G.D.Khosla, C.J. - (1.) In these 49 petitions the vires of Punjab Act No. 7 of 1958 has been challenged before us. This Act amended the East Punjab General Sales Tax Act, 1948 and the amendment had the effect of imposing either new or additional liability in the form of sales or purchase tax upon the petitioners in respect of the goods in which they deal. Most of the petitioners are firms dealing in raw cotton. They purchase raw cotton, gin it in their factories and then sell ginned cotton and the cotton seed obtained in the process of ginning. Of the remaining petitions, the petitioners in Civil Writ No. 898 of I959 deal in non-ferrous metals, the petitioners in Civil Writs Nos. 822 to 827 of 1959 deal in oil-seeds and the petitioners in Civil Writ No. 1271 of 1959 deal in iron scrap. The petitioners in Civil Writ No. 861 of 1959 deal in hosiery goods. The point arising with a small variation is, however, identical in all the 49 petitions and it will be convenient to deal with all of them together.
(2.) Before the passsing of the amending Act the position was that certain types of goods were exempt from sales tax imposed by the East Punjab General Sales Tax Act, 1948. The Schedule appearing at the end of the Act sets out the various goods which were so exempt. Item 29 was "cotton (ginned or unginned)". The tax was payable in respect of what was called taxable turnover. "Turnover" included "the aggregate of the sales and parts of sales actually made" by the person concerned. The amending Act deleted item 29 from the list of exempted goods and also increased the rate of tax from two pice per rupee to four naye paise per rupee. It also altered the definition of "turnover" by adding to the transaction of sale the transaction of purchase. The result, therefore, was that the person who dealt in exempted goods and had been paying no sales tax at all under the old Act was now made liable to pay tax at two stages-(1) when he bought the commodity in which he dealt and (2) when he sold it. The dealers in other goods also became liable to pay tax at two stages instead of at one stage. A modification was, however, found necessary in view of the general provisions of the Central Sales Tax Act of 1956 which implemented the provisions of Article 286 (3) of the Constitution.
(3.) Article 286 (3) is in the following terms :- Any law of a State shall, in so far as it imposes, or authorises the imposition of, a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade Or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify.;