Cases Referred:

Advocates Appeared:
M. R. Bobde, A. S. Bobde and R. R. Dandige, for the applicant.
M. Adhikari, Deputy Advocate-General, for the State.

ORDER

This petitions is by the Madhya Pradesh Pan Merchants Association, Nagpur, though its Secretary L. B. Borgaonkar. Respondents 2 and 3, who are the Sales Tax Officer and the Assistant Sales Tax Officer respectively in the Nagpur district, have issued notices to the dealers forming the Association to submit returns of their sales of betel leaves with a view to assessing them to sales tax. The petitioner claims exemption from the operation of the Sales Tax Act, 1947, and seeks a writ or writs to restrain the respondents from charging sales tax on the sale of betel leaves. In the alternative, it urges that Act XVI of 1949 by which the exemption is withdrawn is ultra vires and illegal.

2. To understand the contention it is necessary to give a short history of the legislation on the subject. In Act XXI of 1947 exemption from the tax is granted by section 6 of the Act. This section reads as follows :-

"(1) No tax shall be payable under this Act on the sale of goods specified in the second column of Schedule II, subject to the conditions and exceptions, if any, set out in the corresponding entry in the third column thereof.

(2) The State Government may, after giving by notification not less than one month's notice of their intention so to do, by a notification after the expiry of the period of notice mentioned in the first notification amend either schedule, and thereupon such schedule shall be deemed to be amended accordingly."

In the Second Schedule there were two items :- Item No. 6 "vegetables", and Item No. 36 "betel leaves". The Legislature, thereafter, passed Act XVI of 1949 and amended the Second Schedule by deleting from it Item No. 36. The petitioner contends that betel leaves were exempted under Item No. 6, though the Legislature ex majori cautela mentioned them once again in Item No. 36. The deletion of Item No. 36, it is submitted, makes no difference whatever to the exemption of betel leaves. The petitioner further contends that the Legislature having expressed its will in section 6 as to the manner in which the Schedule could be amended, no other mode for the amendment thereof was possible so long as section 6 remained intact, and that even if the Legislature wished to amend the Schedule, it had to give a month's notice to the persons affected thereby, before the change could be made. It also contends that Act XVI of 1949 is ultra vires the Provincial Legislature because the Bill needed the assent of the Governor-General under section 100 of the Government of India Act, 1935, and the assent was not obtained. The petitioner claims further that there is discrimination between pan dealers and other vegetable dealers, and Act XVI of 1949 cannot be enforced after the inauguration of the Constitution.

3. On behalf of the respondents a preliminary objection is taken that an indeterminate body like the Pan Dealers Association cannot seek a writ under Article 226 of the Constitution. It is contended that either all the persons affected thereby must join in this petition or all of them must file separate petitions. An application has now been filed by the secretary of the association to limit the petition to L. B. Borgaonkar who is himself a pan dealer, in case the objection is upheld.

4. We heard the preliminary objection as well as the petition, and in view of our decision that there is no room for interference, there is no need to decide the question whether an association can move this Court under Article 226 of the Constitution on behalf of its constituent members. In Halsbury's Laws of England there are cases in which associations moved for relief, but we do not consider it necessary to go into this question in this case.

5. Shri Bobde contends on the strength of certain passages in Craie's Statute Law, p. 98, that Item No. 36 was not outside Item No. 6 but was added ex abundanti cautela. According to him, the exemption from the operation of the Act was granted to betel leaves dealers by Item No. 6 because the term "vegetables" is wide enough to include even betel leaves. The deletion of Item No. 36, therefore, in no way whittled down the operation of Item No. 6 which continues to grant the same exemption which Item Nos. 6 and 36 together did in the past. For this purpose Shri Bobde contends that the word "vegetables" should be given the widest meaning possible to include all commodities which in a botanical sense can be described as vegetables.

6. In our opinion, the word "vegetables" cannot be given the comprehensive meaning the term bears in natural history and has not been given that meaning in taxing statutes before. The term "vegetables" is to be understood as commonly understood denoting those classes of vegetable matter which are grown in kitchen gardens and are used for the table. There are numerous cases in which the term "vegetables" used in taxing statutes has been expounded, and it has been held in them that peanuts, cashew-nuts, valnuts etc., though vegetables in the botanical sense, are not vegetables in the common acceptance of the term. (See Planters Nut and Chocolate Co., Ltd. v. The King ([1952] 1 D.L.R. 385) and the cases collected in Words and Phrases, First Series, Volume 8, page 7284, and in Words and Phrases, Second Series, page 1145). There is also the decision of the Patna High Court in Kokil Ram v. Province of Bihar ([1950] 1 S.T.C. 217; A.I.R. 1951 Pat. 367), where it has been ruled that pans for the purposes of sales tax are not included in the term "vegetables". Pans are not ordinarily used as vegetables but as a masticatory. They are not used as food.

7. We are accordingly quite clear that the exemption which was granted by Item No. 36 was withdrawn by its deletion, and the same exemption cannot be claimed under Item No. 6 which refers to vegetables, in which term betel leaves cannot be included. The cases cited to show that the cultivation of betel leaves amounts to agriculture do not carry the matter any further.

8. This brings us to the question whether Act XVI of 1949 is ultra vires. In this connection reliance has been placed upon the decision in Shriram Gulabdas v. Board of Revenue ([1952] 3 S.T.C. 343; A.I.R. 1952 Nag. 378). In that case Explanation II to section 2(g) introduced by Act XVI of 1949 was challenged before this Court. It was then ruled that the said Explanation was not validly enacted because it required the assent of the Governor-General, since it sought to alter the rules obtaining under the Sale of Goods Act and the Contract Act. The whole of Act XVI of 1949 was not then examined. We are aware that the cited ruling was not followed in the Andhra High Court by Chandra Reddy and Umamaheswaram, JJ., in Kameswara Rao v. State of Madras ([1955] 6 S.T.C. 143). They consider that the ruling is contrary to the decisions of their Lordships of the Supreme Court in The State of Bombay v. United Motors (India) Ltd. ([1953] 4 S.T.C. 133; A.I.R. 1953 S.C. 252) and Poppatlal Shah v. State of Madras ([1953] 4 S.T.C. 188; A.I.R. 1953 S.C. 274) and further that the observations regarding the second Explanation to section 2(g) contradict what the Bench stated earlier on the subject. With all due respect to the learned Judges, we do not agree. The power to levy taxes on the sale of goods (Entry No. 48 of List II, Seventh Schedule to the Government on India Act, 1935) was, no doubt, plenary. But the power to make room for new legislation in an occupied field by enacting rules contrary to existing law made by the Centre did not go with the entry. That power could only be exercised by taking the sanction of the Governor-General to the proposed enactment. The plenary power to tax cannot be confused with the power to make room in the occupied field for the new law in abrogation of the existing law. The Sale of Goods Act had determined the conditions before a contract for the sale of goods could be said to be complete. Any alteration in that law did not fall under Entry No. 48 but under Entry No. 10 of the Concurrent List and sections 100/107, Government of India Act, 1935, were attracted. There is, therefore, no contradiction between the two portions of the judgment, as has been held by Chandra Reddy, J. As regards the observation that the ruling must be treated as bad law in view of the decision of their Lordships of the Supreme Court in The State of Bombay v. United Motors (India) Ltd. ([1953] 4 S.T.C. 133; A.I.R. 1953 S.C. 252) it is sufficient to point out that the ruling of this Court was considered by their Lordships of the Supreme Court in Himmatlal v. State of Madhya Pradesh ([1954] 5 S.T.C. 115; A.I.R. 1954 S.C. 403), and was approved because it was in accordance with what was stated by their Lordships in The State of Bombay v. United Motors (India) Ltd. ([1953] 4 S.T.C. 133; A.I.R. 1953 S.C. 252). This is what their Lordships said in Himmatlal v. State of Madhya Pradesh ([1954] 5 S.T.C. 115; A.I.R. 1954 S.C. 403) :-

"As pointed out above, the High Court held that the new Explanation II was ultra vires the State Legislature and that the mere production of goods was not enough to make the tax payable unless the goods were appropriated to a particular contract. The correctness of this view can no longer be questioned by reason of the majority decision of this Court in The State of Bombay v. United Motors (India) Ltd. ([1953] 4 S.T.C. 133; A.I.R. 1953 S.C. 252)."

We are accordingly not pressed by the argument that Shriram Gulabdas v. Board of Revenue ([1952] 3 S.T.C. 343; A.I.R. 1952 Nag. 378) has been wrongly decided.

9. That, however, is not the end of the matter. In Shriram Gulabdas v. Board of Revenue ([1952] 3 S.T.C. 343; A.I.R. 1952 Nag. 378) the Bench was concerned only with Explanation II to section 2(g) and that was held to be defectively enacted because the Governor-General had not assented to that Explanation. That did not mean that the Bench regarded the whole of the Act was ultra vires. Nor is it true to say that the entire Act needed the assent of the Governor-General. Under the Government of India Act, 1935, the Provincial Legislature could enact valid laws within the ambit of its powers, provided the Governor assented to the measures so enacted. Act XVI of 1949 in such of its parts as bear upon this matter did not need the assent of any authority other than the Governor. To enact Explanation II to section 2(g) a further assent of the Governor-General was required because the field was already occupied by the Sale of Goods Act, and to make room for the new Explanation the assent of the Governor-General was needed to remove repugnancy. That assent was not necessary for the rest of the Bill, and therefore the fact that the Bill was not so assented to did not render invalid such portions of it as were validly enacted with the assent of the Governor. The second Explanation to section 2(g) is severable from the rest of the Act and must be so severed. The Bench, therefore, on the earlier occasion merely pronounced that the second Explanation was ultra vires. In our opinion, the invalidity attaching to second Explanation cannot be carried further because it is severable from the remaining portions of the Act. Indeed, as was pointed in the case of Shriram Gulabdas ([1952] 3 S.T.C. 343; A.I.R. 1952 Nag. 378), the failure to enact legally the said Explanation did not work any change and the old Explanation remained current and was not affected. We accordingly hold that Act XVI of 1949, in so far as it bears upon the present matter, was not invalidly enacted and was effective.

10. As regards the contention that he amendment of the Schedule was defective because the procedure under section 6 was not followed, we have only to say that under section 6 there is a delegation of power to the State Government to amend the Schedule, for which certain conditions precedent have been laid down. That delegation does not rob the Legislature of its plenary power to amend the Act as and when occasion arises. It is not necessary that the delegation should be withdrawn before the Legislature itself can amend the Act. Further, the conditions created for the exercise of the power by the delegate do not bind the Legislature. The Legislature could, and can, at any time amend the whole Act including the Schedule.

11. The scheme of taxation in all countries shows that only certain commodities are selected for the imposition of sales tax. It has not been contended before this that any discrimination results from the taxation of one article as against another. If the argument is carried carried to its extreme, every sale transaction will have to be taxed, and also equally, before sales tax can be imposed on any commodity. Such taxing measures imposing sales tax on selected commodities and not on others cannot be regarded as discrimination between one dealer and another. We do not think that there is any discrimination when betel leaves are sought to be taxed and vegetables are exempted.

12. In our opinion, the petition has no force and must be dismissed. We accordingly dismiss it with costs. Counsel's fee Rs. 100. The petitioner shall be entitled to a refund of the outstanding amount of the security deposited by him.

Petitions dismissed.