LexDEVI DAS GOPAL KRISHNAN & ORS. versus STATE OF PUNJAB & ORS.
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DEVI DAS GOPAL KRISHNAN & ORS.
v.
STATE OF PUNJAB & ORS.
April IO, 1967
(K. SUBBA RAo, C.J., J. C. SHAH, J. M. SHELAT, V. BHARGAVAl
AND G. K. MITTER, JJ.]
Rate fixation-Delegation-Constitutional and
Statutory necessity, if.
proper guides-East Punjab General Sales Tax Act, 1948 (46 of 1948),.
s. 5.
Severabi/ity-C/Jarging section made subject to section granting power·
to fix rates-Latter declared void-If charging section also void-Effect
of subsequent amendment-East Punjab General Sales Tax Act, 1948 ( 46·
of 1948), ss. 4, 5, 6-Ea!I Punjab General Sales Tax (Second Amend-
ment) Act, 1952 (19 of 1952).
EaSI Punjab General Sales Tax Act, 1948-Leglslative competenct-·
Section 2 Cl. (ft)-'Acqulsitlon' meaning of-Valuable
consideration.
meaning of-Act, if in conflict with Sale of Goods Act, 1930; Central'
Sales Tax Act, 1956, s. 15.
Section 5 of the East Punjab Sales Tax Act, 1948, as originally enact··
ed, conferred on the Government power to levy tax at such rates as the
"Government might fix.
The section was amended by Act 18 of 1952,
with retroSpective effect, fixing the rate of tax at "not exceeding two pice>
in a rupt;e". Section 2(ff) of the Act as amended by Act 13 of 1959.
defines- "Purchase" as the
11acquisition"
ot the gooc1s "tor ~se in the·
manufacture of goods for sale, for cash or deferred
payment or other·
valuable consideration otherwise than under a mortgage hypothecation,
charge or pled~e". The appellants' petition in the High Court c!Wleng-
ing the imposition of rurchase tax for the years 1958-59 and 1959-©
on the purchase of oi seeds, steel scrap and cotton for manufacture of
goods for sale, were dismissed, and they appealed to this Court. Mean-
while. the High Court had considered the validity of the Act in a Sales
Tax Reference and declared s. 5, as it originally stood, void. In this Court
it was contended : (i) since s. 5 as originally enacted, was declared void,
that being the charging section, the entire act was void and the Amend-
ing Act of 1952 could not revive an Act which was non est, and (ii)
section 2(ff) was invalid for want of legislative competence.
HELD : (i) Section S as it stood before the amendment was void··
but the section as amended by the Amending Act of 1952 is valid.
'
An Act conferring a power to fix rates of taxation must lay down
clear. le~slative policy or guide-lines in that regard and the doctrine of
~titullon~ and statutory needs would not afford reasonable guide·lines
10 the fixation of such rates. There was nothing in the provisions of
the Act, inc.luding the preamble disclosing any policy or guidance to the
State f~r fixing rates. Section 5 as it stood before the Amendment con-
f~ed on the Govemment an uncontrolled power in the matter of fixa-
tion of rates and was therefore void. [565 G-566 B; 569 FJ
I ,Cedorporatlon of Calcutta v. Liberty Cinema, [1965) 2 S.C.R. 377, ex-
p atn .
State of Madras v, Gannon Dunkerlev & Co. (Madra•) Ltd. [19591
S.C.R. 379, 435, ·vasantlal Maganhhai Sanjanwalti v. State of Bombav
558
SUPREME COURT llJ!PORTS
11967] 3 S.C.R.
{1961) l S.C.R. 341 and The Union of India v. Ml s. Bhona Mal Gul:arl
.Mal, (1960) 2 S.C.R. 627, referred to.
Although s. 5 was void, the entire Act was not void. Section 4 is the
charging section and Section 5 dealt only with the quantification of tax,
· that is, the. charging section was intact and what was struck down was
only the section providing for rates. The fact that s. 4 is made subject to
s. 5 does not render the former void on the principle of non-60Verability,
·because, under the Act, there is a clear distinction between chargeability
and the quantification of tax. Therefore, strikin~ out s. S only made
s. 4 unenforceable. The amendment of s. S bas, 1n sult>tance, the effect
of amending an existing Act. [567 G-H; 568 F-0; 569 B.CJ
B. Shatha Rao v. The Union Territory of Pondicherry,
[1967)
2
S.C.R., distinguished.
B
Kesoram Industries and Cotton Miiis Ltd. v. Commissioner of Wealth
C
:Tax (Central) Calcutta, [1966] 2 S.C.R. 688, referred to.
Conferment of a reasonable area of discretion by a fiscal statute is
·permissible and the discretion to fix the rate between I ~ioe and 2 pi,de
cannot be said to exceed the permissible limits.
[569 0-F)
Khandlge Sham Bhat v. The Agricultural Income Tax Officer, (1963)
. 3 S.C.R. 809, referred to.
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(ii) Clause (ff) of s. 2 is not void for want of legislative ~
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