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3. Now, the construction of this Explanation led to considerable difficulties and a case went up to the Supreme Court from this High Court where the Supreme Court had to consider the effect of this Explanation, and the decision of the Supreme Court is to be found in The State of Bombay and Another v. The United Motors (India) Ltd. and Others ([1953] S.C.R. 1069; 4 S.T.C. 133). What the Supreme Court in effect did was to apply the Explanation not merely for the interpretation of Article 286(1)(a) but also for the purpose of interpretation of clause (2) of Article 286, and the view taken was that if a sale was within the State, by reason of the Explanation that sale was not affected by the restriction contained in clause (2) of Article 286. To use the language of the learned Chief Justice (at p. 1085) :

"We are of opinion that the operation of clause (2) stands excluded as a result of the legal fiction enacted in the Explanation, and the State in which the goods are actually delivered for consumption can impose tax on inter-State sales or purchases. The effect of the Explanation in regard to inter-State dealings is, in our view, to invest what, in truth, is an inter-State transaction with an intra-State character in relation to the State of delivery .........."

4. This question was later reconsidered by the Supreme Court and the Supreme Court in Bengal Immunity Co. Ltd. v. The State of Bihar and Other came to a contrary conclusion, and what the Supreme Court held was that the Explanation cannot be extended to clause (2) of Article 286 and it cannot control or limit the ambit of clause (2). In other words, the view taken by the Supreme Court was that each of the restrictions to which attention has been drawn is separate and independent and it is not permissible to read into clause (2) of Article 286 the words of the Explanation which on the face of it are only intended for the purposes of the restriction contained in Article 286(1)(a).

10. It is then urged that even if Parliament was functioning under Article 286(2), that legislative function cna only be exercised prospectively and not retrospectively. Now, it is a well established cannot of construction in constitutional cases that if the Constitution confers sovereign power upon a Legislature within it own ambit, the power to legislate on a particular topic can be exercised in all its aspects. The Legislature may legislate prospectively or retrospectively and it cannot possibly be suggested that Parliament is not sovereign within its own ambit. Therefore, if the power to provide otherwise under Article 286(2) was conferred upon a sovereign Legislature, that power can be exercised not only prospectively but also retrospectively. Faced with this Mr. Palkhivala suggested that even so the language of Article 286(2) itself makes it clear that the legislative power conferred upon Parliament by that article cna only be exercised prospectively. He said that the construction of the words used precludes a construction which gives power to Parliament retrospectively to lift the ban, and for this purpose reliance was placed upon a decision of the Privy Council reported in Punjab Province v. Daulat Singh ([1948] F.C.R. 1; 48 Bom. L.R. 443). The Privy Council there was considering section 298 of the Government of India Act. Sub-section (1) of section 298 contained a general prohibition to the effect that "No subject of His Majesty domiciled in India shall on grounds only of religion, place of birth, descent, colour or any of them be ineligible for office under the Crown in India, or be prohibited on any such grounds from acquiring, holding or disposing of property or carrying on any occupation, trade, business or profession in British India". Then there was an exception under sub-section (2) and that was to the following effect : "Nothing in this section shall affect the operation of any law which - (a) prohibits, either absolutely or subject to exceptions, the sale or mortgage of agricultural land and situate in any particular area, and owned by a person belonging to some class recognised by the law as being a class of persons engaged in or connected with agriculture in that area to any person not belonging to any such class ..........." The Punjab Legislature passed a law with regard to past sales or mortgages; in other words, the Punjab Legislature retrospectively wanted to exempt sales or mortgages under sub-section (2) from the operation of section 298(1), and the question that the Privy Council had to consider was whether the attempt of the Punjab Legislature was lawful, and the Privy Council accepts the view of Mr. Justice Varadatchariar that the word "prohibit" can only mean the forbidding of a transaction, and such a direction is appropriate only in respect of transactions to take place subsequently to the date of the direction, and cannot include an attempt to reopen or set aside transactions already completed, or to vacate titles already acquired. Therefore, the decision of the Privy Council turned on the construction of the word "prohibit" used in the Government of India Act. When we turn to our Constitution, the language used by the Constitution-makers is "Parliament may by law otherwise provide". There is nothing in the word "provide" which necessarily suggests only futurity. "Provide" is a colourless word and it may include both retrospective and prospective legislation. It is therefore difficult to understand how the construction of a particular word in the Government of India Act can help us in the construction of an entirely different word used in the Constitution. It should also be borne in mind that the prohibition the Privy Council was considering was against the State Legislature and the prohibition was contained in the Government of India Act, which Act could have been modified by the British Parliament. We are here dealing not with the legislative competence of, in a sense, a subordinate Legislature. We are dealing here with the legislative competence of the sovereign Parliament of India, and even assuming that on the language such a construction was possible, it would be totally opposed to all conceptions of the sovereignty of a Legislature to hold that a sovereign Legislature has not the legislative competence to legislate retrospectively as much as prospectively.

11. It is finally said that Article 286(2) contains a condition precedent and therefore that condition precedent must first be complied with before the State Legislature can impose a tax contemplated by that Article. It is urged that Parliament has reversed the process which the Constitution has laid down and according to Mr. Palkhivala the process is first the lifting of the ban or the removal of the restriction by Parliament and then the State legislation. But here we have a State legislation and then a subsequent lifting of the ban. In our opinion, it is a mistake to look upon the provision of Article 286(2) as a condition precedent. We start with the legislative competence of the State Legislature; that is an undisputed fact. If the State Legislature were to pass a law taxing inter-State sales, that law cannot be challenged on the ground of competence. But that the Constitution has done is to have placed a limitation or restriction upon that power and once that restriction is removed the competence is unquestioned and undisputed. Therefore, Article 286(2) deals not with any condition precedent, nor with the compliance of any condition, before the State Legislature can legislate, but it deals with a restriction or a ban which has to be removed in the manner laid down by that Article in order to make the law passed by the State Legislature valid. Therefore, if Parliament could remove the restriction antecedent to the State legislation, equally so it could remove the ban retrospectively and validate a law which was only invalid because the ban had not been lifted and the restriction had not been removed.