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TMI Blog1960 (9) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... e above-mentioned Acts and the rules thereunder and not to enforce the Act. 2. The respondent's case as made in para. 5 of its written-statement was that "the impugned Act is not ultra vires the State legislature. It is a law with respect to the matters enumerated in Entry 62 of the State List read with Entry No. 7 of the concurrent List of the 7th schedule." 3. The High Court held that :- "The impugned Act, is an Act to tax speculation in futures, at least so far as dealers such as the present applicants are concerned, falls within Item 62 of the State List as an Act to impose taxes on betting and gambling, and to that extent at least is valid." 4. In this view the High Court rejected the application. 5. The only question for our decision is as regards the legislative competence of the State Legislature of Punjab to enact this statute. Though a reference under Entry 7 of the Concurrent List of the 7th Schedule of the Constitution was made in the respondent's written statement no reliance appears to have been placed on this entry in the High Court nor has it been relied on before us by the learned counsel appearing on behalf of the respondent and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness in forward contracts unless he has been registered and possesses a registration certificate. Section 7 deals with the mode of payment of the tax and for submission of returns while s. 8 provides for assessment of the tax. 7. As the term "forward contract" has been defined in the statute itself we have to forget for the purpose of deciding the present question any other notion about what a "forward contract" means. For the purpose of this statute every agreement for sale of goods on a future date is not a "forward contract". It has to be an agreement for the sale of goods on a future date and has to satisfy two other conditions, viz., (1) actual delivery of the goods is not made on the basis of the agreement and (2) the difference between the price of the goods agreed upon and that prevailing on the date mentioned in the agreement or any other date is paid by the buyer or received by the seller. The test of a forward contract under this definition is that delivery of goods is not made or taken but only the difference between the price of the goods as agreed upon and that prevailing on some other date is paid. Is such a contract necessarily a wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be demanded or made, but that only difference should be paid. But it will be next to impossible for a tax being imposed on the proof of such intention, not expressed in the written contract. When the agreement for sale of goods is oral, but the parties agrees between themselves that no delivery would be made, but difference in price would be paid, it would be equally impossible for a taxing authority to discover in which of the contracts such an agreement has been made. The dispute whether a particular contract is a wagering contract or not arises in civil courts generally when the contract of sale is sought to be enforced and one of the parties tries to avoid the contract by recourse to s. 30 of the Contract Act. When such a dispute comes before the Court, it becomes necessary to consider all the circumstances to see whether they warrant the legal inference that the parties never intended any actual delivery but intended only to pay or receive the difference according as the market price should vary from the contract price. It is therefore well nigh impossible for any taxing authority to brand a particular forward contract as a wagering contract; nor is it to be expected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in fact that an association would be formed for the purpose of conducting business in wagering contract, it is hardly likely that the Legislature would take upon itself the task of openly permitting and recognizing such associations. These, in our opinion, are good reasons for thinking that the legislature did not contemplate wagering contracts at all in defining "forward contract" in the way it did. 12. Assuming however that the definition is wide enough to include wagering contracts, the question arises whether the portion of the Act which would then be valid is severable from the portion which would remain invalid. Once of the rules approved by this Court in R. M. D. Chamarbaugwala v. The Union of India, [1957]1SCR930 for deciding this question was laid down in these words :- "In determining whether the valid parts of a statute are separable from the invalid parts thereof, it is the intention of the legislature that is the determining factor. The test to be applied is whether the legislature would have enacted the valid part if it had known that the rest of the statute is invalid." 13. A second rule was that if "the valid and invalid parts of a s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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