TMI Blog1985 (9) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... AND AMARENDRA NATH SEN JJ. Soli J. Sorabjee and F.S. Nariman, Senior Advocates, R.C. Ghieya and S.K. Jain, Advocates, with them, for the appellant. L.M. Singhvi, Senior Advocate, and B.D. Sharma, Advocate, with him, for the respondents. -------------------------------------------------- The judgment of the Court was delivered by BHAGWATI, C.J.- These appeals by special leave raise a short question of construction of certain provisions of the Rajasthan Sales Tax Act, 1954 (hereinafter referred to as the State Act). It is a pure question of law and does not depend for its determination on the distinctive facts of any particular case out of this group of appeals but in order to arrive at a proper determination, it is necessary to consider this question in its proper perspective and therefore the broad constellation of facts in which the question arises may be briefly stated. We will confine ourselves only to the facts of Civil Appeals Nos. 207-208 of 1983 for the facts of this appeal are broadly similar to the other appeals comprised in this group. The assessee is a partnership firm which carries on business in grains, oil-seeds, poppy seeds, etc., in B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this Court. Now at the outset we should like to make it clear that ordinarily we do not entertain an appeal directly against an order made by an officer in the hierarchy, when there are other remedies by way of appeal or revision provided to an assessee under the statute. Here the assessee could have preferred an appeal against the order of assessment made by the Commercial Tax Officer and he could have then gone in revision to the Board of Revenue and thereafter to the High Court under article 226 or 227 of the Constitution and then, if he was aggreived by the order passed by the High Court, he could come to this Court under article 136. We would have ordinarily insisted on the assessee going through this hierarchy of judicial process and declined to entertain the petition for special leave directly against the order of assessment made by the Commercial Tax Officer. But we were informed by the learned Advocate appearing on behalf of the assessee, and this was not controverted by the learned Advocate appearing on behalf of the Department, that the High Court in another case has already taken the view that when a resale is made by an assessee which is in the course of inter-Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of 1956)." "Sale price" is defined in section 2, sub-section (p), to mean inter alia "the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount". Then there is the definition of "turnover" in sub-section (t) of section 2 and according to this definition, "turnover" means "the aggregate of the amount of sale prices received or receivable by a dealer in respect of the sale or supply of goods or in respect of the sale or supply of goods in the carrying out of any contract". The expression "taxable turnover" is defined in sub-section (s) of section 2 and it provides inter alia that "taxable turnover" means "that part of turnover which remains after deducting therefrom the aggregate amount of the proceeds of sale of goods, which have been sold to persons outside the State for consumption outside the State". It is clear on a combined reading of these definitions that "taxable turnover" means the aggregate amount of sale prices received or receivable by a dealer in respect of sales of goods within the State. It is only sales of goods within the State which can be taxed by the State Legislature. Clause (1) of article 286 of the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re necessary to be formulated because a sale or purchase of goods in the course of inter-State trade or commerce cannot be taxed by a State on account of entry 92A in List I of the Seventh Schedule to the Constitution which sets out the topic of tax on sale or purchase of goods in the course of inter-State trade or commerce within the exclusive legislative competence of Parliament and so far as sale or purchase of goods in the course of import or export is concerned it is also not taxable by a State by reason of clause (1) of article 286. It is necessary to mention here that sub- section (1) of section 4 opens with the words "Subject to the provisions contained in section 3", but when we turn to explanation II to sub-section (o) of section 2 of the State Act we find that what is incorporated in that sub-section is only sub-section (2) of section 4 and not sub-section (1) of section 4 nor section 3 or section 5 of the Central Act. Now the declarations in form No. S.T. 17 furnished by the assessee to the selling dealers uniformly stated that the goods were purchased by the assessee for the purpose of resale within the State. The advantage of furnishing declaration in form No. S.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in section 3" in sub-section (1) of section 4 of the Central Act. The assessee on the other hand contended that though it was true that the resales effected by it were sales in the course of inter-State trade or commerce as defined in sub-section (3) of the Central Act, they were still sales within the State in accordance with the principles formulated in sub-section (2) of section 4 of the Central Act. The argument of the assessee was that the resales effected by it being sales in the course of inter-State trade or commerce were not liable to be taxed by the State and could be taxed only by the Central Government under the Central Act but that did not deprive the resales of their character of sales within the State which character attached to them by reason of sub-section (2) of section 4 which was incorporated in the State Act by explanation II to sub-section (o) of section 2 of the State Act. The answer given by the assessee to the argument of the Department based on the opening words of sub-section (1) of section 4 of the Central Act was that what was incorporated in explanation II to sub-section (o) of section 2 of the State Act was only sub-section (2) of section 4 and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislature has no legislative competence to impose tax on sale in the course of inter-State trade or commerce. That can be done only by Parliament. If therefore a question arises whether a sale is exigible to tax by the State Legislature, it may have to be considered whether it is a sale in the course of inter-State trade or commerce. The same sale in another context may have to be examined from a different point of view for determining where its situs lies and whether it is a sale inside the State or outside the State. There is therefore no incompatibility in the same sale being both a sale in the course of inter-State trade or commerce within the meaning of section 3 of the Central Act as also a sale inside the State in accordance with the principles laid down in sub-section (2) of section 4 of the Central Act. Now let us turn to consider the purpose mentioned in the declarations in form No. S.T. 17 furnished by the assessee to the selling dealers. The purpose for which the goods were purchased by the assessee was stated in the declarations to be "resale within the State". Obviously the expression "resale within the State" in form No. S.T. 17 must bear the same meaning it has in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where a sale is determined in accordance with sub-section (2) of section 4 to take place inside a State and therefore outside all other States, it would not exclude the applicability of section 3 and if it satisfies the requirements of that section, it would still be a sale in the course of inter-State trade or commerce taxable under the provisions of the Central Act. Secondly, we are not concerned here with the interpretation of sub-section (1) or sub-section (2) of section 4 in the context of section 3 of the Central Act. We are concerned only with explanation II to sub-section (o) of section 2 of the State Act and that explanation refers only to sub-section (2) of section 4 and not to sub-section (1) of that section or to section 3. It is only sub-section (2) of section 4 which is incorporated in explanation II to sub-section (o) of section 2 of the State Act and we are called upon to consider as to what is the effect of such incorporation. The State Legislature could have very well reproduced the entire language of sub-section (2) of section 4 bodily in explanation II to sub- section (o) of section 2 but it preferred to employ a simpler device by incorporating by reference t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and then proceed to apply the explanation to the facts of the present case in order to determine whether the resales effected by the assessee were sales inside the State within the meaning of the explanation. Now it was not disputed on behalf of the Department that at the time when the contracts of resale were made by the assessee, the goods were specific ascertained goods lying at Bhawani Mandi inside the State and if that be so, the resales effected by the assessee must be deemed to have taken place inside the State on the principles laid down in sub-section (2) of section 4 of the Central Act as incorporated in explanation II to sub-section (o) of section 2 of the State Act. It did not make any difference to this position that the resales were sales in the course of inter- State trade or commerce. The only consequence of the resales being sales in the course of inter-State trade or commerce was that they were not taxable under the State legislation. But there is no provision in the State Act which requires that in order that an assessee may be exempt from purchase tax in respect of purchase of goods made by him against a declaration in form No. S.T. 17, he must resell the go ..... 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