Bhaiyalal Shukla vs State Of Madhya Pradesh

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 21 December 1961

Coram: B.P. Sinha, J.C. Shah, J.L. Kapur, J.R. Mudholkar, M. Hidayatullah

In this matter, the Court recorded that six petitions filed under Article 32 of the Constitution were lodged by a single petitioner, Mr Bhaiyalal Shukla, who carried on the business of constructing buildings, roads, bridges and related works as a contractor for the Public Works Department in the Rewa Circle of the former Vindhya Pradesh State, an area that now forms part of the State of Madhya Pradesh. By way of these petitions, Mr Shukla challenged the imposition of sales tax on the building materials that he supplied for the construction of the aforementioned works during the financial years 1953‑54 through 1958‑59. He pointed out that for the first year of the period, i.e., 1953‑54, a sales‑tax demand of Rs 1,840‑5‑0 had already been raised, that the amount had been collected and paid, and that he was now seeking a refund of that sum. He further explained that for the remaining years except the final two, the assessment proceedings had been concluded but the tax amounts remained unpaid, whereas for the last two years assessment proceedings were still pending. The respondents were identified as the State of Madhya Pradesh, which had succeeded the State of Vindhya Pradesh, together with various officers who were involved in the assessment and collection of the tax. The petitioner contended that the tax could not be levied because of the precedent set by two earlier decisions of this Court: The State of Madras v Gannon Dunkerley and Co. (Madras) Ltd., reported in [1959] S.C.R. 379, and Pandit Banarsidas v The State of Madhya Pradesh, reported in [1959] S.C.R. 427. The respondents, on the other hand, argued that the tax was legally valid because the present circumstances fell within the principle laid down in Mithan Lal v The State of Delhi, reported in [1959] S.C.R. 445. The Court then turned to the historical background of the region. It observed that the United State of Vindhya Pradesh had been created by the rulers of the princely states in Baghelkhand and Bundelkhand, who agreed to merge into a single entity with the Maharaja of Rewa appointed as Rajpramukh. By the covenant executed at that time, it was stipulated that until a formal Constitution for the United State was framed, legislative authority would reside with the Rajpramukh, who was empowered to issue ordinances for the peace and good government of the United State or any of its parts, and that any such ordinance would possess the same force as an Act passed by the legislature of the United State. Exercising the powers conferred by the covenant, the Rajpramukh promulgated the Vindhya Pradesh Sales Tax Ordinance 2 of 1949, which provided for the levy of tax on the sale of goods within Vindhya Pradesh. When the present Constitution of India came into force, Vindhya Pradesh initially became a Part B State, but subsequently, by operation of the Constitution (Amendment of the First and Fourth Schedules) Order, 1950, it was transferred from Part B to Part C of the Constitution. The Court noted that the ordinance thus acquired a statutory character under the constitutional scheme.

In this case the chief commissioner of Vindhya Pradesh, acting under section 1(2) of the Vindhya Pradesh Sales Tax Ordinance 2 of 1949, issued Notification No. 7 dated 28 March 1950, thereby extending the jurisdiction of the Rajpramukh to the entire territory of Vindhya Pradesh with effect from 1 April 1950. Subsequently Parliament enacted the Part C States (Laws) Act, 1950, and section 2 of that Act authorized the Central Government, by Gazette notification, to extend to any Part C State—or to any portion thereof—any enactment that was in force in a Part A State on the date of such notification, with such restrictions and modifications as it deemed appropriate; the provision further allowed that, in any enactment so extended, a provision could be made for the repeal or amendment of any corresponding law, other than a Central Act, that was then applicable to the Part C State. Exercising this power, the Central Government issued Notification S.R.O. 6 on 29 December 1950, extending to Vindhya Pradesh the Central Provinces and Berar Sales Tax Act, 1947 (Act 21 of 1947) as it then stood in Madhya Pradesh, subject to certain modifications required for its application to the new area. The same notification inserted a new clause, numbered 29, into the Madhya Pradesh Act, stating that the Vindhya Pradesh Sales Tax Ordinance 2 of 1949 was hereby repealed, subject to specific saving provisions that preserved the continued operation of the Ordinance in certain respects. On 20 March 1951 the Central Government issued Notification No. 52/ECON, invoking the powers conferred by sub‑section (3) of section 1 of the Central Provinces and Berar Sales Tax Act, 1947 as extended to Vindhya Pradesh by Notification S.R.O. 6, and directed that the extended Act would become effective in Vindhya Pradesh on 1 April 1951. On 23 May 1951 this Court delivered its judgment in In re the Delhi Laws Act 1912 [1951] S.C.R. 747, holding by majority that section 2 of the Part C States (Laws) Act, 1950 was constitutionally valid except for its concluding sentence, which authorised a provision to be made in any extended enactment for the repeal or amendment of a corresponding law (other than a Central Act) applicable to the Part C State; that particular phrase was held ultra‑vires the Indian Parliament. In response, Parliament passed the Government of Part C States Act, 1951 (Act 49 of 1951) on 6 September 1951, establishing Legislative Assemblies for the Part C States and, under section 21, conferring upon those Assemblies, subject to certain limitations, the authority to legislate on matters enumerated in the State List or the Concurrent List. Section 22 of the same Act provided that if any provision of a law made by a State Legislative Assembly were repugnant to any provision of a law made by Parliament, the Parliamentary law would prevail and the State law would be void to the extent of the repugnancy, with an explanation clarifying that “law made by Parliament” did not include any law extending to the State a law in force elsewhere in India.

Section 22 provided that whenever a law made by a State Legislative Assembly conflicted with any provision of a law made by Parliament, the Parliamentary law would prevail irrespective of whether it was enacted before or after the State law, and the State law would be void to the extent of the conflict. The explanation clarified that, for the purpose of this section, the term “law made by Parliament” did not include any law that merely extended to the State an existing law that was already in force in another part of the Indian territory.

In accordance with the earlier decision of this Court in the Delhi Laws Act case, Parliament enacted the Part C States (Miscellaneous Law) Repealing Act, 1951 on 31 October 1951. Section 2 of that Act stipulated that the statutes listed in Column 2 of its Schedule were to be repealed or deemed repealed, with effect from the dates specified in the corresponding entries of Column 3. The Schedule indicated that the Vindhya Pradesh Sales Tax Ordinance, 1949 (2 of 1949) was repealed effective 29 December 1950.

Subsequently, the Vindhya Pradesh Legislative Assembly, which had been constituted, passed the Vindhya Pradesh Laws (Validating) Act, 1952 (6 of 1952). That Act was intended to extend to the entire territory of Vindhya Pradesh and was scheduled to come into force on 8 January 1953. It contained a declaration stating that the Central Provinces and Berar Sales Tax Act, 1947, as extended to Vindhya Pradesh under section 2 of the Part C States Laws Act, 1950, was deemed to be in force in Vindhya Pradesh from 1 April 1951. The Act further provided a repeal and savings clause, which specified that, from the dates on which the Acts mentioned in section 2 of the Validating Act actually became operative, the corresponding laws previously in force in Vindhya Pradesh were deemed repealed, without prejudice to any actions taken, rights acquired, privileges enjoyed, obligations incurred, or liabilities sustained under those earlier statutes before the specified dates.

Section 2 of the Central Provinces and Berar Sales Tax Act, 1947, as extended to Vindhya Pradesh, defined “contract” to mean any agreement for the execution, for cash, deferred payment, or other valuable consideration, of construction, fitting‑out, improvement or repair of any building, road, bridge or other immovable property. It defined “goods” to include all kinds of property, encompassing all materials, articles and commodities, whether or not they were to be used in the construction, fitting‑out, improvement or repair of immovable property. The Act further defined “sale” to include a transfer of property in goods made in the course of performing a contract. By virtue of these definitions, the materials supplied by a building contractor in the construction of buildings, roads, bridges and similar structures were made liable to

The Court observed that the question of whether State statutes could levy sales tax on building materials had been examined by the High Courts of India, and two clearly opposite opinions had emerged. The first opinion held that a State, exercising the authority granted to it by Entry 48 of List II in the Seventh Schedule of the Government of India Act 1935 (which corresponds to Entry 54 of the same List in the Constitution), could separate the sale of the materials from the work of construction in a building contract and could therefore tax that sale. In support of this view the courts said that even though a building contract is usually a single, integrated agreement, it nonetheless involves two distinct components – labour and materials – and that the supply of materials represents a transfer of property for a price. Consequently, the legislature was deemed to have the power to define the term “sale” in such a way that the material component could be taxed separately. The opposite opinion, however, maintained that a building contract is an indivisible whole and that, within the meaning of the Indian Sale of Goods Act, there is no “sale of goods” because the Act contemplates a transaction in which movable property is transferred by agreement. This Court, in the case of Gannon Dunkerley (1959 SCR 379), endorsed the latter interpretation, following the judgment of the Madras High Court in Gannon Dunkerley v. State of Madras (1954 5 STC 216). The Court explained that although the public may perceive a sale of the building materials, legally the term “sale of goods” as used in the Sale of Goods Act does not apply because there is no separate agreement to sell the materials and the property does not pass as movable goods. In the case of Pandit Banarsi Das (1959 SCR 427), a matter arising simultaneously from Madhya Pradesh, the Court held that when the parties execute two distinct contracts – one for the supply of materials for a monetary price and another for the payment of labour or services – a sale within the meaning of the Sale of Goods Act occurs and the imposition of tax is valid. Conversely, where a single, integrated contract governs both the supply of materials and the execution of work, the tax on the material component is beyond the competence of the State legislature. Accordingly, the provisions of the Central Provinces and Berar Sales Tax Act that attempted to divide a building contract and tax the alleged sale of materials were declared to be beyond the legislative authority of the State.

The petitioner argued that the provisions of the Central Provinces and Berar Sales Tax Act, as they were applied to Vindhya Pradesh, fell squarely within the two decisions summarised above and therefore should be declared ultra vires the Vindhya Pradesh State Legislature, especially in view of the Vindhya Pradesh Laws (Validating) Act 1952. The respondent, on the other hand, contended that the notification identified as S.R.O. No. 6, which introduced the disputed sections, was validly made and that it authorised the taxation scheme. The respondent further maintained that the legislative competence of the State to enact the validating Act did not affect the validity of the tax provisions, and therefore the impugned sections should be upheld.

The Court observed that the repeal of the Vindhya Pradesh Sales Tax Ordinance 2 of 1949, the Part C States (Miscellaneous Laws) Repealing Act of 1951 and the Vindhya Pradesh Laws (Validating) Act of 1952 all agreed to nullify Ordinance 2 of 1949 as of 29 December 1950, yet they left undisturbed the operation of the Central Provinces and Berar Sales Tax Act as it had been extended to Vindhya Pradesh by S.R.O. No. 6 of 1950. The Vindhya Pradesh Laws (Validating) Act of 1952 merely dispelled any uncertainty by reiterating that the Central Provinces and Berar Sales Tax Act had been, and “shall be deemed to be in force in Vindhya Pradesh from 1 April 1951”, without re‑enacting the Act itself. According to the respondents, the Central Provinces and Berar Sales Tax Act remained in force in Vindhya Pradesh because of its extension by Notification S.R.O. 6 and Notification No. 52 (Econ), while the repeal of Ordinance 2 of 1949 was effected by the Part C States (Miscellaneous Laws) Repealing Act of 1951 on 29 December 1950. On that basis, the respondents sought to uphold the contested provisions, relying on the Supreme Court’s decision in Mithan Lal (1959) SCR 445. In that case the Court had explained that the limitations applicable to State Legislatures under List II did not constrain Parliament when it legislated for Part C States, because Parliament’s authority in that context derived not only from all three lists but also from the residuary taxation power in Article 248(2) of the Constitution. The Court further held that Section 2 of the Part C States (Laws) Act, 1950 was not inconsistent with Article 248(2), that the extended law became part of the Part C States (Laws) Act by reference, and that the tax therefore was a levy imposed by Parliament itself. Accordingly, the respondents argued that, as affirmed in Mithan Lal, when Parliament enacted the Part C States (Laws) Act, 1950 and authorised the Central Government to extend any law of a Part A State to a Part C State, that authority carried the full plenary powers of Parliament. Consequently, even if the law being extended would have been outside the competence of the State Legislature that enacted it, its extension under Parliament’s authority rendered it a valid law within a Part C State. The rival contentions could therefore be reduced to a single question: if the Vindhya Pradesh State Legislature had extended the Central Provinces and Berar Sales Tax Act, the extension would be subject to the limitation identified in Gannon Dunkerley (1959) SCR 379; however, if the Act was extended by a Notification under the Part C States (Laws) Act, 1950, it must be regarded as incorporated into that Act and to possess the full authority of Parliament, which, in relation to Part C States, faced no constitutional restriction. The Court therefore needed to determine whether the Central Provinces and Berar Sales Tax Act had been first extended to Vindhya Pradesh by the State Legislature in 1952, thereby excluding the effect of Notification S.R.O. 6, or whether the Act had continued to operate in Vindhya Pradesh prior to that date, with the 1952 legislation merely removing any doubt about its validity.

It was argued that the Sales Tax Act of 1947 first became applicable to Vindhya Pradesh only when the state legislature enacted the Vindhya Pradesh Laws (Validating) Act, 1952, which expressly excluded the order contained in Notification No S.R.O. 6 and thereby removed any doubts concerning the Act’s validity. The alternative view was that the Act had already been in force in Vindhya Pradesh before that date and that the 1952 validation merely confirmed its continued operation. The petitioner maintained that the portion of the Notification dated 29 December 1950, which dealt with the repeal of Ordinance 2 of 1949, was invalid, relying on the decision of this Court in the Delhi Laws Act case [[1951] S.C.R. 747]. If that part of the Notification were invalid, the petitioner argued, then the extension of the Central Provinces and Berar Sales Tax Act contained in the opening part of the same Notification could never have taken effect. Counsel for the petitioner, Mr Viswanatha Sastri, urged that the Notification must be read as a whole and that it was unreasonable to assume that the Central Government would have extended the Central Provinces and Berar Sales Tax Act while the earlier Ordinance remained operative. He cited the observations of this Court in Pesikaka’s case to contend that the portion of the Notification beyond the Central Government’s authority should be treated as a nullity. Moreover, he argued that if the invalid portion was essential to the operation of the valid portion, then the latter could not stand, because it could not have been intended that two parallel statutes on the same subject operate simultaneously in Vindhya Pradesh. According to his reasoning, the extension of the Central Provinces and Berar Act could not have been effected unless the Ordinance had first been repealed. He pointed out that Section 29, although divided into two clauses, formed part of a single scheme, so that the repeal of the Ordinance and the extension of the Central Provinces and Berar Act were interdependent. Since the Ordinance was never validly repealed, it continued to operate in Vindhya Pradesh until it was finally repealed on 31 October 1951 by the Part C States (Miscellaneous Laws) Repealing Act, 1951. Consequently, when the Notification of 29 December 1950 was deemed to have repealed the Ordinance, there was, in effect, no sales‑tax law in force in Vindhya Pradesh, because the Part C States (Miscellaneous Laws) Repealing Act, 1951, did not enact or extend any sales‑tax legislation for the state. He further asserted that until the Vindhya Pradesh Laws (Validating) Act 6 of 1952 became effective on 8 January 1953, no law imposing sales tax existed in Vindhya Pradesh, and that the state legislature thereafter created such a law by extending the Central Provinces and Berar Sales Tax Act from 1 April 1951. He therefore contended that, as the Vindhya Pradesh Legislature lacked authority to impose sales tax on building materials, any provision of the state Act attempting to do so fell within the principle established in Gannon Dunkerley’s case [[1959] S.C.R. 379] and should be declared void. He also referred to the Vindhya Pradesh Amendment Act 9 of 1953, which further altered the extended Act, and maintained that the amended law derived its existence not from Parliament or the Central Government under the Part C States (Laws) Act, but solely from the Vindhya Pradesh Laws (Validating) Act, 1952 (6 of 1952) and the Vindhya Pradesh Amendment Act, 1953 (9 of 1953).

The Court observed that the Vindhya Pradesh Legislature had not expressly granted itself the power to levy a sales tax on building materials. Consequently, if the Act of the Vindhya Pradesh Legislature attempted to impose such a tax, it would fall within the principle articulated in Gannon Dunkerley’s case [[1959] S.C.R. 379] and would have to be held ineffective. The argument advanced also cited Act 9 of 1953 passed by the Vindhya Pradesh State Legislature, which further amended the earlier Act. It was contended that the amended and extended Act derived its authority not from Parliament nor from the Central Government exercising powers under the Part C States (Laws) Act, but rather from the Vindhya Pradesh Laws (Validating) Act, 1952 (6 of 1952) and the Vindhya Pradesh Amendment Act, 1953 (9 of 1953). The Court identified a fundamental flaw in that reasoning. It noted that the issue concerned the applicability of the Central Provinces and Berar Sales Tax Act as it had been extended to Vindhya Pradesh. The Vindhya Pradesh Amending Act effected only verbal alterations and did not modify the basic structure of the tax. While the amended Act did contain provisions that made sales of building materials taxable, the source of the taxing power was the original extension of the Act by the Central Government exercising authority vested in Parliament for a Part C State. Parliament and the Central Government were not subject to the restrictions highlighted in Gannon Dunkerley’s case, and the situation had already been addressed by the Court’s decision in Mithan Lal’s case [[1959] S.C.R. 445]. Even assuming that Notification S.R.O. No. 6 failed to repeal Ordinance 2 of 1949, Parliament had, by a separate enactment, treated that Ordinance as repealed in Vindhya Pradesh effective 29 December 1950, declaring it deemed repealed from that date. After the Parliament‑passed Repealing Act, it was untenable to claim that Ordinance 2 of 1949 persisted in Vindhya Pradesh until 8 January 1953, because the Ordinance had, by legal fiction, been repealed on 29 December 1950. Parliamentary legislation therefore rescued the Notification by providing the necessary repeal of Ordinance 2 of 1949, an outcome that the Notification itself could not achieve, as explained in the Delhi Laws Act case [[1951] S.C.R. 747]. Accordingly, both the Central Government’s Notification (S.R.O. No. 6) and Act 66 of 1951 jointly effected the removal of the Ordinance on 29 December 1950 and simultaneously extended the Central Provinces and Berar Sales Tax Act in its stead. Counsel further argued, relying on the precedent set in Deepchand v. State of Uttar Pradesh [[1959] Supp. 2 S.C.R. 8, 24], that the validity of a statute must be judged on the date of its enactment; if invalid at that time, the statute is deemed never to have existed unless later re‑enacted. The Court noted that this line of reasoning would apply only if the Notification were considered in isolation and the question were one of validating that Notification. The Notification was challenged because it attempted to repeal Ordinance 2 of 1949, a repeal it could not effect. However, the Court concluded that it could no longer be said that Ordinance 2 of 1949 continued in Vindhya Pradesh, since Parliament, through the Part C States (Miscellaneous Laws) Repealing Act, 1951, had expressly enacted its repeal.

The counsel argued that if a statute is invalid on the date of its enactment, then that statute must be considered as never having existed, unless it is subsequently reenacted. To support this proposition the following passage was cited: “The validity of a statute is to be tested by the constitutional power of a legislature at the time of its enactment by that legislature and, if thus tested, it is beyond the legislative power, it is not rendered valid without re‑enactment if later, by constitutional amendment, the necessary legislative power is granted. An after‑acquired power cannot, ex proprio vigore, validate a statute void when enacted.” (page 24). The argument would be appropriate only if the issue were limited to the validity of Notification No S.R.O. 6 taken by itself. The Notification is being challenged because it attempted to repeal Ordinance 2 of 1949, a power which it did not possess. However, the present case does not permit a conclusion that Ordinance 2 of 1949 continued to operate in Vindhya Pradesh, since Parliament, by the Part C States (Miscellaneous Laws) Repealing Act, 1951, expressly declared that the Ordinance should be deemed repealed as of 29 December 1950.

In the same decision the Court referred to passages from Willoughby on the Constitution of the United States (2nd Edn.) Vol. 1, p. 10, which rely on the United States case John M. Wilkerson v. Charles A. Rahrer [(1891) 140 U.S. 545; 35 L. Ed. 572]. Those passages state that when the source of unconstitutionality is removed, the law need not be reenacted. The factual matrix of the present dispute differs entirely from that in Deepchand v. State of Uttar Pradesh [[1959] Supp. 2 S.C.R. 8, 24]. The extended sales‑tax legislation did not depend on the repeal of the earlier Ordinance for its own validity; it would have been operative even if the earlier Ordinance had remained in force. In reality the earlier Ordinance was repealed on 29 December 1950, and consequently there was never any conflict between the old and the new law. By repealing the Ordinance, Parliament turned the ineffective portion of the Notification into surplusage. The operative portion of the Notification therefore survived, and the Central Provinces and Berar Sales Tax Act, 1947 was validly extended to Vindhya Pradesh. This extension was affirmed as valid law in Mithanlal ‘s case [[1959] S.C.R. 445]. The extension did not suffer from the deficiencies identified by the Court in Gannon Dunkerley ‘s case [[1959] S.C.R. 379], because it was not enacted or extended by a State Legislature. The remaining point for consideration was the argument that the Central Provinces and Berar Sales Tax Act was re‑extended to Vindhya Pradesh by Act 6 of 1952, thereby allegedly relying on a State legislative enactment that lacked competence to impose sales tax on building materials supplied under a works contract. The preamble of the Act shows that it

The Vindhya Pradesh Laws (Validating) Act of 1952 was enacted expressly to dispel uncertainty concerning the date from which the extended Central Provinces and Berar Sales Tax Act became operative in Vindhya Pradesh. The uncertainty centred on whether the Act took effect on the date of passage of Act 66 of 1951, that is 31 October 1951, or whether it became operative earlier, namely on 1 April 1951, the date on which it was brought into force in Vindhya Pradesh by Notification No 52 (Econ.) dated 20 March 1951. To remove this doubt, the Vindhya Pradesh Laws (Validating) Act, 1952, which received the President’s assent, contained a declaration in its section 2—previously quoted—stating that the Central Provinces and Berar Sales Tax Act had been, and “shall be deemed to be in force in Vindhya Pradesh from 1 April 1951.” This declaration did not revive the Sales Tax Act by virtue of its own force; rather, it merely affirmed that the Act should be considered validly in operation from the specified date. Section 7 of the same Act, which has been heavily relied upon, reads: “Repeal and savings: As from the dates of the actual enforcement of the Acts specified in Section 2 of this Act the corresponding laws in force in Vindhya Pradesh immediately before the said dates shall be deemed to have been repealed without prejudice to anything done or suffered thereunder or any right, privilege, obligation or liability acquired, accrued or incurred thereunder before the aforesaid dates.” It has been argued that when sections 2 and 7 are read together, they imply that the Central Provinces and Berar Sales Tax Act was newly extended in Vindhya Pradesh from 1 April 1951 by the Vindhya Pradesh Act, and that any earlier law made by any authority was consequently repealed to make way for this fresh extension. The Court finds this argument to be erroneous. First, the legislative competence of the Vindhya Pradesh Legislature was limited by section 22 of the Government of Part C States Act, 1951, which precludes State Legislatures from enacting laws that are repugnant to any law made by Parliament. The Explanation to that provision defines “law made by Parliament” in a way that excludes a law whose purpose is to extend an existing Parliamentary enactment to a State. Consequently, the Vindhya Pradesh Legislature did not repeal section 2 of the Part C States (Laws) Act or the earlier Notification; instead, it merely added its own declaratory authority to the law that had already been extended. The original extension occurred through Notification S.R.O. No 6 dated 29 December 1950, but the Act was not brought into force in Vindhya Pradesh until Notification No 52 (Econ.) dated 20 March 1950, which specified the commencement date of 1 April 1951. Notification S.R.O. No 6 had replaced sub‑section (3) of section 1 of the Central Provinces and Berar Sales Tax Act with the provision that the Act “shall come into force on such date as may be notified by the Central Government in the Official Gazette.” Until Notification No 52 (Econ.) was issued, the Act remained extended in principle but was not yet operative in Vindhya Pradesh.

It was observed that the Central Provinces and Berar Sales Tax Act had been extended to Vindhya Pradesh but had not actually been in force there. A distinction was drawn between merely extending a law and the law subsequently being brought into force on a later date. Section 7 of Vindhya Pradesh Act 6 of 1952 was said to repeal only those laws that were in force immediately before 1 April 1951, the date on which the Central Provinces and Berar Sales Tax Act was scheduled to become operative. Because the Sales Tax Act had not yet been brought into force at that moment, it could not be the law referred to in the phrase “laws in force in Vindhya Pradesh immediately before 1 April 1951”. The only possible law that might have been in force then was Ordinance 2 of 1949, provided that it had not already been successfully repealed. Although the former Act had been extended on 29 December 1950, its commencement was delayed until 1 April 1951, and the statutory language of section 7 expressly dealt with “laws in force”. Consequently, the provision was understood to refer to Ordinance 2 of 1949, which would have been operative immediately before the appointed commencement date if it had not been repealed earlier. In effect, section 7 merely repealed, from the later date of 1 April 1951 (if a repeal was required at all), Ordinance 2 of 1949—a repeal that might have been thought to continue until 31 October 1951 when it was superseded by Act 66 of 1951. In reality, however, that Ordinance had already been repealed on 29 December 1950 by the Repealing Act 66 of 1951. Accordingly, Vindhya Pradesh Act 6 of 1952 could not be said to have introduced the Central Provinces and Berar Sales Tax Act for the first time in Vindhya Pradesh on 1 April 1951; it merely affirmed a legal fact that already existed. The Sales Tax Act did not derive its existence from Act 6 of 1952; rather, Act 6 only declared the effect of the earlier statutes and granted the Vindhya Pradesh Legislature authority to dispel any uncertainty and to protect the law from challenges on the ground that an incorrect Legislature had repealed the Ordinance or extended the Sales Tax Act. The Court held that this line of argument could not be accepted. A further contention was then considered, namely that after the reorganisation of the States, Madhya Pradesh possessed four distinct Sales Tax Acts. It was argued that a person residing in the area of the former State of Madhya Pradesh should not be liable to sales tax on building materials supplied under a works contract pursuant to the Central Provinces and Berar Sales Tax Act, relying on the decision in Pandit Banarsi Das’s case, whereas a person living in the area that formed part of the former Vindhya Pradesh would remain liable under the same Act as it had been extended to that region. This situation was alleged to be plainly inconsistent with the principle of equal protection guaranteed by Article 14 of the Constitution.

In this case, it was contended that a person residing in the area that formerly constituted Vindhya Pradesh should be required to pay sales tax under the Central Provinces and Berar Sales Tax Act, as the Act had been extended to that territory, and that such requirement was manifestly inconsistent with the principle of equal protection embodied in Article 14 of the Constitution. The Court noted that the statutes applicable in the various portions of the reorganised State of Madhya Pradesh had been enacted by different legislatures before the reorganisation. Section 119 of the States Reorganisation Act provides that all laws which were in force at the time of reorganisation shall continue to operate until they are repealed or altered by the competent legislature. The Court reiterated its earlier finding that the sales‑tax legislation of Vindhya Pradesh had been validly enacted and that, by operation of section 119, its validity was carried forward when Vindhya Pradesh became part of Madhya Pradesh. Consequently, the existence of distinct tax statutes in different geographical areas of Madhya Pradesh can be justified on the basis that the differentiation arises from historical circumstances. The Court referred to its earlier judgments in M. K. Prithi Rajji v. State of Rajasthan and State of Madhya Pradesh v. Gwalior Sugar Co. Ltd, where it had upheld classifications based on historical geography and had held that a sugarcane cess imposed only in the former Gwalior State did not offend Article 14. Relying on that precedent, the Court rejected the argument that the differing tax obligations violated the equal‑protection clause. Accordingly, the writ petitions were dismissed. The Court declined to make any order as to costs, and the petitions were dismissed.