WESTON, C.J. - This is an application under Article 226 of the Constitution. The petitioners are firms or individuals of Ludhiana carrying on business as commission agents for forward contracts in grain and other commodities on the basis, as is admitted, that no delivery is given but differences only are paid or received by the constituents.

The petitioners state that they are affected by the Punjab Forward Contracts Tax Act, 1951, (Act No. VII of 1951) which came into force on the 1st of July, 1951, in that under the Act they are dealers within the definition of Section 2(c), and as such are required to be registered on payment of fees, are liable to penalty for failure of registration and are liable to tax on the transactions effected by them. They claim that the Act is ultra vires the powers of Punjab Legislature as it contravenes Articles 246 and 269(1) of the Constitution. It is claimed that legislation dealing with stock exchanges and futures markets falls within items 48 and 90 of the Union List and therefore the Punjab Forward Contracts Tax Act, 1951, is not within the competence of the State Legislature.

The argument addressed before us on behalf of the State is that the Act is within the competence of the State Legislature and falls within item 62 of the State List in the Seventh Schedule as an Act providing for taxes on betting and gambling. We had issued notice to the Central Government. No appearance has been entered and we are informed by the learned Advocate-General that the Central Government support the validity of the impugned Act.

According to the preamble of the Punjab Forward Contracts Tax Act, 1951, it is an Act to provide for the levy of a tax on forward contracts in the Punjab. "Forward contract" is defined for the purposes of the Act in Section 2(d) as "an agreement, oral or written, for sale of goods on a future date but on the basis of which actual delivery of goods is not made or taken but only the difference between the price of the goods agreed upon that prevailing on the date mentioned in the agreement or any other date is paid or received by the parties."

Article 246 of the Constitution provides that Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule. Article 269(1) so far as material reads :-

"269. (1) The following duties and taxes shall be levied and collected by the Government of India but shall be assigned to the States in the manner provided in clause (2), namely :-

(a) * * * *

(b) * * * *

(c) * * * *

(d) * * * *

(e) taxes other than stamp duties on transactions in stock exchanges and futures markets;"

Items 48 and 90 of the Union List in the Seventh Schedule are :-

"48. Stock exchanges and futures markets."

"90. Taxes other than stamp duties on transactions in stock exchanges and futures markets."

The expression "futures markets" is not defined in the Constitution, nor so far as I am aware, in any enactment. It did not find place in the Government of India Act. The use of it in apparent conjunction with "stock exchanges" suggests that what is contemplated is not the individual commission agent dealing in "futures", but something analogous to a stock exchange, with a system of rules governing not only the place and time of business but also the conduct of business. Futures contracts and trading in futures are matters well understood in commercial circles. I may refer to a publication "Government Control of Business" by an American author Koontz where at page 591, under the heading "Regulation of Commodity Exchanges" he says :-

"In many respects the characteristics of trading on the organised commodity exchanges are similar to the transaction of business on the security exchanges. As a result much of the regulation of the two types of exchange correspo