Judgement

MAHAJAN, C.J.I.

This is an appeal by leave from a judgment of the High Court of Judicature at Nagpur dated 25-4-1952 dismissing a petition under Art. 226 of the Constitution of India filed by the appellant questioning the vires of certain provisions of the Central Provinces and Berar Sales Tax Act, 1947.

2. The appellant represents a concern C. Parakh and Company (India) Limited, a company registered under the Indian Companies Act, 1913, having its head office at Bombay, and several branches in the State of Madhya Pradesh. The main business of the appellant company is that of cotton.

The head-office of the appellant at Bombay sells cotton bales to several mills and individuals under the control and the system regulated by the Textile Commissioner at Bombay, and upon a contract of sale being completed the goods after being ginned and pressed are sent from Khamgaon and other places in the State of Madhya Pradesh and are actually delivered in Bombay and such other places outside the State of Madhya Pradesh as directed by the head office. The cotton bales are sent by rail under an insurance in favour of the appellant, and are delivered to the buyer by tender of railway receipt against the payment of price in Bombay.

3. Under the central Provinces and Berar Sales Tax Act, 1947 (Act 21 of 1947), cotton was declared liable to sales tax on 11-4-1949, and since that date the appellant commenced paying the tax in respect of the purchases made by it, and continued to pay it till 31-12-1950. For the quarter ending on 31-3-1951 the appellant declined to pay the tax in respect of the purchases made during that quaterr, realizing that it could not be made legally liable for the payment of this tax in the State of Madhya Pradesh, the transactions done or effected in Madhya Pradesh not being "sales" within that State.

Apprehending that the Company may be subjected to the payment of the tax without authority of law, an application was preferred in the High Court of Judicature at Nagpur praying for an appropriate writ or writs which may secure to the Company protection from the impugned Act and its enforcement by the State. It was alleged that Explanation II to section 2(g) of the Central Provinces and Berar Sales Tax Act, 1947 as further amended by Act 16 of 1949 was ultra vires and illegal.

4. This petition, along with a Reference in another case) Misc, Civil Case No. 258 of 1951 : - Sir Ram Gulabdas v. Board of Revenue , AIR 1952 Nag 378 (A), was heard by a Division Bench of the Nagpur High Court and it was held that Explanation II to section 2(g) of the Act was not enforceable because under the Constitution sales tax could only be collected in the State where the goods were delivered for consumption. It was further held that explanation II as amended by the C. P. & Berar Act 16 of 1949 was not validly enacted because it made drastic changes in the rules of the Sale of Goods Act without obtaining the assent of the Governor-General as required by section 107 of the Government of India Act, 1935.

It was observed that the mere production of the goods in a State is not enough to made the tax payable unless the goods are appropriated to a particular contract, and that to impose the tax at that stage would be tantamount to charging an excise duty and not a tax on the sale of goods. In spite of these findings the High Court declined to issue a writ and dismissed the petition made to it under Article 226 of the Constitution on the ground that mandamus issues only to compel an authority to do or abstain from doing some act, that it is seldom anticipatory and certainly never issues whether the action of the authority is dependant on some action of the petitioner and that in the present case the petitioner had not even made his return and no demand for the tax could be made from him.

5. In this appeal it was argued by Shri Noshirwan Engineer, learned counsel for the appellant, that an illegal and unjust imposition operates as an illegal restraint