LexTHE SOUTH INDIA CORPORATION(P) LTD. versus THE SECRETARY, BOARD OF REVENUE, TRIVANDRUM & ANR.
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1963 August 13 280 SUPREME COURT REPORTS [ 1964] THE SOUTH INDIA CORPORATION(P) LTD. ti. THE SECRETARY, BOARD OF REVENUE. TRIVANDRUM & ANR. (S. K. DAS, ACTING C. J., K. SUBBA RAO, RAGHUBAR DAYAL, N. RAJAGOPALA AYYANGAR AND J. R. MuoHoLKAR, JJ.) Sales Tax-Assess1nent in respect of works contracts-Constitution- ality-Afreemcnl betwun Prw'dent and Raj Pramukh of Part B St•te-V aliJity-Continuance in force of existing laws and their t!ld•ptati011J-"Subjcct to the other provisions of the Constitution"- Scope and ef}ect of-Constitution of India, Arts. 277, 278, and 372- Tr.vancore-Cochio General Sales Tax Act. 11 of 1125 M.E.-Tra.. v«ncore-Cochin General S•les Tax Act 1957 (12 of 1957)-Kerala Act 11 of 1957. On March 17, 1959 the appellant, a private limited company was aS:i;essed to sales· tax under the Travancore-Cochin General Sales Tax Act, 1125 M.E. for the assessment year 1952-53 in rc.pect of "works contr~cts". The company filed a revision petition before the 1st respondent, but it w~s rejected. Likewise, the 2nd respondent assessed the company to sales tax for the assessment year5 1956-57, 1957-58, 1958-59 in respect of '\vorks contracts". The as!;essment for the year 1952-53 was made only under the Travancorc-Cochin General Sab T.x Act (11 of 1125 M.E.) and, therefore, the subse- quent alleged enhancement of the tax did not affect the as.'iessment of that year. Assessment for the years 1956-57, 1957 .. 58 and 1958-59 were m:;i.de under the Travancore-Cochin General Sales Tax (Amendment) Act, 1957(12 0£ 1957) and, therefore, the provisions if any, enhancing the rate under the Act would affect the said asM:ssments. The enhancen1ents made under the l(erala Act 11 of 1957 would not govern the assessment year 1956-57 but only the assess1nent years 1957-58 and 1958-59. The appellant moved the High Court under Arts. 226 and 227 of the Constitution for quashing the said orders of as!lessqient. The petitions were dismissed. In this Court, the appellant mainly contended : ( 1) Art. 277 can only save the levy of a tax that was being lawfully levied by a State in11r1ediately before the commencement of the Constitution and that as the Act came into force only after the Constitution, the levy made there- under doe~ not satisfy the condition laid do\vn by the Article. (2) Assuming that Art. 277 saved the levy of a tax under the Act, there was an agreement betvveen the President of India and the Raj- pramukh of the State of T ravancore-Cochin and under the said agree- ment the Union agreed to recoup the loss in revenue incurred by the 91.id SNte by rea.5on of the constitutional transference of the B State's power of taxation in respect of certain item5 to the Union List and thati tA!:rraftcr, the State ceased to have the power to levy any tax in > 4 S.C.R. SUPREME COURT REPORTS 281 respect of the subjects so transferred. (3) Article 372 is subject to other provisions of the Constitution and a law empowering a State to impose a tax in respect of a federal subject is inconsistent 'vith the federal structure of the Constitution and, therefore, is bad; and, that apart, it is also inconsistent with the express provisions of Part XII of the Constitution and particularly with those of Arts. 277 and 278 thereof. field: 'J'he tax under the ~i\ct would not be saved, as the necessary condition that the levy should have been lawfully made before the Constit_ation, was not satisfied. The effect of the provisions in Art. 278 is that to the extent c(lvered by an agreem~nt the power of the State Govcrn1nent to continue to leYy taxes under Art. 277 is superseded. -- Union of India v. Maharaj" Krishnag'1rh Mills Ltd. fl961] 3 S.C.R. 524. applied. ·• The agre..:tnent in question fell squarely within the scope of the power. That would have its full force unless the Constitution (Seventh Amendment) Act, 1956, in terms avoided it. The said amend1nent was only prospective in operation and it could not have affected the validity of the agreetnent. It must be held, therefore, that the impugned assessment orders were not validly made by the sales tax authorities in exercise of the power saved under Art. 277 of the Constitution. A- pre-Con~titution la.\V n12de by a competent authority, though it has lost its legislative competency under the Constitution, shall continue in forcr:, provided the law does not contravene the "other r>roviiions" of the Constitution. It!/!. Cannon Dun
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