TMI Blog1954 (3) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... t Nagpur dated the 25th of April, 1952, dismissing a petition under article 226 of the Constitution of India filed by the appellant questioning the vires of certain provisions of the Central Provinces and Berar Sales Tax Act 1947. The appellant represents a concern C. Parakh and Company (India) Limited, a company registered under' the Indian Companies Act, 1913, having its head office at Bombay, and several branches in . the State of Madhya Pradesh. The main business of the appellant company is that of cotton. The head-office of the appellant at Bombay sells cotton bales to several mills and individuals under the control and the system regulated by the Textile Commissioner at Bombay, and upon a contract of sale being completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Act XVI of 1949 was ultra vires and illegal. This petition, along with a refer eence in another case (Miscellaneous Civil Case No. 258 of 1951: A.I.R. 1952 Nag.378), was heard by a Division Bench of the Nagpur High Court and it was held that Explanation II to section 2(g) of the Act was not enforceable because under the Constitution sales tax could only be collected, in the State where the goods were delivered for consumption. It was further held that Explanation 11 as amended by the C.P. Berar Act XVI of 1949 was not validly enacted because it made drastic changes in the rules of the Sale of Goods Act. Without obtaining the assent of the Governor-General as required by section 107 of the Government of India Act, 1935. 'It was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to set out the relevant provisions of the Act which, the High Court has declared ultra vires the State Legislature. Act XXI of 1947 defines the expression sale in section 2(g) of the Act in these terms:- 'Sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payments or other valuable consideration including transfer of property in goods made in the course of the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge . Explanation.(I)- A transfer of goods on hirepurchase 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out above, the High Court held that the new Explanation II was ultra vires the State Legislature and that the mere production of goods was not enough to make the tax payable unless the goods were appropriated to a particular contract. The correctness of this view can no longer be questioned by reason of the majority decision of this court in The State of Bombay v. The United Motors (India) Ltd.([1953] S.C.R. 1069), wherein it was held that article 286(1) (a) of the Constitution read with the Explanation thereto and construed in the light of article 301 and article 304 prohibits the taxation of sales or purchases involving inter-State elements, by all States except the State in which the goods are delivered for the purpose of consum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur opinion, the contentions raised by the learned Advocate-General are not well founded. It is plain that the State evinced an intention that it could certainly proceed to apply the penal provisions of the Act against the appellant if it failed to make the return or to meet the demand and in order to escape from such serious consequences threatened without authority of law, and infringing fundamental rights, relief by way of a writ of mandamus was clearly the appropriate relief. In Mohd. Yasin v. The Town Area Committee([1952] S.C.R. 572, I46), it was held by this court that a licence fee on a business not only takes away the property of the licensee but also operates as a, restriction on his fundamental right to carry on his business and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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