TMI Blog1955 (9) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ent's order no doubt lifted that ban but was not competent to lift the ban under Article 286(1)(a) and the Explanation thereto with the result that in spite of that order the State of Madhya Pradesh was not in a position to impose a tax on these transactions during the post-Constitution period. The assessment of these transactions to tax for the post-Constitu- tion period, therefore, is invalid and cannot be sustained. Allow the petition, set aside the said order dated the 14th July, 1954, and the matter will go back to the Assessment Officer for re-assessment of the petitioners in accordance with law. - CIVIL APPEALS NOS. 132, 133 and 137 of 1955. - - - Dated:- 20-9-1955 - DAS S.R. ACTG. J. AND BHAGWATI N.H. AND JAGANNADHADAS B. AND SYED JAFER IMAM AND CHANDRASEKHARA AIYAR N. JJ. M.C. Setalvad, Attorney-General of India (R.M. Hajarnavis and G.S. Mathur, Advocates, with him), for the appellant in C.A. No. 132 of 1955. R.M. Hajarnivas and G.C. Mathur, Advocates, for the appellant in C.A. No. 133 of 1955. R.N. Hajarnivas and G.C. Mathur, Advocates, for intervener No. 2 in C.A. No. 132 of 1955. R.M. Hajarnivas and G.C. Mathur, Advocates, for the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts' turnover and ordered the appellants to pay ₹ 1,13,850-13-6 as sales tax on the said transactions. The appellants filed an appeal to the Commissioner of Sales Tax, Madhya Pradesh, respondent No. 2, on the 30th July, 1953. The appeal was, however, entertained by the Deputy Commissioner of Sales Tax, Madhya Pradesh, respondent No. 3, who ordered the appellants to pay ₹ 25,000 by the 31st August, 1953. The appellants thereupon filed a petition under Article 226, being Miscellaneous Petition No. 265 of 1953, in the High Court of judicature at Nagpur, asking inter alia for the quashing of the order of 30th June, 1953, passed by respondent No. 1 and for consequential reliefs. The respondents filed a return denying the contentions of the appellants and praying for the dismissal of the petition with costs. The appellants in Civil Appeal No. 133 of 1955 are the Eastern Cotton Company, a firm registered as a dealer under the Central Provinces and Berar Sales Tax Act, 1947, and carrying on business at Amravati and at other places in Madhya Pradesh. They also, during the period 1st October, 1949, to 30th September, 1950, worked as agents of certain mills situated out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein governed the decision in the connected Petitions Nos. 265, 274 and 348 of 1953. The High Court held that the Explanation II to section 2(g) of the Central Provinces and Berar Sales Tax Act, 1947, as amended by the Central Provinces and Berar Act, XVI of 1949, having been declared invalid from its inception by the High Court in Messrs. Shriram Gulabdas v. Board of Revenue (1953) I.L.R. 1953 Nag. 332; 3 S.T.C. 343. and by this Court in Himmatlal Harilal Mehta v. The State of Madhya Pradesh and Others [1954] S.C.R. 1122; 5 S.T.C. 115. the original Explanation remained in force until the 1st April, 1951, when it was amended by the Madhya Pradesh Act IV of 1951. Explanation II originally enacted was in the terms following: 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. The appellants contended that this Explanation offended Article 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, be liable to taxation by that State, vide Article 286(2). The President's order, however, removed this ban and the exporting State was entitled to tax the transaction by virtue of the power derived by it from the same. On a construction of the relevant provisions of Article 286(1) and Article 286(2) the High Court was of the opinion that it would be making the proviso to Article 286(2) nugatory if it was held that Article 286(1) overrides it and takes away the taxing power of all States in inter-State trade or commerce except the delivery State. The High Court accordingly dismissed the petitions with costs. The learned Attorney-General appearing for the appellants before us contended that so far as the post-Constitution period is concerned, the position is governed by our judgment in The Bengal Immunity Co.,Ltd. v. The State of Bihar(1) delivered on the 6th September, 1955. He urged that the bans imposed on the powers of the State Legislatures to levy taxes on the sale or purchase of goods in the several clauses of Article 286 are independent and separate and that the transactions of sale or purchase referred to in the various clauses must be looked at from different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er before a State Legislature can impose tax on transactions of sale or purchase of goods. These bans have been imposed from different view-points, and, even though the transactions of sale or purchase may in conceivable cases overlap so far as these different view-points are concerned, each of those bans is operative and has to be enforced. So far as Article 286(1)(a) is concerned, the Explanation determines by the legal fiction created therein the situs of the sale in the case of transactions coming within that category and when a transaction is thus determined to be inside a particular State it necessarily becomes a transaction outside all other. States. The only relevant enquiry for the purposes of Article 286(1)(a), therefore, is whether a transaction is outside the State and once it is determined by the application of the Explanation that it is outside the State it follows as a matter of course that the State with reference to which the transaction can thus be predicated to be outside it can never tax the transaction. This ban is effective independently of the fact that the transaction may also have taken place in the course of inter-State trade or commerce or with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to raise the ban in so far as it was imposed by the provisions of this clause . The President's order, therefore, only lifted the ban in so far as the transactions took place in the course of inter-State trade or commerce and could not be projected into the sphere of any other clause of Article 286. It had, therefore, not the effect of lifting the ban which was imposed by Article 286(1)(a) and the Explanation thereto, even though the transactions covered by the Explanation to Article 286(1)(a) by and large fell within the category of transactions which took place in the course of inter-State trade or commerce. The ban imposed by Article 286(1)(a) was independent and separate and could not be lifted by the President's order which had operation only in regard to the inter-State character of the transactions. The moment it was determined that the transactions were outside the State by virtue of the Explanation to Article 286(1)(a) the ban imposed by Article 286(1)(a) attached to the same and could not be lifted by the President's order which operated only on the inter-State character of the transactions and saved only those inter-State transactions which did not com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d there; and the State of Madhya Pradesh will also be able to tax under the Explanation II to section 2(g) of the Act because the goods were in the State of Madhya Pradesh at the time when the contracts of sale were made in the State of Bombay. Nobody will say that the Constitution-makers intended to perpetuate multiple taxation of this kind and yet that will be the result if we were to accede to the arguments advanced by the respondents. The result, therefore, is that so far as the post-Constitution period is concerned the ban which is imposed by Article 286(1)(a) and the Explanation thereto cannot be saved by the President's order which was issued under the proviso to Article 286(2) and the High Court was in error when it construed the proviso to Article 286(2) as projecting into the field of Article 286(1)(a) and lifting the ban imposed therein. On the above reasoning, Civil Appeal No. 137 of 1955 filed by the firm of Ramdas Khimji Brothers, Bombay, which relates only to the post-Constitution period will be allowed and the order of assessment dated the 29th December, 1952, will be set aside. The respondents will pay the costs of the appellants here as well as in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the totality of property treated as assessable, and when one component (not dismissible as 'de minimis') is on any view not assessable and wrongly included, it would seem clear that such a procedure is barred, and the assessment is bad wholly. That matter is covered by authority. In Montreal Light, Heat Power Consolidated v. City of Westmount the Court [1926] S.C.R. (Can.) 515.(see especially per Anglin, C.J.) in these conditions held that an assessment which was bad in part was infected throughout, and treated it as invalid. Here their Lordships are of opinion, by parity of reasoning, that the assessment was invalid in toto. It was, therefore, urged that on the facts of this case the assessment was invalid in toto and that it should be set aside. The learned Deputy Advocate-General of Madhya Pradesh did not seriously contest this position and the result, therefore, is that the order of assessment dated the 30th June, 1953, in Civil Appeal No. 132 of 1955 and the order of assessment dated the 9th September, 1953, in Civil Appeal No. 133 of 1955 are liable to be set aside. The appeals will therefore he allowed, the orders of assessment will be set aside and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax assessed was paid up. The petitioners paid about ₹ 91,000 towards the amount of tax assessed but finding it difficult to pay the balance filed this petition against the State of Madhya Pradesh, respondent No. 1, the Commissioner of Sales Tax, Madhya Pradesh, respondent No. 2, and the Deputy Commissioner of Sales Tax, Madhya Pradesh, respondent No. 3, for a writ of certiorari quashing the said order dated the 14th July, 1954, made by respondent No. 3 and for other consequential reliefs. The respondents filed a return denying the contentions of the petitioners and maintaining that the sales tax was lawfully assessed by them against the petitioners. The position as regards the petitioners' turnover for the period of assessment was as stated below: Nature of the parties. Sales prices of goods. Rs. (a) Direct to selling agents on orders........ 6,15,236 3 0 (b) Direct to merchants on orders. 3,99,450 2 0 (c) Direct to destinations other than branches or depots but accounted for against branches and depots. 6,20,996 14 0 (d) Direct to stations or destinations having branches or depots owned by the proprietors of this registered firm-Kanpur, Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to impose tax on the sales of the commodity. They had further submitted that the State of Madhya Pradesh where the bidis were manufactured and from where they were sent could not any more exercise its right to levy a tax on such transactions of sale taking place elsewhere by reason of the inhibition contained in Article 286. In the return filed by the respondents, they did not deny the allegation made by the petitioners in their petition that the bidis manufactured by the firm were all delivered in the State of Uttar Pradesh for consumption in that State. In substance, they contended that in spite of the State of Uttar Pradesh being the delivery State within the meaning of the Explanation to Article 286(1)(a), the liability of these transactions to sales tax at the instance of the State of Madhya Pradesh was saved by the President's order made under the proviso to Article 286(2) and that the imposition of such tax at the instance of the State of Madhya Pradesh was lawful and did not contravene the provisions of Article 286(1)(a) read with the Explanation thereto. Both the order which was made by the Assistant Commissioner of Sales Tax, Jabalpur, in the original assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anks. The very fact that the bills and the railway receipts were sent through the scheduled banks went to show that the petitioners reserved the right of disposal of goods covered by those railway receipts and the property in the goods passed in the State of Uttar Pradesh only after the relative bills were either accepted or honoured by the purchasers and the railway receipts delivered by the scheduled banks to them. It is clear, therefore, that in those cases the sales were completed in the State of Uttar Pradesh and were not intra-State sales or inside sales qua the State of Madhya Pradesh. As regards the direct supplies to destinations other than branches or depots but accounted for against the branches or depots being item (c) above, it was found that the petitioners despatched the goods and billed them to depot managers who were responsible for the collection of the orders and then the railway receipts and bills were sent there. The managers prepared another bill adding incidental or other charges and delivered the railway receipts to the customers to whom the goods were sent from the State of Madhya Pradesh. Here also the despatches of the goods were made from the State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter-State trade or commerce and were hit by the ban of Article 286(2). The President's order no doubt lifted that ban but was not competent to lift the ban under Article 286(1)(a) and the Explanation thereto with the result that in spite of that order the State of Madhya Pradesh was not in a position to impose a tax on these transactions during the post-Constitution period. The assessment of these transactions to tax for the post-Constitu- tion period, therefore, is invalid and cannot be sustained. The assess- ment, moreover, is a composite one covering the pre-Constitution period as well. The case, therefore, falls within our ruling in Civil Appeals Nos. 132, 133 and 137 of 1955 just delivered, and, following the reasoning contained therein, we are of the opinion that the order dated the 14th July, 1954, made by the Deputy Commissioner, Sales Tax, Madhya Pradesh, respondent No. 3, in Sales Tax Appeal No. 6/A- 1-6-54 should be set aside. We accordingly allow the petition, set aside the said order dated the 14th July, 1954, and the matter will go back to the Assessment Officer for re-assessment of the petitioners in accordance with law. The petitioners will be at liberty to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h only emphasises the fact that this is a proviso to Article 286(2) (sic). But there is no mistaking the positive and mandatory terms of the proviso. The effect of this is clearly and unequivocally to make the whole field of inter-State trade and commerce temporarily taxable in respect of the sales which take place in the course thereof. If this be so, it appears to me to be implicit therein that no other ban on such taxation can operate, for the time being, within that very field. To construe the two bans as independently and cumulatively operative is to impute them some kind of picturesque potency and is to miss the reality, viz., that all the bans under Article 286 are meant to serve the same purpose, viz., that of imposing restrictions and thereby demarcating the fields of no taxation. The bans and the proviso are parts of the same Article and have to be harmoniously construed. The unequivocal and positive language of one part cannot be taken to have been obliterated by the negative language of the other part so as to result in futility. A similar situation as that contemplated by the proviso would also arise with reference to the saving clause in Article 286(2). If the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruing the proviso and by parity of reasoning the saving clause, as merely removing the ban of a particular nature leaving another over- lapping ban to operate, would be to render both the saving clause in, and the proviso to, Article 286 (2) virtually nugatory. The argument based on the non-obstante clause in the proviso, viz., Notwithstanding that the imposition of such tax is contrary to the provisions of this clause , remains to be considered. It is urged that this clause clearly indicates the intention that the operation of the proviso is to be confined to the sole purpose of lifting the ban arising under Article 286(2). With respect, I am unable to agree. The non- obstante clause undoubtedly affirms the fact that the proviso is operative in respect of Article 286(2). But it does not purport to limit the effect of the proviso, which a reasonable construction thereof may justify. A non-obstante clause does not normally add to or subtract from the main provision of which it is a part. It is often enough inserted by way of extra caution. But it does not have the effect of limiting the operation of the main provision. (See Aswini Kumar Ghosh v. Arabinda Bose [1953] S.C.R. 1 at ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
