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TMI Blog1969 (8) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods. The total turnover of the business of the appellant for the year 1949-50 was Rs. 17,05,144-2-2. Of the said turnover a sum of Rs. 3,61,442-7-3 represented the turnover of sales effected outside the then Madras State. For the assessment year 1949-50 the Deputy Commercial Tax Officer collected sales tax on the total turnover without exempting the value of the sales effected outside the State. The appellant was permitted to pay sales tax under rule 12 of the Madras General Sales Tax (Turnover and Assessment) Rules. The appellant submitted monthly returns and paid sales tax without claiming any such exemption till the end of January, 1950. But in the returns for the months of February and March, 1950, the appellant claimed exemption on sales effected outside the State. The appellant submitted a consolidated return exhibit A-18 to the Deputy Commercial Tax Officer on March 30, 1950, claiming exemption in respect of a sum of Rs. 10,37,334-7-9 being the value of the sales effected outside the State for the period commencing from April 1, 1949, and ending January 31, 1950. The Deputy Commercial Tax Officer fixed the taxable turnover of the appellant at Rs. 17,05,144-2-2 and iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trial court, after considering the evidence given by the appellant's witnesses came to the conclusion that the deliveries were not made for purposes of consumption within the delivery States only. The High Court by a common judgment dated March 11, 1965, in A.S. Nos. 93 and 169 of 1957 held that the appellant could not claim the benefit under article 286(1)(a) of the Constitution in the absence of evidence as to how the wholesalers disposed of the goods after obtaining delivery and therefore the entire turnover for the year 1949-50 would be assessable to tax. In the result A.S. No. 169 of 1957 filed by the respondent was allowed and A.S. No. 93 of 1957 filed by the appellant was dismissed. The Madras General Sales Tax Act, 1939, was enacted in exercise of the legislative authority conferred upon the Provincial Legislatures by entry 48 of List II read with section 100(3) of the Government of India Act, 1935. The explanation to section 2(h) of this Act is as follows: "Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this Province, wherever the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent." Therefore, by incorporating section 22 of the Madras Act read with article 286, notwithstanding the amplitude of the power otherwise granted by the charging section read with the definition of "sale", a cumulative fetter of triple dimension was imposed upon the taxing power of the State. The Legislature of the Madras State could not since January 26, 1950, levy a tax on sale of goods taking place outside the State or in the course of import of the goods into, or export of the goods out of, the territory of India, or on sale of any goods wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 1950, it was admitted before the Deputy Commercial Tax Officer that the goods were actually in the Madras State at the time the contract of sale was concluded. It was for this reason that the Deputy Commercial Tax Officer negatived the claim which the appellant made in respect of those sales. It appears that in the trial court the appellant challenged the constitutional validity of explanation to section 2(h) of the Act. But in view of the decision of this court in the Tata Iron & Steel Co.'s case [1958] S.C.R. 1355; 9 S.T.C. 267., and Poppatlal Shah's case [1953] S.C.R. 677; 4 S.T.C. 188. counsel on behalf of the appellant did not seriously dispute the vaildity of the assessment in regard to sales from April 1, 1949, to January 25, 1950. With regard to the period from January 26, 1950, to March 31, 1950, the contention of the appellant is that the High Court was in error in holding that the burden of proof was on the appellant to show that there was not only delivery of goods for consumption within the delivery States but there was actual consumption of the goods in those States. In our opinion the argument is well-founded and must be accepted as correct. In India Copper Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t consists of a single undivided sum in respect of the totality of the property treated as assessable, the wrongful inclusion in it of certain items of property which by virtue of a provision of law were expressly exempted from taxation renders the assessment invalid in toto." The court cited with approval a passage from the judgment of the judicial Committee in Bennett & White (Calgary) Ltd. v. Municipal District of Sugar City No. 5 [1951] A.C. 786 at 816.: "When an assessment is not for an entire sum, but for separate sums, dissected and earmarked each of them to a separate assessable item, a court can sever the items and cut out one or more along with the sum attributed to it, while affirming the residue. But where the assessment consists of a single undivided sum in respect of the totality of property treated as assessable, and when one component (not dismissible as de minimis) is on any view not assessable and wrongly included, it would seem clear that such a procedure is barred, and the assessment is bad wholly. That matter is covered by authority. In Montreal Light, Heat Power Consolidated v. City of Westmount [1926] S.C.R. (Can.) 515., the court (see especially per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State but which were returned and assessed in gross and without separation or apportionment, is wholly invalid, or invalid only in the proportion and to the extent that the said receipts were derived from inter-State commerce". It was held unanimously by the Supreme Court of the United States that the assessment was not wholly invalid but it was invalid only in proportion to the extent that such receipts were derived from inter-State commerce. It was observed that where the subjects of taxation can be separated so that that which arises from inter-State commerce can be distinguished from that which arises from commerce wholly within the State, the court will act upon this distinction, and will restrain the tax on inter-State commerce, while permitting the State to collect that upon commerce wholly within its own territory. The principle of this case has been consistently followed in American cases: (see Bowman v. Continental Company 250 U.S. 642.). This case has been cited with approval by this court in State of Bombay v. United Motors (India) Ltd. [1953] S.C.R. 1069 at 1097; 4 S.T.C. 133 at 156., wherein it was observed that the same principle should be applied in dealing with tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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