TMI Blog1976 (10) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... sixth question, which was one of law only, was referred by the Division Bench to a Full Bench, and, this was determined in favour of the State. There are, therefore, four appeals by the assessee against the Full Bench decision. M/s. Central Provinces Manganese Ore Co. Ltd., the assessee, has its Head Office in London. It carries on business on an extensive scale. It owns 22 manganese ore mines in Madhya Pradesh from where manganese ore, after being excavated, is sent mostly abroad through different ports. The Company is a registered dealer under the Act. It used to enter into contracts at places outside Madhya Pradesh for the despatch of what came to be known, in the special parlance of this company's business, as Oriental Mixture But the contracts contain specifications only of strengths of manganese ore to be supplied with permissible percentages of other ingredients as admixtures. The term Oriental Mixture was evidently employed by the Company itself to describe a particular type of conglomerate which the unloading at one place of Various types of manganese ore produced. The required average consistency or strength of manganese ore specified in the contracts, which did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sale Tax (Amendment) Act No. XVI of 1949, came into force on 11th April, 1949. Hence, the law, as found after the amending Act, could apply, .if valid, only to the last two refer- ences. But, the question which arose, on the assumption that the amendment was ineffective, was whether the unamended law could be applied at all after the purported amendment. Section 2(g) of the Act, with its two explanations, before it was amended, may be reproduced here in toto. It reads as follows: 2(g) 'sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable considera- tion, including a transfer of property in goods made in course of the execution of a contract, but does not,include a mortgage, hypothecation, charge or pledge: Explanation (I): A transfer of goods on hire- purchase or other installment system of pay- ment' shall, notwithstanding that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale; Explanation (11): Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which are ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was assent- ed to by the Governor, stood on its own separate footing. Thus, the result was said to be a repeal simpliciter without the enactment of the fresh provision meant to replace it. It was submitted that the High Court, after finding the substituted provisions of section 2(g) of the Act to be invalid, had erred in holding that the repeal was also ineffective. It was contended that such a view resulted in attributing to the legislature an intention contrary to that which it had unmistakably expressed by repealing the una- mended provision. It was urged that the repeal, which was clearly intended, must be held to be valid. According to this submission, neither the old unamended provision nor the replacement of it were in operation during the last two. assessment periods. Of course, this argument assumes that the repeal and the new' enactment are separate. In Shriram Gulabdas v. Board of Revenue, Madhya Pradesh Ant. C) which was cited before us, it was held, on the question argued before us (at p. 366-367): ...... we have already shown that the second Explanation in clause (g) of Sec- tion 2, which makes an agreement of sale taxable even though the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Legislature ? Other questions framed indicate that it was not only the validity of the provision, both before and after its amend- ment, which was directly considered and pronounced upon, but the application of the concept of sale under the unamended law and its effects were also under consideration. There- fore, we think that the decision was directly on a question which necessarily arose for determination before the Court on that occasion. We think that the view that the unamended law was in operation was not a mere obiter dictum. It was necessary to decide that question before other questions could be determined. We give out own reasons below for accepting the correctness of the view taken then. The following passage was also cited from Koteswar Vittal Kamath V.K. Rangappa Baliga Co. (at p. 509): Learned counsel for the respondent, however, urged that the Prohibition Order of 1119 cannot, in any case, be held to have continued after 8th March, 1950, if the prin- ciple laid down by this Court in Firm A.T.B. Mehtab Majid Co. v. State of Madras, (1963) Supp. 2 SCR 435-(AIR 1963 SC 928) is applied. In that case, rule 16 of the Madras General Sales Tax (Turnover and As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der. If the Prohibition Order of 1950 is found to be void ab initio, it could never make the Prohibition Order of 1119 inoperative . The argument before us is that since the word substituted is used in the amending Act of 1949, it necessarily follows that the process embraces two steps. One of repeal and another of the new enactment. But, this argument is basically different from the argument which prevailed in Koteswar's case (supra) where a distinction was drawn be- tween a substitution and supersession . It is true that, as the term substitution was not used there, the old rule was not held to have been repealed. Nevertheless, the real basis of that decision was that what was called supersession was void ab initio so that the law remained what it would have been if no such legislative process had taken place at all. It was held that the void and inoperative legislative process did not affect the validity of the pre-existing rule. And, this is precisely what is contended or by the State before us. In the case before us although the word substitution is used in the amending Act, yet the whole legislative process termed substitution was itself abortive. The whole o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o viewed and interpreted. Some help was sought to be derived by the citation of B.N. Tewari v. Union of India Ors.,( [1965] 2 S.C.R. 421.) and the case of Firm A.T.B. Mehtab Majid Co v. State of Madras (supra). Tewari's case (supra) related to the substitution of what was described as the carry forward rule contained in the departmental instruction which was sought to be substituted by a modified instruction declared invalid by the Court. It was held that when the rule contained in the modified in- struction of 1955 was struck down the rule contained in a displaced instruction did not survive. Indeed, one of the arguments there was that the original carry forward rule of 1952 was itself void for the very reason for which the carry forward rule, contained in the modified instructions of 1955, had been struck down. Even the analogy of a merger of an order into another which was meant to be its substi- tute could apply only where there is a valid substitution. Such a doctrine applies in a case where a judgment of a Subordinate Court merges in the judgment of the Appellate Court or an order reviewed merges in the order by which the review is granted. Its application to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or in the context of it or in the surrounding facts and circumstances to lead to another inference. It means, ordinarily, that unless the substituted provision is there to take its place, in law and in effect, the pre-existing provision continues. There is no question of a revival . This question of interpretation was referred separately to the Full Bench of the Bombay High Court which drew a distinction between the two meanings of the word substitut- ed ; firstly, where it involved a direction as to what would have to be removed or repealed simultaneously with another as to what was to be substituted, so as to involve two directions and secondly where the substitution merely carried one direction to modify . It is difficult to see how a single direction to -one direction to modify. It is difficult to see how a single direction to substitute would be effective without implying in it another to remove 'what was to be displaced. Perhaps more simply and correct- ly stated, the difference between two meanings of the word substituted is one 'where it stands for two separable legislative process and another where it stands for one total or completed legislative proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of which the agree- ment of sale was made. The Tribunal relied on the observations in the Judgment of the Su- preme Court at page 310 which are to the effect that the goods must, at the date of the contract, be there in the taxing State in the form in which they are agreed to be sold. In that case, the agreement of sale can be said to be in respect of those goods. Here, as found by the second appellate authority, ore in the form of Oriental Mixture was present in the taxing State when contracts of sale in re- spect of Oriental Mixture were made by the Head Office of the applicant company . After giving the findings set out above, on the question whether the. goods existed in the State of Madhya Pradesh when they were sold and, whether the contracts were refera- ble to these goods, the High Court proceeded to consider the question whether Oriental Mix- ture itself had come into existence in Madhya Pradesh or at the port where the goods forming the Oriental Mixture became mixed up in the process of unloading and transporta- tion. Apparently, what the High Court had meant by its earlier findings was not that the Oriental Mixture was in existence in Madhya Pradesh, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In any case, the product which came into existence was known and sold as a separate commercial commodity in the mar- ket. It required a process to be gone through at what were known as mixing works of the company to convert it into that commodity. On the other hand, in the case before us, it seems to us that what has been manufactured by the asses- see is the same Oriental Mixture only if the term manufacture can be employed at all to anything done by the assessee. What is to be determined is whether there has been the manufacture of a new product which has a separate commercially current name in the mar- ket. The mere giving of a new name by the seller to what is really the same product is not the manufacture of a new product. There is, it appears to us, no new process of the manufacture of goods at all by the assessee before us. Again, cases in which logs of wood were cut in order to convert them into planks [e.g. Shaw Bros Co. v. The State of West Bengal((1963) 14 S.T.C. 878.)] could be of no assistance in the case before us. That too could be a process of manufacture . The High Court had also made a passing reference to Nil- giri Ceylon Tea Supplying Co. v. The St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal right in holding that Explanation (II) to Section 2(g) as was origi- nally embodied in the Sales Tax Act, 1947, got restored on the Statute-book because of the unconstitutionality of the substituted Explanation enacted in the Sales Tax (Amendment) Act, 1949 ? Ans. There is no question of restoration of unamended explanation (II) to Section 2(g) as the purported amendment itself did not take effect. Hence, the unamended provision stood as it was before the attempted amendment. The question framed rests on a misconception that there was something to be restored. As nothing was taken away, nothing was there to be restored. And, there was nothing added or substituted. Q. 3. Does the Tribunal's decision not contra- dict the true meaning of the language sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made , as occuring in Explanation (II) to section 2(g) of the Sales Tax Act, with reference to in respect thereof is reference to specified or ear- marked goods which are actually present in the taxing State when the contracts are made ? Ans. This is a questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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