A State Legislature has the power to enact laws retrospectively for its territories, even prior to its existence, provided that such laws are not discriminatory and are in consonance with the Central Sales Tax Act and the Constitution of India.

Mahajan, J.

1. This is a petition under Articles 226, and 227 of the Constitution of India. In this petition, the validity of certain provisions of the Punjab General Sales Tax Act, 1948 (hereinafter called the Act), as amended by Punjab General Sales Tax (Haryana Amendment and Validation) Act, 1967 (hereinafter called the Amendment Act) is called in question.

2. The petitioner is a Private Limited Company and carries on business of purchase and sale of cotton at Hansi. Prior to the 1st of Novemeber, 1966, Hansi was part of Punjab State (hereinafter referred to as the Old Punjab). After the reorganisation of the Punjab by the Punjab Reorganisation Act, 1966 (Act No. 31 of 1966) from the appointed day, that is the Ist of November, 1966, the territory of the Old Punjab was divided to form the State of Haryana, the Union Territory of Chandigarh, the State of Punjab (New Punjab) and part of the territories were transferred to Himachal Pradesh.

3. The Reorganisation Act, in S. 2, defines Old Punjab as existing State of Punjab, namely the State of Punjab as pointed day. The new State of Punjab is defined in section 2 (1) as the State with the same name, comprising the territories referred to in sub-section (1) of section 6. Successor State in S. 2 (m), in relation to the existing State of Punjab, means the State of Punjab or Haryana, and includes also the Union in relation to the Union Territory of Chandigarh and the transferred territory. Section 2 (n) defines transferred territory as the territory which, on the appointed day, is transferred from the existing State of Punjab to the Union territory of Himachal Pradesh.

4. Right up to the appointed date, the petitioner was governed by the parent Act (Punjab General Sales Tax Act, 1948, as amended up to date). He was and even now is a registered dealer. Before the Reorganisation Act, the petitioner was liable to pay tax on his turnover under the parent Act. It may be mentioned that in the present petition, we are only concerned with the sale or purchase of declared goods within the meaning of section 2 (c) of the Central Sales Tax Act, 1956 (Act No. 74 of 1956). These goods are specified in schedule C to the parent Act. In the instant case, we are only concerned with the sale or purchase of cotton which is a declared goods and on this, there is no dispute. The main provisions relating to the purchase of declared goods under the principal Act were sections 2 (ff), 2 (I), 5(1) and 5(1) and 5(2). The Supreme Court in Bhawani Cotton Mills Ltd. v. State of Punjab (1967) 20 S. T.C. 290 " (AIR 1967 SC 1616 declared the levy of tax on the purchase of cotton to be ultra vires for want of prescribing a single stage for the levy of such a tax. By reason of this decision, all levies and collection of tax on the purchase of cotton from 1.4.1960 became unlawful. For facility of reference, I have taken the liberty of quoting from the High Court decision the brief history of the legislation which led to the dispute which was settled by the Supreme Court in the aforesaid case:

".........In the Schedule attached to the principal Act, as it stood before 1958, which exempted certain commodities from sales tax, ginned or unginned cotton was included as item No. 29. In the year 1958 by the East Punjab General Sales Tax (Amendment) Act, 1958, (Punjab Act 7 of 1958), item No. 29 was deleted from the Schedule with the result that cotton (ginned or unginned) became liable to the levy of sales tax. The definition of the word purchase was introduced for the first time by Punjab Act 7 of 1958 in section 2 of the principal Act. According to this definition "2 (ff) Purchase", with all its grammatical or cognate expressions, means the acquisition of goods other than sugarcane, foodgrains and pulses for use in the manufacture of goods for sale for cash or deferred payment or other valuable consideration otherwise than under a mortgage, hypothecation, charge or pledge: * * * * * *"

By Punjab Act 13 of