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TMI Blog1965 (12) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... eral of Supplies, Delhi, entered into a contract with the General Manager, Caltex (India) Ltd. at Bombay (hereinafter called the respondent) for the supply of petrol, HSD and power Kero to the State Mechanized Farm at Nandpur located in the State of Jammu and Kashmir. In pursuance of this contract the respondent directed its depot at Pathankot situated in the Punjab State to supply petrol to the Nandpur farm. The procedure adopted was as follows: The officer-in-charge of the Nandpur farm placed indents with the Pathankot depot for supply of specified quantities of petrol to the farm and on receipt of the indents, the Pathankot depot transported the petrol in its own tank-lorries to Nandpur and delivered the petrol to the farm. The petrol was measured by means of dipping rods and approved by the indenting officer at Nandpur farm and thereafter the petrol was delivered to the Nandpur farm through pumps which belonged to the respondent. The price of petrol so supplied was paid to the respondent at Delhi by the Director-General of Supplies. The Petrol Taxation Officer at Srinagar considered that the sales of petrol to Nandpur farm were liable to be taxed under the Jammu and Kashmir Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. (2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce: Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be levied until the thirty-first day of March, 1951. (3) No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 1954. In The Bengal Immunity Company Ltd. v. State of Bihar [1955] 2 S.C.R. 603; 6 S.T.C. 446., this Court held that the operative provisions of the several parts of Article 286, namely clause (1) (a), clause (1) (b), clause (2) and clause (3), were intended to deal with different topics and one cannot be projected or read into another, and therefore the Explanation in clause (1) (a) cannot legitimately be ex- tended to clause (2) either as an exception or as a proviso thereto or read as curtailing or limiting the ambit of clause (2). This Court further held that until the Parliament by law, made in exercise of the powers vested in it by clause (2) of Article 286, provides otherwise no State may impose or authorise the imposition of any tax on sales or purchases of goods when such sales or purchases take place in the course of inter-State trade or commerce, and therefore the State Legislature could not charge inter-State sales or purchases until the Parliament had otherwise provided. The judgment of the Court in the Bengal Immunity Company's case [1955] 2 S.C.R. 603; 6 S.T.C. 446., was delivered on September 6, 1955. The President issued the Sales Tax Laws Validation Ordinance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase of goods takes place in the course of inter-State trade or commerce; and to effectuate the conferment of that power in the Seventh Schedule, Entry 92A was added in the First List and Entry 54 in the Second List was amended. The Parliament enacted, in exercise of that power, the Central Sales Tax Act (Act 74 of 1956) to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India, and to provide for the levy, collection and distribution of taxes on sales of goods in the course of inter-State trade or commerce and to declare certain goods to be of special importance in inter-State trade or commerce etc. Article 286, as amended by the Constitution (Sixth Amendment) Act, 1956, was applied to the State of Jammu and Kashmir on January 16, 1958, by the Constitution (Application to Jammu and Kashmir) Amendment Order, 1958. The Central Sales Tax Act (Act 74 of 1956) was enacted by Parliament on December 21, 1956, but it was applied to the State of Jammu and Kashmir on March 23, 1958, by Act 5 of 1958. The questions presented for determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade but it merely liberated the Sales Tax Acts of several States from the fetter imposed by clause (2) of Article 286 of the Constitution and left the State Act to operate in its own terms. It was submitted that if there was no law in a State empowering the levy of a tax on sales or purchases in the course of inter-State trade or commerce, the State could not derive any advantage from the Sales Tax Laws Validation Act. It was contended that the Explanation to Article 286(1)(a) of the Constitution did not confer any taxing power on any State Legislature. On the contrary, it was intended to place a limitation on the States' taxing power and therefore the mere lifting of the ban under clause (2) of Article 286 did not enable the State to impose the tax on sales in the course of inter-State trade and such levy of tax could be made only when the taxing statute of the State expressly provides for it. In our opinion, the argument of Mr. Setalvad is well-founded. The question, therefore, arises whether the Jammu and Kashmir Motor Spirit (Taxation of Sales) Act, 2005 (herein- after called the Act) applies to the sales of petrol made by the respondent between January 1, 1955, to September ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir at the material time. It is also conceded that the respondent did not hold any licence for storage of petrol within the State. Mr. Setalvad therefore contended that the appellants were not authorised to levy sales tax under the provisions of the Act. We are unable to accept this contention as correct. The charging section-section 3-authorises the Government to levy tax on "all retail sales of motor spirit" at the rate of four annas for each imperial gallon of motor spirit or at such other rate as the Govern- ment may prescribe from time to time. The charging section does not require that for the purpose of assessment of tax the assessee should have his place of business or his storage depot within the State of Jammu and Kashmir. Nor is it a requirement of the section that the assessee should hold a licence of a retail dealer under the Act. The provisions in regard to licence contained in sections 6 and 7 deal with the machinery of collection and it is not permissible, in our opinion, to construe the language of section 3 of the Act with reference to sections 6 and 7 or to place any restriction on the scope and effect of the charge of tax in the context of these sections. We may, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was appropriation of the goods to the contract at Srinagar when the petrol was transferred from the tank-lorries of the respondent for delivery to Nandpur farm and measured by means of dipping rods and approved by the indenting officer. The question as to passing of title of goods is essentially a question of fact and we must deal with the present case on the same basis as the High Court has done, viz., that there was passing of title inside the State of Jammu and Kashmir. We accordingly hold that section 3 of the Act applies to transactions of sale of petrol made by the respondent for the period from January 1, 1955, to September 6, 1955, and assessment of sales tax made by the taxing authorities for this period is legally valid. It was lastly contended by the Solicitor-General that the High Court was in error in taking the view that the taxing authorities were not entitled to levy sales tax for the period from January 1, 1955, to September 6, 1955, because the assessment was one composite whole relating to the entire period from January 1, 1955, to May, 1959, and the assessment which was bad in part was infected throughout and must be treated as invalid. In our opinion, the cr ..... 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