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PUNJAB & HARYANA HIGH COURT
Mehar Singh and Shamsher Bahadur JJ.
Ganga Ram Suraj Parkash
Versus
State Of Punjab
Sales Tax Reference No. 4 of 1961,
Decided On : OCTOBER 24, 1962
PUNJAB GENERAL SALES TAX ACT, 1948 - EDIBLE OILS - TAXATION - PRESIDENT'S ASSENT - ESSENTIAL GOODS (DECLARATION AND REGULATION OF TAX ON SALE OR PURCHASE) ACT, 1952 - VALIDITY OF NOTIFICATION IMPOSING TAX ON EDIBLE OILS - SEVERABILITY OF PROVISIONS.
Fact of the Case:
The petitioners, commission agents dealing in edible oils, challenged the validity of a notification issued by the Punjab Government on August 5, 1954, which imposed a tax on edible oils produced in ghanis run by mechanical process. The notification was issued under the Punjab General Sales Tax Act, 1948, and the petitioners contended that it was ultra vires as it violated Section 3 of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952, which required the President's assent for any law imposing tax on essential goods.
Finding of the Court:
The court held that the notification was invalid and ultra vires. It found that the Punjab General Sales Tax Act, 1948, was unconstitutional in its entirety due to the unfettered discretion it gave to the State Government to levy sales tax at any rate it liked. The court further held that the Act did not acquire validity until the amendment in 1952, which was after the enactment of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952. Therefore, the impugned notification, which was issued without the President's assent, was invalid.
Issues: 1. Whether the notification imposing tax on edible oils was intra vires the Punjab General Sales Tax Act, 1948? 2. Whether the Punjab General Sales Tax Act, 1948, was unconstitutional due to the unfettered discretion it gave to the State Government to levy sales tax? 3. Whether the Act acquired validity after the amendment in 1952? 4. Whether the impugned notification was valid without the President's assent under the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952?
Ratio Decidendi: 1. The court held that the notification was ultra vires the Punjab General Sales Tax Act, 1948, as it violated Section 3 of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952, which required the President's assent for any law imposing tax on essential goods. 2. The court found that the Punjab General Sales Tax Act, 1948, was unconstitutional in its entirety due to the unfettered discretion it gave to the State Government to levy sales tax at any rate it liked. 3. The court held that the Act did not acquire validity until the amendment in 1952, which was after the enactment of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952. 4. The court held that the impugned notification, which was issued without the President's assent, was invalid under the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952.
Final Decision: The court answered the questions formulated by the Financial Commissioner in both sets of cases in the negative, holding that the notification imposing tax on edible oils was invalid and ultra vires.
Shamsher Bahadur, J.
1. This judgment will dispose of a grant of ten petitions under the Punjab General Sales Tax Act, 1948 (hereinafter called the Act), all raising a common question of law stated by the Financial Commissioner as a result of the directions given to him by this Court under Sub-section (3) of Section 22 of the Act. In petitions Ganga Ram Suraj Parkash V/s. The State, S.T.R. No. 4 of 1961, Sultani Mal Amar Chand V/s. The State, S.T.R. No. 5 of 1961, Vijay Bharat Oil Mills V/s. The State, S.T.R. No. 7 of 1961, Sansari Mal Jagdish Chand V/s. The Slate, S.T.R. No. 8 of 1961, Man Singh Gian Singh V/s. The State, S.T.R. No. 9 of 1961 and Hira Nand Daulat Ram V/s. The State, S.T.R. No. 10 of 1961, the Financial Commissioner, Punjab, by his order of the 30th of March, 1961, has referred the following question for the opinion of this Court:
Having found that notification No. 3483-E. & T.-54/723(CH) of 5th August, 1954, had the effect of imposing a tax on the sale of edible oils, which were declared tax-free before and which had been declared by Act 52 of 1952 to be essential for the life of the community and that the said notification had never received the assent of the President of India, is the Financial Commissioner justified in holding that the notification of 5th August, 1954, did not constitute law made by the Legislature of the State.
2. In the other set of four petitions, Sansari Mal Puran Chand V/s. The State, S.T.R. No. 13 of 1961, Hira Nand Daulat Ram V/s. The State of Punjab, S.T.R. No. 14 of 1961, Ganga Ram Suraj Parkash V/s. The Punjab State, S.T.R. No. 15 of 1961 and Hira Nand Daulat Ram V/s. The State of Punjab, S.T.R. No. 16 of 1961, the Financial Commissioner, Punjab, by his order of the 31st of August, 1961, has referred the following question for the opinion of this Court:-
The question which arises in all these cases is whether a notification issued by the Punjab Government dated the 5th of August, 1954, whereby exemption from sales tax granted by the Government in respect of certain edible oils was abolished in the case of such edible oils produced in ghanis run by mechanical process was intra vires.
3. Though the form of question is somewhat different in the two sets of references, the substance of the dispute in all these cases touches the validity of the notification of the 5th of August, 1954. The petitioners in all the ten cases are commission agents and have been transacting business in edible oils. In the case of six petitions, the assessment has been made for the years 1954-55 and 1955-56, while in the set of the remaining four cases the assessment years are those of 1955-56 and I956-57.
4. To appreciate the point in controversy it is necessary to state a few facts. The East Punjab General Sales Tax Act (East Punjab Act No. 46 of 1948), as it was then called, was enacted on 15th of November, 1948. The charging section of this Act is in these terms :-
5. (1) Subject to the provisions of this Act, there shall be levied on the taxable turnover every year of a dealer a tax at such rates as the State Government may by notification direct....
5. Under Sub-section (1) of Section 6 of the Act was set out a list of tax-free goods in the Schedule and under Sub-section (2) the State Government was empowered to add to or delete from the Schedule "after giving by notification not less than three months notice of its intention so to do". By a notification of the Punjab Government No. 3483-E & T-51/2518 dated 30th May, 1951, "edible oils" was added as item No. 57 of the Schedule in the list of tax-free goods. The entry was made in this form:-
57. Edible oils produced from sarson, toria, and til in ghanis but not in hydrogenated form, e.g., vegetable ghee, vanaspati, etc.
6. Thus, an immunity was enjoyed by the dealers in edible oils from the payment of sales tax. A later notification of the Punjab Government No. 3483-E & T-54/723 (CH), dated 5th August, 1954, however, replaced entry No. 57 in the
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