# [1962] 3 S.C.R. 230

- **Citation:** [1962] 3 S.C.R. 230
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** J. L. KAI·l:H, K. SUHllA RAO, !Ii. Huh\' At{;Llah, J. C. Shah, HAGl!t"llAR DAYAL
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1962-3-s-c-r-230-2443
- **Pages:** 20

## Headnote

Prize (,'o-mpelitions-Slale ena('fmPnt for control a11rl la.con
~uch rompetition,,- Ctnt1al t'nacln1c11t fur 1·ontrol and reyulation of'
such ce,,m]Je.filio11s, ad(,ptP.d /,y ,Sfaft.--S1ibstquent. omend1ncnl of
State P.nact1nent by J'ila[e
J.e.gi3falilT€-·-Cun~titutional validityJf yaorP l.ottt:ries und rrize (,'(,1nittitio1t'i l
1unt1ol an<! ]'ax Act,
1951 (My•o" 27 of 1!151), a,, mnn,,/ed /,y Act 26 of /[),5'!,
8'. 8, 12(1)(b), J.; /'l'o1:isa-·l'ri::e Couipetilioms Act, 195L (42 of
1965), as. 4,5-(.,'onstitution of India, Arf,y. 2.5:!, 254, Seventh
Schedule, List II, entries 34, Gt.
The ~fysorc l~oltcrics aud l'rize (:01npetitions Contrc'l
and Tax Act, I ~51, \••as passed hy the ~fysorc l.cgislaturc and-.
came into force on February I, I 952.
Some of the States
comprising the Union of India
pa~se<l resolutions under
Art. 252(lj of the Constitmion of India authorising Parliament
to IC'gi.,late for the control and regulation of Prize Coin petitions,
a.Jd in pursuance thereof Parliament passed the Prize Competi ...
tions Act, 1955, \\•hi ch ca1ne into force on April 11 l 95G.
On
February 23, 1956, the Mysore Legish>ture adopted the said Act
by pas.sing a resolution under Art. 252< 1) that "for the purp()SC
of securing uuiformity in lcgislation ... the control and regulatioA(
of Prize Competitions and all other n1attcrs ancillary thereto
should be regulated in the State of :..fysorc by the Prize Com.
petitions Act, 1955
11
•
The appellants who "·ere conducting
prize competition< in the iltate of Mrsore since 1948 filed a
petition under Art. 32 of the Constitution challenging the
constitutional validity of the Act, and obtained a stay of the
operation of the Act pending disposal of the petition. The
judgment of the Supreme Court dismissing the petition was•
given on April 9, 1957, and on Aogust 31, 1957, an Ordinanc~
\Vas issued, which later wa<; enacted into an Act,
i\fy~ore Act
26of1957, by which the Mysore Act of 1951 was amended
under which, inter a{ia, all prize competitions conducted Let~
ween March 31, 1956, and Au~ust 31, 1957, were brought
within the pur\"iC\\' of tliC amcndcrl Act. 1\s a result of this,
the prize competitions \vhich, as a rc:-ult of the stay of the
operation of the Central Act of 1955, were conducted by the
appellants for the said period became liable for taxation. The
appellants challenged the constitutional validity of the amen<;I,..
mcnt on the grounds that (I) the :\lysorc Legislature by adopting the Central Act \\·as no longer coiupetcnt to pass any lav.·
in regard to prize competitions because the ·whole matter
-
-
-
-
-
3 s.c.R.
SUPREME COURT REPORTS
231
including the povver of taxation \Vas surrendered in favour of
Parliament; (2) even if the whole power had not been surrendered the impugned Act 'i. e., the Mysore Act as amended
violated Art. 252(2) inasmuch as it indirectly amended the
Central Act by adding a new method of control by imposition
of penalties of a monetary nature; (3) the Mysore Legislature
could not amend an Act which stood repealed as a result of
the enactment of the Central .\ct; (4) the Mysore Act
as
amended \Vas repugnant to the Central Act and
was,
therefore, to the extent ofrepug1~ancy, void under Art"254)l)
of the Const1tut1on; and (5) it was colourable leg1slat1on
inasmuch as the tax v.ras imposed on the prize competitions
with the object of controlling them.
Hel.d: (I) that by the adoption of the words "control and
regulation of prize co~petition~ and all other matters ancillaty
thereto" in the resoluuon dated February 23, 1956, the Mysore
Legislature did not surrender every matter and power connected
1vith prize competitions including the po,ver to tax:
R.JJI.D. Cnamarbaugwala v. The Union of India, (1957)
S.C.R. 930, relied on.
(2) that the subject of "betting and gambling" in en try
34 of List II of the Seventh Schedule to the Constitution of
India and that of "ta.xes on betting and gambling" in entry
62 of List II have to be read ,cparately as separate powers,
arid

## Text

_Characters 0–39,865 of 40,098. This is a partial read: ask again with offset=39865 for what follows._

1961
Augu•t 8.
•
230
St'PRE:lfE COGRT REPORTS
[l!J62j
M/S. R. :II. D. C. (:\IYSORE) PRIVATE LTD. ,i
t'.
THE STATE OF MYSORE
(J. L. KAI·l:H, K. SUHllA RAO, !II. HUH\' AT{;LLAH,
J. C. SHAH and HAGl!t"llAR DAYAL, J.J.)
Prize (,'o-mpelitions-Slale ena('fmPnt for control a11rl la.con
~uch rompetition,,- Ctnt1al t'nacln1c11t fur 1·ontrol and reyulation of'
such ce,,m]Je.filio11s, ad(,ptP.d /,y ,Sfaft.--S1ibstquent. omend1ncnl of
State P.nact1nent by J'ila[e
J.e.gi3falilT€-·-Cun~titutional validityJf yaorP l.ottt:ries und rrize (,'(,1nittitio1t'i l
1unt1ol an<! ]'ax Act,
1951 (My•o" 27 of 1!151), a,, mnn,,/ed /,y Act 26 of /[),5'!,
8'. 8, 12(1)(b), J.; /'l'o1:isa-·l'ri::e Couipetilioms Act, 195L (42 of
1965), as. 4,5-(.,'onstitution of India, Arf,y. 2.5:!, 254, Seventh
Schedule, List II, entries 34, Gt.
The ~fysorc l~oltcrics aud l'rize (:01npetitions Contrc'l
and Tax Act, I ~51, \••as passed hy the ~fysorc l.cgislaturc and-.
came into force on February I, I 952.
Some of the States
comprising the Union of India
pa~se<l resolutions under
Art. 252(lj of the Constitmion of India authorising Parliament
to IC'gi.,late for the control and regulation of Prize Coin petitions,
a.Jd in pursuance thereof Parliament passed the Prize Competi ...
tions Act, 1955, \\•hi ch ca1ne into force on April 11 l 95G.
On
February 23, 1956, the Mysore Legish>ture adopted the said Act
by pas.sing a resolution under Art. 252< 1) that "for the purp()SC
of securing uuiformity in lcgislation ... the control and regulatioA(
of Prize Competitions and all other n1attcrs ancillary thereto
should be regulated in the State of :..fysorc by the Prize Com.
petitions Act, 1955
11
•
The appellants who "·ere conducting
prize competition< in the iltate of Mrsore since 1948 filed a
petition under Art. 32 of the Constitution challenging the
constitutional validity of the Act, and obtained a stay of the
operation of the Act pending disposal of the petition. The
judgment of the Supreme Court dismissing the petition was•
given on April 9, 1957, and on Aogust 31, 1957, an Ordinanc~
\Vas issued, which later wa<; enacted into an Act,
i\fy~ore Act
26of1957, by which the Mysore Act of 1951 was amended
under which, inter a{ia, all prize competitions conducted Let~
ween March 31, 1956, and Au~ust 31, 1957, were brought
within the pur\"iC\\' of tliC amcndcrl Act. 1\s a result of this,
the prize competitions \vhich, as a rc:-ult of the stay of the
operation of the Central Act of 1955, were conducted by the
appellants for the said period became liable for taxation. The
appellants challenged the constitutional validity of the amen<;I,..
mcnt on the grounds that (I) the :\lysorc Legislature by adopting the Central Act \\·as no longer coiupetcnt to pass any lav.·
in regard to prize competitions because the ·whole matter
-
-
-
-
-
3 s.c.R.
SUPREME COURT REPORTS
231
including the povver of taxation \Vas surrendered in favour of
Parliament; (2) even if the whole power had not been surrendered the impugned Act 'i. e., the Mysore Act as amended
violated Art. 252(2) inasmuch as it indirectly amended the
Central Act by adding a new method of control by imposition
of penalties of a monetary nature; (3) the Mysore Legislature
could not amend an Act which stood repealed as a result of
the enactment of the Central .\ct; (4) the Mysore Act
as
amended \Vas repugnant to the Central Act and
was,
therefore, to the extent ofrepug1~ancy, void under Art"254)l)
of the Const1tut1on; and (5) it was colourable leg1slat1on
inasmuch as the tax v.ras imposed on the prize competitions
with the object of controlling them.
Hel.d: (I) that by the adoption of the words "control and
regulation of prize co~petition~ and all other matters ancillaty
thereto" in the resoluuon dated February 23, 1956, the Mysore
Legislature did not surrender every matter and power connected
1vith prize competitions including the po,ver to tax:
R.JJI.D. Cnamarbaugwala v. The Union of India, (1957)
S.C.R. 930, relied on.
(2) that the subject of "betting and gambling" in en try
34 of List II of the Seventh Schedule to the Constitution of
India and that of "ta.xes on betting and gambling" in entry
62 of List II have to be read ,cparately as separate powers,
arid, therefore, when control and regulation of prize competitions was rnrrendered to Parliameni by the resolution dated·
February 23, 1956, the power to tax could not be said to have
been surrendered;
Jn ro l'he Central l'rovinces &, Berar Act No. XIV of 1938,
(1939) F.C.R. 18 and State of Bombay v. R.M.D. Chamarbaugwala, (1957) S.C.R. 874, relied on.
.
(3) that the tax imposed under the Mysore Lotteries and
Prize Competitions Control and Tax Act, 1951, was not by
way of penalty but was in the exercise of the power which the
State Legislature possessed of imposing tax under entry 62,
and, consequently, the amendment of the Mysore Act of 1951
could not be said to be a new method of controlling prize
comp·ctitions nor was it a piece of colourable legislation.
K. C. Gajapati Narayan Deo v .. The State of Orissa, (1954)
S.C.R. l, relied on.
(4) that the Prize Competitions Act, 1955, dealt with
"betting and gambling" in entry 34, whereas the taxing sec-.
tions of the Mysore Act related to "tax on betting and
gambling" under entry 62 and, therefore, Art. 252(2) was not
contravened by the amendment of the Mysore Act.
1961
M/s. R. M. D. 0.
(Mysore)
Private Ltd.
v.
The State of il!ysof'I
1~61
M/1. JI. M. D. C.
(My1or•)
PriVate Ltd.
v.
The StaJt of Mvsort
Kapur J.
232
SUPREME COURT HEPORTS
[ IOJ2]
State of Bombay v. R.Jl.D. C'hanwbaug1L-ala, (1957) A
S.C.R. 874,_relied on.
(5) that there was no amendment of the
~lysore Act
,.,.hich stood repealed nor \vas the retroactive operation of the
amending Act affected br Art. 254( I) of the Constitution.
Deep Chand v. The State of Uttar Pradtsh and Uther•
(1959) Supp. 2 S.C.R. 8, relied on.
Crvrr. APPELLATE Ji:HISIJ!CTIO!\: Civil Appeal
No. 517 of 1960.
f
•
Appeal from the Ju<lgmcnt 11ml orcler <lateJ
1\ ovcm her 20, 1958, of the ;\lysorc High Court in
Civil Writ Petition X o. :134 of lD57.
Porus A. Jleltla, J. R. Gagrut an<l
G. Go pafukrisltnan, for the appellants.
N. C. Chatterje.e, G. Channappa, R. Gopolakrisltrum.
and ?.'. M. Sen, for the respondent.
1961. Augu~t 8.
The Judgement of tho Court
was delivcrod by
KAPUR, J. This is an appeal against the judgment and order of t.he High Court of Mysbrn
dismissing tho petition of the appellants mado
undor Art. 226 of tho Constitution. The appollants
were conducting sinco the month of August I !)48,
what were called "prize competitions" in tho Stat-0
of Mysore with the permission of the Government
of
the
erstwhile
Stato
of
llfysorn.
An
Act called the Mysoft\ Lotteries and Prize Competitions Control and Tax: Act, 1951 (Act 27 of l!J51),
hereinafter called the "Mysore Act" was passed by
the Mysore Legislaturo and came into forco as from
June 21, 1951. Tho Rules made thereunder came
into force on February l, 1952. Previous to that
the Bombay Legislature ha<l passed a similitr Act
calle<l tho Bombay Lotteries am! Prize Uompctitions
Control and Tax Act, 1948, which was amendcrl in
November 1952 by the Bombay Act 30 of 1952 .. In
December 1952 and January l!J53 petitions un<lcr
Art. 226 wore filed in tho High Court of Bombay
challongi.ng tho Bombay Act.
On January 12, 1965
•
(
•
I
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-
- ........
3 S.C.R.
SUPREME COURT REPORTS
233
the Bombay High Court held that the provisions of
the Bombay Amendment Act above, referred to
were unconstitutional and that the taxes imposed
under the provisions of that Act were hit by
Art. 301 of the Constitution. The result of that judgment was that though prfae competitions could be
controlled by the .States within their respective
borders, their ramifications beyond those borders
could only be dealt with by action under Art. 25~(1)
of the Constitution. It was for that reason that
the States of Andhra, Bombay, Madras, U. P.,
Hyderabad, Madhya Bharat, Pepsu and Saurashtra
paesed resolutions under Art. 252(1) of tho Constitution authorising Parliament to legislate for the
control and regulation of prize competitions and in
pursuance thereof Parliament passed the Prize Competitions Act (Act 42 of 1955) hereinafter called the
"Central Act" which received the assent of the
President on October 22, 1955, and camo into force
on April 1, 1956. On February 24, 1956, the Mysore
Legislature passed a resolution adopting the said
Act. The resolutions cpassed by the various States
and the resolution passed by the Mysore Legislature
will be quoted in a later part of this judgment.
On April 7, 1956, the itppellants filed a petition under Art. · 32 of the Constitution in the
Supreme Court challenging the validity of the Central Act but that petition was dismissed and is reported as R.M.D.G. Ghamarbaugwala v. The Union of
India ('). The appeal against the Bombay judgment
declaring the· Bombay Act to be ;uncortstitutional
'was brought in this court and was allowed and that
case is repdrted as. State of Bombay v. R. JYI. D.
Ghamarbaut;wala ('). During 'the pendency of their
petition under Art. 32, the appellants applied for
and were granted -a stay of the operation of lhe
Central Act pending the diSposal of the said writ
petition.
This was on April i6, 1956. The judgment of the Supreme Court in that p6'ition was
given on .April 9, 1957; On .August 31, l95V, the
(1) [19s7J s.c.R.. J\Jo, '9s9:
(i) [195'fJ s.c.R. ·a14,' 'J29, ··' ·
1961
M/1. R. M. D, 0.
(Mysore)
Private Ltd.
v.
The State of ~Iysore
Kapur J.
1961
M /•. II . . II. JJ. o:.
( .1'/ytort)
/'rinJtt LtJ.
v.
'J'ht S/(lft c/ ~\ly1or.:
234
SCPREME COPRT REPORTS
. [1962]
;\fysore Lotteries & Prize Compet.itions Control and
Tax ("\mondmeut) Ordiuance, J!);,7 (Ord. 6 of 1957)
was issued h\' the Governor of l\Inorc and thus for
the period of about. ]() mouths th;, appdlants carried
on J>rizo competitions as Lefmc.
The Ordinance was enactrd into an Act ou
i;cl'tcmhcr 28, Hl57, which is l'IIysore Ad ~6 of l!J57.
Ceitain amendment" were made by thL; in the )Iysorc
Act ·1s originally paost:d in l!J51. As 11 result of this
<unc·ndment the defmitiou of prize competition wa.~
;•mewled thr dl'finition as given in
th~ Centrnl Act
was adopted and ss. 8 & !J of the ~lysorc ,\ct. were
omitted with retrospective effect from April I, I ()50;
cl.(b} of suh-H. ( 1) of s.12 was amended and certain
\rnrds referring to lic<'nces under s.8 W(•l'O retrospectively omitted and retrospective eflcct was given to
the Mysore Act as amended. By adding a proviso to
s.15 of the lllysorc Act all prize competitions conducted botwcen March :H,195ti, and August 31 1957,
wore brought within the purview of the amended
Act. Thus the prize competitions which as a result of
the stay of the operation of the Central .Act were
conducted by tho appellants became subject to the
op,.ration of the Mysore Act a8 amended. The
appellants on September 10, Hl57, were called upon
to file their returns but at their request for extension
of time, they were given another 15 <lays in which
to file their return. Th.,y filed their return hut under
protest. The gross collections were of a sum of
.Rs. 20,47,147-5-9 and on that th., appellants wero
"called upcn to pay up provisionally" a sum of
l{i;. ::l,30,893-7-0. As tho money was not paid within
tho time spccifiod proceedings were taken under
s. 6 ( 1) of tho Hevonue Recovery Act, 1890 (Central
Act 1 of 1800), imd certain properties moveable and
immoveable wero attached and one of the properties was soid and tho price so realised was deprn;itcd
in the Government treasury.
Tho Mysore amending Act was challenged in
tho High Court of Mysore by a. petition under
,Art., 226 whioh was dismissed on Nov~mbcr 20, 1958
{
•
•
/
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•
- ~ -
-
)
3 S.C.R.
SUPREME COUH.T REPORTS
235
and against that judgment ancl: order this appeal has
been brought pursm nt to a certificate of the High
Court under Art. 132 (l) of the Constitution. The
Certificate was confined to the interpretation of
Art. 252 of the Constitution. The respondent in the
present appeal is the State of Mysore.
r
The challenge to the constitutionality of the
Mysore Act was on the ground that ( l) the Mysore
Legislature by adopting the Central Act was no
longer competent to pass any law ,in regard to prize
competitions because the whole matter including
the power of taxation was surrendered in' favour of
Parliament. (2) Even if the whole po\ver hacl not
been surrendered the impugned Act i.e. the Mysore
Act as amended violated Art.252(2) of the Constitution inasmuch as it indirectly amends the Central
Act by adding a new method of control by imposition of penalties of a monetary nature. (3) The
Mysore Legislature could not amend an Act which
stood repealed as a
result of the enactment of
the Central Act. (4) The Mysore Act as amended
was
repugnant to the
CJ.intra! Act and is
therefore, to the extent ofrepugnarwy, void under
Art. 254 (1) of the Co11stitution and (5) it was colorable legislation inasmuch as the tax was imp\)sed
on the prize compotit,ions. wit~ the object of controlling them. Cer,tain other questions relating to the
legality of the imposition of the tax and the proce.edip.gs for the recovery of the tax were also raised but
on all these points the High Court found against the
appellants :
·
The first question raised before us is the .effect
of the resolution passed by the legislatures of the
States above mentioned and of the resolutio11 passed
by the Mysore legislature adopting the Central Act.
The resolution passed by . the State.s was in the
following terms.
·
· ·"This Assembly do resolve that it is desirable . that oont1•ol ·and regulation of Prize
"
JD61
M/s. R. M. D • .O.
(MyBore)
Private Ltd,
v.
The State. of Mysore
J(apur J.
1961
M/a. R. l>I. D. 0.
(Jfyso-re)
Private Ltd.
v.
1
The State of J.lysor~.
1.
\
I
I
i
\
I I
I
!
I
I
KapurJ.
·-.'
236
SUPRE::IIE COURT REPORTS
[1962]
.
-
. .
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 two Houses of the · lllysore Legislature passed
the· "following· resolution· on February 23, 1956
. arid February 21, 1956;·respectively :-
· ' ·
.
.' Re~olution passed .by the Mysore Legislative.
Assembly on 23rd, February, 1956.
.
"Whereas fo~ . the purpose
~f 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 l\Iysore by
the. Prize Competitions. Act, .1955 (Central·
Act 42 of 1955) ]Jassed by Parliament ;
·
·
_ Now, therefore, in pllrsuance of Clause (I)
. _ . of Article .252 .of. the Constitution,
this
· Assembly,resolves that the. Act aforesaid.be ·
adopted by the State of Mysore."
It was contended that by these resolutions the legislaturefFof the various. States·· had·· surrendered their
power of legislation ·in ·regard to the "control and
· regulation: of prize puzzle competitions and all other
matters consequential'. anJ . incidental'· thereto · and
had thus no legislative power left in . regard •to that
matter including· the ·power· to tax. Article 252
provides:~
·
. · · · Art; 25:?(1) "If it appears to the legislature
of two or more.States to be desirable that any
·of the matters with respect' to· which'· Parlia-
. :ment has no power to make laws for the
--" ·
States except as provided in articles 249 and
250 shouldJ,be regulated in· such' States by
Parliament by law, and .if resolutions to that -
effect are passed , by !loll . the Houses . of the ·
legislatures of those States, it shall be lawful
-
-~---' ,--- ·_,
.
) I _,,
.
,
\
' ..
3 S.C.R.
SUPRE~IE COURT REPORTS
237
; \
'
I
for Parliament to pass an Act for regulating
that matter accordingly, · and any Act so
passed shall apply to·such States and to any
i:>1her State by 1which it is adopted afterwards
. bv resolution passC'd in ·that behalf by the
'House· or, where there are two-Houses, by
each of the Houses of the Legislature of that
State.
--- -- - · ·
(2) Any Act so passed by Parliament
may be amended. or repealed . by an· Act of
Parliament passed or adopted in like manner
but shall not, as respects any - State to which
· it applies, be amended or repealed ·by an _
Act of the Legislature of that State."
.
.
The result of the passing. of a resolution under
Art. 252(1) is that any matter with respect to· which
Parliament has no power to enact. laws becomes a
matter for the regulation of which __ Parliament
becomes empowered to pass any Act;·and such Act,
if passed by the Parliament, becomes applinable to
th11 States passing the resolution or adopting that
Act. Sub-clause (2) of that Article provides that
any such· Act may be amended or repealed by an -
Act of Parliawent in the like manner i.e. in the
. manner provided in cl. (1) and it cannot be amended or repealed by the Legislature of the State
or States passing the resolution. '.J'he question theri
arises do the resolutions as passed and 'particularly
the words "control and regulation of prize puzzle
competitions and all other matters ancillary thP.reto" ·
surrender the whole subject of prize competitions
to the Central Parliament i.e. everv matter and
power 'connected therewith including the power to
tax .. The argument raised was that the language of
the resolutions was wide enough to comprise the
legislative power under entries 34 and 62 of List
II, the former dealing with "betting and gambling"·
and the latter. with taxation· of luxuries including
"betting and gambling". One of the methods of
nontrol _and regulations, it -was submitted, is by.
1961
1'1 /•. R. J,f. D. C.
(llfysore)
Privatl! Ltd.
Y •
The State of J.1 '!lsort
Kapur J.
238
SUPREME COURT REPORTS
[1962]
tax'.ltion and as the power . to· control: and regulate
.H/ •. R. M •. D. c.
and all powers ancillary to.the subject were surren-
(My••"J
dered the power tci · tax being included therein was
1961
Prii·ate Ltd.
~
v.
also _surrenderPd. In -support of this· argument
- Tl>• State of MY'°'' ·:reliance _was placed on certnih judgments of the
K11t;ur J.
''American -Supreme Court. ·The first case relied
upon was R1J(folph Helu-iq v. United Btates ('). In
---
-that case - th_e __ Cil1estion was about tlie jurisdiction
of
the -United , States District
Court which
depended upon . the nature of the imposition of
an : additional duty i.e . . whether _it was penalty
or·, not.
The imposition was held ·to
qe· a
, penalty as it was not -imposed for"the_pui-pose of
- revenue but _was based upon the particular act of
the importer i.e. his undervaluation of the· goods
imported; in other words thisadditionalsum was a
pPnaJty for unrlervaJnation whether innocently done
or not and :whether jt was called a further sum or
an additional duty th-€' amount: imposed was not a
duty up-on , imported ·article._ but a penalty and
nothing else.
·
',
·
'
• • The next case relied ~pon w~s J. W. Bailey ~.
· Drexel _
Furniture : Companv ('}. _. That - was·_ a
case of· colorable exercise · 'of . legislative power.
Under the Child Labour Tax Law a . tax -of 10% of
the net profits of the year could be imposed upon
an employer and knowingly-during any portion, of
the tinmble : petiod
employed ·children within
-. : certain age limits irrespective of whether only one
child was employed or several, . This was held not
to ,_be a
valid exercise_ by Congress of power of
taxation but an unconstitutional regulation· by the
use of th£ tax as a penalty for -the employment_of
child labour in ,the States'_ which was exclusively a
State function .. That case was_ one in which· the
-congress exercised its. poWCJ'.- -()f regulation by
- imposing a - tax by-ivay of penalty in. ordei: to prevent . the employment, of. child hbour an~'thus by
the exercisP, of !he power; which it possessed i.e. of
(!), (l!)!l3) 188,U. S. 605: 47 L Ed. 614,· .:(2). (1922)259U.S.33,
66LEd.817.
.
,..
•
.
-'
3 S.C.R.
SUPREME COURT REPORTS
239
taxation it tried to regul:i,tc a subject over which
it had nn jurisdiction and that really w~s the matter
which was decided by the American Sapreme Court.
1961
M/s. R. M. D. G.
(i.lfysore}
Privat;: Ltd.
v.
The next case relied upon was r:Jloucester Ferry
Company v. Commonwealth
of Pennsylwnfri (1).
That was a case of interst:ite commerce :i,nd it
was held that no State could impose a tax on that
portion of interstate commerce which is involvPd
in the transportation of persons and ·property what.
ever be the instrumentality by which it is carried
on.
The tax there was levied upon receiving and
landing of passengers and freight which was held
to be a tax on transportation i.e., upon commerce
between the two States involved in such transporhtion. The following passage in the judgment
of Field, J., at p. 162 was relied upo!J by C(•un«~l
for the appellants :-
TheSl1t,ofM1J8 re
"The power to regulate that commerce,
· as well as commerce with foreign nations,
vested iu Congress is the power to prescribe
the rules by whid1 it slrnll be governed-that
is, the comlitions upun which it shall be
conducted ; to determine when it shall be
free, and when subjeet to duties or other
exactions."
But these observntions were mMle in a rlifferent
context, i.e., whether the tax could be levied upon
transportation made in ferry boats which passed
between States ev<;ry hour of the d>1y and as this
transportation was within the commerce clause no
tax could be levier! by the Strites.
Reference was next made to certain obser·
vations mttde in the State of Bombay v. R.111.D.
Oham<irbaugwala (') which was an appeal against
the jurl~ment of the Bombay High Court.
Das,
C. J., observed at p. 926 :-
"The fact that regulatory provisions have
been enacted to control gambling by issuing
(l) (1885) 114 U.S. 196: 29 L. Ed. 158.
(21 [1957] S.C.R. 874, 929.
Kapur J.
240
SUPRE:\fE CO'CRT REPORTS
,[1962)
'
1961
licences and by imposing taxes cloes not in
.If/•. R. M. D. c.
any way altl!r the nature of gambling which
p~t{,%,~
0L'l.
· iR inherently vicious and pernicious."
v.
In that case no question as to the meaning of
Thi Stale of Mg'"'' the \\'Ore I "control n.nd regnlat iun'' arose nor whct.J:cr
those worrls inclmlcd the power of taxation. All
that the Comt was callccl upon to decil!A was
whether prize competitions were trade, commerce
or business or were <inti· soeia I act iv it ics.
It was th(·n argued that it was because of the
decision by the Rom hay High Court in State of
Bombay v. R. Jf. D. Clmmarbaugu:a/a (') whereby
the tnx impose<! rm prize competitions was struck
<lowll as contrnvenin~ Art. 304(b), that the various
8tates combined together and passed the resolution
1m<lcr Art. 252(1) of the Constitution. The object
of the resolutions, it was submitted, was to get
over the unconstitutionality pointed out by the
Born hny High Court and therefore the resolutions
were passed in the language used therein, i.e., for
the nontrol and regulation of prize competitions
which power wns transferred <ind surrendered to
Parliament along with the powers incidental and
n.ncillarv thereto which must im:lurle taxation. It
~ms further argued that ns Parliament had failed
to impose any tax it implied that it hnd refused
to clo so.
In support of this argument relhnee
wn.s placec! on Scibirce
Robb·in.~ \'. Taxing Di.strict of
Shelby CO'Unty, Tennessee('). It was there held th<it
where the power of the Legislature is exclusive its
· failure to make express regulation indica.kd its will
that the subject shall he left free from any rcstric·
tiun or imposition. The pi,·ot of the appellants'
<irgnment is th~t the worcls "control and regulation"
and "incidental and ancillarv thereto" included
power of tiixation but this argirn1ent is not well
founded. The power in rcgarcl to betting and gambJ.
ina is cont1iin~d in entrv :>i of the State List which
~
.
'• ns follows ;
Entry 34: "Betting and gambling".
:.L.R. [1955] Born. 680.
(21
30 L. Ed. 694.
'
. ...
..
3 s.C.R.
SUPREME COURT REPORTS
.241
l
•
--
The power of taxation is contained in entry
62 which is as under :-
1961
M/e. R. M. D. C.
(My60re)
Pritiale Ltd.
Entry 62 : "Taxes on luxuries, including
v.
The State of My•ore
ta:x:es on entertainments, amusements, betting and
gambling."
Kapur J.
In the Indian Con~titution as it was in the Government of India Act the power of legislation is
distributed between the Union and the States and
the subjects on which the respective Legislatures can
legislate are enumerated in the three Lists and in
the Articles of the Constitution, provision is made
as to what is to happen if there Is a conflict between
the Statutes passed by Parliament and the Legislatures of the States. The peculiar nature of
the Indian Constitution in regard to the enumeration of powers in the entries in the Lists was
emphasised by Gwyer, C. J., in re The Central
Provinces & Berar Act No. XIV of 1938 (1) at
p. 38 and by Sulaiman, J., at pp. 73 and 74. Gwyer,
C.J., sa.id:-
"But there are few subjects on which
the decision of other Courts require to be
treated with greater caution than that of
federal and provincial powers, for in the
last analysis the decision must depend upon
the words of the Constitution which the
Court is interpreting ; and since no two
Constitutions are in identical terms, it is
extremely unsafe to assume that a decision
on one of them can be applied without
qualification t.o another. This may be so
even where the words or expressions used
are the same in both cases ; for a word or a
phrase may take a colour from its context
and bear different senses accordingly."
(I) [1939] F.C.R. 18, 38, 73, 74.
!Ml
M/1. R. M,D. C.
(My-•)
l'ri..,. LJd.
v.
Thi !it<d1 .j M~""''
r.,....J.
242
SUPREME COURT REPORTS
[1962]
At p. i4 Sulaiman, J., observed:
"The heads have been separately specified
in great detail ; and a special head "taxes on
the sale of goods" has been assigned to the
Provinces, which did not at all find a separate
and distinct place in tho State or Provincial
List of any of the Dominions. This peculiarity
is a unique feature of the Indian Constitution,
having
an
important
bearing
on
the
present case, as taxes on sales have been
adopted as a post-war measure in
mos~
countries."
The entries in the Lists have to be read in accordance
with the words employed and it will be wholly
{
unjustified in forcing into them a meaning which
...
they cannot reasonably bear.
Seo Brophy v.
Att. Gen. of Manitoba (') Similar observations were
made by Lord Wright, M. R. in James v. Commonwealth of Au.stralia (') and both these oases wet'e
quoted with approval in re The Central Provincu
and Berar Act No. XIV of 1938 (') by Sulaiman, J.
Thus the subject of "betting and gambling" given
in entry 34 of List II and tho taxes on betting
~
and gambling as given in entry 62 of List II have
to be read separately as separate powers and
therefore when control and regulation of prize
competitions was surrendered to Parliament by the
resolutions above quoted the power to tax: under
entry 62 of List II, which is a separate head, cannot
•
be said to have been surrendered. See the observ~tions of Das, C. J., in State of Bombay v. R. ltl. D.
ChamtJrbaugwala quoted
a little later in this
judgment.
The scheme of the Indian Constitution and
distribution of powers under it are entirely different
from what it is in America and therefore the
construction of the entries in the mam1er contended
for by the appellants would be erroneous.
It was then contended that " tax must be
tll [189SJ A.C. 202, 215.
(2} [1936] A.C. 578, 613.
. -
-
•
3S.C.R.
SUPREME COURT REPORTS
243
t
levied for the purpose of revenue and cannot be
for purpose of control and that in the Mysore Act
was really colourable
legislation
in that the
impugned tax had been levied for the purpose of
controlling prize
competitions although it was
given the form of a tax. It may be remarked that
the Court in
construing
and interpreting the
Constitution or provisions of an enactment has to
'r
aacertain the meaning and intention of Parliament
from the language used in the statute itself and it
is not concerned with the motives of Parliament.
To use the language of Gwyer, C.J., in re The
Central Provinces and Berar Act No XIV of 1938 (1) :
"It is not for the Court to express, or
indeed to entertain, any opinion on the
expediency of 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."
Similar observations in regard to the doctrine of
colourable legislation were made by Mukherjea, J.,
(as he then was), in K. C. Gajapati Narayan Deo
& Others v. The State of Orissa ('), where it was
observed:
"It may be made clear at the outset that
the doctrine of colourable legislation does not
involve any question of bona /ides or mala
fides on the part of the legislature. The
whole doctrine resolves itself into the question
of competency of 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
(11 [1939) F.C.R. 18, 38, 73, 7f,
(2), [1954] S.C.R. I, 10.
1961
M/a, R. M. D. a.
(M'J'Of'•}
Pri"4t6 Ltd.
v.
e
The Stat, of My•o<
Kapw J.
1161
•\Ifs. R. M. I!, C.
(Mya,,,.,)
['rivat1 Lid.
v.
TM Stat1 of M y:i<Jrt
Kapllr J.
24·1
SUPREME COURT REPOllTS
[1062)
statue is constitutional or not is thus always
iL question of power."
.
Thereforo if tho :llysoro Legislatui-e h<1d tho power,
which in our opinion. it had and it had not
surrendered it.s power to Parliament which, in our
opinion, it had not then it cannot be said that tho
imposition of tho tax i8 a piece of colonrable
legislation and is on that ground unconstitutional.
It will he opposite to quote at thi,; stage the
observations of Das, C.J., in the Staw of Bombay v.
R.Jl.D. Chamnrbaug1m/a (') :-
"For the reasons stated iLbuvc, we h11\'o
c.ome to the conclusion that the impugned
law is a law with respect to betting and
gambling under entry 34 and the impugnml
taxing ~ection i~ iL law with respect to a tax
on betting and gambling under entry 62 and
that it w,ts within tho legislative competence
of tho State legislature to have enacted it.
Thero is sufficient territorial nexus to C'ntitle
the State legi;;laturc to collect the tax from
the
petitioners who carry
on tho prize
competitions through tho medium of 1.1 newspaper printrcl and publishet! outside the State
of Bombav."
Thus the Centn~l Act is with respect to hotting and
gambling under entry 34 of List II and tho taxing
sections of the ~lysore Act are with rospcct to a.
tax on betting n.ml gambling under entry tl2.
It is
al.so instructive to note that Venkatarama Ayyar, J.,
in R. 1ll. D. Clwmrirbaugwala v. 'l'he Union of
India (')in construing the language of the resolution
was of the opinion that the uso of tho word
"control and regulation" was requisite in the
uase of gambling and a11 regards regulation of
competitions involving skill mere regulation would
have been suflicicnt.
In view of our finding that by passing tho
resolution the States did not surrender their power
of taxation it cannot be said that cl. (2) of Art. 252
(I) [1957] S.C.R. 874, 929.
(2) [1957] S.C.R. 930, 939.
I
•
--
- ... __
3S.C.R.
SUPREME COURT REPORTS
245
of tho Constitution was violated by the amendment
of the Mysore Act ; nor can it be said that in reality
it was a piece of colourable legislation by an indirect attempt to amend the Central Act and a
new inethod of control was devised by imposing a
penalby under the name ,of tax. We have already
held that the tax imposed under the Mysore Act
was not by way of penalty but w<.1s the exercise of
tho power which the
legislature possessed of
imposing tax under entry 62.
The next contention raised was that after the
passing of the Central Act, s.12(l)(b) of the Mysore
Act became void because of the provisions of
Art. 254(1) of the Constitution which provides:
Art. 254(1) "If any provision of a lii.w
made by the Legislature of a State is repugnant to any provision of a lu.w made by
Parliament which Parliament is competent
to enact or to any provision of an existing
law with reapect to one of the matters enumerated in the Concurrent List, then, subject
to the provisions of clause (2) the law made
by Parliament whether passed before or after
the law made by the Legislature of such
State or as the case may be, the existing law
shall prevail and the law made by the
Legislature of the State shall, to the extent
of the repugnanoy; be void."
It was contended that because of the repugnanoy
between the Central Act and the Mysore Act
in regard to licensing all provisions which had
any reference to licensing became void under
Art. 254(1) and if they were void they could not be
amended. On behalf of the State it was submitted
that Art. 252(1) was a complete code by itself and
Art. 254 was inapplicable because the latter Article
like its predecessor, s.107 of the Government of
India .Aot, 1935, applied where the repugnanoy
arose under List III of the Constitution i.e., the
1961
M/a. R. M. D. C.
(Mysore)
Pri i•ate Ltd.
v.
The State of My~ore
Kapu1· J.
1961
~1 /1. 11. M. D. C.
(My1e>rt)
Privat.r Ltd.
v.
TM Slate of .\/y1qre
Kaf"'r J.
246
SUPREME COURT REPORTS
(1962]
Concurrent List. It is not necesswry to decide this
latter contention or to refer to cases which have been .
relied upon i.e. Jlegh Raj v. Allah Rakhia (')or Deep
Chand v. The State of Dttar Pradesh & Others ('). The
inconsiMtcncy would opera.to on that portion of the
Mysore Act which became repugnant to ss. 4 and 5
of tho Central Act 8.8 to prohibition of prize compe·
titione and liceneing of prize competitions e.g., s.8
of the Mysore Act and consequently that. portion
of s.ll!(l)(b) which deals with taxes in respect of
prize competitions for which a licence had been
obtained under s.8 might be said to have become
void and not the rest. Therefore by the omission·
of words "for which a licence had been obtained",
under s.8, the rest of the clause would be valid. 1 he
effect of the amending Act is that the above mentioned words were deemed to have been omitt~d as
from April 1, 1950, and the rest of clause (b) is not
repugnant to any of the provisiollS of the Central
Act. Article 254( l) t.hercforo did not make s.12( 1)( b)
wholly void. All that it did was that the portion
which refers to licensing became repugnant but it
did not affect the rest of the section. At the time
when the Mysore Act was passed it was within the
legislative power of the Mysore Legislature and it
may be that it was rendered unconstitutional by
reason of ss. 4 and 5 in the Central Act but that
portion which deals with taxation cannot be held
to be void because as a re&ult of tho Amending Act
the words which were repugnant to the provisions
of the Central Act were subsequently declared by
the Mysore Legislature to be deemed to have been
omitted as from April l, 1956, the day when the
Central Act came into force.
This is in accord with
the view taken m Deep Chand v. 1'he State of Utta.r
Prade8h and Others('), i.e. the doctrine of eclipse
could be invoked in the case of a law which w&S
valid when made but was rendered invalid by a.
supervening constitutional
inconsistency.
This
(I) (19i7) L. R. 74 I.A. 12, 19.
(2) [1959] Supp.ZS. C.R. 3, 24, 4%.
1
..
I
. .J
3 S.C.R.
SUPRK\IE COURT REPORTS
247
disposes of the challenge to' the .·constitutionality of
liSl
_-the Mysore'Act on the five'' points set out above.
M/•. R. M. D. c.
Therefore the law ma_y•be summed up as follows :
J.%~:;-£,~.
- · ~ ·. · .- · (l) 'By pas'sirig the' res~lutions.~~ to con-· Th• s1.,,v;1 Mysrrr
•trol and regulation the.power to tax had not
--
-
• c been surrendered to Parliament .. - -. .
Kapur J .
. ,.
.... · .... : · (2} ·The_ amending 'Act was not a new
·· - .:·"method 'of controlling prize competitions nor
.,_ •• -r was it a piece of.colourable legislation;· -'• •-:
-:(3) There Wis' no ainendmont of an Act __ -
., . wh~ch. stood repealed.,nor.was the.retroactive
,_ .... operation ,of .the .Amending Act affected by
:·.: .. , _, Art; 254(1) of ~!ie • Constitutbn. __ :_ : ;· · --
: ._The next· three: objections. to the :legality of
the assessment were : •(I} that the: assessment was
provisional which was not contemplat.ed . under the
Act'; (2) there should have been ·a fresh Iiotificaticin
'after th~: _amendment of the Ilfysore· A_ct and (3! .at
ithe time wh_bll the _recovery proceedings were : taken
~li,e_ tax had not become due _as it was payable within
a week which had -not expired. On September IO,
1957, the Deputy C0mmissioner, -Bangalore 'ealled
•upon -the ·appe!Jants to 'p.roduce accounts in ~espeqt
of prizo competitions conducted -as from Aprffl;
1956; up to the" date of the closure of the competitions and three days were given to comply' With that - .
. notice,:_ Their .reply. was that the Ordinance under
which the notice was issued was-unconstitutional and
illegal· and they also .asked .for thirty days in which
·to prepare their statements_ but they were granwd a
period of:fifteen days only. They, agreed.tu file their
statements· within • the time. ailowed . though .under
_protest .. · .These ... statements· were -submitted· on
October 9, 1957, and at the ·end of· the statements
which showed a gross collection of Rs. 26,47,147-5-9,
t,heri: w~s the fol!ow;ing ~ndorsement ::-:- _ · :. ; .
'
.
.
•
:
f'
-
---
'.' .
'
'
.
' . -. •'.The' above figures of co!lectioris are verified partly.With available ballk statements and
. partly with, the ·books of- accounts · and are
~
•
•
•
0
•
T
<
•'
1961
.IJ/A.' R. M. D. C.
r~lty11ort)
Prirate Ltd.
v.
Tht Stolt of .\!ysort
Kapur J.
248
SUPRE!lm COURT REPORTS
[1962]
suhject to reconciliation between the amount
j
as per ledger ancrthat as above. The commis- ·
sion and expPnscs deducted by Collectors
nre acceptrd as per certifi<'ate of the l\fanagement and the State Account. Collections are
'l"erified only with the Collection Register.
(Sd.) ............................... ..
Chartered Accountants."
'Cndcr this the Deputy Commissioner wrote a letter
on October 16, 1957, in which it was said : -
"You are hereby called upon to pav up
provisionally a sum
of Rs. S,30,893-7 ·O
to"Wards tax amount to the Rc·scrve Bank of
lndia and forward the ('hallan in token of pay·
ment to this o~ce within a week."
As the tax was not paid the provisions of the Revc·
nue Recovery Aet were resorted to. This cannot
be said to be a provibional assessment. The return
submitted by tho appellants as far as it went was
aceepted and on-that the tax was.demanded which
was not a case of provisional assessment at all but
as was holrl by tho High Court it mu~t ho taken to
be a final assessment and if and when any further
nssessm ent or a revised assessment is made the
que~tion may become relevant.
The next qn<'stion as to the necessity of a
fresh notification, tho submission is cqnally unsubstantial. Its legality depends upon the constitution.
alit~· of amended s.12(l)(b) and if that is valid, as
we havo held ii to be, the notification is equally
vali<l.
The notifir~ition was only in regard to the
rate of taxation and had no reference to the obtain·
ing or not ohtnining of tho licence.
The last point raised was that the tax was
payable within a week which had not expired. As
we have point-0d out the notice of demand called
upon the appellants to pay the sum therein specified
and to produce the challan in token of payment
..
.. -
Is'
3 S.C.R.
SUPREME COURT REPORTS
249
within a wePk. It is not the case of the appelhnts
th:i,t they had paid or were in a position to produce
the challan within a week. It was not an order
m•ikin~ the tax payable within a week.