M/S. R. M. D. C. (Mysore) Private Ltd vs The State of Mysore

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

Court: supreme-court

Case Number: Civil Appeal No. 517 of 1960

Decision Date: 8 August 1961

Coram: KAPUR, J.

In this matter, the petition was filed by M/S. R. M. D. C. (Mysore) Private Ltd against the State of Mysore, and the case was decided by the Supreme Court of India on 8 August 1961. The petition concerned legislation relating to prize competitions, specifically the Mysore Lotteries and Prize Competitions Control and Tax Act of 1951, as it stood after amendment by Act 26 of 1957, and the central legislation known as the Prize Competitions Act of 1955. The issues examined involved the constitutional validity of the State legislation in view of the provisions of the Constitution of India, namely Articles 252 and 254, the Seventh Schedule, List II entries 34 and 62, and the question of whether the State retained the power to tax prize competitions after having adopted the central Act.

The Court recorded that the Mysore Lotteries and Prize Competitions Control and Tax Act, 1951, had been passed by the Mysore Legislature and had become effective on 1 February 1952. Subsequently, a number of States, acting under Article 252(1) of the Constitution, passed resolutions authorising Parliament to legislate for the control and regulation of prize competitions. In response, Parliament enacted the Prize Competitions Act, 1955, which came into force on 1 April 1956. On 23 February 1956, the Mysore Legislature adopted the central Act by passing a resolution under Article 252(1) that, in order to achieve uniformity in legislation, “the control and regulation of prize competitions and all other matters ancillary thereto should be regulated in the State of Mysore by the Prize Competitions Act, 1955.”

The petitioners, who had been conducting prize competitions in Mysore since 1948, filed a petition under Article 32 of the Constitution challenging the constitutional validity of the central Act. They succeeded in obtaining a stay of the operation of the central legislation while their petition was pending. The Supreme Court dismissed the petition on 9 April 1957. Shortly thereafter, on 31 August 1957, the Governor issued an ordinance that was later enacted as Mysore Act 26 of 1957. This amendment to the 1951 State Act brought all prize competitions held between 31 March 1956 and 31 August 1957 within the scope of the amended State legislation. Consequently, the prize competitions that had been held during the period of the stay of the central Act became liable to taxation under the amended State law.

The petitioners challenged the constitutional validity of this amendment on several grounds. First, they argued that by adopting the central Act, the Mysore Legislature had surrendered its competence to legislate on prize competitions, including the power to tax, to Parliament. Second, they contended that even if the entire power had not been surrendered, the amendment violated Article 252(2) because it indirectly altered the central legislation. These arguments formed the basis of the petitioners’ claim that the amendment was unconstitutional.

The petitioners contended that the amendment of the Central Act introduced a new method of control by imposing monetary penalties; that the Mysore Legislature lacked authority to amend a law which had been repealed by the enactment of the Central Act; that the amended Mysore Act conflicted with the Central Act and therefore was void to the extent of that conflict under Article 254(1) of the Constitution; that the amendment was colourable legislation because the tax on prize competitions was imposed with the purpose of controlling those competitions; and that the amendment was therefore unconstitutional. The Court examined each of these submissions and reached several conclusions. First, it held that the resolution of 23 February 1956, which used the expression “control and regulation of prize competitions and all other matters ancillary thereto,” did not surrender every power relating to prize competitions, and in particular did not relinquish the power to levy tax, relying on the decision in B.R.M.D. Chamarbaugwala v. Union of India (1957) S.C.R. 930. Second, the Court observed that “betting and gambling” listed in entry 34 of List II of the Seventh Schedule and “taxes on betting and gambling” listed in entry 62 of the same List are distinct subjects, so that surrender of control and regulation under the resolution did not include the power to tax; this view was supported by In re The Central Provinces & Berar (1939) F.C.R. 18 and State of Bombay v. B.M.D. Chamarbaugwala (1957) S.C.R. 874. Third, the Court found that the levy imposed under the Mysore Lotteries and Prize Competitions Control and Tax Act, 1951, was a tax exercised under entry 62 and not a penalty, and therefore the amendment did not constitute a new method of control nor was it colourable legislation, relying on K.C. Gajapati Narayan Deo v. State of Orissa (1954) S.C.R. 1. Fourth, the Court clarified that the Prize Competitions Act, 1955, dealt with “betting and gambling” under entry 34, whereas the taxing provisions of the Mysore Act concerned “tax on betting and gambling” under entry 62, so that Article 252(2) was not violated by the amendment, with reference to State of Bombay v. R.M.D. Chamarbaugwala (1957) S.C.R. 874. Fifth, the Court determined that there was no amendment of a repealed Mysore Act and that the retroactive effect of the amending Act was not affected by Article 254(1), citing Deep Chand v. State of Uttar Pradesh and others (1959) Supp. 2 S.C.R. 8. The judgment was delivered in a civil appellate jurisdiction, concerning Civil Appeal No. 517 of 1960, which arose from the order of the Mysore High Court dated 20 November 1958 in Civil Writ Petition No. 234 of 1957. Counsel for the appellants included representatives for the petitioners, while counsel for the respondent were also listed.

In this appeal, the Court reviewed the decision of the High Court of Mysore that had dismissed the appellants’ petition filed under Article 226 of the Constitution. The appellants had been conducting activities described as “prize competitions” in the State of Mysore since August 1948, doing so with the explicit permission of the then Government of Mysore. To regulate such activities, the Mysore Legislature enacted the Mysore Lotteries and Prize Competitions Control and Tax Act, 1951 (referred to as “the Mysore Act”), identified as Act 27 of 1951, which became effective on 21 June 1951. The detailed rules made under that Act were brought into force on 1 February 1952.

Prior to the Mysore legislation, the Bombay Legislature had passed a comparable statute, the Bombay Lotteries and Prize Competitions Control and Tax Act, 1948, which was subsequently amended by the Bombay Act 30 of 1952 in November 1952. In response to those amendments, petitions invoking Article 226 were filed in the Bombay High Court during December 1952 and January 1953, challenging the validity of the Bombay amendment. On 12 January, the Bombay High Court pronounced that the provisions of the Bombay amendment were unconstitutional and that the taxes imposed under those provisions were barred by Article 301 of the Constitution. The Court’s ruling clarified that while individual States could regulate prize competitions within their own territories, any effects that extended beyond state borders required legislative action under Article 252(1) of the Constitution.

Consequently, a series of State legislatures—including those of Andhra, Bombay, Madras, Uttar Pradesh, Hyderabad, Madhya Pradesh, Bharat, Patiala and East Punjab States Union, and Saurashtra—adopted resolutions under Article 252(1) authorising the Parliament of India to enact a uniform law for the control and regulation of prize competitions. Acting on those authorisations, Parliament passed the Prize Competitions Act, 1955 (identified as Act 42 of 1955 and hereinafter “the Central Act”). This Central Act received the President’s assent on 22 October 1955 and was brought into operation on 1 April 1956.

Following the enactment of the Central Act, the Mysore Legislature, on 24 February 1956, passed a resolution formally adopting the Central Act. The specific resolutions adopted by each State, including the one passed by Mysore, are set out later in this judgment. On 7 April 1956, the appellants approached the Supreme Court with a petition under Article 32 of the Constitution, challenging the constitutional validity of the Central Act. That petition was dismissed, and the dismissal is reported in the case titled R.M.D.C. Chamarbaugwala v. Union of India. The appellants also pursued an appeal against the Bombay High Court’s decision that had declared the Bombay Act unconstitutional; that appeal was heard by this Court and was allowed, as recorded in the decision reported as State of Bombay v. R. M. D. Chamarbaugwala.

During the period when the Article 32 petition was pending, the appellants applied for and obtained a stay of the operation of the Central Act, ensuring that the provisions of the Central Act would not take effect until the writ petition was finally disposed of. This stay was granted on

On April 16, 1956, the Supreme Court delivered its judgment in the petition filed under article 32, and the decision was announced on April 9, 1957. Subsequently, on August 31, 1957, the Governor of Mysore issued the Mysore Lotteries and Prize Competitions Control and Tax (Amendment) Ordinance, 1957 (Ordinance 6 of 1957). This ordinance permitted the appellants to continue conducting prize competitions for approximately sixteen months, as they had been doing before the stay of the Central Act. The ordinance was later transformed into an Act on September 28, 1957, becoming Mysore Act 26 of 1957. The amendment introduced several changes to the original 1951 Mysore Act. Notably, the definition of “prize competition” was altered to match the definition provided in the Central Act, and sections eight and nine of the Mysore Act were removed with retrospective effect dating from April 1, 1956. Additionally, clause (b) of sub‑section (1) of section twelve was modified, and language referring to licences under section eight was omitted, also with retrospective effect. A proviso was added to section fifteen, bringing all prize competitions conducted between March 31, 1956, and August 31, 1957, within the scope of the amended Act. Consequently, the prize competitions that the appellants had organized during the stay of the Central Act became subject to the amended Mysore legislation.

On September 10, 1957, the authorities required the appellants to file their returns. The appellants sought an extension, which was granted for an additional fifteen days. They submitted their returns, but did so under protest. Their gross collections were recorded as Rs 26,47,147‑5‑9, and they were asked to make a provisional payment of Rs 3,30,893‑7‑0. Because the appellants failed to make the payment within the stipulated time, proceedings were initiated under section six(1) of the Revenue Recovery Act, 1890 (Central Act 1 of 1890). As a result, both movable and immovable properties of the appellants were attached, and one of the attached properties was sold. The proceeds from the sale were deposited in the Government treasury.

The amended Mysore Act was challenged in the High Court of Mysore through a petition under article 226. The High Court dismissed the petition on November 20, 1958. The appellants then filed the present appeal, relying on a certificate issued by the High Court under article 132(1) of the Constitution. The certificate was limited to the interpretation of article 252 of the Constitution. In the present appeal, the State of Mysore is the respondent. The appellants contended that the Mysore Legislature, having adopted the Central Act, no longer possessed the competence to enact any law relating to prize competitions because the entire subject matter, including the power to tax, had been surrendered to Parliament. They further argued that, even assuming some power remained, the amended Mysore Act was unconstitutional for other reasons.

The appellants argued that the Mysore Act, as amended, was unconstitutional for several reasons. First, they claimed it violated Art. 252(2) of the Constitution because it indirectly altered the Central Act by introducing a new method of control through monetary penalties. Second, they asserted that the Mysore Legislature lacked authority to amend a statute that had been repealed by the enactment of the Central Act. Third, they maintained that the amended Mysore Act conflicted with the Central Act and, to the extent of that conflict, was void under Art. 254(1) of the Constitution. Fourth, they alleged that the legislation was colourable, since the tax imposed on prize competitions was intended primarily to regulate those competitions rather than to raise revenue. Fifth, they questioned the legality of the tax itself and the procedures used for its recovery. On all of these points, the High Court ruled against the appellants, finding the challenges untenable and upholding the validity of the Mysore Act as amended.

The principal question before the Court concerned the effect of the resolutions adopted by the legislatures of several States and the specific resolution adopted by the Mysore Legislature in relation to the Central Act. The resolution passed by the other States read: “This Assembly do resolve that it is desirable that control and regulation of prize‑puzzle competitions and all other matters consequential and incidental thereto insofar as these matters are matters with respect to which Parliament has no power to make laws for the States should be regulated by Parliament by law.” The Mysore Legislative Assembly and Legislative Council each passed resolutions on 23 February 1956 and 21 February 1956 respectively. The Assembly’s resolution stated: “Whereas for the purpose of securing uniformity in legislation it is desirable that the control and regulation of prize competitions and all other matters ancillary thereto should be regulated in the State of Mysore by the Prize Competitions Act, 1955 (Central Act 42 of 1955) passed by Parliament; now, therefore, in pursuance of Clause (1) 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 adopting these resolutions the legislatures of the various States had surrendered their legislative power concerning the control and regulation of prize‑puzzle competitions and all consequential matters, including the power to tax such competitions. Article 252(1) provides: “If it appears to the legislature of two or more States to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in Articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the legislatures of those States, it shall be lawful for Parliament to pass an Act for regulating that matter accordingly, and any Act so passed shall …” The Court thus examined whether the resolutions effected a surrender of legislative competence and the consequent scope of parliamentary authority under Article 252.

Article 952(1) provides that an Act passed by Parliament shall extend to every State that has adopted it by a resolution of its Legislature, and it shall also extend to any other State that subsequently adopts the Act by a similar resolution passed either by the single House of that State’s Legislature or, where the Legislature consists of two Houses, by each of those Houses. Clause (2) of the same article states that any such Act may be amended or repealed only by another Act of Parliament enacted in the same manner, and that a State’s own Legislature may not amend or repeal the Act insofar as it applies to that State.

The effect of a resolution passed under Article 952(1) is that a subject matter which Parliament could not otherwise legislate upon becomes a matter over which Parliament acquires the authority to enact legislation. Once Parliament passes such legislation, the law automatically becomes binding on all States that have passed the resolution or have otherwise adopted the Act. Sub‑clause (2) reinforces this regime by specifying that only Parliament may modify or revoke the law, and that no State Legislature may do so for the States that are subject to the Act.

The Court then examined whether the resolutions adopted by the States, particularly the wording “control and regulation of prize puzzle competitions and all other matters ancillary thereto,” transferred the entire field of prize‑puzzle competitions to the Central Parliament, including the power to levy taxes on that subject. It was argued that the language of the resolutions was sufficiently broad to encompass the legislative competence enumerated in entries 34 and 62 of List II—the former dealing with betting and gambling and the latter covering the taxation of luxuries, which expressly includes betting and gambling. The argument further contended that one method of control and regulation is taxation; therefore, by surrendering all powers ancillary to the subject, the States also surrendered the power to impose taxes on prize‑puzzle competitions.

To support this contention, reference was made to certain decisions of the United States Supreme Court. The first cited case was Rudolph Helen v. United States. In that case the Court considered whether a United States District Court had jurisdiction over the imposition of an additional duty, examining whether the duty functioned as a penalty rather than a revenue‑raising measure. The Court concluded that the additional sum was a penalty because it was levied not for revenue purposes but as a consequence of the importer’s undervaluation of imported goods; consequently, the sum was characterized as a penalty and not as a duty.

The second cited decision was J. W. Bailey v. Dexel Furniture Company. That case dealt with a colourable exercise of legislative power, illustrating how a tax can be used as a device to achieve regulatory objectives beyond the proper scope of the taxing authority.

In the case concerning the Child Labour Tax Law, the Court described a statute that allowed a tax equal to ten percent of an employer’s annual net profits to be imposed when the employer knowingly employed children within specified age limits during any part of the taxable period, regardless of whether one child or several children were employed. The Court held that this imposition did not represent a valid exercise of Congress’s power of taxation; rather, it constituted an unconstitutional regulation because the tax functioned as a penalty for the employment of child labour, a matter that was exclusively within the domain of the States. The decision explained that Congress had, in that case, exercised a regulatory power by imposing a tax that operated as a penalty in order to prevent the employment of child labour, and that by attempting to regulate a subject beyond its jurisdiction, Congress exceeded the limits of its taxation power. The Court noted that this principle had been decided by the United States Supreme Court in earlier decisions, specifically citing (1) (1903)188 U.S.605: 47 L.Ed. 614 and (2) (1922)259 U.S.33: 66 L. Ed. 817.

The next authority relied upon was Gloucester Perry Th (company v. Commonwealth of Pennsylvania (1). In that case, the Court held that no State could levy a tax on the portion of interstate commerce that involved the transportation of persons or property, regardless of the instrumentality used. The tax in question had been imposed on the receipt and landing of passengers and freight, and the Court classified that tax as a tax on transportation, that is, a tax on commerce between the two States involved in the transportation.

The Court also cited a passage from the judgment of Field, J., at page 162, which stated: “The power to regulate that commerce, as well as commerce with foreign nations, vested in Congress is the power to prescribe the rules by which it shall be governed, that is, the conditions upon which it shall be conducted; to determine when it shall be free, and when subject to duties or other exactions.” The Court observed that those remarks were made in a different context, namely the question of whether a State could tax transportation carried on ferry boats that passed between States continuously, and concluded that because such transportation fell within the commerce clause, the States could not impose a tax on it.

Finally, the Court referred to observations made in State of Bombay v. R.M.D. Chamarbaugwala (2), an appeal from the Bombay High Court. Justice Das, C.J., at page 926 observed that “The fact that regulatory provisions have been enacted to control gambling by issuing licences and by imposing taxes does not in any way alter the nature of gambling which is inherently vicious and pernicious,” citing (1) (1885) 114 U.S. 196: 29 L. Ed. 158 and (2) [1957] S.C. R. 874, 929. The Court noted that in that case there was no question regarding the meaning of “control and regulation” or whether those words included the power of taxation.

In the matter before the Court, the principal question was whether prize competitions should be regarded as forms of trade, commerce or business, or whether they were to be classified as anti‑social activities. Counsel submitted that the issue arose because the Bombay High Court, in State of Bombay v. R. M. D. Chamarbaugwala (1), had set aside a tax on prize competitions on the ground that it violated Article 304(b) of the Constitution. On that basis, the various States, it was argued, had acted together to adopt a resolution under Article 252(1) of the Constitution. The purpose of the resolution, according to the submission, was to overcome the constitutional infirmity identified by the Bombay High Court; consequently, the resolution employed the same language as the High Court, namely “for the control and regulation of prize competitions,” and transferred that authority, together with any powers incidental or ancillary, to Parliament. It was further contended that Parliament’s failure to subsequently impose a tax indicated an intention to refrain from doing so. To support this line of argument, reliance was placed on Sabine Robbins v. Taxing District of Shelby County, Tennessee (2), where it was held that when a legislature possesses an exclusive power, its omission to enact regulation reflects a decision to leave the subject free from restriction or imposition. The appellant’s central contention was that the terms “control and regulation” and “incidental and ancillary thereto” necessarily encompassed the power to tax. The Court, however, found this reasoning unconvincing. It observed that the authority over betting and gambling is specifically listed in Entry 34 of the State List, which reads “Betting and gambling.” By contrast, the power to levy taxes is enumerated in Entry 62, which states “Taxes on luxuries including taxes on entertainments, amusements, betting and gambling.” The Constitution, following the pattern of the Government of India Act, allocates legislative powers between the Union and the States, and the subjects each may legislate upon are set out in the three Lists. The Constitution also contains provisions governing the resolution of conflicts between statutes enacted by Parliament and those passed by State legislatures. The unique character of the Indian Constitution’s distribution of powers was highlighted by Gwyer, C. J., in Re The Central Provinces & Berar Act No. XIV of 1938 (1) at page 38, and by Sulaiman, J., at pages 73 and 74. Gwyer, C. J. warned that decisions concerning federal and provincial powers must be grounded in the specific wording of the Constitution, noting that no two constitutions are identical and that it is unsafe to apply a ruling from one jurisdiction to another without careful qualification. This caution was reaffirmed by Sulaiman, J., who observed that the detailed specification of heads in the Lists, such as the distinct entry for “taxes on the sale of goods” granted to provinces, underscores the need to interpret each entry according to its language and not to force meanings upon them that they cannot reasonably bear, as illustrated in Brophy v. Att. Gen. of Manitoba (1).

The Court observed that a principle applied in one case cannot be transferred to another without careful qualification, even when the same words appear in both situations, because a word or phrase may acquire a particular shade of meaning from its context and consequently convey a different sense. The Court cited the observations of Sulaiman, J., who noted that the constitutional heads have been delineated with great precision and that a specific head, “taxes on the sale of goods,” has been allocated to the Provinces. This allocation does not appear as a distinct entry in the State or Provincial List of any of the Dominions, making it a unique feature of the Indian Constitution and one that is highly relevant to the present dispute, especially since taxes on bales have been adopted as a post‑war measure in many countries. The Court stressed that the entries in the constitutional Lists must be interpreted according to the language used, and it would be wholly unjustified to impose a meaning upon them that they cannot reasonably sustain. The Court referred to Brophy v. Att. Gen. of Manitoba for support and also mentioned similar observations made by Lord Wright, M. R., in James v. Commonwealth of Australia, both of which were quoted with approval in re The Central Provinces and Berar Act No. XIV of 1938 by Sulaiman, J. Consequently, the subject of “betting and gambling” listed in entry 34 of List II and the taxes on betting and gambling listed in entry 62 of List II must be read as separate powers. Hence, when the control and regulation of prize competitions were surrendered to Parliament by the cited resolutions, the power to tax under entry 62 of List II—which is a distinct head—cannot be said to have been surrendered. The Court also referred to the observations of Das, C. J., in State of Bombay v. R. M. D. Chamarbaugwala, cited later in the judgment. It was emphasized that the scheme of the Indian Constitution and the distribution of powers under it differ fundamentally from that of the United States, and therefore the construction of the entries advocated by the appellants would be erroneous. The parties contended that a tax must be levied for revenue purposes and not for the purpose of control, asserting that the Mysore Act represented colourable legislation because the impugned tax was ostensibly designed to control prize competitions. The Court remarked that in interpreting the Constitution or any statutory provision, the judiciary must ascertain Parliament’s meaning and intention from the language of the enactment itself, without regard to the motives behind it. As Gwyer, C. J., warned in re The Central Provinces and Berar Act No. XIV of 1938, “It is not for the Court to express, or indeed to entertain, any”

The Court observed that it could not render an opinion on the desirability of a particular statute once it was satisfied that the legislation lay within the competence of the enacting Legislature, and that it would not allow policy considerations to influence its judgment because such considerations lie wholly outside its domain. Similar observations concerning the doctrine of colourable legislation were made by Mukherjea, J., in K. C. Gajapati Narayan Deo and Others v. The State of Orissa, where he explained that the doctrine does not raise any question of good faith or bad faith on the part of the Legislature. He stated that the doctrine reduces to the issue of whether the particular legislature possessed the authority to enact the law in question; if the legislature was competent, the motives behind the enactment are irrelevant, and if the legislature lacked competence, motive is a non‑issue. He further remarked that the constitutionality of a statute is always a question of power. Accordingly, the Court held that the Mysore Legislature possessed the authority to impose the tax, that it had not surrendered its taxing power to Parliament, and therefore the levy could not be characterised as colourable legislation nor be struck down on that ground. The Court then turned to the observations of Das, C.J., in the State of Bombay v. R.M.D. Chamarbaugwala, quoting that the impugned law pertained to betting and gambling under entry 34 and that the taxing provision related to a tax on betting and gambling under entry 62, both within the legislative competence of the State legislature. He further noted that a sufficient territorial nexus existed to permit the State to collect the tax from petitioners who conducted prize competitions through a newspaper printed and published outside the State of Bombay. Consequently, the Central Act concerned betting and gambling under entry 34 of List II, while the taxing sections of the Mysore Act related to a tax on betting and gambling under entry 62. The Court also observed, with reference to Venkatarama Ayyar, J., in B.M.D. Chamarbaugwala v. The Union of India, that the term “control and regulation” was necessary for gambling, whereas mere regulation would suffice for contests involving skill. In view of the finding that the States, by passing the resolution, had not relinquished their power of taxation, the Court concluded that the impugned levy could not be described as colourable legislation.

The Court observed that the amendment of the Mysore Act did not contravene Article 252(1) of the Constitution, as cited in the 1957 Supreme Court Reports at pages 874‑929 and 930‑939, and it could not be characterised as a colourable attempt to amend the Central Act by disguising a penalty as a tax. The Court reiterated its earlier finding that the levy imposed under the Mysore Act was a genuine tax, exercised under the legislative authority granted by entry 62, and not a penalty in disguise. The next issue raised concerned the status of section 12(1)(b) of the Mysore Act after the Central Act came into force. It was argued that, on the basis of Article 254(1) of the Constitution, this provision became void because any State law repugnant to a law made by Parliament on a matter in the Concurrent List must, to the extent of the repugnancy, be declared void, the Parliament law prevailing irrespective of which was enacted first. The contention was that the repugnancy between the Central Act and the Mysore Act regarding licensing rendered all provisions that referred to licensing void, and consequently those provisions could not be amended. The State submitted that Article 252(1) constituted a complete code and that Article 254 was inapplicable, likening it to section 107 of the Government of India Act 1935, which applies only where the conflict arises under List III of the Constitution. The Court noted that it was unnecessary to resolve this latter argument or to refer to the authorities cited, namely Megh Raj v. Allah Rakhia (1) and Deep Chand v. The State of Uttar Pradesh & Others (2). The Court explained that the inconsistency would affect only that part of the Mysore Act that became repugnant to sections 4 and 5 of the Central Act, namely the provisions dealing with the prohibition and licensing of prize competitions, such as section 8 of the Mysore Act. Accordingly, the portion of section 12(1)(b) that dealt with taxation of prize competitions for which a licence had been obtained under section 8 could be said to have become void, while the remainder of the provision remained valid. By omitting the words “for which a licence had been obtained” from section 8, the rest of the clause was preserved. The effect of the amending Act, as the Court held, was that the offending words were deemed omitted from 1 April 1956, and the remaining part of clause (b) was not repugnant to any provision of the Central Act.

In the Court’s view, the portion of clause (b) of section 12 (1) that dealt with licensing became inconsistent with the Central Act, but the remainder of the clause was not repugnant to any provision of the Central legislation. Accordingly, Article 254 (1) of the Constitution did not render section 12 (1) (b) entirely void; it only nullified the part that referred to licensing. When the Mysore Act was originally enacted, it fell within the legislative competence of the Mysore Legislature. Although the licensing provisions may have become unconstitutional because of sections 4 and 5 of the Central Act, the taxation provisions could not be declared void. The Amending Act later deemed the words that conflicted with the Central Act to have been omitted as of 1 April 1956, the date on which the Central Act became operative. This approach aligns with the reasoning in Deep Chand v The State of Uttar Pradesh and Others, where the doctrine of eclipse applies to a law that was valid at the time of its passage but later became invalid due to a subsequent constitutional inconsistency. The cited authorities (1) (1947) L.R. 74 I.A. 12, 19 and (2) [1959] Supp. 2 S.C.R. 8, 24, 42 support the conclusion that the challenge to the constitutionality of the Mysore Act on the five points raised was resolved. The Court therefore summarised the law as follows: first, by adopting resolutions concerning control and regulation, the power to tax was not surrendered to Parliament; second, the Amending Act did not introduce a new method of controlling prize competitions nor was it a colourable piece of legislation; third, there was no amendment of an Act that had already been repealed, and the retroactive effect of the Amending Act was not disturbed by Article 254 (1) of the Constitution.

The Court then considered three further objections to the legality of the assessment. The first objection claimed that the assessment was provisional, a situation not contemplated by the Act. The second objection asserted that a fresh notification should have been issued after the amendment of the Mysore Act. The third objection argued that, at the time the recovery proceedings were initiated, the tax had not yet become due because the statutory period of one week for payment had not expired. On 10 September 1957, the Deputy Commissioner of Bangalore issued a notice requiring the appellants to produce accounts for prize competitions conducted from 1 April 1956 up to the date of the competitions’ closure, giving them three days to comply. The appellants responded that the Ordinance under which the notice was issued was unconstitutional and illegal, and they requested thirty days to prepare their statements. The Deputy Commissioner granted only fifteen days. Although the appellants protested, they agreed to file their statements within the period allowed. Consequently, the statements were submitted on 9 October 1957, showing a gross collection of revenue amounting to the sum indicated in the record.

The record shows that the entry numbered 26,47,147‑5‑9 contained the following endorsement: “The above figures of collections are verified partly with available bank statements and partly with the books of accounts and are subject to reconciliation between the amount as per ledger and that as above. The commission and expenses deducted by Collectors are accepted as per certificate of the Management and the State Account. Collections are verified only with the Collection Register. (Sd.)…………………………………… Chartered Accountants.” Under this endorsement the Deputy Commissioner issued a letter dated 16 October 1957 stating: “You are hereby called upon to pay up provisionally a sum of Rs. 3,30,893‑7‑0 towards tax amount to the Reserve Bank of India and forward the challan in token of payment to this office within a week.” Because the tax was not paid, the authorities proceeded under the provisions of the Revenue Recovery Act. The Court observed that this demand could not be characterised as a provisional assessment. The return filed by the appellants had been accepted, and on the basis of that return the tax was demanded; consequently the demand was to be treated as a final assessment, not a provisional one. The High Court had previously held that the assessment should be regarded as final, and the Court noted that any later assessment or revised assessment might raise the issue of provisionality, but that was not the situation here. The next contention raised by the appellants concerned the necessity of issuing a fresh notification. The Court found this submission unsubstantial, holding that the validity of the notification depended on the constitutionality of the amended Section 12(1)(b). Having upheld the constitutionality of that amendment, the Court concluded that the notification was likewise valid. The notification, the Court explained, dealt solely with the rate of taxation and made no reference to the acquisition or non‑acquisition of any licence. The final argument advanced by the appellants was that the tax was payable within a week, a period that had not yet elapsed. The Court clarified that the notice of demand required the appellants to pay the specified sum and to produce the challan as proof of payment within a week; it did not constitute an order fixing the tax as payable within that week. The appellants had not made the payment nor produced the challan within the stipulated time, and therefore the objection was without merit. In view of these findings, the Court overruled the objections, dismissed the appeal, ordered the appeal to be dismissed with costs, and affirmed that the appeal was dismissed.