R.M.D.C. Mysore Private Limited vs State of Mysore

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

Court: supreme-court

Case Number: Appeal (civil) 517 of 1960

Decision Date: 22 August 1961

Coram: J.L. Kapur, M. Hidayatullah, J.C. Shah, R. Dayal

The appeal concerned R.M.D.C. Mysore Private Limited versus the State of Mysore and was decided by the Supreme Court of India on 22 August 1961. The case was listed as Appeal (civil) 517 of 1960. The bench that heard the matter comprised Justice J.L. Kapur, Justice K. Subbarao, Justice M. Hidayatullah, Justice J.C. Shah and Justice R. Dayal. Justice Kapur delivered the judgment on behalf of the Court. The present petition challenged the judgment and order of the High Court of Mysore, which had dismissed an earlier petition filed by the appellants under Article 226 of the Constitution.

The appellants had been conducting prize competitions in the State of Mysore since August 1948 with the explicit permission of the then Government of Mysore. The Mysore Legislature subsequently enacted the Mysore Lotteries and Prize Competitions Control and Tax Act, 1951 (Act 27 of 1951), hereinafter referred to as the “Mysore Act”, which came into force on 21 June 1951; the rules made under that Act became effective on 1 February 1952. Earlier, the Bombay Legislature had enacted a similar statute, the Bombay Lotteries and Prize Competitions Control and Tax Act, 1948, which was amended by the Bombay Act 30 of 1952 in November 1952. Petitions invoking Article 226 were filed in the Bombay High Court in December 1952 and January 1953 challenging the Bombay legislation. On 12 January 1955 the Bombay High Court ruled that the amended provisions of the Bombay Act were unconstitutional and that the taxes imposed under those provisions violated Article 301 of the Constitution. The Court clarified that while States could regulate prize competitions within their own territories, any effects beyond those borders required legislation under Article 252(1). Consequently, the States of Andhra, Bombay, Madras, Uttar Pradesh, Hyderabad, Madhya Bharat, Pepsu and Saurashtra passed resolutions under Article 252(1) authorising Parliament to legislate on the control and regulation of prize competitions. In response, Parliament enacted the Prize Competitions Act, 1955 (Act 42 of 1955), referred to as the “Central Act”, which obtained presidential assent on 22 October 1955 and became operational on 1 April 1956. The Mysore Legislature adopted the Central Act by passing a resolution on 24 February 1956; the full text of the various State resolutions and the Mysore resolution would be reproduced later in the judgment. On 7 April 1956 the appellants filed a petition under Article 32 of the Constitution in this Court challenging the validity of the Central Act. That petition was dismissed, and the dismissal is reported as R.M.D.C. Chamarbaugwala v. Union of India (1957 SCR 930, 939).

The Court referred to the decision of Union of India ( 1957 SCR 930, 939) and observed that the appeal challenging the Bombay judgment, which declared the Bombay Act to be unconstitution, was brought before this Court and allowed; the decision is reported as State of Bombay v. R. M. D. Chamarbaugwala ( 1957 SCR 874, 929). While the petition under Article 32 was pending, the appellants applied for, and on April 16 1956 obtained, a stay of the operation of the Central Act pending disposal of that writ petition. The Supreme Court delivered its judgment on the petition on April 9 1957. Subsequently, on August 31 1957, the Governor of Mysore issued the Mysore Lotteries & Prize Competitions Control and Tax (Amendment) Ordinance, 1957 (Ord. 6 of 1957), which permitted the appellants to continue conducting prize competitions for roughly sixteen months. The Ordinance was later enacted as Mysore Act 26 of 1957 on September 28 1957. By amending the Mysore Act originally passed in 1951, the definition of “prize competition” was altered to adopt the definition contained in the Central Act; sections 8 and 9 of the Mysore Act were omitted with retrospective effect from April 1 1956. Clause (b) of sub‑section (1) of section 12 was also amended, removing references to licences under section 8, and the amendment was given retrospective operation. A proviso added to section 15 brought all prize competitions held between March 31 1956 and August 31 1957 within the scope of the amended Act. Consequently, the prize competitions that the appellants conducted during the stay of the Central Act became subject to the amended Mysore Act. On September 10 1957 the appellants were required to file their returns; upon requesting an extension, they were granted an additional fifteen days and filed their returns, albeit under protest. Their gross collections amounted to Rs 26,47,147‑5‑9, and they were provisionally required to pay Rs 3,30,893‑7‑0. Because the payment was not made within the stipulated period, proceedings were instituted under section 6(1) of the Revenue Recovery Act, 1890 (Central Act 1 of 1890); movable and immovable properties were attached, one property was sold, and the proceeds were deposited in the Government treasury. The amendment to the Mysore Act was challenged before the High Court of Mysore by a petition under Article 226; that petition was dismissed on November 20 1958. The present appeal was filed against that judgment and order pursuant to a certificate issued by the High Court under Article 132(1) of the Constitution, with the certificate limited to the interpretation of the relevant constitutional provisions.

The State of Mysore appeared as the respondent in the appeal. The appellants contested the constitutionality of the Mysore Act on several grounds. First, they argued that by adopting the Central Act, the Mysore Legislature had relinquished its competence to enact any law concerning prize competitions, including the authority to levy taxes, because the entire subject matter and the fiscal power were said to have been surrendered to Parliament. Second, the appellants maintained that even if such surrender had not occurred, the amended Mysore Act contravened Article 252(2) of the Constitution because it effectively altered the Central Act by introducing a new method of control through monetary penalties. Third, they contended that the Mysore Legislature lacked authority to amend an Act that had been repealed by the enactment of the Central Act. Fourth, the appellants asserted that the amended Mysore Act was inconsistent with the Central Act and, to the extent of that inconsistency, was void under Article 254(1) of the Constitution. Fifth, they described the legislation as colourable, claiming that the tax imposed on prize competitions was intended primarily to control those competitions rather than to raise revenue. In addition to these points, other questions were raised concerning the legality of imposing the tax and the procedures employed for its recovery. The High Court examined all of these arguments and ruled against the appellants on each of the issues raised.

The principal question that the Court considered next concerned the effect of the resolutions passed by the legislatures of the various States mentioned earlier, as well as the resolution adopted by the Mysore Legislature that embraced the Central Act. The resolution passed by the States was expressed as follows: “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 regulation by Parliament by law.” The two houses of the Mysore Legislature each passed a resolution, the Legislative Assembly on 23 February 1956 and the Legislative Council on 21 February 1956. The Assembly’s resolution read: “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 argued that by adopting these resolutions, the legislatures of the various States had surrendered their legislative power regarding the control and regulation of prize‑puzzle competitions and all related matters, thereby leaving them without any authority to legislate, including the power to tax, on that subject. Article 252(1) provides: “If it appears to the legislature of two or more…”

The Court set out the language of Article 252 of the Constitution. It read: “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 apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where there are two Houses, by each of the Houses of the Legislature of that State.” Clause (2) added: “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 Court explained that the effect of a resolution under clause (1) was that a matter, which ordinarily fell outside Parliament’s legislative competence, became a matter within Parliament’s power to regulate by an Act. Once Parliament enacted such an Act, it became binding on every State that had passed the required resolution or later adopted the Act by a similar resolution. Sub‑clause (2) made clear that any amendment or repeal of that Act could be done only by Parliament in the same manner, and that the State legislature could not amend or repeal the Act for the State to which it applied.

The issue then before the Court was whether the resolutions adopted by the State legislatures, and particularly the words “control and regulation of prize puzzle competitions and all other matters ancillary thereto,” relinquished the entire field of prize competitions to Parliament, including the power to impose taxes. The petitioner argued that the language of the resolutions was broad enough to encompass the legislative powers listed under entry 34 and entry 62 of List II, the former covering “betting and gambling” and the latter covering the taxation of luxuries, including “betting and gambling.” The petitioner contended that one method of exercising control and regulation is taxation, and therefore, by surrendering all powers ancillary to prize competitions, the State also surrendered its power to tax such activities. To support this contention, the petitioner relied on decisions of the United States Supreme Court. The first case cited was Rudolph Helwig v. United States (1903 (188) US 605 : 47 L. Ed. 614). In that case the Court examined whether an additional duty imposed by the United States District Court was a penalty or a revenue duty, and held that the imposition was a penalty because it was not levied for the purpose of revenue but as a sanction for the importer’s undervaluation of goods. The second case cited was J. W. Bailey v. Drexel Furniture Company (1922 (259) US 33 : 66 L. Ed. 817). That case involved a so‑called Child Labour Tax Law in which a tax of ten per cent of net profits was conditioned on the employment of child labour, and the United States Court held that the statute was an unconstitutional colourable use of the taxing power, effectively a penalty rather than a genuine tax.

In the case of Rudolph Helwig v. United States the Court examined an additional sum imposed on an importer. The Court held that the sum was not intended to raise revenue but was imposed because of the importer’s act of undervaluing the imported goods. Accordingly, the additional amount functioned as a penalty for the undervaluation, regardless of whether the undervaluation was intentional or innocent, and irrespective of whether the statute described the amount as a “further sum” or an “additional duty.” The Court therefore concluded that the amount was a penalty, not a duty on the imported article.

The next authority relied upon was J. W. Bailey v. Drexel Furniture Company, 1922 (259) US 33 : 66 L Ed. 817. That decision concerned a colourable exercise of legislative power under a Child Labour Tax Law. The statute authorized a tax of ten per cent of the net annual profits of an employer who knowingly employed children within prescribed age limits during any part of the taxable period, whether a single child or several were employed. The United States Supreme Court held that this tax was not a valid exercise of Congress’s taxation power. Rather, the tax operated as a penalty intended to discourage the employment of child labour, a matter that the Court recognized as an exclusive function of the States. The Court explained that Congress had used its power of taxation as a tool to regulate a subject over which it lacked jurisdiction, effectively imposing a punitive measure in place of a legitimate tax. This principle formed the basis of the Court’s decision.

The third precedent cited was Gloucester Ferry Company v. Commonwealth of Pennsylvania, 1885 (114) US 196 : 29 L Ed. 158. The case dealt with interstate commerce, and the Court ruled that a State could not levy a tax on the portion of interstate commerce that involved the transportation of persons and property, regardless of the mode of transportation used. The tax in question was imposed on the receipt and landing of passengers and freight, and the Court characterized it as a tax on transportation—that is, a tax on commerce occurring between the two States involved.

In support of these authorities, counsel for the appellants quoted a passage from the judgment of Field, J., at page 162: “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 counsel observed that these remarks were made in a different factual context, namely whether a State could tax ferry transportation that operated continuously between States. Because such transportation falls within the scope of the commerce clause, the Court held that States could not impose such a tax. The argument then proceeded to reference observations made in the decision of State of Bombay v. R. M. D. C. Mysore Private Limited, which were also invoked by the appellants.

In this matter the Court referred to the decision reported in M. D. Chamarbaugwala, 1957 SCR 874 at page 929, which was an appeal against a judgment of the Bombay High Court. The Chief Justice, Das, observed at page 926 that the mere enactment of regulatory provisions to control gambling by issuing licences and imposing taxes does not in any way alter the character of gambling, which he described as inherently vicious and pernicious. The Court noted that in that case no question arose concerning the meaning of the expression “control and regulation”, nor was it necessary to decide whether those words included a power of taxation. The only issue before the Court was whether prize competitions constituted trade, commerce or business, or whether they were anti‑social activities.

The parties argued that the Bombay High Court’s decision in State of Bombay v. R. M. D. Chamarbaugwala, I.L.R. 1955 Bom 680, which struck down a tax on prize competitions as contravening Article 304(b) of the Constitution, had prompted the various States to combine and pass a resolution under Article 252(1) of the Constitution. According to the appellants, the purpose of those resolutions was to overcome the unconstitutionality identified by the Bombay High Court; consequently the resolutions were drafted in the same language, namely “for the control and regulation of prize competitions,” and the power thus transferred to Parliament was said to include the powers “incidental and ancillary thereto,” which the appellants claimed must encompass the power to tax.

The appellants further contended that Parliament’s failure to impose any tax on such competitions indicated a deliberate refusal to exercise that power. In support of this contention they relied on the American case Sabine Robbins v. Taxing District of Shelby County, Tennessee, 39 L.Ed. 694, where it was held that when a legislature possesses an exclusive power, its failure to make an express regulation shows an intention to leave the subject free from restriction or imposition.

The Court observed that the core of the appellants’ argument was that the words “control and regulation” and “incidental and ancillary thereto” included the power of taxation, but it found that argument to be unsound. The Court pointed out that the power concerning betting and gambling is expressly listed in Entry 34 of the State List, which reads “Betting and gambling.” The power of taxation, on the other hand, is found in Entry 62, which states “Taxes on luxuries, including taxes on entertainments, amusements, betting and gambling.” The Court emphasized that, under the Indian Constitution as inherited from the Government of India Act, legislative authority is divided between the Union and the States, with subjects enumerated in three separate Lists and in the Articles of the Constitution. The Constitution also contains provisions that determine the outcome when a statute made by Parliament conflicts with a statute made by a State legislature. Finally, the Court noted that the distinctive feature of the Indian Constitution, namely the precise enumeration of powers in the entries of the Lists, had been highlighted by Justice Gwyer in earlier jurisprudence.

In discussing the limits of federal and provincial powers, the Court referred to the Central Provinces & Berar Act No. XIV of 1938, cited in the 1939 Federal Court Reports at pages 18, 38, 73 and 74. The Court also quoted the observations of Justice Sulaiman at pages 73 and 74 of that report. Justice Gwyer, C. J., was quoted as saying: “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 a decision on one of them can be applied without qualification to another. This may be so even where the words or expressions used are the same in both cases; for a word or a phrase may take a colour from its context and bear different senses accordingly.” Justice Sulaiman, at page 74, observed that the heads of power have been separately specified in great detail and that a special head labelled “taxes on the sale of goods” has been assigned to the Provinces, a head that did not appear as a separate and distinct item in the State or Provincial Lists of any of the Dominions. He noted that this peculiarity is a unique feature of the Indian Constitution and that it has important bearing on the present case because taxes on sales have been adopted as a post‑war measure in most countries. The Court explained that the entries in the constitutional Lists must be read according to the words employed and that it would be wholly unjustified to force a meaning into them that they cannot reasonably bear, citing Brophy v. Att. Gen. of Manitoba ([1895] A.C. 202, 215). Similar observations of Lord Wright, M. R., in James v. Commonwealth of Australia ([1936] A.C. 578, 613) were also quoted with approval by Justice Sulaiman. Accordingly, the Court held that the subject of “betting and gambling” listed in entry 34 of List II and the power to levy taxes on betting and gambling listed in entry 62 of List II must be read as separate powers. Consequently, when the control and regulation of prize competitions was surrendered to Parliament by the resolutions previously quoted, the power to tax under entry 62 of List II, being a distinct head, was not surrendered. The Court referred to the observations of Chief Justice Das in State of Bombay v. R. M. D. Chamarbaugwala, cited later in the judgment, to reinforce that the scheme of the Indian Constitution and the distribution of powers under it are entirely different from those in the United States, and that the construction proposed by the appellants would be erroneous. The appellants had contended that a tax must be levied solely for the purpose of revenue and not for the purpose of control, arguing that the Mysore Act was colourable legislation because the impugned tax was levied for the purpose of controlling prize competitions.

The Court observed that the impugned provision was presented as a tax while its true purpose was to control prize competitions. It emphasized that when the Court interprets the Constitution or any statutory provision, its task is to determine the meaning and intention of Parliament from the language of the statute itself, without regard to the motives behind the legislation. The Court then quoted the judgment of Gwyer, C. J., in re The Central Provinces and Berar Act No. XIV of 1938 (1939 FCR 18, 38, 73, 74), stating: “It is not for the Court to express, or indeed to entertain, any opinion on the expediency of a 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.” The Court further noted similar observations on the doctrine of colourable legislation made by Mukherjea, J., then a Judge, in K. C. Gajapati Narayan Deo & Others v. The State of Orissa (1954 SCR 1, 10). In that case the learned Judge explained: “It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona fides or mala fides on the part of the legislature. The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand, if the legislature lacks competency, the question of motive does not arise at all. Whether a statute is constitutional or not is thus always a question of power.” Applying this principle, the Court held that the Mysore Legislature possessed the requisite power, which it had not surrendered to Parliament, and therefore the imposition of the tax could not be characterised as colourable legislation nor as unconstitutional. The Court then referred to the observations of Das, C. J., in the State of Bombay v. R. M. D. Chamarbaugwala (1957 SCR 874, 929), which concluded: “For the reasons stated above, we have come to the conclusion that the impugned law is a law with respect to betting and gambling under entry 34 and the impugned taxing section is a law with respect to a tax on betting and gambling under entry 62 and that it was within the legislative competence of the State legislature to have enacted it. There is sufficient territorial nexus to entitle the State legislature to collect the tax from the petitioners who carry on the prize competitions through the medium of a newspaper printed and published outside the State of Bombay.” Consequently, the Court affirmed that the Central Act pertained to 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, and that the taxing sections of the Mysore Act are with

In this case the Court observed that the taxation provision of the Mysore Act fell within entry 62, which authorised a tax on betting and gambling. The Court further referred to the judgment of Venkatarama Ayyar, J., in R. M. D. Chamarbaugwala v. The Union of India (1957 SCR 930, 939), where the judge had examined the wording of the resolution and held that the expression “control and regulation” was essential when dealing with gambling, whereas for competitions that required skill, merely “regulation” would have sufficed. Applying that analysis, the Court found that the resolution adopted by the States did not surrender their authority to levy tax; consequently, the amendment of the Mysore Act did not breach clause (2) of Article 252 of the Constitution. Moreover, the Court rejected the allegation that the amendment represented colourable legislation, an indirect attempt to modify the Central Act by introducing a penalty disguised as a tax. It affirmed that the levy imposed by the Mysore Act was a genuine tax, exercised under the legislative power granted by entry 62, and not a penalty. The next issue raised concerned the effect of the Central Act on Section 12(1)(b) of the Mysore Act. It was argued that, after the Central Act became operative, Section 12(1)(b) became void under Article 254(1) of the Constitution, which provides that if a provision of a State law is repugnant to a law made by Parliament on a matter in the Concurrent List, the State provision shall be void to the extent of the repugnancy. The State contended that because the repugnancy related to licensing, every provision referring to licensing should be declared void and consequently could not be amended. The State further submitted that Article 252(1) formed a complete code, rendering Article 254 inapplicable, since Article 254, like the earlier section 107 of the Government of India Act, 1935, applied only when the conflict arose under List III, the Concurrent List. The Court noted that it was unnecessary to resolve this subsidiary argument or to consider the authorities cited by the parties, such as Megh Raj v. Allah Rakhia ((1947) L.R. 74 I.A. 12, 19) and Deep Chand v. The State of Uttar Pradesh & Others (1959 (S2) SCR 8, 24, 42). The Court concluded that any inconsistency would affect only that part of the Mysore Act which became repugnant, leaving the remainder of the provision intact.

In this part of the judgment the Court examined how sections 4 and 5 of the Central Act, which prohibited prize competitions and regulated their licensing, conflicted with section 8 of the Mysore Act. The Court observed that the conflict rendered void only the fragment of section 12(1)(b) that imposed taxes on prize competitions for which a licence had been obtained under section 8, while the remainder of that provision remained intact. Consequently, the Court held that by eliminating the words “for which a licence had been obtained” from the wording of section 8, the balance of the clause continued to be valid. The amending Act, the Court noted, treated those omitted words as if they had been removed effective 1 April 1956, and therefore the surviving part of clause (b) no longer conflicted with any provision of the Central Act. Under Article 254(1) this meant that section 12(1)(b) was not entirely void; only the portion relating to licensing was repugnant, leaving the rest of the section operative. The Court further explained that 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 the Central Act’s sections 4 and 5, the taxation provisions could not be declared void. This was because, following the Amending Act, the Mysore Legislature deemed the offending words to have been omitted from 1 April 1956, the date on which the Central Act became effective. The Court aligned this reasoning with the doctrine of eclipse articulated in Deep Chand v. The State of Uttar Pradesh and Others (1959 (S2) SCR 8, 24, 42), which allows a law that was valid at its inception to become inoperative when a later constitutional inconsistency arises. With this analysis, the Court concluded that the constitutional challenge to the Mysore Act on the five points previously raised was resolved. The Court then summarised the law as follows: first, the passage of resolutions concerning control and regulation did not surrender the power to tax to Parliament; second, the Amending Act was not a novel scheme for regulating prize competitions nor a colourable piece of legislation; third, no amendment was made to a repealed act, and the retroactive effect of the Amending Act was not impaired by Article 254(1). The Court proceeded to address three further objections to the assessment’s legality: first, the assessment was provisional, a circumstance not provided for by the Act; second, a fresh notification should have been issued after the Mysore Act was amended; and third, at the time the recovery proceedings were initiated, the tax had not yet become due because the statutory one‑week period for payment had not expired. Accordingly, on 10 September 1957, the Deputy Commissioner of Bangalore summoned the appellants to comply with the assessment.

The Deputy Commissioner issued a notice requiring the appellants to produce accounts for every prize competition that had been conducted from 1 April 1956 up to the date each competition closed, and he allowed three days for compliance. The appellants responded that the Ordinance on which the notice was based was unconstitutional and illegal, and they requested thirty days to prepare the statements, but the Deputy Commissioner granted only fifteen days. Despite their protest, the appellants agreed to submit the statements within the fifteen‑day period that had been granted. The statements were filed on 9 October 1957 and they indicated a gross collection amounting to Rs. 26,47,147‑5‑9. The statements bore an endorsement stating that the figures were verified partially with available bank statements and partially with the books of accounts, and that reconciliation between the ledger and the reported amounts remained pending. The endorsement further noted that the commission and expenses deducted by collectors were accepted according to the certificate of the Management and the State Account, and that the collections were verified only with the Collection Register, signed by chartered accountants. The chartered accountants signed the endorsement, confirming that the verification had been performed in accordance with professional standards. On 16 October 1957 the Deputy Commissioner sent a letter directing the appellants to pay provisionally the sum of Rs. 3,30,893‑7‑0 as tax to the Reserve Bank of India and to forward the challan as token of payment within one week. The letter explicitly instructed the appellants to make the payment provisional, meaning that the amount was to be treated as an interim demand pending final determination.

Because the appellants failed to make the payment, the authorities invoked the provisions of the Revenue Recovery Act to recover the tax. The Court clarified that this demand could not be characterized as a provisional assessment, since the return submitted by the appellants had been accepted and the tax was demanded on the basis of that accepted return. The Court emphasized that a provisional assessment is one made before the final determination of the tax liability, which was not the situation here. Consequently, the Court held, following the High Court, that the demand constituted a final assessment, and only if a further or revised assessment were made would the question of provisionality arise. Regarding the objection that a fresh notification was required, the Court found the submission unsubstantial, observing that the legality of the notification depended on the constitutionality of the amended section 12(1)(b), which had been upheld as valid. The Court examined the constitutional challenge to the amended section and found no infirmity, thereby upholding the statutory basis for the notification. The Court therefore concluded that the notification, which concerned only the rate of taxation and made no reference to the issuance or non‑issuance of a licence, was itself valid. The appellants also argued that the tax was payable within a week that had not yet expired, but the Court noted that the notice of demand merely called upon the appellants to pay the specified sum and to produce the challan within a week, without constituting an order fixing the tax payable within that period. The Court further observed that the requirement to produce a challan within a week was a procedural step, not a substantive imposition of the tax within that timeframe. Since the appellants neither paid the amount nor were able to produce the challan within the stipulated week, the Court found this objection without merit. Accordingly, the Court overruled all the objections raised by the appellants. In the final order, the Court dismissed the appeal and held that it had failed.

The Court concluded the proceedings by directing that the party who had been unsuccessful in the appeal shall be responsible for bearing the costs of the suit. This directive required that the losing party discharge the expenses incurred by the opposite side in connection with the litigation. The order encompassed all ordinary expenditures that arose from the conduct of the case, including but not limited to filing fees, counsel fees, and any other charges properly incurred during the course of the hearing. By imposing this liability, the Court intended that the unsuccessful party shoulder the financial burden generated by the adjudication of the matter, thereby ensuring that the prevailing party would not be left to absorb the monetary consequences of the dispute. The cost award was made as part of the final judgment and formed an integral component of the relief granted, reflecting the Court’s assessment that the appellant’s contentions lacked merit and that the dismissal of the appeal warranted the imposition of costs upon that party.