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TMI Blog1955 (12) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... with the mills a confir- matory order in writing bearing No. Cal/J-1/2001/103 for the supply to the Government of India of a large quantity of hessian cloth of different descriptions at different prices therein mentioned. It was stipulated that the contract would be governed by the conditions of contract specified in Form WSB 133 as amended up-to-date. It was specifically mentioned that the goods ordered were required to meet an international obligation of the Government of India and as such the execution of the contract in accordance with the programme of deliveries as given in the schedule at- tached thereto was essential. The agreed prices were stated to be exclusive of the Bengal sales tax and it was stipulated that the Government of India would arrange direct payment of sales tax to the Government of West Bengal if it was ultimately found that sales tax was payable in respect of that contract. Pursuant to the aforesaid contract, the mills supplied goods to the Government of India of the aggregate value of Rs. 2,10,040 calculated at the prices agreed upon. The Commercial Tax Officer, Beadon Street, District II Charge, claimed that the aforesaid sales should be included in the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that sales tax was due and had been legitimately assessed and demanded. On behalf of the Union of India was filed an affidavit affirmed by one M.P. Pai, the then Joint Secretary in the Ministry of Works, Production and Supply. It was therein stated that a department of the Government of India named the Department of Supply came into existence in the month of September, 1939, imme- diately on the commencement of World War II and before the enact- ment of the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941). It was averred that before the 7th January, 1946, the said Department of Supply was charged with the procurement of Stores from all places in India including Bengal and that it also directed the work of Indian Stores Department in the United Kingdom and of the India Supply Mission in the United States of America. It was added that by Resolu- tion No. 227/45-Pub. (c) dated the 31st December, 1945, the Governor- General in Council announced the creation with effect from the 7th January, 1946, of the Department of Industries and Supply in place of the existing Department of Supply and of Industries and Civil Supplies. It was claimed that the powers and functions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside the order of Bose, J., and dismissed the application of the mills under Article 226. The mills as well as the Union of India have now come up on appeal before us with a certificate of fitness granted by the High Court. In view of the decision of this Court in National Sewing Thread Co. Ltd. v. James Chadwick & Bros. Ltd.(1), the question of maintainability of the appeal before the High Court has not been raised before us. The appeals have been fought out on the merits only. The appeals came up before this Court for hearing on the 22nd and 23rd September, 1955. After going through the records it was felt that the materials on record were not sufficient to enable the Court to deter- mine the real point of controversy between the parties. The appeals were accordingly adjourned and directions were given for the filing of supplementary affidavits setting out the facts relied on by the parties respectively. Fresh affidavits have since been filed. It appears from the affidavit of one A.R. Iyer, Deputy Director, Directorate General of Supplies and Disposals, under the Ministry of Works, Housing and Supply, that in 1918 a department called the Con- tracts Directorate had been cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1st July, 1941, the Bengal Legislature passed the Bengal Finance (Sales Tax) Act, 1941, which by section 5(2)(a)(iii) exempted sales to the Indian Stores Department, the Supply Department of the Government of India and any railway or water transport administration from sales tax. Sales to other departments of the Government of India were not so exempted. By a press note dated the 2nd September, 1941, issued by the Government of India in the Supply Department (Annexure XIII to Iyer's affidavit) a purchase branch of the Supply Department for the duration of the war was created with effect from the 1st August, 1941, and it shows that the Contracts Directorate and the Indian Stores Department had then "ceased to exist as separate entities" for the duration of the war and a new branch was being organised in their place. Then came the Office Memorandum dated the 23rd December, 1941, issued by the Government of India in the Department of Supply (Annexure XIV) which superseded the previous Office Memorandum dated the 13th December 1940 (Annexure XII). The authorities under the Central Government concerned with the production, manufacture and purchase of supplies were shown in Statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. In addition to these duties this department was authorised also to deal with other things, namely, deve- lopment of industries, administration of Government factories not allo- cated to specialised departments, Disposals of Surplus and Civil Supplies. The nature and volume of the purchases made by this newly created department became obviously different from and larger than those of the two departments it replaced. It is also noteworthy that the Depart- ment of Supply which was created for the prosecution of war was abolished as soon as the war was over (Annexure XVII to the affidavit of Iyer). The Resolution of the Government of India dated the 2nd Septem- ber, 1947, published in the Gazette of India dated the 6th September, 1947, (Annexure XVIII) announced, amongst other things, that with effect from the 29th August, 1947, the Department of Industries and Supplies would be re-designated as the Ministry of Industries and Supply. From the summary of the annexures to the affidavit of Iyer filed in these proceedings it is quite clear that while the Ministry of Industries and Supply was a new designation of the Department of Industries and Supplies, the Department of Industries a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of such goods as, at the date of the Act, used to be made to those departments and, therefore, sales of those goods made to any department of the Government of India which came to be charged with the duty of pur- chasing those goods should also come within the purview of the section and be entitled to the benefit of the exemption conferred by it. We are unable to accept this line of reasoning. This interpretation will unduly narrow the scope and ambit of the exemption by limiting it to sales of only those goods as, at the date of the Act, used to be sold to those two departments and sales of other goods even to those two departments, however necessary for the prosecution of the war, would not get the benefit of the exemption. Such could not possibly be the intention of the legislature as expressed by the language used by it in framing the section. According to the section the exemption is given to all sales made to those two departments, no matter whether the sales were only of the kind of goods which used to be sold to them at the date of the Act or of other kinds of goods. The suggested interpretation involves the addition of qualifying words to the section which ordinarily it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorised to deal with the outside world and to enter into contracts of sale and purchase and other transactions in the same way as an ordinary person or company may do. Such Government departments, therefore, may well be regarded as distinct units or quasi legal entities, at least for the particular purposes for which they are created. At any rate, the Bengal Finance (Sales Tax) Act, 1941, by providing for the deduction of the sales to the two named departments from the taxable turnover certainly treated those two departments as distinct entities. This exemption is the creation of the statute and must be construed strictly and cannot be extended to sales to other departments. The fact that the section was not amended until 1949 does not at all indicate that the Bengal Legislature intended to extend the benefit of the section to any but the departments specifically mentioned in the section. In our opinion the conclusion arrived at by the Appeal Court, namely that the sales tax is payable on the sale in question is correct and these appeals must be dismissed with costs. SINHA, J.-I regret to have to differ from my learned brethren in the determination of the only question involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 went up in appeal under the Letters Patent. The appeal was heard by a Division Bench which came to the contrary conclusion. The major portion of the judgment of the Letters Patent Bench was devoted to the discussion of the question whether the judgment of the learned Single Judge in the writ matter was amenable to the appellate jurisdiction under the Letters Patent. That question has not been pressed during the arguments and is therefore no more in controversy. The only question that was canvassed before us was the applicability of section 5(2)(a)(iii) of the Act which contains the exemption, the benefit of which is being sought by the appellants in each case. The exemption is in these terms: "Sales to the Indian Stores Department, the Supply Department of the Government of India, and any railway or water transport administration." It has been contended on behalf of the appellants that the sale of hessian by the mills to the Government of India in the Ministry of Industry and Supply is within the terms of the exemption quoted above. On the other hand, it is contended on behalf of the Sales Tax Department of the Government of West Bengal that the sales in question were not covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for the needs of the Army. But after the constitution of the Indian Stores Department in 1922 the Army authorities also began to utilize the services of the Indian Stores Department for procurement of several categories of stores required by them. By a Resolution of the Home Department dated the 26th August, 1939, apparently to meet the demands of the imminent second world war, the Contracts Directorate and the Indian Stores Department were in 1940 amalgamated with the Department of Supply so that in 1941, when the Act was passed, the position was that the Department of Supply as reorganized on the 3rd August, 1940, included amongst its activities and functions the purchase of stores for the needs of the Government. This branch of its activity was administered by the Directorate General, Supply Branch, located at New Delhi. jute products and textiles including hessian had to be purchased only by placing indents by the department concerned with the Directorate General of Supply, New Delhi. Thus this department absorbed for the duration of the war the purchasing sections of the Indian Stores Depart- ment and the Contracts Directorate which were placed under completely self-cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticles as the Department of Supply had been doing before the coming into existence of the Department of Industries and Supplies so that the creation of the Department of Industries and Supplies did not make any difference in its activities relating to purchase of stores. There was no addition to or subtraction from its functions in the matter of purchase of stores. From what has been stated above, it is clear that the purchasing functions of the Government of India with special reference to the pro- curement of textiles including hessian with which we are immediately concerned were discharged by the Indian Stores Department from 1st January, 1922. Those functions were taken over by the Department of Supply in 1940. The Department of Supply itself merged in the Department of Industries and Supplies with effect from the 7th January, 1946. By a notification of the 2nd September, 1947, the Department of Industries and Supplies was re-designated as the Ministry of Industry and Supply with effect from the 29th August, 1947, as a result of the emergence of India as an Independent State. Thus the Ministry of Industry and Supply is a lineal descendant of the Indian Stores Depart- ment, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Industry and Supply. The judgment under appeal is based chiefly on the consideration that the exemption clause in question does not in terms refer to the newly created depart- ment which now goes by the name of the Ministry of Industry and Supply. But this department, in so far as it deals with industry, is not concerned with the main purchasing activities of the Government of India. The exemption was granted in respect of the purchasing activity of the Government of India and that function continues to be assigned to the Supply Department which has now become a wing of the newly created department of the Government. The question therefore arises whether in those circumstances the Government of India could claim the benefit of the exemption. The High Court in answering that question in the negative has gone upon mere nomenclature. It has emphasized the change in the name and overlooked the substance of the matter. After all, what is a department of a Government? It is not a mere name, whatever else it may be. It is not a person, either natural or artificial. A department of Government is a particular function. The Government has so many functions and each of its functions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modified form in order to give effect to the real intentions of the legislature where, as in the present case, the language is only of a descriptive nature and not a definitive one. An instance of this is furnished by the case of Miller v. Salomons(1). In that case the question arose whether a person of Jewish persuasion who was returned to Parliament as a Member of the House of Commons was entitled to sit without taking the prescribed oath. The form of the oath as given by 6 Geo. 3, c. 53, mentioned the name of "King George" only. It was argued on behalf of that Member that the oath was confined to the name of a sovereign who bore that name. But it was held by the Court that it was a mere description and that the intention of the statute was to include all sovereigns who came after King George III. The relevant portion of the observations of the Court are in these terms: "The second question arising on the construction of the Act is, whether, as the form of the oath given by the 6 Geo. 3, c. 53, mentions the name of King George only, the obligation to administer-it ceased with the reign of that Sovereign, because it was applicable to no other than to him. I think this argument can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that Province. It was therefore stated at the Bar that though the present case involved taxes amounting to less than Rs. 10,000, the question arising for determination in this case affected much larger amounts because such sales within the Province amounted to several crores. I should have thought that the business community in the Province of Bengal having had the advantage of the transactions of sale, the Government of Bengal in all fairness should have allowed the purchasing agency of the Government of India the benefit of the exemption until that benefit was in terms withdrawn some time in the beginning of 1949. The matter can be looked at from another point of view also. We are concerned here with the sale of hessian. As pointed out in the affidavit filed on behalf of the Government of India, the purchase of hessian has all along been the concern of the Supply Department, now incorporated in the Ministry of Industry and Supply. Sales tax is a tax on sale of goods and tax on hessians falls within the contemplation of the law granting the exemption if the sales were effected through the purchasing agency of the Government of India. The beneficiary cer- tainly was not an amor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department of the Government of India were so exempt. In para. 7 of the affidavit referred to above it has been stated on behalf of the Government that the different departments were entitled to make local purchases of small values, that is to say, not exceeding Rs. 100 and of certain specified commodities like food-stuffs which were not within the purchasing activity of the departments aforesaid of the Government of India. Hence, in my opinion, there is no validity in this argument either. It was also suggested during the argument that if the exemption were to be related to only such commodities and articles as were within the purview of the Stores Department and later of the Supply Depart- ment, then such an interpretation would involve addition of qualifying words to the section which is not ordinarily within the function of the courts. But, in my opinion, this argument also suffers from the infirmity that it equates the departments mentioned in the exemption clause quoted above with a legal person,-an argument which has already been dealt with. In my opinion, there is no escape from the conclusion that those are mere words of description and are not words with defined connotat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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