TMI Blog1973 (7) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,32,954.37 which relates to the period from 1st April, 1955, to 6th September, 1955. That the transactions constituting the turnover were inter-State in character, is no longer In dispute. The only question is whether the tax on non-explanation sales effected during the period could be the subject of validation under the Sales Tax Laws Validation Act, 1956. In view of the argument presented to us, it is necessary to briefly notice the state of law prior to and after the Constitution in respect of taxation on inter-State sales. Prior to the Constitution, there was no ban on States' powers to tax inter-State sales. That was held in Poppatlal Shah v. State of Madras[1953] 4 S.T.C. 188 (S.C.). Explanation (2) to section 2(h) defines a sale a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) did not apply to the power of the State to charge an explanation sale. In the Bengal Immunity case[1955] 6 S.T.C. 446 (S.C.)., however, the Supreme Court did not accept the mask theory; but held that article 286(2) imposed an independent ban, which, unless removed by Parliament by appropriate provision, would still apply, so that, without such legislation, the delivery State could not bring to tax an explanation sale. This created a difficult situation for the several States which had, on the strength of the earlier law as declared by the Supreme Court, imposed tax on the explanation sales. In order to remove that difficulty, the Sales Tax Laws Validation Ordinance, 1956, was promulgated and it was followed by the Sales Tax Laws Validat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be construed as a law authorising imposition of tax on inter-State sales, for, as may be clear from the language employed in the explanation, it merely deemed a particular type of inter-State sale as inside sale and imposed tax on the said sale. So it is said, the Validation Act will not help the State to retain the tax as having been validly imposed. Though the argument so presented is a new one, in the sense, that, in the form, it did not appear to have been presented in any earlier case, we are satisfied that we cannot accept it. There are two reasons why we take that view. One is, the subject of explanation (2) to section 2(h) is, in fact, an inter-State sale. It is true the explanation, by deeming, regarded such a sale as inter-State s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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