Judgment

GAJENDRAGADKAR, J.: This is a group of three appeals which have been filed in this Court by the State of Bihar (hereinafter called the appellant) against three separate registered dealers with a certificate issued by the Patna High Court under Art. 132(1) of the Constitution that they involve a substantial question of law as to the interpretation of Art. 20(1) of the Constitution. The facts in each one of the three appeals are similar, though not exactly the same, but they raise a common question of law under the proviso to S. 14A of the Bihar Sales Tax Act, 1947 (Act XIX of 1947) (hereinafter called the Act). Orders of forfeiture have been passed against the three registered dealers in the three appeals respectively, and they raise a common question of law in regard to the validity of the said orders. By consent Civil Appeal No. 678 of 1957 has been argued before us as the principal appeal and it has been conceded that our decision in that appeal will govern the two other appeals. We would, therefore, set out the facts in Civil Appeal No. 678 of 1957 and deal with the merits of the points raised for our decision in that appeal.

2. Rai Bahadur Hurdut Roy Motilal Jute Mills, Katihar (hereinafter called the first respondent) was at the material time registered as a dealer under the Act and was carrying on business of manufacture and sale of gunny bags, hessian and other jute products at Katihar in the District of Purnea. During the period April 1, 1950 to March 31, 1951, the said respondent sold and despatched its ware worth about Rs. 92,24,386-1-6 to dealers outside the State of Bihar and realised a sum of Rs. 2,11,222-9-6 as sales tax from such dealers. The said respondent s assessment to sales tax for the relevant period was taken up by the Superintendent of Sales Tax, Purnea (hereinafter called the second respondent) on May 31, 1953; and in consequence of these proceedings the impugned order of forfeiture came to be passed.

3. Meanwhile Art. 286 of the constitution along with other articles was considered by this Court in the State of Bombay v. The United Motors (India) Ltd., 1953 SCR 1069. The question which this Court had to consider in that case was about the vires of the impugned provisions of the Bombay Sales Tax Act, 1952 (Act XXIV of 1952), and for the decision of the said question Art. 286 fell to be considered. According to the majority judgment in that case Art. 286(1) (a) read with the explanation thereto and construed in the light of Art. 301 and Art. 304 prohibits the taxation or sales of purchases involving inter-State elements by all States except the State in which the goods are delivered for the purpose of consumption therein. The latter State is left free to tax such sales or purchases and it derives this power not by virtue of the explanation to Art. 286(1) but under Art. 243(3) read with Entry 54 of List II. The view that the explanation does not deprive the State in which the property in the goods passed of its taxing power and that consequently both the State in which the property in the goods passes and the State in which the goods are delivered for consumption have the power to tax is not correct.

4. When the first respondent s assessment was taken up by the second respondent his attention was invited to this Court s decision in the case of the United Motors, 1953 SCR 1069: he followed the said decision and held that the turnover of Rs. 92,24,386-1-6 on account of despatch of manufactured jute products to out of State buyers was exempted from the levy of tax; this meant a deduction of the said amount from the amount of the total turnover shown by the first respondent in the return submitted by him according to the provisions of the Act.

5. Subsequently the second respondent proceeded against the first respondent under S. 14A of the Act and issued a notice in that behalf on June 18, 1954. By this notice the first respondent was called upon to show cause why the entire amount of Rupees 2,11,222-9-6