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TMI Blog1966 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... he "Act"). For the purposes of manufacture of bidis, the appellant imported from the State of Bombay large quantities of tobacco. During the period from November 7, 1953 to October 26, 1954, the appellant imported from that State tobacco worth Rs. 84,29,580-15-0 and during the period from October 27, 1954 to November 14, 1955, the appellant imported tobacco worth Rs. 1,38,27,630-12-6. In the usual course, the tobacco, after being imported into the State of Madhya Pradesh, was rolled into bidis which were largely exported to other States for sale and consumption in those States. In respect of the imports of tobacco the Sales Tax Authorities required the appellant to file returns in Part B of Form IV clause 2 of which stated as follows: "2. Purchase price of goods other than those mentioned in Schedule 11 purchased on declaration under rule 26 as being goods specified in the registration certificate as intended for use as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State but utilised for any other purpose, such as one's own consumption or for export outside the State for which deduction is claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions in question were all after the 31st March, 1951, with the result that the ban imposed by Article 286(2) was in operation and if the transactions took place in the course of inter-State trade or commerce not only were Shri Chhaganlal Ugarchand Nipani and Shri Maniklal Chunanlal Baroda exempt from the liability to pay the tax on these transactions but the petitioners also were similarly exempt. No liability, therefore, could be imposed either for sales tax or for purchase tax within the terms of the Act on these transactions which as above stated took place in the course of inter-State trade or commerce." This Court accordingly granted a writ to the following effect: "The respondents will be restrained from enforcing the Central Provinces and Berar Sales Tax Act, 1947, and its provisions against the petitioners and from imposing a tax in respect of the transactions in question and in particular from imposing a tax on the purchase price of goods purchased on the declarations under rule 26 being goods specified in the registration certificate as intended for use as raw material in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be construed accordingly; * * * * Explanation (II).-Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, but subject to the provision contained in the Explanation to clause (1) of Article 286 of the Constitution the sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this State wherever the contract of sale or purchase might have made- (a) if the goods were actually in this State at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced or found in this State at any time after the contract of sale or purchase in respect thereof was made; Explanation (III).-Notwithstanding anything to contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which have actually been delivered in the State of Madhya Pradesh as a direct result of such sale for the purpose of consumption in the said State, shall be deemed, for the purpose of this Act, to have taken place in the said State, irrespective of the fact that the property in the goods has by reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interpretation of sub-clause (i) of clause (a) of sub-section (1)." Article 286(1) and (2) of the Constitution, as it stood at the material time, is reproduced below: "286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. Explanation.-For the purposes of sub-clause (a), 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on sales made in the course of inter-State trade or commerce and in con- sequence the Sales Tax Laws Validation Act, 1956, which merely lifted the ban and did not impose any tax, had no application to the case of the appellant. To put it differently, the contention of Mr. A.K. Sen was that before advantage could be taken of the Sales Tax Laws Validation Act, 1956, there had to be in existence a State Act imposing tax on such sales and section 27-A of the Act imposed no such tax on the sales. We are unable to accept this argument as correct. An identical question was the subject-matter of consideration by this Court in M.P.V. Sundararamier and Co. v. The State of Andhra Pradesh and Another [1958] S.C.R. 1422; 9 S.T.C. 298. and it was held that section 22 of the Madras Sales Tax Act had a positive content and the Explanation in the context of section 22 authorised the State of Madras to impose tax on sales falling within its purview. In the course of his judgment Venkatarama Aiyar, J., speaking for the Court, observed: "These considerations will clearly be inapposite in construing a taxing statute like the Madras Act, the object of which is primarily to confer power on the State to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal is whether the provisions of section 4(6) of the Act are attracted in the circumstances of the case. It was submitted for the appellant that the section has no application because tobacco was not specified in the certificate of registration granted to the appellant "as intended for use by it as raw material in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State". Section 2(j) of the Act, as it originally stood, was to the following effect: "Sales to a registered dealer of goods specified in such dealer's certificate of registration as being intended for resale by him, or for use by him in the manufacture of any goods for sale or in the execution of any contract and on sales to a registered dealer of containers and other materials for the packing of such goods." The section was amended from time to time until, with effect from December 1, 1953, it stood as follows: "Sales to a registed dealer of goods declared by him in the prescribed form as being intended for resale by him by actual delivery in Madhya Pradesh for the purpose of consumption in that State or of goods specified in such dealer's certificate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant and grant him a certificate of registration in the prescribed form which, in the case of a registered dealer who manufactures any goods for purposes of sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State, shall specify the raw materials which are intended to be used by him in the manufacture of such goods." In this connection reference may be made to section 2(j)(a)(ii) which states that a selling dealer is entitled to deduct from his turnover sales to a registered dealer of goods "specified in such dealer's certificate of registration as being intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State". It is manifest that the only legitimate object which the purchasing dealer seeks in having a class of goods specified in the certificate of registration as "raw materials" is to purchase the goods tax-free in the sense contemplated by the Act. By asking for such specification the dealer represents that he intends to use the goods specified in the manufacture of other goods for the purpose of sale by actual delivery in the State of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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