1959 (11) TMI 48 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Constitutional validity and legality of the sales tax levied on the sale of 1,800 wagons.
2. Violation of Article 286 of the Constitution.
3. Violation of Article 19(1)(g) of the Constitution.
4. Legality of the assessment order concerning sales for the period ending 31st March 1954.

Issue-wise Detailed Analysis:

1. Constitutional Validity and Legality of the Sales Tax Levied on the Sale of 1,800 Wagons:
The appellant contested the sales tax levied on the sale of 1,800 wagons to the Railway Board, arguing that the sales were exempt as they were for consumption outside West Bengal. The Commercial Tax Officer included these sales in the taxable turnover, and the appellant's appeal was dismissed. The appellant challenged the legality of the sales tax through a writ petition, which was also dismissed by Sinha, J.

2. Violation of Article 286 of the Constitution:
The appellant argued that the sales tax imposition violated Article 286, which prohibits a state from taxing sales outside its borders or in the course of inter-State trade. The contract for the sale was made through correspondence between New Delhi and Calcutta, with the goods delivered in West Bengal. The wagons were for the Western Railway, administered by the Railway Board, which operates across multiple states. The court held that the goods were delivered in West Bengal and the sale was completed there, making it taxable by West Bengal. The court also discussed the implications of the Explanation to Article 286(1)(a), concluding that the delivery was not for consumption in any one state, thus not an "Explanation sale."

3. Violation of Article 19(1)(g) of the Constitution:
Mr. Das attempted to introduce a new argument that the tax violated Article 19(1)(g), which guarantees the right to practice any profession or business. The court did not allow this new point, as it was not raised in the original petition or the memorandum of appeal, nor argued before Sinha, J.

4. Legality of the Assessment Order Concerning Sales for the Period Ending 31st March 1954:
The appellant also contested the inclusion of sales worth Rs. 66,492 in the taxable turnover, claiming they occurred before 31st March 1949 and were exempt under section 5(2)(a)(iii) of the Bengal Finance (Sales Tax) Act of 1941. However, this point was not pressed before Sinha, J., and the court found insufficient evidence to support the appellant's claim. Consequently, the court decided not to allow this point to be raised in the appeal.

Conclusion:
The appeal was dismissed, upholding the legality and constitutionality of the sales tax levied on the sale of 1,800 wagons. The court found no violation of Article 286 or Article 19(1)(g) and rejected the challenge to the assessment order concerning the sales for the period ending 31st March 1954.