Judgement

SHAH, J.: At the conclusion of the hearing of these appeals on April 23, 1969, we announced that "the appeals are dismissed with costs; reasons in support of the order will be delivered thereafter". We proceed to record the reasons in support of the order.

2. The appellants carry on business as dealers in "cane jaggery" in the State of Tamil Nadu. As a result of certain legislative and executive measures, transactions of sale in "cane jaggery" were made liable as from January 1, 1968 to tax under the Madras General Sales Tax Act, 1959, and transactions of sale in "palm jaggery" remained exempt from sales tax. The appellants filed petitions in the High Court of Madras challenging the validity of the levy of tax on "cane jaggery", on three grounds:

(1) that the levy of tax on turnover from sale of "cane jaggery" was discriminatory and violated the equality clause of the Constitution.

(2) that the levy of tax imposes a restriction on trade and commerce contrary to the provisions of Part XIII of the Constitution; and

(3) there is excessive delegation of legislative authority to the executive and on that account the levy of tax pursuant to an order made in exercise of the powers under Section 59 of the Madras General Sales Tax Act 1 of 1959 on "cane jaggery" is invalid.

The High Court rejected all the contentions.

3. Counsel for the appellants have in these appeals urged the first two grounds and have in addition submitted that in levying tax on turnover from sale of "cane jaggery" legislative power has been colourably exercised. The argument that there was excessive delegation to the executive of the legislative power was abandoned before the Court, because the State of Madras has enacted Act II of 1968 authorising levy of tax on sale of jaggery by amending Sch. III to Madras Act 1 of 1959.

4. Turnover from sale of jaggery- cane or palm - was subject to tax under S. 3 (1) of the Madras Act IX of 1939 at three pies per rupee. By G. O. 651 dated February 28, 1955 and G. O. 2780 dated September 7, 1955 all sales of "palm jaggery" effected through Co-operative Societies and the Palm Gur Federation was exempted from tax. By another G. O. No. 1605 dated April 19, 1956, all transactions of sale in "palm jaggery" were exempted from sales tax with effect from April 1, 1956. Transactions of sale in "cane jaggery" therefore continued to remain liable to tax whereas sales of "palm jaggery" enjoyed the benefit of exemption from tax.

5. After the judgment of this Court in Bengal Immunity Co. Ltd. v. State of Bihar, 1955-2 SCR 603 the Parliament amended Article 286 and Entry 54 in List II of the Seventh Schedule and added to new Entry 92A in List I in the Seventh Schedule by the Constitution (Sixth Amendment) Act. In exercise of the power under Entry 92A, List I the Parliament enacted the Central Sales Tax Act 74 of 1956. By Ch. IV of that Act the power reserved under the amended Article 286, Clause (3) was exercised by the Parliament and certain classes of goods were declared to be of "Special importance in inter-State trade or commerce". By Section 15 certain modifications were declared in State Acts relating to the levy of taxes on sales and purchases of declared goods. However in the list of goods of "special importance in inter-State trade or commerce" gur or jaggery was when the Act was enacted, not included.

6. The Parliament then enacted the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Act 58 of 1957). Section 3 of that Act authorised the levy and collection of additional duties in respect of several classes of goods including "sugar". By Section 4 it was provided that during each financial year, there shall be paid out of the Consolidated Fund of India to the States in accordance with the provisions of the second schedule, such sums, representing a part of the net proceeds of the additional duties levied and collected during that financial year, as are specified in that Schedule. It was enacted by the proviso to