CHANDRANA & CO. versus STATE OF MYSORE

Citation: [1972] 2 S.C.R. 344 · Decided: 11-11-1971 · Supreme Court of India · Bench: C.A. VAIDYIALINGAM · Disposal: Dismissed

Judgment (excerpt)

344 
CHANDRANA & CO. 
v. 
STATE OF MYSORE 
November 11, 1971 
(C. A. VAIDIALINGAM AND K. K. MATHEW, JJ.] 
Mysore Sales Tax Amendment Act, 1963 (IX of 1964), s. SA-· 
imposition of Sales ·Tax at rate higher than in Central Sales Tax Act on 
textiles for period when textiles were not declared goods--Competency of 
Jhe State Legisla(ure. 
A 
B 
Section ·15 of the Central Sales Tax Act, 1956, subjects every sales tax 
.Jaw of a State to the restriction that the tax on the oalc or purchase of 
<ieclared goods shall not exceed the rate prescribed in the section. 
On 
C 
April 1, 1958, textiles became declared gogds and thereafter the Mysore 
State Legislature enacted the Mysore Sales-tax (Amendment) Act, 
1963 
(Mys. Act IX of 19,64) by which a new sub-s. 5(A) was introduced in the 
Mysore Sales-tax Act, 19S7, imposing on sales of textiios during the assess-
ment period October 1, 1957 to March 31, 1958, when textiles were not 
.declared goods, tax at t]Je rate specified in the Second Schedule to the 
1957-Act, that is, at a rate in excess of that specified in the Central Sales 
D 
Tax Act. 
The ~ubstituted sub-section of the amending Act. was to be 
<ieemed always to liave been there. 
In the appeal to this Court it was 
contended that if the Mysore Legislature had no power on February 27, 
1964, the date on which Act IX of 1964 came into force. to impose. tax 
<in sales of declared goods at a rate in excess of 'that specified in s: 15 ~f 
the Centr.al Sa~~ Tax Act, it was not competent to the legislature lo give 
retrospective effect to s. SA covering the period of assessment even if dur-
ing that period it had the power to do so. 
Dismissing the aj>peal, 
E 
HELD : 
(i). It was because textiles became declared goods from 
April 1, 1958, that the· Mysore Legislature lost its power to tax the sales .of 
textiles eit a rate higher than that specified in1 s. lS of the Central Sales 
·Tax Act as it stood at the relevant time. Thoq.gh the goods on the sale 
of which tax was imposed remained the safoe in substance their legal 
quality became different. 
As textiles were not declared 
goods 
before 
April 1, 19S8, there was no inhibition on the part of the legislature in 
F 
subjecting the turnover of sales of textiles, before that period, to tax at a 
rate higher than. that specified in s. lS of the Central Sales Tax Act. 
[351 EJ 
A. llajee Abdul Shakoor & Co. v. State of Madras, [19C4] 8 S. C.R. 
217, 231, explained and held inapplicable. 
(ii) Looked at from' a different angle, the only limit on the po.ver of 
G 
.a legislature to create a fictjon is· that it shquld not lransCcnd its power bv 
the creation of the fiction. 
The Iimit;1tion on the power of the legislature 
·of Mysore when it enacted ·Act IX of 1964 .vas that on the sale of dec-
lared goods it could not ha\·e imposed sales tax at the rate higher than 
that specjfied in s. 15 of the Central Sales Tax Act as it stood then. 
There was no limitation on its power to impose tax on the turnover of 
sales of textiles before April l, 1958, when they 
were 
not 
declared 
-goods. [351 HJ 
H 
1The question whether, after Ap;il 1, 1958, when textiles became dec-
lared goods, the rate of tax as provided in the Second Schedule to the 
Mysore General Sales Tax Act, 1957, as amended would stand modified 
A 
B 
c 
D 
E 
F 
G 
H 
CHANDRANA &. co. v. MYSORE (1Hathew, J.) 
345 
in view of the s. 15 of the Central Sales Tax Act. 1956, <lid not arise for 
consideration and, therefore, no opinion \Vas expressed on that ao;.pccl.j 
[352 BJ 
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1079 
and 1080 of 1967. 
Appeals by special leave from the judgment and order date:J 
November 16, 1966 af the Mysore High Court in Sales Tax Revi-
sion P.~tition No. 52 of J 965 and Writ Petition No. 2349 of 1965 
respectivdv. 
S. T. Desai and T. A. Ramachandran, for' the appellant 
(in 
both the appeals). 
A. R. Somanatha Jyer,.M. S. Narasimhan and R. B. Datar, for 
the respondent (in C.A. No. 1079 of 1967) and respondents 
Nos. 2 to 4 (in C.A. No. 1080 of 1967). 
The J udgmen~ of the Court was delivered by-
Mathew, J. 
These two appeals by Special Leave, arc Irolll 
the judgment dated November 16, 1966 of the Mysor.e High 
Court in S.T.R.P. No. 52 of 1965 and Writ Petition No. 2349 
of 1965. 
The appellant was a dealer, among other things, in textiles, 
with its head office at Mercara and a branch at Bangalore. It was 
assessed to sales tax on April 29, 1965 under the Mysore General 
Sales Tax A

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