TMI Blog1959 (7) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ubber tyres, tubes, etc., in the erstwhile Hyderabad State with their office at Bombay. The assessees sold their tyres and tubes either to merchants or consumers in Hyderabad State as the direct result of which they were delivered in the taxing territory for consumption. The Sales Tax Officer, Central Circle, Hyderabad, assessed their turnover to tax. The appeal of the respondents against this assessment to the Deputy Commissioner, Hyderabad, was unsuccessful. A further appeal was filed by the assessees before the Sales Tax Appellate Tribunal. The Tribunal upheld the contention of the assessees that the sales in question were not taxable under the provisions of the Act by reason of Explanation 2 to clause (k) of section 2 of the Act. The Tribunal declined to go into the question as to whether the sales occurred within the Hyderabad State, taking the view that they partook of the character of inter-State sales and were therefore hit at by Explanation 2. The department, aggrieved by this order, has carried a revision to this Court. The decision of this revision case, as of most others, turns upon the interpretation of section 2(k) of the Act. At the outset, it may be mentioned that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of the Constitution. We will have occasion to advert to such provisions in one or two enactments presently. Having regard to the part this Article plays in connection with this enquiry, it is necessary to refer to the terms thereof: "Article 286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place, (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. Explanation: For the purpose of sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. (2) Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate trade or commerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of inter-State trade or commerce; and all such taxes levied or collected or purporting to have been levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law." Indisputably, the impugned assessment was during the period specified in the section and also related to sales or purchases that took place in the course of inter-State trade or commerce. Consequently, they fall within the purview of that section. But there is an essential condition to attract the applicability of that section, namely, the existence of a law imposing or authorising the imposition of a tax on sales or purchases as contemplated therein. So the principal question that falls to be determined is whether the relevant section of the Act permitted such an imposition. As already noticed, under the definition of sale as contained in section 2(k), power is conferred on the State to tax only sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Andhra State could not make the impost having regard to the construction put by the Supreme Court on the Explanation to Article 286(1) in the Bengal Immunity case[1955] 2 S.C.R. 603; 6 S.T.C. 446. It was urged that a different construction could not be given to the same provision embodied in section 22 of the Madras General Sales Tax Act. This did not find favour with the Supreme Court. In repelling that argument, Venkatarama Ayyar, J., said: "These considerations will clearly be inapposite in construing a taxing statute like the Madras Act, the object of which is primarily to confer power on the State to levy and collect tax. When we find in such a statute a provision containing a prohibition followed by an Explanation which is positive in its terms, the true interpretation to be put on it is that while the prohibition is intended to prevent taxation of outside sales on the basis of the nexus doctrine, the Explanation is intended to authorise taxation of sales falling within its purview, subject of course to the other provisions of the Constitution, such as Article 286(2). It should be remembered that unlike the Constitution, the law of a State can speak only within its ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat has been brought into this Explanation. It is further urged that the original Explanation 2, which was analogous to the Explanation to Article 286(1) was deleted and the present Explanation enacted and that this emphasises the intention of the Legislature to take certain sales out of the purview of the relevant definition and not to expand it by reading Article 286 into the Explanation. We find ourselves in disagreement with this view. As already pointed out, the object of adding this Explanation was to bring the Sales Tax laws of the States in consonance with the Constitution. In fact, the existing State laws all over India were attempted to be brought into conformity with the provisions of the Constitution by means of adaptation laws and subsequent amendments. In doing so, the different States adopted different devices. The main bulk of the Sales Tax Acts added sections similar to section 22 of the Madras General Sales Tax Act. Some States amended the definition section itself by incorporating the Explanation. A few of the States adopted a different device, for instance, the Assam Sales Tax Act, 1947, made an addition to the charging section 3 of the Act by inserting the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oad Co. v. Johnson264 US.-68 Lawyers' Edition 748. also illustrates this principle. It is true that Article 286 of the Constitution is not made a part of the Explanation in question in so many words. But we are inclined to think that an express declaration is not essential to make it such. The setting in which the reference to Article 286 of the Constitution is made, the scheme of the Act, and the words used, may indicate that one statute was imported into another. In the present case, the object and the language inescapably lead to the conclusion that Article 286 was written into the Explanation. The words "by reason of the provisions contained in Article 286" denote, in our judgment, that Article 286 was written into the Explanation. As a result of the nonobstante clause in the Explanation, the ambit of clause (k) of section 2 is cut down. This was necessitated by the restriction laid down by Article 286. In order to ascertain the nature of the restriction, we have to read the provisions of Article 286 including the Explanation which by its fictional test has converted outside sales into inside sales. That Explanation as understood in the context of the Constitution, though couch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on its terms apply by invoking considerations of the supposed intention of the Legislature. It is equally well-settled that if the language is sufficiently flexible, an interpretation which is more in harmony with the legislative intent must be put upon it. The endeavour should be to give a real meaning to the statute. If two constructions are equally permissible, that which leads to smooth working of the system which the statute purports to be regulating should be preferred and the alternative that creates uncertainty and confusion in the working of the system should be rejected. Courts should lean in favour of a construction which is on the whole best calculated to carry out the object of the enactment if it could be ascertained, and which avoids absurd results. We may here usefully extract the following passage from Halsbury's Laws of England, Hailsham Edition, Vol. 31, page 497: "If it is possible, the words of a statute must be construed so as to give a sensible meaning to them, ut res magis valeat quam pereat. This rule applies where the words under consideration admit of two interpretations, one leading to an absurdity and one not, in which case the court will conclude th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be included at all within the calculation of the net turnover on which only the sales tax could be levied." The various remarks made by the learned Judge in the course of the judgment gives an indication that section 2(k) with Explanation 2 serves the same purpose as the provisions of the Sales Tax Acts of other States, such as section 22 of the Madras General Sales Tax Act or section 26 of the Travancore-Cochin General Sales Tax Act. We are convinced that the wording of Explanation 2 is of sufficient amplitude to incorporate Article 286. In this instance, the Legislature has adopted the device of legislation by reference. The utmost that could be said is that the intention was inelegantly expressed or apt or accurate terms were not employed. But that should not be allowed to stand in the way of interpreting the language as carrying the meaning the Legislature intended that it bears. We are not also very much impressed with the argument based on the deletion of the original Explanation 2. Presumably, the Legislature had replaced it by the present with a view to make it more comprehensive and to carry out the full significance of Article 286. In this connection, it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resident agents. In T.R.Cs. Nos. 68 and 76 of 1958, Sri Rajaram Aiyar raises the point that his clients are also non-resident agents and non-resident dealers but this does not seem to have been advanced either before the assessing authority or before the Deputy Commissioner. Despite this fact we think that these are fit cases which should be sent back to the Tribunal for investigation into the question as to whether these respondents are non-resident agents since it appears from a copy of the affidavit produced by Sri Rajaram Aiyar that some such point was sought to be raised before the Tribunal. In all the remanded cases the respondents will pay costs to the petitioners as the main contention advanced on their behalf was the same as that involved in the other cases. Advocate's fee is fixed at Rs. 100 in each. Writ Petitions Nos. 291 and 496 of 1957 are dismissed with costs. Advocate's fee Rs. 100 in each. We are told that the petitioners have also preferred appeals before the Deputy Commissioner against the assessments raising various contentions. Our order in these writ petitions does not preclude the petitioners from raising other points since the arguments here were confine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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