(1.) M/s. Pierce Leslie & Company hereinafter called the assessee is a dealer registered under the Travancore Cochin General Sales Tax Act, 1125 M. E. and carries on the business of supplying paints and allied products to dealers within the State of Travancore Cochin. The assessee prayed for exclusion from its turnover Rs. 1,49,000/- odd for the assessment year 1954-55 and Rs. 1,39,000/- odd for the assessment year 1955-56 on the plea that the amounts represented turnover from inter State sales. The Sales Tax Officer, 1st Circle, Mattancherry rejected the claim. The order was confirmed in appeal by the Additional Appellate Assistant Commissioner of Agricultural Income tax and Sales Tax, Ernakulam. But the Kerala Sales Tax Appellate Tribunal held that the turnover in dispute being from inter State sales effected by the assessee in respect of the year 1954-55 and 1955-56 could not be taxed under the Travancore Cochin General Sales Tax Act, 1125 M. E. The Deputy Commissioner of Agricultural Income Tax and Sales Tax, Central Zone, Ernakulam then moved revision applications before the High Court of Kerala. The High Court, following their earlier decision in Deputy Commissioner of Agricultural Income Tax and Sales Tax. Central Zone, Ernakulam v. The Cochin Coal Company Ltd. 14 STC 845 held that the tax was not leviable in view of the provisions of S.26(1)(b) of the General Sales Tax Act as amended by Act 12 of 1957, and that Act 9 of 1962 which purported to validate the levy of tax was beyond the competence of the State Legislature. The State of Kerala has appealed to this Court with certificate granted by the High Court.
(2.) S.26(1)(b) of the Travancore Cochin General Sales Tax Act 1125 M.E. in so far as it relates to the present case read originally as follows:
"(1) Notwithstanding anything contained in this Act,--
X X X X
(b) a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter state trade or commerce except in so far as Parliament may by law otherwise provide."
This provision was enacted to give effect to Art.286(2) of the Constitution before its amendment by the Constitution (Sixth Amendment) Act, 1956. After the judgment of this Court in The Bengal Immunity Co. Ltd. v. The State of Bihar, 1955 (2) SCR 603 and the enactment of the Sales Tax Laws Validation Act 7 of 1956, the State of Kerala enacted Act 12 of 1957 with effect from August 7, 1957. S.26(1) insofar as it is material, after the amendment effected by Act 12 of 1957, read as follows:
"(1) Notwithstanding anything contained in this Act,--
(a) x x xx
(b) a ax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter state trade or commerce."
(3.) In Union Carbide India Ltd v. The Sales Tax Officer and Another 14 STC 850 the Kerala High Court held that even after the amendment of the General Sales Tax Act by Act 12 of 1957 the inter State sales made after March 31, 1951 could not be taxed. The State of Kerala then enacted Act 9 of 1962. By S.2 of the Amending Act in clause.(b) of sub-s.(1) of S.26 the words "6th day of September 1955'' and the following sub-s.(2A) was added to the principal Act with effect from April 1,1951:
"Notwithstanding anything contained in sub-s.(1), any sale or purchase which took place on or before the 6th day of September, 1955, shall be deemed to have taken place inside the State, if the goods had actually been delivered as a direct result of such sale or purchase for the purpose of consumption in the State, though the property in the goods by reason of such sale or purchase passed in another State under the general law relating to sale of goods, and be subject to tax under this Act accordingly." S.3 provided:
"Notwithstanding anything contained in any judgment, decree, or order of any court, authority or tribunal, or any notification under S.6 of the principal Act, or any press note issued by the Government,--
(a) all taxes levied, assessed or collected on sales or purchases falling within the purview of sub-s.(2A) of S.26 of the principal Act as amended by this Act shall for all purposes be deemed to be, and to have always been, validly levied, assessed or collected; and
(b) all proceedings taken, orders passed and acts done by any officer, authority or tribunal for the levy, assessment or collection of tax on such sales or purchases shall for all purposes be deemed to be and to have always been, taken, passed and done in accordance with law, and all such proceedings, orders and acts may be Continued as if taken, passed and done under the principal Act as amended by this Act:
Provided x x x x"
The validity of Act 9 of 1962 was challenged before the Kerala High Court in the Cochin Coal Company Ltd.'s case 14 STC 845 and the Court held that the State Legislature had, in view of the Constitution (Sixth Amendment) Act, 1956, no power to enact the Act. The judgment was brought up in appeal to this Court at the instance of the State of Kerala. This Court held that the effect of the Sales Tax Laws Validation Act, 1956, was to validate the levy of sales tax up to September 6, 1955, that the amendment introduced in S.26 of the Travancore Cochin General Sales Tax Act by Act 12 of 1957 was only prospective and did not operate to validate any levy of tax imposed before the date of the Act. This Court further held that it was not necessary to consider the question whether the State of Kerala had legislative competence to enact Act 9 of 1962 so as to amend S.26 of the Travancore Cochin General Sales Tax Act, 1125 M.E. by substituting the date "6th September, 1955" in place of "31st March 1951", and purporting to validate the levy and collection of taxes on sales and purchases falling within the purview of sub-s.(2A) of S.26 of the principal Act. The ban imposed by S.26 of the General Sales Tax Act 1125 M. E., it was said, was lifted by the Central Sales Tax Laws Validating Act, 1956, and the State was competent to collect all taxes in respect of sales in the course of inter State trade and commerce up to September 5, 1955. (Apparently the date September 5, 1955 is a typographical error for September 6, 1955.) In view of this exposition, it must be held that by virtue of the Sales Tax Laws Validation Act, 1956, the levy of tax under the General Sales Tax Act in respect of inter State sales stood validated for the period April 1, 1951 to September 6, 1955.;