TMI Blog1965 (10) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... h him), for the appellant. M.C. Setalvad and N.A. Palkhivala, Senior Advocates (A.P. Sen and R.K.P. Shankardas and J.B. Dadachanji, O.C. Mathur and Ravinder Narain of J.B. Dadachanji and Co., with them), for intervener No. 2. S.V. Gupte, Solicitor-General of India (R.N. Sachthey with him), for intervener No. 5. D. Muni Kanniah, Senior Advocate (T.V.R. Tatachari with him), for the respondents. N.A. Palkhivala, Senior Advocate (A.P. Sen and R.K.P. Shankardas and J.B. Dadachanji, O.C. Mathur and Ravinder Narain of J.B. Dadachanji and Co., with him), for intervener No. 3. J.B. Dadachanji of J.B. Dadachanji and Co., for intervener No. 4. -------------------------------------------------- The judgment of the Court was delivered by SHAH, J.- The question which falls to be determined in these appeals is "whether the appellant-company is liable to pay sales tax assessed under the Hyderabad General Sales Tax Act, 1950, on the price of coal supplied to allottees outside the taxing State pursuant to directions of the Coal Commissioner issued under the Colliery Control Order, 1945". The Company which has its registered office at Hyderabad, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1954-55 and 1955-56 brought to tax the turnover which was previously treated as exempt. The orders were carried to the High Court in appeal and the same grounds which were set up in the revision application relating to the assessment year 1956-57 were set up, besides the ground that the action for reopening the assessments by the Commissioner of Commercial Taxes was barred by limitation and was therefore incompetent. The High Court rejected these contentions. With certificate granted by the High Court, these appeals are preferred by the Company. At the material time, by section 2(k) of the Hyderabad General Sales Tax Act, 1950, the expression "sale" was defined as under: "'Sale' with all its grammatical variations and cognate expressions means every transfer of property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration and includes also a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge. Explanation 2. -Notwithstanding anything to the contrary in any other law for the time being in force, a transfer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in that behalf under clause 4, and from granting or agreeing to grant any commission, rebate or such other concession in any form having the effect of reducing either directly or indirectly the said price (clause 5). A colliery owner could with the consent of the Deputy Coal Commissioner sell coal at the price fixed under clause 4 direct to a consumer, if an allotment was made by the Deputy Coal Commissioner to the consumer for such direct sale (clause 6). The Central Government could issue directions to any colliery owner regulating the disposal of his stocks of coal or of the expected output of coal in the colliery during any period (clause 8); and notwithstanding any contract to the contrary, every colliery owner to whom a direction was given under clause 8 had to dispose of coal in accordance therewith and could not dispose of coal in contravention thereof (clause 9). The Coal Commissioner could order that coal despatched by any colliery owner to any person which was in transit (terminii whereof were defined by the explanation) shall subject to the terms and conditions if any imposed by the Coal Commissioner be diverted and delivered to another person specified in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making out a "sale note" mentioning the cost per ton F.O.R. Colliery with "freight to pay" and despatched the same by rail to the consumer at the destination requested. In the "sale note" were set out the name of the buyer, grade and quantity of coal allotted, the terms of sale, cost per ton F.O.R. Colliery, other charges, and particulars of despatch, such as the name of the railway station to which the coal should be booked and the name of the consignee. The sale note was subject to conditions of sale, that the colliery shall not be responsible for non-delivery or late delivery of coal or for any loss occasioned in consequence of fire, snow, heat, flood, strikes, lockouts, shortage of wagons, restrictions on booking, accidental losses, etc.: that any taxes, export duty, cess or other charges not in force imposed by the Government after the date of the sale note shall be borne by the purchaser: that the colliery reserved the right to demand payment in advance and to have a right of lien on all coal despatched until it was paid for: that the sale note was subject to the quantity allotted by the Deputy Coal Commissioner for buyers outside the State and in the event of the Deputy Coal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of goods where such sale or purchase takes place- (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. Explanation .-For the purposes of sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. (2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce: Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance, 1956, on January 30, 1956, the provisions of which were later embodied in the Sales Tax Laws Validation Act, 1956. By this Act notwithstanding any judgment, decree or order of any Court, no law of a State imposing or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter-State trade or commerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of inter-State trade or commerce; and all such taxes levied or collected or purported to have been levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law. The Parliament thereby removed the ban contained in Article 286(2) of the Constitution retrospectively but limited only to the period between April 1, 1951, and September 6, 1955. All transactions of sale, even though they were inter-State could for that period be lawfully charged to tax. But Article 286(2) remained operative after September 6, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and the Sales Tax Laws Validation Act, 1956, not having been extended to cover that period, inter-State sales could not be taxed by the State Legislature. During the period September 11, 1956, to January 4, 1957, Article 286(2) stood repealed by the Constitution (Sixth Amendment) Act, 1956, but the Parliament had assumed to itself the power under Entry 92A of the First List in the Seventh Schedule to tax sale or purchase of goods where such sale or purchase takes place in the course of inter-State trade or commerce. In exercise of the power to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce, the Parliament enacted the Central Sales Tax Act, 1956, which was brought into force on January 5, 1957, and after that date inter-State sales could be taxed under the provisions of the Central Sales Tax Act. The Company claims that the transactions which are sought to be charged for the period between April 1, 1954, to September 6, 1955, are not taxable, because they were covered by Explanation to clause (1)(a) of Article 286 of the Constitution, before it was amended. For the period between September 7, 1955 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the taxing State and therefore the principle of Shree Bajrang Jute Mills' case [1964] 15 S.T.C. 430. did not apply to those transactions. That contention has however no force. The Explanation defines the State in which the goods have actually been delivered for consumption, as the State in which for the purpose of clause (1)(a) of Article 286 the sale shall be deemed to have taken place. That State alone in which the sale is deemed to take place has the power to tax the sale, and for this purpose it is immaterial that property in the goods has under the general law relating to sale of goods passed in another State in which the allottee resided or carried on business. Delivery of coal to the Railway Administration may amount to delivery to the allottee for the purpose of the general law relating to sale of goods, but thereby coal cannot be said to be "actually delivered" within the meaning of the Explanation to Article 286(1)(a). It is also true that under the terms of the sale note under which coal was despatched on terms F.O.R. Singareni the Company was not responsible for loss or damage to the consignment after it was loaded in the wagons; that may indicate that the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -State sales was governed by the Central Sales Tax Act, 1956. By the Constitution (Sixth Amendment) Act amending Article 286(2) and incorporating Entry 92A in List I of the Seventh Schedule read with Article 269(3) the power to tax sales in the course of inter-State trade or commerce rested with the Central Government. Sales Tax for the period from January 5, 1957, to March 31, 1957, has not been levied under the Central Sales Tax Act, 1956, and if the transactions by the Company were taxable under that Act, the State of Andhra Pradesh had no power to tax those transactions. As transactions of sale in the course of inter-State trade or commerce within the meaning of section 3, they could not be taxed under the Hyderabad General Sales Tax Act, 1950. Section 3 of the Central Sales Tax Act, 1956, provides that "a sale......of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale.........occasions the movement of goods from one State to another or is effected by a transfer of documents of title to the goods during their movement from one State to another". In Tata Iron and Steel Company Ltd. v. S.R. Sarkar [1961] 1 S.C.R. 379; 11 S.T.C. 655., th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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