TMI Blog1960 (9) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... f 57). B.P. Maheswari, Advocate, for the appellants (in C.A. No. 3 of 60). A.V. Viswanatha Sastri, Senior Advocate (D.P. Singh, Advocate, with him), for the respondent (in C.As. Nos. 338 of 58 and 3 of 60). J.C. Sinha, S. Mustafi and R.R. Biswas, Advocates, for the appellants (in C.As. Nos. 791 and 792 of 57). S.P. Varma, Advocate, for the appellants (in C.As. Nos. 339 and 340 of 58). -------------------------------------------------- The Judgment of the Court was delivered by SHAH, J.- In these six appeals, the constitutional validity of section 2(g) of the Bihar Sales Tax Act, XIX of 1947, as amended by the Bihar Sales Tax (Amendment) Act, VI of 1949, is challenged. To appreciate the grounds on which the contention is raised by the appellants, it is necessary to set out the legislative provisions applicable to the sales in respect of which tax was sought to be levied by the State of Bihar under the Bihar Sales Tax Act, 1947. In exercise of the legislative power conferred by entry 48 in List II of the Government of India Act, 1935, the Legislature of the Province of Bihar enacted the Bihar Sales Tax Act, XIX of 1947, which was brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ief Justice Das in dealing with the legislative competence of the Bihar State Legislature observed at pp. 1367-68: "Both before and after the amendment of section 2(g) the principal part of the definition meant the transfer of the property in goods. All that the second proviso did was not to extend the definition of 'sale', but only to locate the 'sale' in certain circumstances mentioned in that proviso in Bihar. The basis of liability under section 4(1) remained as before, namely, to pay tax on 'sale'. The fact of the goods being in Bihar at the time of the contract of sale or the production or manufacture of goods in Bihar did not by itself constitute a 'sale' and did not by itself attract the tax. The taxable event still remained the 'sale' resulting in the transfer of ownership in the thing sold from the seller to the buyer. No tax liability actually accrued until there was a concluded sale in the sense of transfer of title. It was only when the property passed and the 'sale' took place that the liability for paying sales tax under the 1947 Act arose. There was no enlargement of the meaning of 'sale' but the proviso only raised a fiction on the strength of the facts mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intending purchaser has to apply for a permit to the Iron and Steel Controller at Calcutta, who forwards the requisition to the Chief Sales Officer of the assessee working in Calcutta. The Chief Sales Officer thereafter makes a 'works order' and forwards it to Jamshedpur. The 'works order' mentions the complete specification of the goods required. After the receipt of the 'works order' the Jamshedpur factory initiates a 'rolling' or 'manufacturing' programme. After the goods are manufactured, the Jamshedpur factory sends the invoice to the Controller of Accounts who prepares the forwarding notes, and on the basis of these forwarding notes, railway receipts are prepared. The goods are loaded in the wagons at Jamshedpur and despatched to various stations, but the consignee in the railway receipt is the assessee itself and the freight also is paid by the assessee. The railway receipts are sent either to the branch offices of the assessee or to its bankers, and after the purchaser pays the amount of consideration, the railway receipt is delivered to him. These facts are admitted and the correct- ness of these facts are not disputed by the State of Bihar." In that case, it is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the provisions of the Government of India Act, 1935, and the Court was not concerned to decide the legislative competence in the light of Article 286 of the Constitution. Similarly in all the appeals before us the question of vires has to be adjudged in the light of the provisions of the Government of India Act and not the Constitution. We may now proceed to deal with the facts which give rise to these six appeals which fall in four groups. CIVIL APPEAL NO. 338 OF 1958. The appellant in this appeal is the Bharat Sugar Mills Ltd., a public limited company which has its registered office at Calcutta and its factory for manufacturing sugar at Sidhwalia in the district of Saran in Bihar. The appellant was registered as a "dealer" under the Bihar Sales Tax Act. For the period of assessment 1949-50, (April 1, 1949, to March, 31, 1950) the Superintendent of Sales Tax, Chapra, deter- mined the gross turnover of the appellant at Rs. 82,79,207-4-6 and the taxable turnover at Rs. 66,33,155-8-3. In computing the taxable turn- over, the Sales Tax Officer included sales of the value of Rs. 16,33,959-5-3 in respect of goods despatched for sale by the appellant to its regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , legally valid." The High Court was of the view that the question raised in the reference was covered by its judgment in Messrs Tata Iron Steel Co., Ltd. v. The State of Bihar (1956) 7 S.T.C. 158; A.I.R. 1956 Pat. 92 and answered the question against the appellant and in favour of the State of Bihar. Against the order passed by the High Court this appeal was preferred with special leave under Article 136 of the Constitution. In the meantime, the judgment of the High Court in Messrs Tata Iron Steel Co., Ltd. v. The State of Bihar (1956) 7 S.T.C. 158; A.I.R. 1956 Pat. 92, was brought in appeal before this Court with special leave and this Court substantially agreed with the view of the Patna High Court, and for reasons already stated, held that section 2(g) of the Bihar Sales Tax Act as it stood at the material time was constitutionally valid and that the assessee in that case was properly taxed for the period 1st April, 1949, to 25th January, 1950 (see Tata Iron Steel Co., Ltd. v. The State of Bihar (1958) S.C.R. 1355; 9 S.T.C. 267.). In view of the decision of this Court, the judgment of the High Court must be affirmed. This appeal is therefore dismissed with costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of Revenue. The appellant also obtained an order from the High Court directing the Board of Revenue to refer seven questions to the High Court under section 25 of the Bihar Sales Tax Act. The questions substantially related to the vires of section 2(g) of the Bihar Sales Tax Act as amended by Bihar Act VI of 1949 and the liability of the appellant to pay sales tax on "the railway freight collected with the prices" of the materials sold. The High Court was of the view that in dealing with the first six questions relating to the vires of section 2(g) of the Bihar Sales Tax Act as amended by Bihar Act VI of 1949 and the liability of the appellant to be assessed to tax in respect of goods manufactured in Bihar but sold outside, they were bound by their judgment in Tata Iron Steel Co., Ltd. v. The State of Bihar [1956] 7 S.T.C. 158; A.I.R. 1956 Pat. 92. The High Court accepted the contention of counsel for the appellant that the railway freight collected by it was not to be included in the taxable turnover and accordingly directed that if the appellant satisfied the taxing authorities as to what amount was spent towards the cost of freight and collected as such, the appellant would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Bihar to the Board of Revenue, it was held that the amount of Rs. 10,66,577-8-0 being the price of the goods transferred for sale from the manufacturing centre to Calcutta was liable to be included in the taxable turnover. The High Court directed the Board of Revenue to state a case with regard to the question arising out of the order of assessment and the Board of Revenue referred a question as to the vires of sec- tion 2(g) of the Bihar Sales Tax Act and the liability of the appellant to pay sales tax in respect of sales between April 1, 1949, and January 25, 1950. At the hearing of the reference, the High Court following its judgment in Tata Iron Steel Co., Ltd. v. The State of Bihar [1956] 7 S.T.C. 158; A.I.R. 1956 Pat. 92. decided the reference against the appellant. Against that order, this appeal with special leave has been preferred under Article 136 of the Constitution. As the orders passed by the Patna High Court in Tata Iron Steel Co., Ltd. v. The State of Bihar [1956] 7 S.T.C. 158; A.I.R. 1956 Pat. 92. has been confirmed by this Court, vide Tata Iron Steel Co., Ltd. v. The State of Bihar [1958] S.C.R. 1355; 9 S.T.C. 267., this appeal must fail and is dismis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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