate manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the manufacture of sugar. In para 53 of the Report (at page 52 of STC), Krishna Iyer, J., speaking for the Supreme Court made the following pertinent observations: "Nothing in these provisions regulates or controls the industry itself nor exacts any levy on the manufacture of sugar or its wider ramifications. Nothing more than prevention of escapement of purchase tax on cane is done and what is done is legitimately incidental to the taxing power. Peripheral similarity between purchase tax and excise levy, does not spell essential sameness. Sugarcane tax operates in the neighbourhood of sugar excise but proximity is not identity. The tax is only on purchase of cane, not its conversion into sugar. If the miller has his own cane farm and crushes it, he has no purchase tax to pay but cannot escape excise duty, if any." We may also refer to another decision in Tata Iron Steel Co. Ltd. v. State of Bihar [1958] 9 STC 267 (SC); AIR 1958 SC 452. In that case, the Supreme Court was concerned with the vires of section 4(1) read with section 2(g) second proviso of the Bihar Sales Tax Act, which was a preconstitution Act governed by the provisions of the Government of India Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person who is taxed qua such manufacture and not otherwise. As we have seen earlier, on the express language of the section, taxing event does not get extended up to the stage of manufacturing of final product out of purchased raw material and that charge of tax gets settled the moment raw material is purchased and utilised in the manufacturing process of taxable goods. A dealer is being taxed as purchaser of raw material. He is not being taxed as manufacturer of finished product. It is also pertinent to note that charge of tax attached to purchased raw materials and does not attach to the final product produced out of them. Hence, it can never be styled as excise duty on the ultimate manufactured goods. They are entirely of different class. They have nothing to do with purchase of raw materials or inputs. All inputs which get exhausted in the manufacturing process have nothing to do with nor have they nexus with the ultimate output. Excise duty is on output and not on inputs. Such type of tax is not contemplated by section 15B. The submission of the learned advocates for the petitioners that this section in substance imposes a tax in the nature of excise because manufacture contem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ingredients of sub-sections (4) and (5), the Supreme Court held that these sub-sections contained definition of taxable goods. However, the result remains the same. Ingredients of sub-sections (4) and (5) of Tamil Nadu Act are parallel to the provisions found in the definition of taxable goods in section 2(33) of the Gujarat Act. Therefore, it must be held on parity of reasoning, that the phrase "uses them as raw material or processing materials or consumable stores in the manufacture of taxable goods" as employed by section 15B would mean user of such raw material in the manufacturing process for manufacturing generally taxable goods under the Act and ultimately, in given circumstances, such manufactured goods may not attract tax under the charging provision and still they would remain taxable goods. It is, therefore, not possible to agree with the contention of the petitioners that charging event under section 15B would be manufacture of taxable goods. As already discussed earlier, charging event would stop short at the stage of utilisation of the purchased raw material in the manufacturing process of taxable goods. Ultimately such taxable goods may emerge or not. That would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxable nature of the goods when manufactured are wholly irrelevant factors. If taxable goods were purchased against the certificate in form 19 without payment of tax and if such goods were used contrary to the certificate in the manufacture of goods for sale, which were not exigible to tax at the point of sale, then section 16 would come into the picture and purchase tax would become leviable upon the turnover of purchases of the purchasing dealer. The aforesaid view of this Court is confirmed by the Supreme Court in the later decision reported in [1981] 47 STC 376 (Hindustan Brown Boveri Ltd. v. State of Gujarat). In our view, these decisions cannot be of any avail to the petitioners. If the condition of a certificate issued under section 16 is breached, then on the express language of section 16, liability to pay purchase tax would arise and the section in terms lay down that where any dealer or commission agent has purchased any taxable goods under a certificate given by him under section 12 or 13, contrary to such certificate, the goods are used for another purpose or are not resold or despatched in the manner and within the period certified, then such dealer or commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gets attracted when the raw materials are purchased and used in the process of manufacture of taxable goods and it has nothing to do with ultimate emergence of taxable goods. They may emerge or may not emerge, they may remain taxable goods or may not remain taxable goods. Charge under the section is not concerned with these eventualities. Under these circumstances, with respect, it is not possible to agree with the view taken by the Bombay High Court in Hindustan Lever case [1990] 79 STC 255. In our view, section 15B does not cover the field envisaged by entry 84 of the Union List, and cannot be termed as imposing any duty in the nature of excise. In this connection Mr. Kaji submitted that the impugned provision can be read as under: A dealer purchases raw material, processing material or consumable stores, etc., and manufactures taxable goods out of them and accordingly, it would amount to imposing tax in the nature of excise. It is not possible to agree with this contention, for the simple reason that the section couched in different term cannot be re-read on the basis of supposed redrafting so as to make it one imposing excise duty, if the Legislature has not thought it fit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners on the phraseology in the section to the effect "where a dealer purchases any taxable goods and uses them as raw or processing materials or consumable stores in the manufacture of taxable goods then..." for submitting that taxable event occurs when purchased taxable goods are used as raw or processing material or consumable stores in the manufacturing process especially in the light of the word "then" used in the section, also cannot be of any avail. In this connection, the learned Advocate-General rightly invited our attention to the fact that the word "then" is an adverb and it connotes two eventualities-(i) reference to the time and (ii) reference as to the contingency, meaning thereby, it either means at that time or in that case. In the context of the section, it is obvious that the word "then" does not refer to time when use is made in the manufacturing process of such purchased raw materials, etc. But it only means in the case, such purchased raw materials, etc., are used in the manufacturing process. Taxable event under the section becomes complete when taxable goods, viz., raw materials, consumable stores, etc., are purchased in the State with the obvious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by entry 92B of the Union List, and, therefore, tax on such goods would not remain within entry 54 of the State List and that in view of such a texture of the provisions, the argument of the learned advocate for the State authorities that taxing event was to have taken effect at the time of purchase of inputs, raw materials, which remained dormant and would get activised when the input embedded in the ultimately manufactured goods got despatched out of the State, was repelled as such argument could not be countenanced in the fact of the express language of the provisions dealt with by the Supreme Court and which clearly referred to and tried to tax entirely different manufactured commodity which had nothing to do with the original purchase of inputs. Such is not the position in the present case. As seen earlier, the section does not refer to the dispatch of ultimately manufactured goods out of the State. It is, therefore, not levying any consignment tax nor is it concerned with any levy on ultimately manufactured goods out of inputs. Consequently, it remains in the domain of purchase tax imposed on inputs which are purchased in the State and which are ultimately used in the man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se also, taxable event is complete when taxable goods are purchased as raw material, etc., and their subsequent use as such only fortifies such requirement underlying initial purchase. It is also interesting to note that there are two decisions of the Supreme Court, wherein on construction of pari materia provisions, it was held that tax sought to be imposed was purchase tax. One such decision is rendered in connection with Madhya Pradesh legislation in the case of Ganesh Prasad Dixit v. Commissioner of Sales Tax [1969] 24 STC 343 (SC). In that case, section 7 of the Madhya Pradesh General Sales Tax Act, fell for consideration of the Supreme Court. It provided that every dealer who in the course of his business purchases any taxable goods, in circumstances in which no tax under section 6 is payable on the sale price of such goods and either consumes such goods in the manufacture of other goods for sale or otherwise or disposes of such goods, etc., shall be liable to pay tax. The aforesaid phraseology ran almost parallel to the phraseology of section 15B of the present Act. Such a tax was considered to be genuine purchase tax on construction of the provisions. It is true that in tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich no tax is payable under section 5, and either (a) consumes such goods in the manufacture of other goods for sale or otherwise, shall.......pay tax........" The argument that such tax imposed user tax and, therefore, was outside the legislative competence of the State Legislature was repelled by P. Subramonian Poti, J., placing reliance on the Constitution Bench decision of the Supreme Court in [1968] 21 STC 212 (Andhra Sugars Ltd. v. State of Andhra Pradesh). In para 5 of the Report, the learned Judge, interpreting the aforesaid pari materia provision, observed as under: "In the scheme of the section, it goes without saying that the purchase by the dealer who is taxed under the section becomes taxable in his hands only if the goods are consumed or disposed of in any manner other than by way of sale or despatch to places outside the State otherwise than as a result of inter-State purchases. These are all subsequent events and, therefore, the time at which tax is imposed is postponed to the happening of subsequent events, but by the very fact of purchase the dealer becomes liable to pay tax on the purchase. It depends upon subsequent contingencies and tax become payable when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax as contended by the learned advocates of the petitioners. We may now briefly refer to certain decisions on which reliance was placed by the learned advocates for the petitioners in support of their contentions that section imposes user tax. In Jiyajeerao Cotton Mills Ltd. v. State of Madhya Pradesh AIR 1963 SC 414, the Supreme Court was concerned with the question about tax on consumption of electricity. Such tax would squarely fall under entry 53 of the State List and it was upheld as such. The said decision is of no assistance to the petitioners. Similarly, the decision in Devi Dass Gopal Krishnan v. State of Punjab [1967] 20 STC 430 (SC); AIR 1967 SC 1895 instead of supporting the petitioner goes against them, as in that case, the Supreme Court in terms held that tax on purchase of raw materials for use as inputs in the manufacturing process would be covered by entry 54 of the State List and would not be excise. Our attention was also invited to the decision in Commissioner of Sales Tax v. N.L. Mehta [1986] 61 STC 362. In that case, the Bombay High Court was not concerned with the legislative competence of the State Legislature in enacting section 13 of the Bombay Sales T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the field covered by entry 62 of the List II which was in the exclusive domain of the State Legislature, being tax on luxury. Upholding the legislative competence of the Parliament in enacting Expenditure Tax Act, the Constitution Bench of the Supreme Court speaking through Venkatachaliah, J., laid down the following propositions: "(i) Wherever legislative powers are distributed between the Union and the States, situations may arise where the two legislative fields might apparently overlap. It is the duty of the courts, however difficult it may be, to ascertain to what degree and to what extent, the authority to deal with matters falling within these classes of subjects exists in each Legislature and to define, in the particular case before them, the limits of the respective powers. It could not have been the intention that a conflict should exist; and in order to prevent such a result the two provisions must be read together, and the language of one interpreted, and where necessary modified, by that of the other. (ii) The law 'with respect to' a subject might incidentally 'affect' another subject in some way; but that is not the same thing as the law being on the latter s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dealer purported to collect sales tax from purchasers when such levy was not legally permissible, the amount so collected shall be forfeited to the State (sic) amount of penalty. It was contended that such type of confiscatory provision was beyond entries 54 and 64 of the State List and it was a colourable legislation. This High Court upheld this contention. Allowing the appeal of the State of Gujarat, the Constitution Bench of the Supreme Court speaking through Krishna Iyer, J., held that in pith and substance, the provisions fell within entries 54 and 64 of the State List and when the State legislation had legislative competence to legislate on the topics, ancillary and incidental powers flowing from such legislative powers inhered in the State Legislature. The following pertinent observations made by Krishna Iyer, J., speaking for the Supreme Court are required to be noted in this behalf: "...........the true key to constitutional construction is to view the equity of the statute and sense the social mission of the law, language permitting, against the triune facets of justice highlighted in the Preamble to the Paramount Parchment, read with a spacious signification of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 1986 and consequently, all the earlier Acts would be deemed to have been done under the new provision which is deemed to be existing all throughout from 1st April, 1986, on the statute book and as no judgment of any High Court had struck down old section 15B, there was no occasion to enact any validating provision validating the past acts notwithstanding any judgment or order of any court. It was next submitted, placing reliance on section 9 of the Bombay General Clauses Act, 1904, that when old section 15B was repealed and was re-enacted in modified form by the present section 15B, reference as made to the earlier repealed provision that in any instrument including order of assessment by authorities would be treated to be reference to the present re-enacted provision of section 15B. It was also submitted that in fairness to the assessees, if any more tax is leviable under section 15B as re-enacted with retrospective effect as compared to the tax which was levied on them under the old section, as rule 42E is not and cannot be enacted with retrospective effect, the Commissioner of Sales Tax in exercise of his power under section 55 would permit such extra levy and all assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trued as reference to the provision so re-enacted." We do not find any contrary intention in the Amending Act 6 of 1990. Hence, reference made to old section 15B in any assessment order can be said to be reference made to new section 15B in an instrument as it is wellsettled by decision of the Supreme Court that the term "instrument" as employed in the General Clauses Act and even otherwise, can cover in its sweep any written document including even a judicial order (Mohan Chowdhury v. Chief Commissioner AIR 1964 SC 173 and Purushottam H. Judye v. V.B. Potedar AIR 1966 SC 856). Consequently, it must be held that despite non-enactment of any express validating provision, the actions taken and assessments made under the repealed provision of old section 15B will be treated to have been done under the newly enacted section 15B with retrospective effect. As new section 15B operates retrospectively from 1st April, 1986, while rule 42E which dilutes its rigour and impact operates prospectively from the date of the enactment a situation may arise where taxing authorities can legitimately demand more tax from the concerned tax-payers on account of wider net of new section 15B de hors rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on this aspects, as on the main contention, the petitioners have failed before us. On point No. IV, therefore, it is held that in view of our finding on point No. III, the petitioners are not entitled to any relief and their petitions are liable to fail. In the result, these petitions fail and are dismissed. Rules issued in these petitions are discharged. There will be no order as to costs in each one of them. Per G.N. RAY, C.J.-I have read the judgment delivered today by my learned brother. He has elaborately dealt with the individual arguments advanced by the learned counsel appearing in these groups of cases, where vires of section 15B of the Gujarat Sales Tax Act, 1969, as amended by the Gujarat Act No. 6 of 1990 [Gujarat Sales Tax (Amendment) Act, 1990] are under challenge; and I concur with the decision of my learned brother. Initially, I had some doubts as to whether or not section 15B of the Gujarat Sales Tax Act is essentially a tax on user of taxable goods but on further consideration, I agree with my learned brother that section 15B imposes tax on purchase and it is neither a tax on use or consignment nor a duty on finished product pertaining the character of exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that there is overlapping does not detract from the distinctiveness of the aspects. The true nature and character of the legislation must be determined with reference to the power of the Legislature. The consequences and effects of the legislation are not the same thing as the legislative subject-matter. It is the true nature and character of the legislation and not its ultimate economic result that matters. Nomenclature of an Act is not conclusive and for determining the true nature and character of a particular tax with reference to the legislative competence, one should look into its pith and substance. It is well-settled that while determining the nature of tax, though the standard or measure on which the tax is levied may be a relevant consideration, it is not a conclusive consideration. Its pith and substance will only determine the category into which it will fall [1989] 74 STC 102 (SC) (Federation of Hotel Restaurant Association of India v. Union of India), [1990] 76 STC 71 (SC) (Goodyear India Ltd. v. State of Haryana), [1945] 1 STC 135 (PC); AIR 1945 PC 98 (Governor-General in Council v. Province of Madras), AIR 1980 SC 1088 (R.R. Engineering Co. v. Zila Parishad), [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of the statute even if the meaning is ambiguous. (Halsbury's Laws of England, 3rd Edition, Volume 36, page 401). In determining the limits of the weight and amplitude of the "freedom" guaranteed by article 301, a rational and workable test to apply would be Does the impugned restriction affect directly or indirectly trade on its movement? It is this free movement of trade from one part to another part of the country that is to be saved. [1961] 1 SCR 809; AIR 1961 SC 232 (Atiabari Tea Co. Ltd. v. State of Assam), [1963] 1 SCR 491; AIR 1962 SC 1406 [Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan]. In construing whether a particular tax is a tax on sale or purchase, it is necessary to determine whether the transaction is one of "sale of goods" as known to law and in construing the character of sale or purchase, it is necessary to determine the true character of the transaction involved and not the point of time at which the duty becomes leviable. "Disposal" means "transfer of title in the goods to any other person"; and, therefore, it would not include mere despatch to one's own self or to one's agents or branch offices or depots. Plainly a tax levied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axation Act, 1938). Taxable event is that occurrence of which creates or attracts liability to tax. Such liability does not exist or occur at any earlier or later point of time. The identification of the subject-matter of a tax is to be found in the charging section. In appreciating whether the tax is imposed on the purchase or sale, it is to be ascertained the true character of the taxable event. It is one thing to levy a purchase tax where the character of goods in respect of which the tax is levied is described in a particular manner and in a case where tax though described in a particular nomenclature actually becomes effective with reference to a totally different class of goods and that too on happening of an event unrelated to the purchase or sale of the commodity. [1990] 76 STC 71 (Goodyear India Ltd. v. State of Haryana) (emphasis* supplied). It is to be carefully ascertained as to whether or not ultimately the taxable event is on the sale or purchase of the goods which may be but to use in the manufacturing process but not on the user of such goods in such process and the tax is really not imposed on the final product. One must read the words in the context of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for want of legislative competence. It is immaterial to consider what should be the effect of the incidence of tax and the burden on the tax-payer because of the additional tax sought to be imposed under section 15B. Such consideration is not at all germane for considering the question of legislative competence vis-a-vis entry 54 of List II of the Seventh Schedule to the Constitution. He has contended that there is no doubt that the liability under the Sales Tax Act should ultimately depend not only on the section itself, but on the cumulative effect of the Act and Rules and notifications issued thereunder, but in deciding the case of legislative competence, the ultimate liability under the Gujarat Sales Tax Act read with the Rules and notifications is not at all a relevant consideration. He has submitted that the rule made under a delegated authority under the Act cannot be taken into consideration for the purpose of determining the legislative competence. He has contended that the provisions of an Act do not get sustenance from the Rules framed thereunder, but the Rules so framed get sustenance under the Act. The aforesaid submission of the learned Advocate-General must be accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 15B of Gujarat Sales Tax Act. In considering the vires of the impugned provisions of the Bombay Act (section 13AA) and of the West Bengal statutes [section 4(6)(ii) of Bengal Finance (Sales Tax) Act and section 4(1)(i) of West Bengal Sales Tax Act], the impugned sections themselves had been interpreted, but for considering the vires of section 15B of the Gujarat Sales Tax Act on the store of legislative incompetence, attempt has been made to interpret the said section with the aid of rule 42E of the Gujarat Sales Tax Rules. It has already been indicated that such attempt to interpret the section on the scope of legislative competence is not permissible. It, therefore, cannot be argued that section 15B as amended is outside the scope and ambit of entry 54 of List II of the Seventh Schedule to the Constitution. The Legislature has, therefore, the competence to enact the said section 15B. Mr. Pathak, learned counsel appearing for some of the petitioners, has contended that section 15B should be struck down as arbitrary and a piece of legislation in terrorem. I have already indicated that law has been well-settled by the Supreme Court in the case of Federation of Hotels Restaurant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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