TMI Blog1957 (1) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ler liable to tax in respect of the latter turnover and that he was not liable to tax on the former. Though the former transaction had inter-State elements as the goods were delivered for consumption in the Andhra State, the Tribunal, relying upon The State of Bombay v. United Motors (India) Ltd.(1), held against the assessee. On that finding, the Tribunal gave a direction to the assessing authority to revise the assessment. The Government filed the aforesaid revision questioning the finding of the Tribunal in so far as it was against them. Learned Government Pleader contends that the decision of the Tribunal in so far as it held that the turnover representing sales possessing inter-State elements was liable to be taxed was wrong as it was based upon The State of Bombay v. United Motors (India) Ltd.[1953] 4 S.T.C. 133., which was overruled by the Supreme Court in Bengal Immunity Co. Ltd. v. State of Bihar(2). Learned counsel for the assessee, while conceding that on the basis of the Bengal Immunity case[1955] 6 S.T.C. 446., the finding of the Tribunal may be wrong, seeks to sustain the said finding on the foot of the Sales Tax Laws Validation Act (VII of 1956). Section 2 of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6th September, 1955. The question, therefore, is whether under law during the prescribed period sales or purchases, which took place in the course of inter-State trade or commerce, were liable to be taxed. The law that governed the imposition of tax on sales was embodied in the Madras General Sales Tax Act, 1939. It is, therefore, necessary to scrutinise that Act to ascertain if sales tax on such transactions was leviable. The material provisions of that Act read as follows: "Preamble.-Whereas it is expedient to provide for the levy of a general tax on the sale of goods in the State of Madras: Section 2.-(h) 'Sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, and includes also a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge: 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 only introduced a fiction whereby the sale or purchase of any goods, wherever the contract of sale or purchase might have been made, should be deemed to have taken place in that State if the goods were actually in that State at the time when the contract of sale or purchase in respect thereof was made or in case the contract was for the sale or purchase of future goods by description, then if the goods are actually produced in that State at any time after the contract of sale or purchase in respect thereof was made. A sale, which took place in the course of any interState trade or commerce, was not a "sale" within the State factually or fictionally and, therefore, was not liable to be taxed under the Act. Learned counsel called in aid the provisions of section 22 and contended that the Explanation to that section must be read as an Explanation to the definition of the word "sale" in the Act and, if so read, a sale or purchase would be deemed to have taken place in the State in which the goods were actually delivered as the direct result of such sale or purchase. Section 22 in terms did not create a liability to tax if a transaction was not liable to be taxed under the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of section 22 into the Madras General Sales Tax Act, sales or purchases made in the course of inter-State trade or commerce were not liable to tax though the goods were delivered for the purpose of consumption in the State. If that was the position, it follows that there was no pre-existing State law imposing or authorising the imposition of a tax on the sale or purchase of any goods in the course of inter-State trade or commerce. Section 2 of the Sales Tax Laws Validation Act, 1956, operates on the pre-existing law mentioned therein and, when there is none, it cannot obviously be invoked. We are not able to appreciate the argument of the learned counsel that the Explanation to clause (a)(i) of section 22 should be treated as an Explanation to the definition of "sale" under the Act. If the Legislature intended to introduce the Explanation as one to the definition of the word "sale" in the Act, it would have done so instead of adding it to section 22. It offends all canons of construction to transplant the Explanations added to one section to another. As we have already pointed out, section 22 only introduced with immaterial variations the constitutional bans embodied in Artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inter-State sales and purchases were subjected to tax and they came within the operation of the charging sections 8,9 and 10." It will be noticed from the aforesaid observations that the Explanation making the delivery State as that in which the sale is deemed to have taken place was added to the definition of sale itself and, therefore, but for section 46, which corresponds to section 22 of the Madras General Sales Tax Act, the tax was exigible under the State law in respect of such sale. The learned Judges held that the conditional ban imposed by section 46 was retrospectively removed by the validating Act, and, therefore, the said sale was subject to tax. This judgment cannot be invoked in support of the respondent's contention as in the Madras Act the Explanation was not added to the definition of "sale " and, therefore, a sale covered by the Explanation was not liable to tax under the charging sections. The decision of a Division Bench of the Madras High Court in Mettur Industries Limited v. The State of Madras[1956] 7 S.T.C. 691. directly covers the point raised before us. Adverting to the argument based upon section 22 of the Madras General Sales Tax Act, Rajagopalan a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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