TMI Blog1955 (1) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ." The additions to this section which are impugned before us are in the following words: "Explanation (2): 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 State, wherever the contract of sale or purchase might have been 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 in this State at any time after the contract of sale or purchase in respect thereof was made." The validity of this explanation is attacked on two grounds: (1) that this is ultra vires the Madras Legislature as it is incompetent to a Pro- vincial Legislature to enact a statute having an extra-territorial operation; (2) that this explanation is repugnant to the provisions of the Indian Sale of Goods Act and therefore void to the extent of repugnancy for want of sanction of the Governor-General as required by section 107 of the Government of India Act, 1935. On the first p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bordinate Legislature define the possible scope of its legislative enactments or mark the field open to its vision. The ambit of the powers possessed by a subordinate Legislature depends upon the proper construction of the statute conferring those powers. No doubt, the enabling statute has to (1) [1948] 16 I.T.R. 240; (1948) 2 M.L.J. 62. be read against the background that only a defined territory has been committed to the charge of the Legislature. Concern by a subordinate Legislature with affairs or persons outside its own territory may there- fore suggest a query whether the Legislature is in truth minding its own business. It does not compel the conclusion that it is not. The enabling statute has to be fairly construed." In another part of the judgment, it is stated: "The resulting general conception as to the scope of income-tax is that, given a sufficient territorial connection between the person sought to be charged and the country seeking to tax him, income-tax may pro- perly extend to that person in respect of his foreign income." These passages summarise succinctly the law on the subject which bears a close analogy to the present one. The view enunciated in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now in these terms: "The presence of the goods within the Province at the time of the contract would undoubtedly make the sale, if subsequently completed a sale within the Province by reason of the explanation added by Act XXV of 1947; but as this explanation was not in operation during the relevant period with which we are concerned, the assessment of sales tax, in our opinion, on the transactions during this period is illegal and not warranted by the provisions of the Act." It may be mentioned that the tax which formed the subject matter of enquiry in that case related to a period between 1st April, 1947, and 31st December, 1947, and as already pointed out the explanation now assailed came into force only on 1st January, 1948. After this authoritative pronouncement, it is futile to question the vires of explanation 2 to section 2(h) of the Madras General Sales Tax Act. I may also refer usefully to a passage in the judgment of the Supreme Court in State of Bombay v. United Motors (India) Ltd.(1) "In the case of sales tax it is not necessary that the sale or pur- chase should take place within the territorial limits of the State in the sense that all the ingredients of a sale lik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovincial list which confers authority on the Provincial Legis- lature to make laws for levy of taxes on the sale of goods and on advertisements. Thus, the object of this entry is not to confer power on Provincial Legislatures to enact the legislation to deal with contracts of sales or sales as such. The pith and substance of this is to provide power to levy taxes on sale of goods and it does not entrench upon the province of the concurrent list and therefore there is no repugnancy to Sale of Goods Act. It is certainly within the legitimate sphere of the Provincial Legislature to make the laws so long as it does not travel beyond the scope of entry 48. That the Sale of Goods Act does not prescribe a situs of sale and consequently there can be no conflict in regard to this matter between section 2 of the Madras General Sales Tax Act and the material provisions of the Indian Sale of Goods Act is apparent from a statement in the judgment of Patanjali Sastri, C.J., in State of Bombay v. United Motors (India) Ltd.(4) "Neither the Sale of Goods Act nor the common law relating to the sale of goods has anything to say as to what the situs of a sale is, though certain rules have been laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, however, does not arise in this case but is applicable to the other case which, for other reasons, we have decided to reject." Apart from how far these observations can have relevancy in the present context and whether they could be reconciled to what was stated by the learned judge earlier, they could not have much force in the light of the rule stated by the Supreme Court in State of Bombay v. United Motors (India) Ltd.(3), and also Poppatlal Shah v. The State of (1) [1954] 5 S.T.C. 307; (1954) 2 M.L.J. 326. (2) [1952] 3 S.T.C. 343 at p. 360; A.I.R. 1952 Nag. 378 at p. 384. (3) [1953] 4 S.T.C. 133, at p. 145; (1953) 1 M.L.J. 743 at 748. Madras(1). Further, there is the direct decision of the Madras High Court referred to above which is binding on us so long as it is not overruled. It follows that there is really no repugnancy between the present enact- ment and the Sale of Goods Act of the Central Legislature and the former can operate without any question of voidness. This contention can be rejected on another ground. The sanction of the Governor-General is essential only in cases falling under sec- tion 107(2) of the Government of India Act, 1935. Sub-section (2) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if the subjects dealt with by the two enactments are different and the sources of the power of the Legislatures are traceable to two different lists, section 107 cannot have any operation. These two authorities were followed by the Bench in Louis Dreyfus and Co. v. The State of Madras(1). It is not necessary to refer to the other decisions which state the law to the same effect. On these rulings, the argument as to repugnancy cannot have any force and has to be repelled. In the circumstances, the appeals are dismissed with costs. Govern- ment Pleader's fee is fixed at Rs. 125 in each case. UMAMAHESWARAM, J.-These Revision Petitions are filed under section 12B of the Madras General Sales Tax Act against the orders of the Sales Tax Appellate Tribunal, Madras, and they raise difficult and interesting questions of law. The main point that arises for consideration is whether the amendment introduced by Act XXV of 1947 to the definition of "sale" in section 2(h) of the Madras General Sales Tax Act is ultra vires of the Madras Legislature. Explanation 2 to section 2(h) is in the following terms: "Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involving transfer of property in the goods. Even though the contract of sale is entered into outside the State and the actual sale involving the transfer of the property in goods takes place in another State, still the Madras State is entitled, by reason of the explanation, to levy tax if the goods are within the State when the contracts of sale are entered into. This position is conceded by the learned Government Pleader and he states that no sales tax is sought to be levied by reason of the explanation on the mere contracts of sale which are unaccompanied or followed by the sale of the goods i.e., the passing of ownership or title in those goods. The decision of the Allahabad High Court in Budh Prakash v. Sales Tax Officer, Kanpur(1), confirmed by the Supreme Court(2) has really no application to the present case. As already pointed out, the learned Govern- ment Pleader rightly conceded that the liability to be assessed to sales tax can arise only if there is a completed sale and not when there is only an agreement to sell (which can only result in a claim for damages) and that the State Legislature cannot enlarge the definition of sale so as to include agreements to sell and ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sale: (i) the existence of goods which form the subject matter of the sale, (ii) the bargain or contract which, when executed, will result in the passing of the property in the goods for a price, (iii) the payment, or promise of payment of a price, (iv) delivery of the goods, and (v) the passing of title. The Madras Legislature had enacted that, if the goods forming the subject matter of the contract of sale, are actually in the State when the contract of sale is made, or in the case of the sale of future goods by description, if the goods are actually produced in the State at any time after the contract of sale is made, the sale shall be deemed to be made within the State. We are inclined to hold that the existence of the goods affords sufficient nexus and that the Legislature (1) [1953] 4 S.T.C. 188; (1953) 1 M.L.J. 739 S.C. (2) [1948] 16 I.T.R. 240; (1948) 2 M.L.J. 62. (3) [1953] 4 S.T.C. 133; (1953) 1 M.L.J. 743. was competent to impose a tax in respect of such a transaction wherever the actual sales take place. The learned advocate for the petitioners drew our attention to the passage at page 748 in State of Bombay v. United Motors (India) Ltd.(1) which is in the following t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53] 4 S.T.C. 133; (1953) 1 M.L.J. 743 S.C. (2) (1953) 4 S.T.C. 188; (1953) 1 M.L.J. 739. relating to agricultural land." As the power of the Madras Legislature is derived from item 48 of List No. 2 and not item 10 of List No. 3, we are of opinion that no question of repugnancy between the Madras Sales Tax Act and the Sale of Goods Act arises. This principle, namely, that if the power of legislation is derived from different lists no question of repugnancy arises, is well settled and concluded by the Privy Council in Meghraj v. Alla Rakhia(1) and by the Federal Court in Lachminarayan Das v. Province of Bihar(2). Following those decisions, we hold that as the subject matters of the two enactments are entirely different, no question of repugnancy under section 107 of the Government of India Act arises and the amendment is not invalid on the ground that the assent of the Governor-General was not obtained. We are supported in this conclusion by a recent decision of the Madras High Court in Louis Dreyfus and Co. v. State of Madras(3). We respectfully follow that decision as the identical question was considered therein. In this view, it is unnecessary to consider whether the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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