TMI Blog1961 (4) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ections of section 3. Sub-section (1)A has the added support of Article 286, and the Constitution must prevail. Thus, both Article 286 and sub-section (1)A of section 3 are there to save from taxation all sales in the course of inter- State trade or commerce, and there is no need to look further into the Act to see whether they are exempted once again or not. - Civil Appeal No. 167 of 1960, - - - Dated:- 14-4-1961 - DAS S.K., KAPUR J.L., HIDAYATULLAH M., SHAH J.C. AND VENKATARAMA AIYAR T.L. JJ. A.V. Viswanatha Sastri, Senior Advocate (Naunit Lal, Advocate, with him), for the appellant. -------------------------------------------------- The Judgment of the Court was delivered by HIDAYATULLAH, J. -This appeal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed dealer, the goods intended for resale in the State could alone be excluded from the gross turnover. This amendment was followed by amendment of the rules. Rule 80 was enacted to provide as follows: "80. (1) A dealer who wishes to deduct from his gross turnover the amount of sales on the ground that he is entitled to make such deductions under clause (b) of sub-section (1) of section 15 shall, on demand produce in respect of such sales the copy of the relevant cash memo or bill according as the sale is a cash sale or a sale on credit, and a true declaration in writing by the purchasing dealer or by such responsible person duly authorised by the purchasing dealer in this behalf that the goods in question are specified in the certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxing sales in the course of inter-State trade or commerce and were, therefore, illegal. Ram Labhaya, J., held that the sale to R.C. Dey and the sale by him in Calcutta were separate sales, and that the first sale was not in the course of inter-State trade or commerce, and was taxable. He how- ever, held that though by section 3, which is the charging section, sales in the course of inter-State trade or commerce were excluded from the ambit of the Act, this section remained only "a pious declaration", because its effect was not incorporated in the machinery section, namely, section 15. According to the learned Judge, what was taxable under the Act was the net turnover of a registered dealer. The machinery section showed how the net turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d discussed the question from the angle of Article 286(1) of the Constitution, and it was pointed out that the same reasoning applied also to Article 286(2). It was observed in the case as follows: "The argument on behalf of the petitioner is that as the goods were purchased for the purpose of being sold to dealers outside the State, and they were, in fact, so sold, the purchases were in the course of inter-State trade, and the levy of tax thereon was within the prohibition enacted by Article 286(2). We do not agree with this con- tention. The transactions of sales which have been taxed were wholly inside the State of Orissa. They were sales by persons in the State of Orissa to persons within the State of Orissa of goods which were in O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Assam; (ii) in the course of the import of the goods into, or export of the goods out of, the territory of India; or (iii) in the course of inter-State trade or commerce except in so far as Parliament may by law otherwise provide." The introduction of sub-section (1)A did no more than repeat in the Act the prohibition contained in Article 286. The first two clauses of this sub-section reiterate the prohibition contained in Article 286(1), and the third clause reiterates the prohibition contained in Article 286(2) of the Constitution. The first proviso to section 2(12), which is referred to in sub-section (1)A, enacts the Explanation to clause (1) of Article 286. Now, it is quite clear that from the operation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , section 15, does not repeat the exemption given by the charging section, the turnover of a dealer would necessarily include the sales in the course of inter-State trade or commerce. Even if the net turnover did so include such sales, the dealer would, under sub- section (1)A of section 3, be able to claim that those transactions were not taxable, because they fell within the ban of Article 286(2) as well as section 3(1)A(iii) of the Act. What has already been excluded by the operation of the Constitution and the Act cannot become taxable, because the net turnover has to be calculated in a particular manner. From that net turnover, such sales must be excluded by the operation of Article 286(2) and section 3(1)A of the Act. In our opinion, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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