TMI Blog1966 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents. A.K. Sen, and R.M. Hazarnavis, Senior Advocates (D.N. Verma, and O.P. Malhotra and O.C. Mathur J.B. Dadachanji and Ravinder Narain of J.B. Dadachanji and Co., with them), for the appellant. -------------------------------------------------- The judgment of the Court was delivered by RAMASWAMI, J.- This appeal is brought, by certificate, from the judgment of the High Court of Madhya Pradesh dated February 19, 1962, in Miscellaneous Petition No. 395 of 1958. The appellant is a firm carrying on the business of manufacturing and selling bidis. During the period April 1, 1951 to September 6, 1955, the appellant was registered as a "dealer" under the Central Provinces and Berar Sales Tax Act, 1947 (C.P. and Berar Act 21 of 1947) (hereinafter called the "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 cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined in spite of his being a registered dealer with reference, inter alia, to the provisions of section 27-A of the Act which incorporates within its terms the bans which have been imposed on the powers of the State Legislatures to tax under Article 286(1)(a) and (2) of the Constitution. If, there- fore, a dealer who has got himself registered as dealer under the provisions of section 8(1) of the Act is sought to be made liable in respect of transactions of sale effected by him he could claim exemption from such liability if the transactions of sale or purchase took place in the course of inter-State trade or commerce after the 31st March, 1951, except in so far as Parliament may by law otherwise provide. In the case before us there was no such provision made by Parliament and the transactions 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ya Pradesh rejected the petition of the appellant. By the Madhya Pradesh Sales Tax (Amendment) Act, 1953 (M.P. Act 20 of 1953) certain amendments were made in the Act. The material provisions of the latter Act, as amended by the former Act, were as follows: "2. (c) 'dealer' means any person who, whether as principal or agent, carries on in Madhya Pradesh the business of selling or supply- ing goods, whether for commission, remuneration or otherwise and includes a firm, a partnership........." "2. (g) 'sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract......... and the word 'purchase' shall 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover and be liable to tax in accordance with the provisions of this Act." "27-A. (1) Notwithstanding anything contained in this Act,- (a) a tax on the sale or purchase of goods shall not be imposed under this Act- (i) where such sale or purchase takes place outside the State of Madhya Pradesh; or (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territories of India; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter-State trade or commerce except in so far as Parliament may by law otherwise provide. (2) The Explanation to clause (1) of Article 286 of the Constitution shall apply for 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trade or commerce; and all such taxes levied or collected or purporting to have been validly levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law. Explanation .-In this section 'law of a State' in relation to a State specified in Part C of the First Schedule to the Constitution, means any law made by the Legislative Assembly, if any, of that State or extended to that State by a notification issued under section 2 of the Part C States (Laws) Act, 1950 (30 of 1950)." It was argued by Mr. A.K. Sen on behalf of the appellant, in the first place, that section 27-A of the Act places a restriction on the power of the taxing authorities and so long as it stood unrepealed there was no pre-existing law authorising the imposition of tax 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 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its setting in section 22 of the Madras Act, where it must have a positive content." Section 22 of the Madras Act is couched in a similar language to section 27-A of the Act. In our opinion, the principle of the decision in M. P. V. Sundararamier and Co. v. The State of Andhra Pradesh and Another' therefore governs the present case. We should also refer to the additional circumstance that in the present case the third Explanation to section 2(g) incorporates into the definition of "sale" the Explanation occurring in Article 286 in contrast to the Madras Act where there is no such incorporation in the definition of sale under section 2(h) of that Act. We are accordingly of the opinion that the argument of the appellant must be rejected on this aspect of the case. The next question to be considered in this appeal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 8 and other relevant provisions of the Act. Before the amendment made by Act 20 of 1953 section 8(3) read as follows: "8. (3) If the said authority is satisfied that an application for registration is in order, it shall in accordance with such rules as may be made under this Act, register the applicant and grant him a certificate of registration in the prescribed form which, in the case of a registered dealer who himself manufactures any goods for purposes of sale shall specify the class or classes of goods which are intended to be used by him in the manufacture of such goods." After the amendment the sub-section was to the following effect: "8. (3) If the said authority is satisfied that an application for registration is in order, it shall in accordance with such rules as may be made under this Act, register the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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