Untwalia, J. - (1.) The Chief Commissioner, Union Territory, Chandigarh, has preferred this appeal by certificate from the decision of the High Court of Punjab and Haryana allowing the Writ Petition of the respondent and declaring the amendment of item 30 in Sch. B to the Punjab General Sales Tax Act, 1948, hereinafter referred to as the Act, invalid.
(2.) The composite and the then existing State of Punjab was reorganised by the Punjab Reorganisation Act, 1966, Central Act 31 of 1966. The Union Territory of Chandigarh was carved out as one of the States on and from November 1, 1966. Under Section 6 of the Act no tax was payable on the sale of goods specified in Schedule B. The State Government could amend this Schedule and at the relevant time the power so conferred on the State Government was in the following terms:- "The State Government after giving by notification not less than three months' notice of its intention so to do may, by like notification add or delete from Schedule B and thereupon Schedule B shall be deemed to be amended accordingly." Item 30 of Schedule B exempted from sales tax:- "All varieties of cotton, woollen or silken textiles, including rayon, artificial silk or nylon, whether manufactured by handloom or powerloom or otherwise, but not including carpets, druggets, woollen durees and cotton floor durees."
(3.) On August 24, 1966 the State Government of the composite State of Punjab issued a notification giving three months' notice of its intention to amend Schedule B to exclude pure silken fabrics from the list of tax free goods. But before the expiry of three months and before any further notification could be issued by the State Government as required by Section 6 of the Act, the Union Territory of Chandigarh came into existence on November 1, 1966. The Government of the Union Territory issued a notification dated January 4, 1968 amending item 30 as intended to be amended by the notification dated Aug. 24, 1966 issued by the State Government of the composite State of Punjab. The respondent filed a writ petition in the High Court challenging this notification as being invalid on the ground that the earlier notification could not be availed of by the new Government for amending Schedule B. The stand taken on behalf of the appellant was that the earlier notification was a "law in force" within the meaning of Section 88 of Central Act 31 of 1966. The High Court repelled this argument, and in our opinion. rightly.;