TMI Blog1976 (10) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... n not contradict the true meaning of the language "sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made", as occurring in explanation (11) to section 2(g) of the Sales Tax Act, with reference to "in respect thereof " is reference to "specified or earmarked" goods which are actually present in the taxing State when the contracts are made - Held that:- This is a question of fact as to what contracts specify and whether those goods were taxed, on which the findings already recorded are enough to dispose it off against the assessee. Was the Tribunal right in its interpretation, application and use of the provisions of original explanation (11) to section 2(g) of the Sales Tax Act even as they were? - Held that:- Yes. Was the Tribunal right in assuming the law to be that the existence of ingredients of ores in the taxing State in question, which were sufficient if and when mixed in due proportion for yielding different varieties of standard mixtures contracted for by the overseas buyers, was in law enough to attract the tax? - Held that:- There is no question of assuming anyt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tensive scale. It owns 22 manganese ore mines in Madhya Pradesh from where manganese ore, after being excavated, is sent mostly abroad through different ports. The company is a registered dealer under the Act. It used to enter into contracts at places outside Madhya Pradesh for the despatch of what came to be known, in the special parlance of this company's business, as "oriental mixture". But, the contracts contain specifications only of strengths of manganese ore to be supplied with permissible percentages of other ingredients as admixtures. The term "oriental mixture" was evidently employed by the company itself to describe a particular type of conglomerate which the unloading at one place of various types of manganese ore produced. The required average consistency or strength of manganese ore specified in the contracts, which did not contain a reference to any "oriental mixture", was said to be obtained in the course of this mechanical process of transportation when various grades of manganese ore were heaped together. These grades of manganese ore were transported, in railway wagons, from one or more mines, and it appears that the order in which trucks were loaded in goods t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, with its two explanations, before it was amended, may be reproduced here in toto. It reads as follows: "2. (g) 'sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge: Explanation (I).- A transfer of goods on hire-purchase or other instalment system of payment shall, notwithstanding that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale. Explanation (II).- Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made, shall, wherever the said contract of sale is made, be deemed for the purpose of this Act to have taken place in the Central Provinces and Berar." Section 2 of the amending Act of 1949 provided: "2. In section 2 of the Central Provinces and Berar Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that such a view resulted in attributing to the legislature an intention contrary to that which it had unmistakably expressed by repealing the unamended provision. It was urged that the repeal, which was clearly intended, must be held to be valid. According to this submission, neither the old unamended provision nor the replacement of it were in operation during the last two assessment periods. Of course, this argument assumes that the repeal and the new enactment are separate. In Shriram Gulabdas v. Board of Revenue, Madhya Pradesh [1952] 3 S.T.C. 343 at 366-367., which was cited before us, it was held, on the question argued before us: "...we have already shown that the second explanation to clause (g) of section 2, which makes an agreement of sale taxable even though the sale may have taken place outside the Province, is not ultra vires the Provincial Legislature. We must make it clear that our answer to this question is in the affirmative, free from considerations arising under article 286. We have shown that the necessary power to make the unamended explanation did exist in the State Legislature; but we have also made it clear that by virtue of article 286, the explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision was directly on a question which necessarily arose for determination before the court on that occasion. We think that the view that the unamended law was in operation was not a mere obiter dictum. It was necessary for this Court to decide that question before other questions could be determined. The following passage was also cited from Koteswar Vittal Kamath v. K. Rangappa Baliga Co. [1969] 3 S.C.R. 40 at 47; A.I.R. 1969 S.C. 504 at 509.: "Learned counsel for the respondent, however, urged that the Prohibition Order of 1119 cannot, in any case, be held to have continued after 8th March, 1950, if the principle laid down by this Court in Firm A. T. B. Mehtab Majid Co. v. State of Madras [1963] 14 S.T.C. 355 (S.C.); [1963] Supp. 2 S.C.R. 435., is applied. In that case, rule 16 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, was impugned. A new rule 16 was substituted for the old rule 16 by publication on September 7, 1955, and this new rule was to be elective from 1st April, 1955. The court held that the new rule 16(2) was invalid because the provisions of that rule contravened the provisions of article 304(a) of the Constitution. Thereupo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the new enactment. But this argument is basically different from the argument which prevailed in Koteswar's case[1969] 3 S.C.R. 40 at 47; A.I.R. 1969 S.C. 504 at 509., where a distinction was drawn between a "substitution" and "supersession". It is true that, as the term substituted was not used there, the old rule was not held to have been repealed. Nevertheless, the real basis of that decision was that what was called supersession was void ab initio so that the law remained what it would have been if no such legislative process had taken place at all. It was held the void and inoperative legislative process did not affect the validity of the pre-existing rule. And this is precisely what is contended for by the State before us. In the case before us, although the word "substitution" is used in the amending Act, yet, the whole legislative process termed substitution was itself abortive. The whole of that process did not take effect as the assent of the Governor-General, required by section 107, Government of India Act, was lacking. Such ineffectiveness was the very reason why, in the case of Shriram Gulabdas [1952] 3 S.T.C. 343., it was held by this court that the previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.C.R. 435. Tewari's case [1965] 2 S.C.R. 421., related to the substitution of what was described as the "carry forward" rule contained in the departmental instruction which was sought to be substituted by a modified instruction declared invalid by the court. It was held that when the rule contained in the modified instruction of 1955 was struck down, the rule contained in a displaced instruction did not survive. Indeed, one of the arguments there was that the original "carry forward" rule of 1952 was itself void for the very reason for which the "carry forward" rule, contained in the modified instructions of 1955, had been struck down. Even the analogy of a merger of an order into another, which was meant to be its substitute, could apply only where there is a valid substitution. Such a doctrine applies in a case where a judgment of a subordinate court merges in the judgment of the appellate court or an order reviewed merges in the order by which the review is granted. Its application to a legislative process may be possible only in cases of valid substitution. The legislative intent and its effect is gathered, inter alia, from the nature of the action of the authority which func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is there to take its place, in law and in effect, the pre-existing provision continues. There is no question of a "revival". This question of interpretation was referred separately to the Full Bench of the Bombay High Court which drew a distinction between the two meanings of the word "substituted": firstly, where it involved a direction as to what would have to be removed or repealed simultaneously with another as to what was to be substituted, so as to involve two directions; and, secondly, where the "substitution" merely carried one direction to modify. It is difficult to see how a single direction to substitute would be effective without implying in it another to remove what was to be displaced. Perhaps more simply and correctly stated, the difference between two meanings of the word "substituted" is one where it stands for two separable legislative processes and another where it stands for one total or completed legislative procedure, including the assent of the GovernorGeneral, which would be covered by the words "shall be substituted". The Full Bench came to the conclusion that, in the context in which the words directing substitution occur, they do not imply that, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State in the form in which they are agreed to be sold. In that case, the agreement of sale can be said to be in respect of those goods. Here, as found by the second appellate authority, ore in the form of oriental mixture was present in the taxing State when contracts of sale in respect of oriental mixture were made by the head office of the applicant- company." After giving the findings set out above, on the question whether the goods existed in the State of Madhya Pradesh when they were sold and whether the contracts were referable to these goods, the High Court proceeded to consider the question whether "oriental mixture" itself had come into existence in Madhya Pradesh or at the port where the goods forming the "oriental mixture" became mixed up in the process of unloading and transportation. Apparently, what the High Court had meant by its earlier findings was not that the "oriental mixture" was in existence in Madhya Pradesh, but that the ingredients which went into its composition existed in Madhya Pradesh at the time when the contracts were made. It had finally reached the conclusion that the mixture itself was formed at the port where the ingredients were unloaded. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case before us, it seems to us that what has been "manufactured" by the assessee is the name "oriental mixture" only if the term "manufacture" can be employed at all to anything done by the assessee. What is to be determined is whether there has been the manufacture of a new product which has a separate commercially current name in the market. The mere giving of a new name by the seller to what is really the same product is not the "manufacture" of a new product. There is, it appears to us, no new process of the manufacture of goods at all by the assessee before us. Again, cases in which logs of wood were cut in order to convert them into planks (e.g., Shaw Bros. Co. v. State of West Bengal [1963] 14 S.T.C. 878.) could be of no assistance in the case before us. That too could be a process of "Manufacture". The High Court had also made a passing reference to Nilgiri Ceylon Tea Supplying Co. v. State of Bombay [1959] 10 S.T.C. 500., a case decided by the Bombay High Court, where different brands of tea, purchased in bulk and "without application of any mechanical or chemical process", were mixed so as to conform to a particular mixing formula, but this mixture was held not to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f unamended explanation (11) to section 2(g) as the purported amendment itself did not take effect. Hence, the unamended provision stood as it was before the attempted amendment. The question framed rests on a misconception that there was something to be restored. As nothing was taken away, nothing was there to be restored. And, there was nothing added or substituted. Q. 3: Does the Tribunal's decision not contradict the true meaning of the language "sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made", as occurring in explanation (11) to section 2(g) of the Sales Tax Act, with reference to "in respect thereof " is reference to "specified or earmarked" goods which are actually present in the taxing State when the contracts are made. Ans.: This is a question of fact as to what contracts specify and whether those goods were taxed, on which the findings already recorded are enough to dispose it off against the assessee. Q. 4: In any case, was the Tribunal right in its interpretation, application and use of the provisions of original explanation (11) to section 2(g) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
