TMI Blog1967 (8) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ----------------------------------------------- The judgment of the Court was delivered by MITTER, J.-T his appeal, by special leave, is from a judgment and order of the High Court of Kerala dated August 16, 1963, passed in Tax Revision Case No. 17 of 1962 filed by the respondent, Cochin Coal Co. Ltd. against the order of the Sales Tax Appellate Tribunal, Trivandrum. The facts necessary for the disposal of this appeal are as follows: The respondent-assessee was a non-resident dealer (not resident in Kerala) during the year 1955-56. The period we are concerned with here ends on September 4, 1955. It used to supply coal to consumers in Travancore- Cochin State which later became Kerala. For the assessment year in question (1955-56) the assessee was asked to file statements showing its turnover of supplies of coal made to purchasers in the State of Kerala and in reply to the notice under section 12(2)(b) of the Travancore-Cochin General Sales Tax Act, it stated that the sales of coal to steamers arriving and berthed in Travancore-Cochin State waters were not taxable because the goods were stored by the steamers for consumption on the high seas. The assessee however did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Another [1958] S.C.R. 1422; 9 S.T.C. 298. The Supreme Court held that section 22 of the Madras Act "intended to authorise taxation of sales falling within the Explanation, subject to authorisation by Parliament as provided in Article 286(2)." (4) Act 12 of 1957 raised the controversy as to whether Central Act 7 of 1956 could be considered as salvaging the levy of tax on inter-State sales after the amendment introduced in section 26. According to the decision in T.R.Cs. Nos. 1, 2 and 3 of 1961(1), inter-State sales after 31st March, 1951, were not taxable. (5) The Constitution (Sixth Amendment) Act, 1956, made substantial changes as regards levy of tax on inter-State sales. As a result of the amendment of Article 269 taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce were to be levied and collected by the Government of India and it was for Parliament to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce. (6) The Validating Act 9 of 1962 was enacted subsequent to the Constitution (Sixth Amendment) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided, no Bihar law could tax these sales or purchases although they fell within the Explanation to Article 286 (1) and other States could not tax the same by reason of both clause (1)(a) read with the Explanation and clause (2) of Article 286. This led to the passing of Central Act 7 of 1956. The object of the Act was to validate laws of States imposing or authorising the imposition of taxes on the sale or purchase of goods in the course of inter-State trade or commerce. Section 2 of the Act provided that: "Notwithstanding any judgment, decree or order of any court, no law of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place In the course of inter-State trade or commerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of inter-State trade or commerce; and all such taxes levied or collected or purporting to have been levied or collected during the aforesaid period shall be deemed always to have been validly levied o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective. It did not seek to disturb the position in law obtaining up to that date. It was argued before us that the State Legislature was not competent to legislate in this field after the Constitution (Sixth Amendment) Act. On March 11, 1958, Sundararamier Co.'s case [1958] S.C.R. 1422; 9 S.T.C. 298. was decided by this Court. That case dealt with the competence of the States to levy tax on inter-State sales and to enact conditional legislation on the subject. The statute which came up for consideration was the Madras General Sales Tax Act, 1939 (Madras Act 9 of 1939) as adapted to Andhra read with section 2 of the Sales Tax Laws Validation Act (7 of 1956). Section 22 of the Madras General Sales Tax Act was inserted in the statute by an Adaptation Order of the President issued on July 2, 1952, and clause (a) thereof was substantially similar to section 26(1)(a) of the Travancore-Cochin General Sales Tax Act (11 of 1125). The effect of clause (b) of section 22 was that nothing in the Act (Madras Act) was to be deemed to 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and it must fall to the ground." The case of State of Kerala and Others v. The Cochin Coal Company Ltd. [1961] 2 S.C.R. 219; 12 S.T.C. 1. was decided on October 31,1960. There, the respondent who stocked bunker coal at Candle Island in the State of Madras sold the coal to steamers calling at the port of Cochin in the State of Travancore- Cochin and delivered it there. The respondent was assessed to sales tax on such sales for the years 1951-52 and 1952-53. The respondent contended inter alia that the sale being in the course of inter-State trade was covered by the ban contained in Article 286(2) of the Constitution and was not taxable under the Travancore-Cochin General Sales Tax Act, 1125. The State contended that this claim for exemption was not available in view of the Sales Tax Laws Validation Act, 1956. The High Court held that the Validation Act could not avail the State because on their con- struction of section 26 of the Act, no tax had been levied or was leviable on sales in the course of inter-State trade or commerce and that the Validation Act having validated only taxes already levied could not enable the State to levy tax which had not been imposed by the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1957 do not fall to be considered in this case inasmuch as the Act was only prospective and did not operate to invalidate any levy of tax imposed before. In this view of the matter we are really not concerned to go into the question as to whether the State of Kerala had legislative competence to enact Act 9 of 1962 seeking thereby to amend section 26 of the Travancore-Cochin General Sales Tax Act, 1125, by substituting the date 6th September, 1955, in place of 31st March, 1951, and purporting to validate the levy and collection of taxes on sales and purchases falling within the purview of sub-section (2A) of section 26 of the principal Act as inserted by the Act of 1962. The ban imposed by section 26 of the General Sales Tax Act, 1125, having been lifted by the Central Sales Tax Validating Act, 1956, the State was competent to collect all taxes in respect of sales in the course of inter-State trade and commerce up to September 5, 1955. In the result, we hold that sales tax was properly leviable by the State of Kerala on the transactions which formed the subject-matter of this case up to 4th September, 1955; but the question raised in the application for revision was not correc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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