1. This is one of a series of petitions challenging the validity of the Central Sales Tax (Amendment) Act, 1969, Act 28 of 1969 hereinafter referred to as the Act). Those petitions were posted along with this petition and we heard arguments in all the cases. The main points raised were that the provisions of the Act are violative (a) of Art.14 of the Constitution and (b) of Art.19(1)(f) and 19(1)(g) of the Constitution. Two further contentions were raised. It was urged that because of S.8(2A) of the Central Sales Tax Act, 1956 inter State sales of goods which were taxable only at the last purchase point inside the State under the State Sales Tax Act, were not taxable under the Central Sales Tax Act, 1956, even as amended by the Act. It was further contended that the provision in S.9 of the Act will not have the effect of validating orders of this Court setting aside assessments made under the Central Act before the Act was passed and that for the years covered by those assessment orders (which had been set aside) there can be no tax liability.

2. Based on the above arguments it was also contended that the notice issued by the 3rd respondent directing the petitioner to pay the tax collected by the petitioner in relation to the transactions for the period from 10-11-1964 to 9-6-1969 should be quashed. There is a further prayer that the notice Ex.P1 relating to the years 1964-65 to 1967-68 directing the petitioner to produce the account books, documents and statements etc. detailed in that notice should also be quashed.

3. We shall deal with these contentions seriatim. But before doing so, we think it would be necessary to refer to S.8 and S.9 of the Central Sales Tax Act, J 956 as they stood before the Central Sales Tax Act was amended by the Central Sales Tax (Second Amendment) Act, 1958; as they stood after the (Second Amendment) Act, 1958, and as they are after the amendments effected by the Act. These sections as they stood at the relevant periods are extracted in the Appendix to this judgment.

4. Based on S.8(2) and S.9 of the Central Sales Tax Act, 1956 as they stood before the amendments effected by the (Second Amendment) Act, in 1958, the Supreme Court in The State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons 1965 (16) STC 231 took the view that if a particular transaction of sale or purchase was not taxable under the Sales Tax Law of the concerned State, a subsequent sale transaction in the course of inter State trade or commerce is also not taxable. Before this decision was rendered on 10-11-1964, the Central Sales Tax Act had been amended by Act 31 of 1958 and the amended sections became applicable for the assessments for the years 1958-59 onwards. The Madras High Court had to consider the effect of the amendments made by Act 31 of 1958 in the decision in M. A. Khader & Co., and others v. The State of Madras and others 1966 (17) STC 39. and came to the conclusion that the principle laid down by the Supreme Court in The State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons. could not be applied in view of the amendments effected by Act t 31 of 1958 to the Central Sales Tax Act, 1956. It was ruled therein that even if a particular transaction was not taxable under the Sales Tax Law of the State it may be taxable under the Central Sales Tax Act. However the Supreme Court applied the principle of the decision in The State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons 1965 (16) STC 231. in deciding The State of Mysore v Mysore Silk House 1966 (17) STC 309. and The State of Mysore v. Karnatak Coffee Co. 1966 (17) STC 311. The effect of the amendments made by Act 31 of 1958 was not considered in these decisions, apparently because those amendments were not brought to the notice of the Court. But in State of Kerala v. P. P. Joseph and Co. and Joseph Elias 1970 (25) STC 483. a contention was raised that in view of the amendment of the Central Sales Tax Act, 1956 by Act 31 of 1958, the position had altered and a tax can be imposed under the Central Sales Tax Act though a particular transaction was not taxable even if it had taken place inside the State, under the State Law. Before this case could be argued, Ordinance No. 4 of 1969 was promulgated which was replaced by the Act and extensive amendments were effected to the Central Sales Tax Act as already noticed. So their Lordships of the Supreme Court in deciding State of Kerala v. P. P. Joseph and Co. and Joseph Elias referred to Ordinance No. 4 of 1969 and expressed the view that it was unnecessary to consider the contention raised by counsel for the State. This is the relevant paragraph of the judgment:

"Counsel for the State contended that the decision of this court in Yaddalam Lakshminarasimhiah Setty's case proceeds upon the interpretation of S.8, sub-s.(2), as it stood before it was amended by Act 31 of 1958 and cannot be regarded as an authority for the true interpretation of S.8 as it stood in the year of assessment after the enactment of the Central Sales Tax Act by the Central Sales Tax (Second Amendment) Act, 1958 (31 of 1958), which came into force in October, 1958. It is not necessary to express our opinion on the contention raised by counsel for the State because the President of India has promulgated on June, 9, 1969, the Central Sales Tax (Amendment) Ordinance, 1969 (4 of 1969), which dispenses with the necessity to consider the validity of the argument."

5. After referring to the amendments effected by the Ordinance, their Lordships set aside the High Court decision which relied on the decision in The State of Mysore v Yaddalam Lakshminarasimhiah Setty and Sons,1 and the decisions of the Tribunal and of the Sales Tax authorities, and directed that the assessments should be made under the Central Sales Tax Act, 1956 as amended by the Ordinance. This decision impliedly at least holds that assessments in relation to transactions in the course of inter State trade or commerce can be assessed and tax levied on those transactions under the Central Sales Tax Act, 1956 after its amendment by Ordinance No. 4 of 1969 though the particular transaction was not taxable under the Sales Tax Law of the State had those transactions taken place inside the State. But no arguments were advanced before the Supreme Court or considered by it about the validity of the Act and we must therefore now proceed to consider those aspects on the basis of the contentions raised by counsel on behalf of the petitioner.

6. The contention that Art.14 has been violated is rested, as pleaded in this petition, on three different grounds which we may mention one by one: (a) It is said that a number of assessments made under the Central Sales Tax Act had been set aside by the Tribunals and High Courts in India following the decision in The State of Mysore v Yaddalam Lakshminarasimhiah Setty and Sons1 and that there can be no assessments in relation to some at least of the years relating to which assessments had been set aside because R.6(7) of the Central Sales Tax (Kerala) Rules, 1957 precluded a reassessment even on the basis of escape of turnover after four years of the expiry of the year. On the other hand, due to the lethargy of the Sales Tax Officers or purposely, or otherwise, assessment proceedings may be pending and in relation to those pending assessments the Central Sales Tax Act as amended could be applied and therefore it is said that the same type of assessees are treated differently, by some escaping liability and by others becoming liable, (b) In certain cases, pursuant to the decisions of this Court and other courts there have been directions to refund the tax collected and taxes had been refunded accordingly and there is no provision in the Act to direct for the recovery of such taxes from those to whom it had been refunded. But it is said that in the case of assessees whose assessments had not been completed there will be liability to be taxed and there is no justification for such a distinction, (c) The tax liability under the Central Sales Tax Act as amended is cast only on such dealers who, for the transactions that took place between the dates 10-11-1964 and 9-6-1969 had collected the tax. The date 10-11-1964 is an arbitrary date and liability to tax being made to depend on collection or non-collection is also arbitrary and hence discriminatory.

7. We shall deal with these three aspects of the arguments. We do not think that the first contention which is based on a distinction between those who had escaped the liability to taxation by virtue of the lapse of time and others who were liable because their assessments were pending, has any relation to the provisions in the Act amending the Central Sales Tax Act. A provision fixing a period within which assessments should be made in relation to escaped turnover was in existence in almost all the Sales Tax enactments or the rules framed thereunder. This difference arises by virtue of this provision that there shall not be an assessment in relation to escaped turnover after the lapse of a certain period which was originally three years, and now four years and is intended to give a quietus in relation to the liability for taxation for a particular year. No decision has been brought to our notice wherein a view had been taken that such 1 a provision is discriminatory. The discrimination, if there is any, arises from this provision and not from any provision in the Act. The provision in R.6(7) of the Central Sales Tax (Kerala) Rules, 1957 has not been challenged before us and from this supposed difference no question of the validity of the Act can be determined. We therefore negative this contention.

8. We see no force in the second aspect either. We will presently be dealing with the question of the effect of the amendments that have been introduced by the Act on the Central Sales Tax Act and particularly the effect of the enactments on the decisions of this Court setting aside assessments that were made before the amendment. Our view is that those decisions are rendered ineffective by the amendments that had been introduced and therefore the liability under the Act subject to the provisions in the Act and the rules framed thereunder will be subsisting and appropriate proceedings can be taken either for assessment if one such is necessary or for collection of tax already imposed if a fresh assessment is unnecessary. In this view, the distinction sought to be made out under the second aspect or discrimination relied on by counsel for the petitioner does not exist

9. Passing on to the third aspect, it has to be mentioned that it is not as though the date 10-11-1964 has no significance. That was the date of the decision of the Supreme Court in The State of Mysore v Yaddalam Lakshminarasimhiah Setty and Sons. The provision in S.10 which section we shall presently read exempts from liability those who had, if we may say so, been misled by the conclusion reached by the Supreme Court in The State of Mysore v Yaddalam Lakshminarasimhiah Setty and Sons, we say misled, in view of the retrospective amendments made by the Act. We shall now extract S.10 of the Act:

"Exemption from liability to pay tax in certain cases:-- (1) Where any sale of goods in the course of inter state trade or commerce has been effected during the period between the 10th day of November, 1964 and the 9th day of June, 1969, and the dealer effecting such sale has not collected any tax under the principal Act on the ground that no such tax could have been levied or collected in respect of such sale or any portion of the turnover relating to such sale and no such tax could have been levied or collected if the amendments made in the principal Act by this Act had not been made, then, notwithstanding anything contained in S.9 or the said amendments, the dealer shall not be liable to pay any tax under the principal Act, as amended by this Act, in respect of such sale or such part of the turnover relating to such sale.

(2) For the purposes of sub-s.(1), the burden of proving that no tax was collected under the principal Act in respect of any sale referred to in sub-s.(1) or in respect of any portion of the turnover relating to such sale shall be on the dealer effecting such sale."

10. It was found necessary by the Parliament that there should be a tax liability on transactions of sale in the course of inter State trade or commerce even if such sale had they taken place inside the State were not taxable under the Sales Tax Law of the State. At the same time, it had been realised that based on the decision in The State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons dealers might not have collected tax from their purchasers. To impose tax liability on the dealers who had not collected tax from their purchasers, it was felt, would cause hardship to those dealers and the Parliament deemed it fit to exempt those who had not collected the tax, from the liability cast by the amendment introduced by the Act. The question is whether so differentiating this group who had not collected tax from those who had collected tax is an intelligible differentiation which has any nexus to the object sought to be achieved by the statute. No doubt, it is not a necessary incidence of Sales Tax that a dealer on whom the tax is imposed must be in a position to pass it on to the consumer or the person to whom the goods are sold. Nevertheless it is an accepted fact that in most cases, if not all, the incidence of Sales Tax falls on the purchasers or the consumers and the real position is that the dealer is not out of pocket when he is made liable to pay the Sales Tax. This reality is recognised by enacting S.10 of the Act. We think that the classification made is justified. The two groups are distinct and separate and can be classified separately exempting one from the liability under the Act and making the other liable. The matter is anyway concluded by the decision of the Supreme Court in Jonnala Narasimharao and Co. and others, etc etc. v. State of Andhra Pradesh and others.1971 (2) S.C. Cases 163. The question arose before the Supreme Court in these circumstances: S.9 of the Andhra Pradesh General Sales Tax (Amendment) Act, 1970 provided that the dealers of jaggery who had not collected sales tax on the purchases, under the Principal Act, on the ground that no such tax could have been levied or collected shall not be liable to pay any tax under the Principal Act as amended. It was contended before the High Court that the provision is discriminatory and the High Court accepted the contention. The Supreme Court in appeal however reversed the decision of the High Court and it is sufficient to extract the Head note of the decision as reported in the Supreme Court Cases which correctly reflects the dicta:

"The section was enacted with the object of removing shortcomings in the Principal Act. The interregnum between the declaration by the High Court, of certain provision of the Act in Irri Raju and Others v Commercial Tax Officer, Tadelligudam and Others, Sales Tax Cases Vol. XX (1967) (p. 501) as being unconstitutional and the attempt of the Legislature to remedy the defects and to give retrospective effect hereto created distinction between the dealers who collected the tax and those who did not. The dealers who had not collected the tax could not have collected it as the law stood and therefore the Legislature did not think it just or proper to collect tax from those who were not liable. The classification was reasonable and related to the object of the Amendment Act."

We therefore negative the contention that S.10 of the Act is discriminatory and the further contention that S.10 being an essential part of the Act, the whole Act should be held discriminatory.

11. The attack on the validity of the Act based on Art.19 of the Constitution is mainly rested on the ground that the basis of the tax has been fundamentally changed by the Act and the contention proceeds on the basis that the Parliament has no power to so change the basis of the tax. Such a contention cannot be upheld. As long as the Act is within the legislative competence of the Parliament, it is open to the Parliament to choose the basis of taxation. The only question that can arise is whether it will fall within the powers of the Parliament under List I of the Seventh Schedule to the Constitution, There can be no doubt that the Act will fall under item 92A of List I of the Seventh Schedule to the Constitution which reads thus:

"92A. Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter State trade or commerce."

12. The Act has not in any manner exceeded the powers conferred on the Parliament by this item in List I of Seventh Schedule to the Constitution, All that is said in the petition relating to this contention is in these terms:

"The petitioner states that the alteration of the basis of charge from 1957 and creating a new and additional liability with retrospective effect is violative of Art.19(1) of the Constitution. This is not a case of validating an Act which was discovered to have violated some constitutional provisions but a case where the basis of the change has been altered from 1957."

13. It was clarified at the time of the arguments that it is clauses (f) and (g) of Art.19 (1) of the Constitution dealing with the right to hold and dispose of property and the right to carry on any occupation, trade or business that are violated and as is seen from the contention, it is said to be violative because the basis of the tax has been changed. Such a change is perfectly permissible. We reject this contention as well.

14. We may now proceed to deal with the arguments based on S.8 (2A) of the Central Sales Tax Act, 1956. The only change effected by S.4 of the Act to sub-s.(2A) of S.8 as it stood before the amendment was the substitution for the words, brackets and figures "Notwithstanding anything contained in sub-s.(1) or sub-s.(2)", the words, brackets, figures and letter "Notwithstanding anything contained in sub-s.(1A) of S.6 or in sub-s.(1) or sub-s.(2) of this section". The amended S.8 (2A) and the explanation may be read:

"Notwithstanding anything contained in sub-s.(1A) of S.6 or in sub-s.(1) or sub-s.(2) of this section, if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate.

Explanation:-- For the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages or otherwise than with reference to the turnover of the goods."

To understand the full scope of the argument it is necessary to refer also to S.6 (1A) of the Central Sales Tax Act which too was introduced by the Act. That section is in these terms:

"A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the Sales tax law of the appropriate State if that sale had taken place inside that State."

15. The contention that was put forward by counsel on behalf of the petitioner is that though by the introduction of sub-s.(1A) of S.6, a dealer became liable to pay tax under the Central Sales Tax Act on the sale of any goods effected in the course of inter State trade or commerce notwithstanding that no tax would have been leviable under the Sales Tax Law of the appropriate State if that sale had taken place inside that State, the effect of that provision has been taken away by S.8(2A) which is notwithstanding anything contained in sub-s.(1A) of S.6. It is therefore said that if the transaction, had it taken place inside the State was not taxable under the State law, it was not taxable under the Central Sales Tax Act in view of sub-s.(2A) of S.8. Reliance has been placed for this contention on the decision of the Mysore High Court in Mysore Silk House v The State of Mysore (1962 (13) STC 597). wherein Justice Hegde took the view, because of the provision in S.8(2) of the Central Sales Tax Act as it stood before it was amended by Act 31 of 1958, wherein provision was made that the tax payable

"shall be calculated at the same rates and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State,"

that if the transaction, had it taken place inside the State, was not taxable under the State Law it will not be taxable under the Central Sales Tax Act either. It was suggested in the course of arguments that this decision has been approved by the Supreme Court in appeal, the appellate decision being reported in The State of Mysore v Mysore Silk House. Before the Mysore High Court two questions arose. One related to a portion of the turnover of Rs. 34,839.77 which had been held to be liable to be taxed under S.8(2) and the remaining portion of the turnover of Rs. 86,577.49 which had been held liable to be taxed under S.8 (1) of that Act. In relation to the sum of Rs. 34,839.77 relying on the decision of the Mysore High Court in Yadalam Lakshminarasimhiah Setty & Sons, v State of Mysore (1962 (13) STC 583). (which was the decision that went up to the Supreme Court, the Supreme Court decision being reported in The State of Mysore v Yaddalam Lakshminarasimhiah Setty and Sons, it was held that no tax could be levied in view of the wording of S.8(2). The liability in relation to the turnover of Rs. 86,577.49 had to be considered under S.8(1) and based on the proviso to that section which ran thus:

"Provided that, if under the sales tax law of the appropriate State, the sale or purchase of any goods by a dealer is exempt from tax generally and not in specified cases or in specified circumstances or is subject to tax (by whatever name called) at a rate or rates which is or are lower than the rate specified in sub-s.(1), the tax payable under this Act on the turnover in relation to the sale of such goods in the course of inter State trade or commerce shall be nil or shall be calculated at the lower rate, as the case may be."

it was held that the turnover was not taxable under the Central Sales Tax Act either. This aspect of the question was not considered by the Supreme Court in The State of Mysore v Mysore Silk House as it did not form the subject matter of the appeal before the Supreme Court. The decision of the Supreme Court cannot therefore be relied on for interpreting the words "the sale or purchase of any goods by a dealer is exempt from tax generally and not in specified cases or in specified circumstances" which occur in the proviso to S.8(1) of the Central Sales Tax Act as it stood before the Act was amended by Act 31 of 1958. The words that would fall for interpretation now are those in S.8 (2A), "the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally". There can be no ambiguity now in relation to what is meant by "exempt from tax generally" in view of the explanation that has been introduced to sub-s.(2A) of S.8 which we have already read. In the cases before us, the exemption granted under the State Act is only under specified conditions or under specified circumstances. Therefore it is not possible to say that these transactions were exempt from tax generally under the Sales Tax Law of the State. So S.8 (2A) of the Central Sales Tax Act has no application. We also think that at least by necessary implication, this point has been negatived by the Supreme Court in State of Kerala v P. P. Joseph and Co. and Joseph Elias the facts of which would clearly show that the turnover of the goods concerned could not have been taxed under the Central Sales Tax Act if the contention of counsel for the assessee is right. We negative ' this contention as well.

16. Now we will deal with the question as to the effect of the amendments introduced by the Act to the Central Sales Tax Act and its impact on the decisions rendered by this Court setting aside the assessments that had been made under the Central Sales Tax Act before it was amended by the Act. Counsel for the petitioner contended that the effect of the provisions introduced by the Act to the Central Sales Tax Act, is to nullify the decision of this Court and the Parliament had no such power to pass any law nullifying any decision rendered by a competent court in a matter that duly came up before it; and that therefore the Act is ultra vires the powers of the Legislature. The question has arisen in a number of cases before the Supreme Court as to what can be done by the Legislature where there has been decisions of Courts setting aside the proceedings taken under a statute, either on the ground that the statute under which proceedings had been taken were ultra vires the powers of the Legislature or because the statute did not contain the power to assess or to take other steps under the Act. It may broadly be stated that the Legislature has no power to set at naught decisions of competent courts rendered in cases that came up before them and which had been decided by him. But it is equally well established that the Legislature has the power to alter the basis of the decision of the Court so as to make those decisions ineffective by removing the ground of those decisions either by supplying the lacuna which the statute under which action had been taken suffered from, or by providing for the first time a legal basis for the action and it has also been ruled that this can be done with retrospective effect. It is unnecessary to refer to the large number of decisions on this aspect but we may refer to two decisions of the Supreme Court which are reported in Shri Prithvi Cotton Mills Ltd., etc. v Broach Borough Municipality and others AIR 1970 SC 192 and in The Municipal Corporation of the City of Ahmedabad and another v. The New Shrock Spg. and Wvg. Co. Ltd. etc. AIR 1970 SC 1292. In the former decision, the question was about the effect of the amendment made to the Bombay Municipal Boroughs Act (18 of 1925) by S.3 of the Gujarat Imposition of Taxes by Municipalities (Validation) Act 1963. By the (Validation) Act, 1963 imposition and collection of taxes or rates by Municipalities based on the capital value of lands and buildings, were made valid. The Supreme Court earlier had decided in Patel Gordhandas Hargovindas v Municipal Commissioner, Ahmedabad AIR 1963 SC 1742. that the words "a. rate on buildings or lands or both" occurring in S.73 of the Municipal Boroughs Act (18 of 1925) had been used in the special sense in which the words were understood in the legislative practice of India before that date, and that therefore the rate of tax must be related to the annual letting value and not to the capital value of lands or buildings or both. By amendment by the (Validation) Act, 1963 it was provided that the rate would mean not only the rate as attributable to the annual letting value but to the capital value of the asset. Dealing with the general aspect arising from these circumstances, their Lordships observed: --

"When a legislature sets out to validate a tax declared by a Court to be illegally collected under ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a Court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by reenacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the reenacted law. Sometimes the legislature gives its own meaning and interpretation of the law under which the tax was collected and by legislative fiat makes the new meaning binding upon courts. The legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the Court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the legislature has the power over the subject matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject matter and whether in making the validation it removes the defect which the Courts had found in the existing law and makes adequate provisions in the validating law for a valid imposition of the tax."

Their Lordships finally held that the tax, therefore, can no longer be questioned on the ground that S.73 spoke of a 'rate' and the imposition was not a ' 'rate' as properly understood, but a tax on capital value. This is a case where the basis of the decision of the Supreme Court had been removed and adequate provision made in validating law for a valid imposition of tax. But in the decision in The Municipal Corporation of the City of Ahmedabad and another v The New Shrock Spg. and Wvg. Co. Ltd., etc. it was held that the provision made in sub-s.(3) introduced in S.152A by Gujarat Amending and Validation Ordinance, 1969 is "an attempt to make a direct inroad into the judicial powers of the State". We shall extract the relevant part of the judgment:--

"This is a strange provision. Prima facie that provision appears to command the Corporation to refuse to refund the amount illegally collected despite the orders of this Court and the High Court. The State of Gujarat was not well advised in introducing this provision. That provision attempts to make a direct inroad into the judicial powers of the State. The legislatures under our Constitution have within the prescribed limits, powers to make laws prospectively as well as retrospectively. By exercise of those powers, the legislature can remove the basis of a decision rendered by a competent court thereby rendering that decision ineffective. But no legislature in this country has power to ask the instrumentalities of the State to disobey or disregard the decisions given by courts."

The provision that was considered was in these terms: --

"Notwithstanding anything contained in any judgment, decree or order of any court, it shall be lawful, and shall be deemed always to have been lawful, for the Municipal Corporation of the City of Ahmedabad to withhold refund of the amount already collected or recovered in respect of any of the property taxes to which sub-s.(1) applies till assessment or reassessment of such property taxes is made, and the amount of tax to be levied and collected is determined under sub-s.(1)."

This provision was held to be repugnant to the Constitution. The provision, it was further held, authorised the Corporation to retain the amounts illegally collected and that such conferment of power was not permissible.

17. Most of the important decisions on this aspect have been referred to in the decision in State of Tamil Nadu and another v M. Rayappa Gounder AIR 1971 SC 231. Therein it was held that by the amendment introduced, the necessary legal provisions for validating the assessment had not been introduced.

18. What is sought to be remedied by the Act, as we understand its provisions, is to supply a basis for assessing a transaction under the Central Sales Tax Act even when such transactions, had they taken place inside the State were not taxable under the State Law. The basis of the decision in the State of Mysore v Yaddalam Lakshminarasimhiah Setty and Sons was the provisions in the Central Sales Tax Act as they stood at that time before its amendment by Act 31 of 1958 and interpreting those provisions the Supreme Court ruled that under the Central Sales Tax Act, no tax could be imposed on a transaction if that transaction, had it taken place inside the State would not have been taxed under the State law. The provisions in the Central Sales Tax Act, 1956 have been drastically altered by the amendments introduced by the Act and S.6(1A) introduced now specifically provides for a tax being imposed on a transaction in the course of inter State trade or commerce even if that transaction had it taken place inside the State would not have been taxable under the State Law and we have said that S.8(2A) does not exempt the tax under the Central Sales Tax Act in cases where there are specific exemptions in relation to particular sales or at different stages of the transactions by the State Law. So the foundation of the decision of the Supreme Court in The State of Mysore v Yaddalam Lakshminarasimhiah Setty and Sons has been removed and it is inconceivable that the court could have decided the matter in the same way if the question arose for decision after the amendments effected. We think, it is impossible so to decide. In view of this, the decisions of this Court have definitely been rendered ineffective and those decisions cannot be relied on for the purpose of contending that in relation to any of the years there will be no liability under the Central Sales Tax Act as amended by the Act. So in relation to the years 1957-58 to 1963-64, the judgment in Original Petition No. 4392 of 1967 as well as the decision of this Court in O.P. No. 4353 of 1967 for the year 1967-68 quashing the assessments for that year have become ineffective. There is no reason therefore to interfere with the notice Ex. P2 in view of the decisions of this Court in O.P. No. 4392 of 1967 and in O.P. No. 4353 of 1967 on the ground that there is no liability for tax for the years 1957-58 to 1963-64 and for the year 1967-68.

19. Before closing this aspect of the case, it is necessary to refer to an argument advanced by counsel on behalf of the petitioner that the words in S.9 of the Act are not enough and do not in fact validate the assessments for the years 1957-58 to 1963-64 and 1967-68 that have been set aside by this Court. We shall extract S.9 of the Act:--

"9. Validation of assessments, etc:-- (1) Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the principal Act before the 9th day of June, 1969 shall be deemed to be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Act and accordingly: --

(a) all acts, proceedings or things done or taken by the Government or by any officer of the Government or by any authority in connection with the assessment, reassessment, levy or collection of such tax shall, for all purposes, be deemed to be, and to have always been, done or taken in accordance with law;

(b) no suit or other proceedings shall be maintained or continued in any court or before any authority for the refund of any such tax: and

(c) no court shall enforce any decree or order directing the refund of any such tax.

(2) For the removal of doubts, it is hereby declared that nothing in sub-s.(1) shall be construed as preventing any person:--

(a) from questioning in accordance with the provisions of the principal Act, as amended by this Act, any assessment, reassessment, levy or collection of tax referred to in sub-s.(1), or

(b) from claiming refund of any tax paid by him in excess of the amount due from him by way of tax under the principal Act as amended by this Act.''

20. It is contended that the assessment orders can be said to be validated only if those orders in all its aspects could have been passed under the provisions of the Central Sales Tax Act as amended by the Act and not otherwise. It is suggested that the method of computing the turnover is different under the Central Sales Tax Act, 1956 and counsel for the petitioner invited our attention to S.8(2A) and suggested that this provision is new and provides for a different method for computing the turnover. It is therefore said that the orders of assessments for the years referred to would not have been passed had they been passed under the Central Sales Tax Act as amended by the Act. So it is urged that the orders of assessments that have been set aside will not become valid and for this proposition, the decision of the Supreme Court in R. L. Arora v State of Uttar Pradesh and others AIR 1964 SC 1230. was relied on. That was a case in which a land acquisition proceedings had been set aside on the ground that it was not for a public purpose. Thereafter by the Land Acquisition (Amendment) Act (31 of 1962) by S.7, a new section, S.40(1)(aa) was introduced and the acquisition for a company if the activities of the company were for public purposes was made permissible under the Act. This section, S.7, introduced by the amendment was challenged as discriminatory and in dealing with this question, their Lordships observed as follows:

"(13) We may in this connection refer to the words "as valid as if" appearing in S.7 of the Amendment Act, because they are in our opinion the key words for the purpose of interpreting the extent of the validity conferred on acquisitions before July 20, 1962. What the second fiction provides is that an acquisition made before that date shall be as valid as if the provisions of S.40 and 41 of the Act as amended by the Amendment Act were in force at all material times. The force of the words "as valid as if" clearly is that the validity of acquisitions made before July 20, 1962 has to be judged on the basis that Clause.(aa) was in force at the material time and in accordance therewith. The validity therefore is not absolute; it is conditioned by the fact that it will be as valid as if clause.(aa) was in force; so that if it could not be valid even if clause.(aa) was in force and could not be justified under the terms of that clause, the validity conferred by S.7 of the Amendment Act will not attach to it. This in our opinion is the force of the words "as valid as if" and the validity it has conferred is not absolute as contended on behalf of the petitioner and will not apply to those acquisitions which would not be valid if they could not be justified on the basis of clause.(aa) assuming it to be in force at the material time. In this view the attack under Art.14 as well as Art.31(2) fails, for in neither case can acquisition be valid whether made before July 20, 1962 or thereafter, unless the conditions of clause.(aa) are satisfied."

21. To understand the import of these observations of the Supreme Court, one has to bear in mind that the question that was considered was about the validity of S.7 introduced by the amending Act validating acquisitions made before 20th July, 1962 and the contention that was advanced before the Supreme Court was that this was an absolute validation of all acquisitions made before the 20th of July, 1962 irrespective of the question whether such acquisitions would be justified or not under the provisions of S.40(1)(aa) introduced by the amendment Act. It was therefore contended that the acquisitions after 20th July, 1962 would be valid only if S.40(1)(aa) was satisfied whereas the acquisitions made before 20th July, 1962 would be valid even if they did not satisfy S.40(1)(aa). It was in answer to this contention that it was said that the validation was only to the extent permissible by applying S.40(1)(aa). Now turning to the facts before us, we have to bear in mind the circumstances under which and the reason for the decision in The State of Mysore v Yaddalam Lakshminarasimhiah Setty and Sons. That was because of the provisions in the Central Sales Tax Act interdicting the imposition of tax under that Act or a transaction which, had it taken place inside the State would not have been taxable under the State Law. The provisions in the Central Sales Tax Act have been changed by the amendments introduced by the Act, and the ground of the decision in The State of Mysore v Yaddalam Lakshminarasimhiah Setty and Sons has been wiped out by the amendment introduced which we may point out is to take effect from the date on which the Central Sales Tax Act, 1956 came into force In view of this, all assessments made which were invalid at one time will be valid as they should be deemed to have been made under the provisions of the Act as amended and it is idle to contend that the validation by S.9 of the Act is only to some limited extent and therefore there is no validation of such assessments at all. In fact we feel, such an argument cannot be advanced on the basis of the provision in S.9. It may be that either the quantum of the turnover or some other matter of detail had been ascertained wrongly. But this will have to be rectified by appropriate proceedings under the Act. For that, provision is specifically made in sub-s.(2) of S.9 and the resort of the aggrieved party must be to that provision. In given circumstances some of those assessments may also be questioned in proceedings under Art.226 of the Constitution. There is no such challenge of the assessment orders in this petition and it is therefore unnecessary for us to consider this aspect. Suffice it to say that validation under S.9 has the effect of restoring the assessment orders that had been quashed by this Court in the previous proceedings.

22. The only other question that we have to advert to though not consider, arises from the argument of counsel for the petitioner for which no foundation has been laid in this petition that in any view of the matter the amendments effected cannot affect the position before 1-10-1958. This is the date on which the Central Sales Tax Act, 1956 was amended by Act 31 of 1958 and S.8 of the Central Sales Tax Act was altered. Before that S.8 was differently worded and we shall extract sub-s.(1) and (2) of S.8 along with the proviso to sub-s.(1): --

"8. Rates of tax on sales in the course of inter State trade or commerce:-- (1) Every dealer who, in the course of inter State trade or commerce sells to a registered dealer goods of the description referred to in sub-s.(3) shall be liable to pay tax under this Act, which shall be one per cent of his turnover:

"Provided that, if under the sales tax law of the appropriate State, the sale or purchase of any goods by a dealer is exempt from tax generally and not in specified cases or in specified circumstances or is subject to tax (by whatever name called) at a rate or rates which is or are lower than the rate specified in sub-s.(1), the tax payable under this Act on the turnover in relation to the sale of such goods in the course of inter State trade or commerce shall be nil or shall be calculated at the lower rate, as the case may be."

(2) The tax payable by any dealer in any case not falling within sub-s.(1) in respect of the sale by him of any goods in the course of inter State trade or commerce "shall be calculated at the same rates and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State," and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law."

23. It was argued that though S.8(1)(a) of the Central Sales Tax Act came into force from the date of inception of the Central Sales Tax Act, 1956, the introduction of S.8 (2A) is only with effect from 1-10-1958 and it was suggested that the provisions of that section are different from the proviso to S.8(1) and therefore an exemption under the Central Sales Tax Act will have to be given even when the exemption under the State Act is only in specified cases or in specified circumstances as referred to in the proviso to sub-s.(1) of S.8. Reliance for this submission has been made on the decision of the Mysore High Court in Mysore Silk House v The State of Mysore which we have already adverted to. Counsel on behalf of the State however submitted that the decision failed to take note of the expression in the statute that the exemption must be from tax generally and not in specified cases or in specified circumstances and these words had not been given their due weight in Mysore Silk House v The State of Mysore, This question is not before us, and we do not wish to express any opinion on this aspect. At the same time the petitioner need not be stultified. If and when any action is taken in relation to a period before 1-10-1958, it will be open to the assessee to raise this contention.

24. No further points arise in this case. Subject to what we have said in Para.23 above, we dismiss this Original Petition. There will be no order as to costs.

APPENDIX

S.8 and 9 as they stood before the (Second Amendment) Act, 1958.

"8. Rates of tax on sales in the course of inter State trade or commerce: -- (1) Every dealer who, in the course of inter State trade or commerce sells to a registered dealer goods of the description referred to in sub-s.(3) shall be liable to pay tax under this Act, which shall be one per cent of his turnover:

Provided that, if under the sales tax law of the appropriate State, the sale of purchase of any goods by a dealer is exempt from tax generally and not in specified cases or in specified circumstances or is subject to tax (by whatever name called) at a rate or rates which is or are lower than the rate specified in sub-s.(1), the tax payable under this Act on the turnover in relation to the sale of such goods in the course of inter State trade or commerce shall be nil or shall be calculated at the lower rate, as the case may be.

(2) The tax payable by any dealer in any case not falling within sub-s.(1) in respect of the sale by him of any goods in the course of inter State trade or commerce "shall be calculated at the same rates and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State," and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.

(3) The goods referred to in sub-s.(1): --

(a) in the case of declared goods, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him; and

(b) in any other case, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or for use by him in the manufacture of goods for sale or for use by him in the execution of any contract; and in either case include the containers or other materials used for the packing of goods of the class or classes of goods so specified.

Explanation:-- For the purposes of this sub-section, "contract" means any agreement for carrying out for cash or deferred payment or other valuable consideration:

(i) the construction, fitting out, improvement or repair of any building, road, bridge or other immovable property; or

(ii) the installation or repair of any machinery affixed to any building or other immovable property.

(4) The provisions of sub-s.(1) shall not apply to any sale in the course of inter State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold, containing the prescribed particulars on a prescribed form obtained from the prescribed authority.

(5) Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, direct that in respect of such goods or classes of goods as may be mentioned in the notification and subject to such conditions as it may think fit to impose, no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sale by him from any such place of business of any such goods in the course of inter State trade or commerce or that the tax on such sales shall be calculated at such lower rates than those specified in sub-s.(1) or sub-s.(2) as may be mentioned in the notification.

9. Levy and collection of tax:-- (1) The tax payable by any dealer under this Act shall be levied and collected in the appropriate State by the Government of India in the manner provided in sub-s.(2).

(2) The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India and subject to any rules made under this Act, assess, collect and enforce payment of any tax payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, appeals, reviews, revisions, references, penalties and compounding of offences, shall apply accordingly.

(3) The proceeds (reduced by the cost of collection) in any financial year of any tax levied and collected under this Act in any State on behalf of the Government of India shall, except in so far as those proceeds represent proceeds attributable to Union territories, be assigned to that State and shall be retained by it; and the proceeds attributable to Union territories shall form part of the Consolidated Fund of India."

S.8 and 9 of the Central Sales Tax Act, 1956 as modified by the (Second Amendment) Act, 1958 (Act 31 of 1958).

"8. Rates of tax on sales in the course of inter State trade or commerce:-- (1) Every dealer, who in the course of inter State trade or commerce:

(a) sells to the Government any goods; or

(b) sells to a registered dealer other than the Government goods of the description referred to in sub-s.(3);

shall be liable to pay tax under this Act, which shall be one per cent of his turnover.

(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter State trade or commerce not falling within sub-s.(1): --

(a) in the case of declared goods, shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State; and

(b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher;

and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.

(2A) Notwithstanding anything contained in sub-s.(1) or sub-s.(2), if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than one per cent (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate.

Explanation:-- For the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages or otherwise than with reference to the turnover of the goods.

(3) The goods referred to in clause (b) or sub-s.(1): --

(a) in the case of declared goods are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him;

(b) in the case of goods other than declared goods are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central

Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power;

(c) are containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale;

(d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in clause (a) or clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in clause (c).

(4) The provisions of sub-s.(1) shall not apply to any sale in the course of inter State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner:

(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or

(b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government.

(5) Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, direct that in respect of such goods or classes of goods as may be mentioned in the notification and subject to such conditions as it may think fit to impose, no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sale by him from any such place of business of any such goods in the course of inter State trade or commerce or that the tax on such sales shall be calculated at such lower rates than those specified in sub-s.(1) or sub-s.(2) as may be mentioned in the notification.

9. Levy and collection of tax and penalties: -- (1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter State trade or commerce (whether such sales fall within clause (a) or clause (b) of S.3) shall be levied and collected by the Government of India in the manner provided in sub-s.(3) in the State from which the movement of the goods commenced:--

provided that, in the case of a sale of goods during their movement from one State to another being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within sub-s.(2) of S.6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained the form prescribed for the purpose of clause (a) of sub-s.(4) of S.8 in connection with the purchase of such goods. B

(2) The penalty imposed upon any dealer under S.10A shall be collected by the Government of India in the manner provided in sub-s.(3):--

(a) in the case of an offence falling under clause (b) or clause (d) of S.10, in the State in which the person purchasing the goods obtained the form prescribed for the purposes of clause (a) of sub-s.(4) of S.8 in connection with the purchase of such goods;

(b) in the case of an offence falling under clause (c) of S.10, in the State in which the person purchasing the goods should have registered himself if the offence had not been committed.

(3) The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India and subject to any rules made under this Act, assess, collect and enforce payment of any tax, including any penalty, payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns appeals, reviews, revisions, references, penalties and compounding of offences, shall apply accordingly.

Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf, make necessary provision for all or any of the matters specified in this sub-section, and such rules may provide that a breach of any rule shall be punishable with fine which may extend to five hundred rupees; and where the offence is a continuing offence, with a daily fine which may extend to fifty rupees for every day during which the offence continues.

(4) The proceeds in any financial year of any tax, including any penalty, levied and collected under this Act in any State (other than a Union territory) on behalf of the Government of India shall be assigned to that State and shall be retained by it; and the proceeds attributable to Union territories shall form part of the Consolidated Fund of India.

9A. Collection of tax to be only by registered dealers. No person who is not a registered dealer shall collect in respect of any sale by him of goods in the course of inter State trade or commerce any amount by way of tax under this Act, and no registered dealer shall make any such collection except in accordance with this Act and the rules made thereunder."

S.8 and 9 after they were amended by the Act.

"8. Rates of tax on sales in the course of inter State trade or commerce. (1) Every dealer, who in the course of inter State trade or commerce: --

(a) sells to the Government any goods; or

(b) sells to a registered dealer other than the Government goods of the description referred to in sub-s.(3);

shall be liable to pay tax under this Act, which shall be three per cent of his turnover.

(2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter State trade or commerce not falling within sub-s.(1):

(a) in the case of declared goods, shall be calculated at the rate applicable to the sale or purchase of such goods inside the appropriate State; and

(b) in the case of goods other than declared goods, shall be calculated at the rate of seven per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher;

and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law.

(2A) Notwithstanding anything contained in sub-s.(1A) of S.6 or in sub-s.(1) or sub-s.(2) of this section, if under the sales tax law of the appropriate State the sale or purchase, as the case may be of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate.

Explanation:-- For the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law it is exempt only in specified circumstances or under specified conditions or in relation to which the tax is levied at specified stages or otherwise than with reference to the turnover of the goods.

(3) The goods referred to in clause (b) of sub-s.(1): --

(b) * * * are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power;

(c) are containers or other materials specified in the certificate of registration of the registered dealer purchasing the goods, being containers or materials intended for being used for the packing of goods for sale;

(d) are containers or other materials used for the packing of any goods or classes of goods specified in the certificate of registration referred to in * * * clause (b) or for the packing of any containers or other materials specified in the certificate of registration referred to in clause (c).

(4) The provisions of sub-s.(1) shall not apply to any sale in the course of inter State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner:

(a) a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or

(b) if the goods are sold to the Government, not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government.

(5) Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette, direct that in respect of such goods or classes of goods as may be mentioned in the notification and subject to such conditions as it may think fit to impose, no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sale by him from any such place of business of any such goods in the course of inter State trade or commerce or that the tax on such sales shall be calculated at such lower rates than those specified in sub-s.(1) or sub-s.(2) as may be mentioned in the notification.

8A. Determination of turnover:-- (1) In determining the turnover of a dealer for the purposes of this Act, the following deductions shall be made from the aggregate of the sale prices, namely:

(a) the amount arrived at by applying the following formula: --

rate of tax x aggregate of sale prices

-------------------------------------------

100 plus rate of tax

Provided that no deduction on the basis of the above formula shall be made if the amount by way of tax collected by a registered dealer, in accordance with the provisions of this Act, has been otherwise deducted from the aggregate of sale prices.

Explanation:-- Where the turnover of a dealer is taxable at different rates, the aforesaid formula shall be applied separately in respect of each part of the turnover liable to different rate of tax;

(b) the sale price of all goods returned to the dealer by the purchasers of such goods:--

(i) within a period of three months from the date of delivery of the goods, in the case of goods returned before the 14th day of May, 1966:

(ii) within a period of six months from the date of delivery of the goods, in the case of goods returned on or after the 14th day of May, 1966:

Provided that satisfactory evidence of such return of goods and of refund or adjustment in accounts of the sale price thereof is produced before the authority competent to assess or, as the case may be, reassess the tax payable by the dealer under this Act; and

(c) such other deductions as the Central Government may, having regard to the prevalent market conditions, facility of trade and interests of consumers, prescribe.

(2) Save as otherwise provided in sub-s.(i), in determining the turnover of a dealer for the purposes of this Act, no deduction shall be made from the aggregate of the sale prices.

9. Levy and collection of tax and penalties. (1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter State trade or commerce, whether such sales fall within clause (a) or clause (b) of S.3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provisions of sub-s.(2), in the state from which the movement of the goods commenced:--

Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods, the tax shall, where such sale does not fall within sub-s.(2) of S.6, be levied and collected in the State from which the registered dealer effecting the subsequent sale obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause (a) of sub-s.(4) of S.8 in connection with the purchase of such goods.

(2) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, reassess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall ,on behalf of the Government of India, assess, reassess, collect and enforce payment of tax, including any penalty, payable by a dealer under this Act as if the tax or penalty payable by such a dealer under this Act is a tax or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, penalties, compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly:

Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, by rules made in this behalf make necessary provision for all or any of the matters specified in this sub-section.

(3) The proceeds in any financial year of any tax, including any penalty, levied and collected under this Act in any State (other than a Union territory) on behalf of the Government of India shall be assigned to that State and shall be retained by it: and the proceeds attributable to Union territories shall form part of the Consolidated fund of India.

9A. Collection of tax to be only by registered dealers. No person who is not a registered dealer shall collect in respect of any sale by him of goods in the course of inter State trade or commerce any amount by way of tax under this Act, and no registered dealer shall make any such collection except in accordance with this Act and the rules made thereunder."