M/S. R. M. D. C. (MYSORE) PRIVATE LTD. versus THE STATE OF MYSORE

1961 Augu•t 8.

230 St'PRE:lfE COGRT REPORTS

[l!J62j

M/S. R. :II. D. C. (:\IYSORE) PRIVATE LTD. ,i t'.

THE STATE OF MYSORE

(J. L. KAI·l:H, K. SUHllA RAO, !II. HUH\' AT{;LLAH, J. C. SHAH and HAGl!t"llAR DAYAL, J.J.)

Prize (,'o-mpelitions-Slale ena('fmPnt for control a11rl la.con ~uch rompetition,,- Ctnt1al t'nacln1c11t fur 1·ontrol and reyulation of' such ce,,m]Je.filio11s, ad(,ptP.d /,y ,Sfaft.--S1ibstquent. omend1ncnl of State P.nact1nent by J'ila[e J.e.gi3falilT€-·-Cun~titutional validity-Jf yaorP l.ottt:ries und rrize (,'(,1nittitio1t'i l1unt1ol an<! ]'ax Act, 1951 (My•o" 27 of 1!151), a,, mnn,,/ed /,y Act 26 of /[),5'!, 8'. 8, 12(1)(b), J.; /'l'o1:isa-·l'ri::e Couipetilioms Act, 195L (42 of 1965), as. 4,5-(.,'onstitution of India, Arf,y. 2.5:!, 254, Seventh Schedule, List II, entries 34, Gt. The ~fysorc l~oltcrics aud l'rize (:01npetitions Contrc'l and Tax Act, I ~51, \••as passed hy the ~fysorc l.cgislaturc and-. came into force on February I, I 952. Some of the States comprising the Union of India pa~se<l resolutions under Art. 252(lj of the Constitmion of India authorising Parliament to IC'gi.,late for the control and regulation of Prize Coin petitions, a.Jd in pursuance thereof Parliament passed the Prize Competi ... tions Act, 1955, \\•hi ch ca1ne into force on April 11 l 95G. On February 23, 1956, the Mysore Legish>ture adopted the said Act by pas.sing resolution under Art. 252< 1) that "for the purp()SC of securing uuiformity in lcgislation ... the control and regulatioA( of Prize Competitions and all other n1attcrs ancillary thereto should be regulated in the State of :..fysorc by the Prize Com. 11petitions Act, 1955• The appellants who "·ere conducting prize competition< in the iltate of Mrsore since 1948 filed petition under Art. 32 of the Constitution challenging the constitutional validity of the Act, and obtained stay of the operation of the Act pending disposal of the petition. The judgment of the Supreme Court dismissing the petition was• given on April 9, 1957, and on Aogust 31, 1957, an Ordinanc~ \Vas issued, which later wa<; enacted into an Act, i\fy~ore Act 26of1957, by which the Mysore Act of 1951 was amended under which, inter a{ia, all prize competitions conducted Let~ ween March 31, 1956, and Au~ust 31, 1957, were brought within the pur\"iC\\' of tliC amcndcrl Act. 1\s result of this, the prize competitions \vhich, as rc:-ult of the stay of the operation of the Central Act of 1955, were conducted by the appellants for the said period became liable for taxation. The appellants challenged the constitutional validity of the amen<;I,.. mcnt on the grounds that (I) the :\lysorc Legislature by adopt-ing the Central Act \\·as no longer coiupetcnt to pass any lav.· in regard to prize competitions because the ·whole matter

3 s.c.R. SUPREME COURT REPORTS

including the povver of taxation \Vas surrendered in favour of Parliament; (2) even if the whole power had not been surren-dered the impugned Act 'i. e., the Mysore Act as amended violated Art. 252(2) inasmuch as it indirectly amended the Central Act by adding new method of control by imposition of penalties of monetary nature; (3) the Mysore Legislature could not amend an Act which stood repealed as result of the enactment of the Central .\ct; (4) the Mysore Act as amended \Vas repugnant to the Central Act and was, therefore, to the extent ofrepug1~ancy, void under Art"254)l) of the Const1tut1on; and (5) it was colourable leg1slat1on inasmuch as the tax v.ras imposed on the prize competitions with the object of controlling them.

Hel.d: (I) that by the adoption of the words "control and regulation of prize co~petition~ and all other matters ancillaty thereto" in the resoluuon dated February 23, 1956, the Mysore Legislature did not surrender every matter and power connected 1[vith prize competitions including the po,ver to tax: ]

R.JJI.D. Cnamarbaugwala v. The Union of India, (1957)

S.C.R. 930, relied on.

(2) that the subject of "betting and gambling" in en try

34 of List II of the Seventh Schedule to the Constitution of India and that of "ta.xes on betting and gambling" in entry 62 of List II have to be read ,cparately as separate powers, arid, therefore, when control and regulation of prize competi-tions was rnrrendered to Parliameni by the resolution dated· February 23, 1956, the power to tax could not be said to have been surrendered;

Jn ro l'he Central l'rovinces &, Berar Act No. XIV of 1938, (1939) F.C.R. 18 and State of Bombay v. R.M.D. Chamarbaug-wala, (1957) S.C.R. 874, relied on. .

(3) that the tax imposed under the Mysore Lotteries and Prize Competitions Control and Tax Act, 1951, was not by way of penalty but was in the exercise of the power which the State Legislature possessed of imposing tax under entry 62, and, consequently, the amendment of the Mysore Act of 1951 could not be said to be new method of controlling prize comp·ctitions nor was it piece of colourable legislation.

K. C. Gajapati Narayan Deo v .. The State of Orissa, (1954) S.C.R. l, relied on.

(4) that the Prize Competitions Act, 1955, dealt with "betting and gambling" in entry 34, whereas the taxing sec-. tions of the Mysore Act related to "tax on betting and gambling" under entry 62 and, therefore, Art. 252(2) was not contravened by the amendment of the Mysore Act.

M/s. R. M. D. 0. (Mysore) Private Ltd. v. The State of il!ysof'I

232 SUPREME COURT HEPORTS [ IOJ2] 1~61 State of Bombay v. R.Jl.D. C'hanwbaug1L-ala, (1957) M/1. JI. M. D. C. S.C.R. 874,_relied on. (My1or•) (5) that there was no amendment of the ~lysore Act PriVate Ltd. v. ,.,.hich stood repealed nor \vas the retroactive operation of the The StaJt of Mvsort amending Act affected br Art. 254( I) of the Constitution. Deep Chand v. The State of Uttar Pradtsh and Uther• (1959) Supp. 2 S.C.R. 8, relied on. Crvrr. APPELLATE Ji:HISIJ!CTIO!\: Civil Appeal No. 517 of 1960. Appeal from the Ju<lgmcnt 11ml orcler <lateJ 1\ ovcm her 20, 1958, of the ;\lysorc High Court in Civil Writ Petition X o. :134 of lD57. Porus A. Jleltla, J. R. Gagrut an<l G. Go pafukrisltnan, for the appellants. N. C. Chatterje.e, G. Channappa, R. Gopolakrisltrum. and ?.'. M. Sen, for the respondent. (

1961. Augu~t 8. The Judgement of tho Court was delivcrod by

KAPUR, J. This is an appeal against the judg-ment and order of t.he High Court of Mysbrn dismissing tho petition of the appellants mado undor Art. 226 of tho Constitution. The appollants were conducting sinco the month of August I !)48, what were called "prize competitions" in tho Stat-0 of Mysore with the permission of the Government of the erstwhile Stato of llfysorn. An Act called the Mysoft\ Lotteries and Prize Competi-tions Control and Tax: Act, 1951 (Act 27 of l!J51), hereinafter called the "Mysore Act" was passed by the Mysore Legislaturo and came into forco as from June 21, 1951. Tho Rules made thereunder came into force on February l, 1952. Previous to that the Bombay Legislature ha<l passed similitr Act calle<l tho Bombay Lotteries am! Prize Uompctitions Control and Tax Act, 1948, which was amendcrl in November 1952 by the Bombay Act 30 of 1952 .. In December 1952 and January l!J53 petitions un<lcr Art. 226 wore filed in tho High Court of Bombay challongi.ng tho Bombay Act. On January 12, 1965

Kapur J.

- ........

3 S.C.R. SUPREME COURT REPORTS

the Bombay High Court held that the provisions of the Bombay Amendment Act above, referred to were unconstitutional and that the taxes imposed under the provisions of that Act were hit by Art. 301 of the Constitution. The result of that judg-ment was that though prfae competitions could be controlled by the .States within their respective borders, their ramifications beyond those borders could only be dealt with by action under Art. 25~(1) of the Constitution. It was for that reason that the States of Andhra, Bombay, Madras, U. P., Hyderabad, Madhya Bharat, Pepsu and Saurashtra paesed resolutions under Art. 252(1) of tho Constitu-tion authorising Parliament to legislate for the control and regulation of prize competitions and in pursuance thereof Parliament passed the Prize Com-petitions Act (Act 42 of 1955) hereinafter called the "Central Act" which received the assent of the President on October 22, 1955, and camo into force on April 1, 1956. On February 24, 1956, the Mysore Legislature passed resolution adopting the said Act. The resolutions cpassed by the various States and the resolution passed by the Mysore Legislature will be quoted in later part of this judgment.

On April 7, 1956, the itppellants filed peti-tion under Art. · 32 of the Constitution in the Supreme Court challenging the validity of the Cen-tral Act but that petition was dismissed and is re-ported as R.M.D.G. Ghamarbaugwala v. The Union of India ('). The appeal against the Bombay judgment declaring the· Bombay Act to be ;uncortstitutional 'was brought in this court and was allowed and that case is repdrted as. State of Bombay v. R. JYI. D. Ghamarbaut;wala ('). During 'the pendency of their petition under Art. 32, the appellants applied for and were granted -a stay of the operation of lhe Central Act pending the diSposal of the said writ petition. This was on April i6, 1956. The judg-ment of the Supreme Court in that p6'ition was given on .April 9, 1957; On .August 31, l95V, the (1) [19s7J s.c.R.. J\Jo, '9s9: (i) [195'fJ s.c.R. ·a14,' 'J29, ··' ·

(i) [195'fJ s.c.R. ·a14,' 'J29, ··' ·

M/1. R. M. D, 0. (Mysore) Private Ltd. v. The State of ~Iysore Kapur J.

M /•. II . . II. JJ. o:. ( .1'/ytort) /'rinJtt LtJ. v.

'J'ht S/(lft c/ ~\ly1or.:

234 SCPREME COPRT REPORTS

. [1962]

;\fysore Lotteries & Prize Compet.itions Control and Tax ("\mondmeut) Ordiuance, J!);,7 (Ord. 6 of 1957) was issued h\' the Governor of l\Inorc and thus for the period of about. ]() mouths th;, appdlants carried on J>rizo competitions as Lefmc.

The Ordinance was enactrd into an Act ou i;cl'tcmhcr 28, Hl57, which is l'IIysore Ad ~6 of l!J57. Ceitain amendment" were made by thL; in the )Iysorc Act ·1s originally paost:d in l!J51. As 11 result of this <unc·ndment the defmitiou of prize competition wa.~ ;•mewled thr dl'finition as given in th~ Centrnl Act was adopted and ss. 8 & !J of the ~lysorc ,\ct. were omitted with retrospective effect from April I, I ()50; cl.(b} of suh-H. ( 1) of s.12 was amended and certain \rnrds referring to lic<'nces under s.8 W(•l'O retrospec-tively omitted and retrospective eflcct was given to the Mysore Act as amended. By adding proviso to s.15 of the lllysorc Act all prize competitions con-ducted botwcen March :H,195ti, and August 31 1957, wore brought within the purview of the amended Act. Thus the prize competitions which as result of the stay of the operation of the Central .Act were conducted by tho appellants became subject to the op,.ration of the Mysore Act a8 amended. The appellants on September 10, Hl57, were called upon to file their returns but at their request for extension of time, they were given another 15 <lays in which to file their return. Th.,y filed their return hut under protest. The gross collections were of sum of .Rs. 20,47,147-5-9 and on that th., appellants wero "called upcn to pay up provisionally" sum of l{i;. ::l,30,893-7-0. As tho money was not paid within tho time spccifiod proceedings were taken under s. 6 ( 1) of tho Hevonue Recovery Act, 1890 (Central Act 1 of 1800), imd certain properties moveable and immoveable wero attached and one of the proper-ties was soid and tho price so realised was deprn;itcd in the Government treasury.

Tho Mysore amending Act was challenged in

tho High Court of Mysore by a. petition under ,Art., 226 whioh was dismissed on Nov~mbcr 20, 1958

and against that judgment ancl: order this appeal has been brought pursm nt to certificate of the High Court under Art. 132 (l) of the Constitution. The Certificate was confined to the interpretation of Art. 252 of the Constitution. The respondent in the present appeal is the State of Mysore. r

The challenge to the constitutionality of the Mysore Act was on the ground that ( l) the Mysore Legislature by adopting the Central Act was no longer competent to pass any law ,in regard to prize competitions because the whole matter including the power of taxation was surrendered in' favour of Parliament. (2) Even if the whole po\ver hacl not been surrendered the impugned Act i.e. the Mysore Act as amended violated Art.252(2) of the Constitu-tion inasmuch as it indirectly amends the Central Act by adding new method of control by imposi-tion of penalties of monetary nature. (3) The Mysore Legislature could not amend an Act which stood repealed as result of the enactment of the Central Act. (4) The Mysore Act as amended was repugnant to the CJ.intra! Act and is therefore, to the extent ofrepugnarwy, void under Art. 254 (1) of the Co11stitution and (5) it was color-able legislation inasmuch as the tax was imp\)sed on the prize compotit,ions. wit~ the object of con-trolling them. Cer,tain other questions relating to the legality of the imposition of the tax and the proce.ed-ip.gs for the recovery of the tax were also raised but on all these points the High Court found against the appellants : ·The first question raised before us is the .effect of the resolution passed by the legislatures of the States above mentioned and of the resolutio11 passed by the Mysore legislature adopting the Central Act. The resolution passed by . the State.s was in the following terms. ·

· ·"This Assembly do resolve that it is desir-able . that oont1•ol ·and regulation of Prize "

M/s. R. M. • .O. (MyBore) Private Ltd,

The State. of Mysore

J(apur J.

236 SUPRE::IIE COURT REPORTS [1962] . -. . 1961 Puzzle competitions and all other matters M/a. R. l>I. D. 0. consequential. and incidental . thereto. insofar Private (Jfyso-re) Ltd. . as these matters are matters with respect to v. which Parliament has no power to make· laws 1 The State of J.lysor~. · for the States should be regulated by Parlia-1. KapurJ. ment by law.'.' The two Houses of the · lllysore Legislature passed \ the· "following· resolution· on February 23, 1956 . arid February 21, 1956;·respectively :-· ' · I . .' Re~olution passed .by the Mysore Legislative. Assembly on 23rd, February, 1956. . "Whereas fo~ . the purpose ~f securing I . uniformity in legislation, -it _is desirable that the control and. regulation of Prize Compe-i should titions and be regulated all other.matters in the State ancillary of l\Iysore thereto by the. Prize Competitions. Act, .1955 (Central· Act 42 of 1955) ]Jassed by Parliament ; · · _ Now, therefore, in pllrsuance of Clause (I) . _ . of Article .252 .of. the Constitution, this · Assembly,resolves that the. Act aforesaid.be · adopted by the State of Mysore." \ It was contended that by these resolutions the legis-I laturefFof the various. States·· had·· surrendered their I power of legislation ·in ·regard to the "control and · regulation: of prize puzzle competitions and all other I ! had matters thus consequential'. no legislative power anJ . incidental'· left in . regard thereto •to · that and matter including· the ·power· to tax. Article 252 provides:~ · . · · · Art; 25:?(1) "If it appears to the legislature of two or more.States to be desirable that any ·of the matters with respect' to· which'· Parlia-. :ment has no power to make laws for the --" · States except as provided in articles 249 and I 250 shouldJ,be regulated in· such' States by I Parliament by law, and .if resolutions to that -effect are passed , by !loll . the Houses . of the · legislatures of those States, it shall be lawful

3 S.C.R. ; I \ '

SUPRE~IE COURT REPORTS

for Parliament to pass an Act for regulating that matter accordingly, · and any Act so passed shall apply to·such States and to any i:>1her State by 1which it is adopted afterwards . bv resolution passC'd in ·that behalf by the 'House· or, where there are two-Houses, by each of the Houses of the Legislature of that State. --- -- - · ·

1'1 /•. R. J,f. D. C. (llfysore) Privatl! Ltd.

The State of J.1 '!lsort Kapur J.

(2) Any Act so passed by Parliament may be amended. or repealed . by an· Act of Parliament passed or adopted in like manner but shall not, as respects any - State to which · it applies, be amended or repealed ·by an _ Act of . the Legislature of that State." .

The result of the passing. of resolution under Art. 252(1) is that any matter with respect to· which Parliament has no power to enact. laws becomes matter for the regulation of which __ Parliament becomes empowered to pass any Act;·and such Act, if passed by the Parliament, becomes applinable to th11 States passing the resolution or adopting that Act. Sub-clause (2) of that Article provides that any such· Act may be amended or repealed by an -Act of Parliawent in the like manner i.e. in the . manner provided in cl. (1) and it cannot be amen-ded or repealed by the Legislature of the State or States passing the resolution. '.J'he question theri arises do the resolutions as passed and 'particularly the words "control and regulation of prize puzzle competitions and all other matters ancillary thP.reto" · surrender the whole subject of prize competitions to the Central Parliament i.e. everv matter and power 'connected therewith including the power to tax .. The argument raised was that the language of the resolutions was wide enough to comprise the legislative power under entries 34 and 62 of List II, the former dealing with "betting and gambling"· and the latter. with taxation· of luxuries including "betting and gambling". One of the methods of nontrol _and regulations, it -was submitted, is by.

1961 tax'.ltion and as the power . to· control: and regulate .H/ •. R. M •. D. c. and all powers ancillary to.the subject were surren-Prii·ate (My••"J Ltd. dered the ~ power tci · tax being included therein was v. also _surrenderPd. In -support of this· argument - Tl>• State of MY'°'' ·:reliance _was placed on certnih judgments of the K11t;ur J. ''American -Supreme Court. ·The first case relied upon was R1J(folph Helu-iq v. United Btates ('). In ----that case - th_e __ Cil1estion was about tlie jurisdiction of the -United , States District Court which depended upon . the nature of the imposition of an : additional duty i.e . . whether _it was penalty or·, not. The imposition was held ·to qe· , penalty as it was not -imposed for"the_pui-pose of - revenue but _was based upon the particular act of the importer i.e. his undervaluation of the· goods imported; in other words thisadditionalsum was pPnaJty for unrlervaJnation whether innocently done or not and :whether jt was called further sum or an additional duty th-€' amount: imposed was not duty up-on , imported ·article._ but penalty and nothing else. · ', · ' • • The next case relied ~pon w~s J. W. Bailey ~. · Drexel _ Furniture : Companv ('}. _. That - was·_ case of· colorable exercise · 'of . legislative power. Under the Child Labour Tax Law . tax -of 10% of the net profits of the year could be imposed upon an employer and knowingly-during any portion, of the tinmble : petiod employed ·children within -. : certain age limits irrespective of whether only one child was employed or several, . This was held not to ,_be valid exercise_ by Congress of power of taxation but an unconstitutional regulation· by the use of th£ tax as penalty for -the employment_of child labour in ,the States'_ which was exclusively State function .. That case was_ one in which· the -congress exercised its. poWCJ'.- -()f regulation by - imposing - tax by-ivay of penalty in. ordei: to pre-vent . the employment, of. child hbour an~'thus by the exercisP, of !he power; which it possessed i.e. of (!), (l!)!l3) 188,U. S. 605: 47 L Ed. 614,· .:(2). (1922)259U.S.33, 66LEd.817. .

3 S.C.R. SUPREME COURT REPORTS

taxation it tried to regul:i,tc subject over which it had nn jurisdiction and that really w~s the matter which was decided by the American Sapreme Court.

M/s. R. M. D. G. (i.lfysore} Privat;: Ltd.

The next case relied upon was r:Jloucester Ferry Company v. Commonwealth of Pennsylwnfri (1). That was case of interst:ite commerce :i,nd it was held that no State could impose tax on that portion of interstate commerce which is involvPd in the transportation of persons and ·property what. ever be the instrumentality by which it is carried on. The tax there was levied upon receiving and landing of passengers and freight which was held to be tax on transportation i.e., upon commerce between the two States involved in such trans-porhtion. The following passage in the judgment of Field, J., at p. 162 was relied upo!J by C(•un«~l for the appellants :-

TheSl1t,ofM1J8 re

Kapur J.

"The power to regulate that commerce, · as well as commerce with foreign nations, vested iu Congress is the power to prescribe the rules by whid1 it slrnll be governed-that is, the comlitions upun which it shall be conducted ; to determine when it shall be free, and when subjeet to duties or other exactions."

But these observntions were mMle in rlifferent context, i.e., whether the tax could be levied upon transportation made in ferry boats which passed between States ev<;ry hour of the d>1y and as this transportation was within the commerce clause no tax could be levier! by the Strites.

Reference was next made to certain obser· vations mttde in the State of Bombay v. R.111.D. Oham<irbaugwala (') which was an appeal against the jurl~ment of the Bombay High Court. Das, C. J., observed at p. 926 :-

"The fact that regulatory provisions have been enacted to control gambling by issuing (l) (1885) 114 U.S. 196: 29 L. Ed. 158. (21 [1957] S.C.R. 874, 929.

240 SUPRE:\fE CO'CRT REPORTS ,[1962) '

licences and by imposing taxes cloes not in any way altl!r the nature of gambling which · iR inherently vicious and pernicious."

.If/•. R. M. D. c. p~t{,%,~0L'l.

v. In that case no question as to the meaning of Thi Stale of Mg'"'' the \\'Ore I "control n.nd regnlat iun'' arose nor whct.J:cr those worrls inclmlcd the power of taxation. All that the Comt was callccl upon to decil!A was whether prize competitions were trade, commerce or business or were <inti· soeia I act iv it ics.

It was th(·n argued that it was because of the decision by the Rom hay High Court in State of Bombay v. R. Jf. D. Clmmarbaugu:a/a (') whereby the tnx impose<! rm prize competitions was struck <lowll as contrnvenin~ Art. 304(b), that the various 8tates combined together and passed the resolution 1m<lcr Art. 252(1) of the Constitution. The object of the resolutions, it was submitted, was to get over the unconstitutionality pointed out by the Born hny High Court and therefore the resolutions were passed in the language used therein, i.e., for the nontrol and regulation of prize competitions which power wns transferred <ind surrendered to Parliament along with the powers incidental and n.ncillarv thereto which must im:lurle taxation. It ~ms further argued that ns Parliament had failed to impose any tax it implied that it hnd refused to clo so. In support of this argument relhnee wn.s placec! on Scibirce Robb·in.~ \'. Taxing Di.strict of Shelby CO'Unty, Tennessee('). It was there held th<it where the power of the Legislature is exclusive its · failure to make express regulation indica.kd its will that the subject shall he left free from any rcstric· tiun or imposition. The pi,·ot of the appellants' <irgnment is th~t the worcls "control and regulation" and "incidental and ancillarv thereto" included power of tiixation but this argirn1ent is not well founded. The power in rcgarcl to betting and gambJ. ina is cont1iin~d in entrv :>i of the State List which ~ . '• ns follows ;

Entry 34: "Betting and gambling".

:.L.R. [1955] Born. 680. (21 30 L. Ed. 694.

3 s.C.R. SUPREME COURT REPORTS

The power of taxation is contained in entry 62 which is as under :-

M/e. R. M. D. C. (My60re) Pritiale Ltd. v. The State of My•ore Kapur J.

Entry 62 : "Taxes on luxuries, including ta:x:es on entertainments, amusements, betting and gambling."

In the Indian Con~titution as it was in the Govern-ment of India Act the power of legislation is distributed between the Union and the States and the subjects on which the respective Legislatures can legislate are enumerated in the three Lists and in the Articles of the Constitution, provision is made as to what is to happen if there Is conflict between the Statutes passed by Parliament and the Legis-latures of the States. The peculiar nature of the Indian Constitution in regard to the enume-ration of powers in the entries in the Lists was emphasised by Gwyer, C. J., in re The Central Provinces & Berar Act No. XIV of 1938 ([1]) at p. 38 and by Sulaiman, J., at pp. 73 and 74. Gwyer, C.J., sa.id:-

"But there are few subjects on which the decision of other Courts require to be treated with greater caution than that of federal and provincial powers, for in the last analysis the decision must depend upon the words of the Constitution which the Court is interpreting ; and since no two Constitutions are in identical terms, it is extremely unsafe to assume that decision on one of them can be applied without qualification t.o another. This may be so even where the words or expressions used are the same in both cases ; for word or phrase may take colour from its context and bear different senses accordingly."

(I) [1939] F.C.R. 18, 38, 73, 74.

!Ml M/1. R. M,D. C. (My-•) l'ri..,. LJd. v. Thi !it<d1 .j M~""'' r.,....J.

At p. i4 Sulaiman, J., observed:

"The heads have been separately specified in great detail ; and special head "taxes on the sale of goods" has been assigned to the Provinces, which did not at all find separate and distinct place in tho State or Provincial List of any of the Dominions. This peculiarity is unique feature of the Indian Constitution, having an important bearing on the present case, as taxes on sales have been adopted as post-war measure in mos~ countries."

The entries in the Lists have to be read in accordance with the words employed and it will be wholly unjustified in forcing into them meaning which they cannot reasonably bear. Seo Brophy v. Att. Gen. of Manitoba (') Similar observations were made by Lord Wright, M. R. in James v. Common-wealth of Au.stralia (') and both these oases wet'e quoted with approval in re The Central Provincu and Berar Act No. XIV of 1938 (') by Sulaiman, J. Thus the subject of "betting and gambling" given in entry 34 of List II and tho taxes on betting and gambling as given in entry 62 of List II have to be read separately as separate powers and therefore when control and regulation of prize competitions was surrendered to Parliament by the resolutions above quoted the power to tax: under entry 62 of List II, which is separate head, cannot be said to have been surrendered. See the obser-v~tions of Das, C. J., in State of Bombay v. R. ltl. D. ChamtJrbaugwala quoted little later in this judgment.

The scheme of the Indian Constitution and

distribution of powers under it are entirely different from what it is in America and therefore the construction of the entries in the mam1er contended for by the appellants would be erroneous.

It was then contended that " tax must be tll [189SJ A.C. 202, 215. (2} [1936] A.C. 578, 613.

3S.C.R. SUPREME COURT REPORTS

levied for the purpose of revenue and cannot be for purpose of control and that in the Mysore Act was really colourable legislation in that the impugned tax had been levied for the purpose of controlling prize competitions although it was given the form of tax. It may be remarked that the Court in construing and interpreting the Constitution or provisions of an enactment has to aacertain the meaning and intention of Parliament from the language used in the statute itself and it is not concerned with the motives of Parliament. To use the language of Gwyer, C.J., in re The Central Provinces and Berar Act No XIV of 1938 ([1]) :

"It is not for the Court to express, or indeed to entertain, any opinion on the expediency of particular piece of legislation, if it is satisfied that it was within the competence of the Legislature which enacted it ; nor will it allow itself to be influenced by any considerations of policy, for these lie wholly outside its sphere."

Similar observations in regard to the doctrine of colourable legislation were made by Mukherjea, J., (as he then was), in K. C. Gajapati Narayan Deo & Others v. The State of Orissa ('), where it was observed:

"It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona /ides or mala fides on the part of the legislature. The whole doctrine resolves itself into the question of competency of particular legislature to enact particular law. If the legislature is competent to pass particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legis-lature lacks competency, the question of motive does not arise at all. Whether (11 [1939) F.C.R. 18, 38, 73, 7f, (2), [1954] S.C.R. I, 10.

M/a, R. M. D. a. (M'J'Of'•} Pri"4t6 Ltd. v. The Stat, of My•o< Kapw J.

•\Ifs. R. M. I!, C. (Mya,,,.,) ['rivat1 Lid. v. TM Stat1 of M y:i<Jrt Kapllr J.

24·1 SUPREME COURT REPOllTS

statue is constitutional or not is thus always iL question of power." .

Thereforo if tho :llysoro Legislatui-e h<1d tho power, which in our opinion. it had and it had not surrendered it.s power to Parliament which, in our opinion, it had not then it cannot be said that tho imposition of tho tax i8 piece of colonrable legislation and is on that ground unconstitutional. It will he opposite to quote at thi,; stage the observations of Das, C.J., in the Staw of Bombay v. R.Jl.D. Chamnrbaug1m/a (') :-

"For the reasons stated iLbuvc, we h11\'o

c.ome to the conclusion that the impugned

law is law with respect to betting and gambling under entry 34 and the impugnml taxing ~ection i~ iL law with respect to tax on betting and gambling under entry 62 and that it w,ts within tho legislative competence of tho State legislature to have enacted it. Thero is sufficient territorial nexus to C'ntitle the State legi;;laturc to collect the tax from the petitioners who carry on tho prize competitions through tho medium of 1.1 news-paper printrcl and publishet! outside the State of Bombav."

Thus the Centn~l Act is with respect to hotting and gambling under entry 34 of List II and tho taxing sections of the ~lysore Act are with rospcct to a. tax on betting n.ml gambling under entry tl2. It is al.so instructive to note that Venkatarama Ayyar, J., in R. 1ll. D. Clwmrirbaugwala v. 'l'he Union of India (')in construing the language of the resolution was of the opinion that the uso of tho word "control and regulation" was requisite in the uase of gambling and a11 regards regulation of competitions involving skill mere regulation would have been suflicicnt.In view of our finding that by passing tho resolution the States did not surrender their power of taxation it cannot be said that cl. (2) of Art. 252 (I) [1957] S.C.R. 874, 929. (2) [1957] S.C.R. 930, 939.

3S.C.R. SUPREME COURT REPORTS

of tho Constitution was violated by the amendment of the Mysore Act ; nor can it be said that in reality it was piece of colourable legislation by an in-direct attempt to amend the Central Act and new inethod of control was devised by imposing penalby under the name ,of tax. We have already held that the tax imposed under the Mysore Act was not by way of penalty but w<.1s the exercise of tho power which the legislature possessed of imposing tax under entry 62.

The next contention raised was that after the passing of the Central Act, s.12(l)(b) of the Mysore Act became void because of the provisions of Art. 254(1) of the Constitution which provides:

Art. 254(1) "If any provision of lii.w

made by the Legislature of State is repug-nant to any provision of lu.w made by Parliament which Parliament is competent to enact or to any provision of an existing law with reapect to one of the matters enu-merated in the Concurrent List, then, subject to the provisions of clause (2) the law made by Parliament whether passed before or after the law made by the Legislature of such State or as the case may be, the existing law shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnanoy; be void."

It was contended that because of the repugnanoy between the Central Act and the Mysore Act in regard to licensing all provisions which had any reference to licensing became void under Art. 254(1) and if they were void they could not be amended. On behalf of the State it was submitted that Art. 252(1) was complete code by itself and Art. 254 was inapplicable because the latter Article like its predecessor, s.107 of the Government of India .Aot, 1935, applied where the repugnanoy arose under List III of the Constitution i.e., the

M/a. R. M. D. C. (Mysore) Pri i•ate Ltd. v. The State of My~ore

Kapu1· J.

~1 /1. 11. M. D. C. (My1e>rt) Privat.r Ltd. v. TM Slate of .\/y1qre Kaf"'r J.

Concurrent List. It is not necesswry to decide this latter contention or to refer to cases which have been . relied upon i.e. Jlegh Raj v. Allah Rakhia (')or Deep Chand v. The State of Dttar Pradesh & Others ('). The inconsiMtcncy would opera.to on that portion of the Mysore Act which became repugnant to ss. 4 and 5 of tho Central Act 8.8 to prohibition of prize compe· titione and liceneing of prize competitions e.g., s.8 of the Mysore Act and consequently that. portion of s.ll!(l)(b) which deals with taxes in respect of prize competitions for which licence had been obtained under s.8 might be said to have become void and not the rest. Therefore by the omission· of words "for which licence had been obtained", under s.8, the rest of the clause would be valid. 1 he effect of the amending Act is that the above men-tioned words were deemed to have been omitt~d as from April 1, 1950, and the rest of clause (b) is not repugnant to any of the provisiollS of the Central Act. Article 254( l) t.hercforo did not make s.12( 1)( b) wholly void. All that it did was that the portion which refers to licensing became repugnant but it did not affect the rest of the section. At the time when the Mysore Act was passed it was within the legislative power of the Mysore Legislature and it may be that it was rendered unconstitutional by reason of ss. 4 and 5 in the Central Act but that portion which deals with taxation cannot be held to be void because as re&ult of tho Amending Act the words which were repugnant to the provisions of the Central Act were subsequently declared by the Mysore Legislature to be deemed to have been omitted as from April l, 1956, the day when the Central Act came into force. This is in accord with the view taken m Deep Chand v. 1'he State of Utta.r Prade8h and Others('), i.e. the doctrine of eclipse could be invoked in the case of law which w&S valid when made but was rendered invalid by a. supervening constitutional inconsistency. This (I) (19i7) L. R. 74 I.A. 12, 19. (2) [1959] Supp.ZS. C.R. 3, 24, 4%.

3 S.C.R. SUPRK\IE COURT REPORTS

disposes of the challenge to' the .·constitutionality of liSl _-the Mysore'Act on the five'' points set out above. M/•. R. M. D. R. M. D. M. D. D. c. Therefore the law ma_y•be summed up as follows : J.%~:;-£,~. - · ~ ·. · .- · (l) 'By pas'sirig the' res~lutions.~~ to con-· Th• ss1.,,v;1 Mysrrr •trol and regulation the.power to tax had not --• been surrendered to Parliament .. - -. . Kapur J . . ,. ,.

M/•. R. M. D. R. M. D. M. D. D. c. J.%~:;-£,~. Th• ss1.,,v;1 Mysrrr --

. ,. ,. .... · .... : · (2} ·The_ amending 'Act was not new ·· - .:·"method 'of controlling prize competitions nor .,_ •• -r was it piece of.colourable legislation;· -'• •-:

-:(3) There Wis' no ainendmont of an Act __ -

., . wh~ch. stood repealed.,nor.was the.retroactive ,_ .... operation ,of .the .Amending Act affected by

:·.: .. , _, Art; 254(1) of ~!ie • Constitutbn. __ :_ : ;· · --

: ._The next· three: objections. to the :legality of the assessment were : •(I} that the: assessment was provisional which was not contemplat.ed . under the Act'; (2) there should have been ·a fresh Iiotificaticin 'after th~: _amendment of the Ilfysore· A_ct and (3! .at ithe time wh_bll the _recovery proceedings were : taken ~li,e_ tax had not become due _as it was payable within week which had -not expired. On September IO, 1957, the Deputy C0mmissioner, -Bangalore 'ealled •upon -the ·appe!Jants to 'p.roduce accounts in ~espeqt of prizo competitions conducted -as from Aprffl; 1956; up to the" date of the closure of the competi-tions and three days were given to comply' With that - . . notice,:_ Their .reply. was that the Ordinance under which the notice was issued was-unconstitutional and illegal· and they also .asked .for thirty days in which ·to prepare their statements_ but they were granwd period of:fifteen days only. They, agreed.tu file their statements· within • the time. ailowed . though .under _protest .. · .These ... statements· were -submitted· on October 9, 1957, and at the ·end of· the statements which showed gross collection of Rs. 26,47,147-5-9, t,heri: w~s the fol!ow;ing ~ndorsement ::-:- _ · :. ; .

' . . • : f' ----'.' . ' ' . ' . -. •'.The' above figures of co!lectioris are veri-fied partly.With available ballk statements and . partly with, the ·books of- accounts · and are

~ • • • 0 • T < •'

.IJ/A.' R. M. D. C. r~lty11ort) Prirate Ltd. v. Tht Stolt of .\!ysort Kapur J.

SUPRE!lm COURT REPORTS [1962]

suhject to reconciliation between the amount as per ledger ancrthat as above. The commis- · sion and expPnscs deducted by Collectors nre acceptrd as per certifi<'ate of the l\fanage-ment and the State Account. Collections are 'l"erified only with the Collection Register.

(Sd.) ............................... ..

Chartered Accountants."

'Cndcr this the Deputy Commissioner wrote letter on October 16, 1957, in which it was said : -

"You are hereby called upon to pav up provisionally sum of Rs. S,30,893-7 ·O to"Wards tax amount to the Rc·scrve Bank of lndia and forward the ('hallan in token of pay· ment to this o~ce within week."

As the tax was not paid the provisions of the Revc· nue Recovery Aet were resorted to. This cannot be said to be provibional assessment. The return submitted by tho appellants as far as it went was aceepted and on-that the tax was.demanded which was not case of provisional assessment at all but as was holrl by tho High Court it mu~t ho taken to be final assessment and if and when any further nssessm ent or revised assessment is made the que~tion may become relevant.

The next qn<'stion as to the necessity of fresh notification, tho submission is cqnally unsub-stantial. Its legality depends upon the constitution. alit~· of amended s.12(l)(b) and if that is valid, as we havo held ii to be, the notification is equally vali<l. The notifir~ition was only in regard to the rate of taxation and had no reference to the obtain· ing or not ohtnining of tho licence.

The last point raised was that the tax was

payable within week which had not expired. As we have point-0d out the notice of demand called upon the appellants to pay the sum therein specified and to produce the challan in token of payment

3 S.C.R.

within wePk. It is not the case of the appelhnts th:i,t they had paid or were in position to produce the challan within week. It was not an order m•ikin~ the tax payable within week. These objections, in our opinion, are without sub~tance and 1tre therefore overruled.

In the result this appeal fails and is diHmissed with costs.

Appeal dismissed.

M/•. R. If. D. ( \fyme) Private Ltd. v. Th( State of \l 11s*