Judgment

SHAH, J. : In these six appeals, the constitutional validity of S. 2(g) of the Bihar Sales Tax Act XIX of 1947 as amended by the Bihar sales Tax (Amendment Act) VI of 1949 is challenged.

2. To appreciate the grounds on which the contention is raised by the appellants, it is necessary to set out the legislative provisions applicable to the sales in respect of which tax was sought to be levied by the State of Bihar under the Bihar Sales Tax Act, 1947. In exercise of the legislative power conferred by entry 48 in List II of the Government of India Act, 1935, the Legislature of the province of Bihar enacted the Bihar Sales tax Act XIX of 1947, which was brought into operation on July 1, 1947. The Act was amended by Bihar Sales Tax (Amendment) Act VI of 1949. Section 4(1) of the Act (which is the charging section) as amended, provided, in so far as it is material, that :

"Subject to the provisions of Ss. 5, 6, 7 and 8 and with effect from the commencement of this Act, every dealer whose turnover during the year immediately preceding the date of such commencement, on sales which have taken place both in and outside Bihar exceeded Rs. 10,000/- shall be liable to pay tax under this Act on sales which have taken place in Bihar on and from the date of such commencement".

3. Section 2(g) defined "sale" as meaning "with all grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract, but does not include a mortgage, charge or pledge :

Provided .........................................

Provided further that notwithstanding anything to the contrary in the India Sale of Goods Act, 1930 (Act III of 1930), the sale of any goods -

1. which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in S. 4 of that Act is made, or

2. which are produced or manufactured in Bihar by the producer or manufacturer thereof, shall, wherever the delivery or contract of sale is made, be deemed for the purposes of this Act to have taken place in Bihar."

4. Sale is under the definition undoubtedly transfer of property in the goods for consideration; but even if the transfer takes place, under the rules governing sale of goods under the Sales of Goods Act, outside the taxable territory, for the purposes of the Bihar sales Tax Act, the suits of the sale is to be regarded as taking place in Bihar if at the time of the contract of sale the goods were actually in Bihar or the goods had been produced or manufactured in Bihar by the producer or manufacturer thereof.

5. The competence of the State Legislature to enact S. 2(g) as amended by Bihar Act VI 1949 in exercise of authority under entry 48 in List II of the seventh schedule of the Government of India Act, 1935, was challenged in the Tata Iron & Steel Co., Ltd. v. State of Bihar, 1958 SCR 1355 . Chief Justice Das in dealing with the legislative competence of the Bihar State Legislature observed at pp. 1367-68 (of SCR).

"Both before and after the amendment of S. 2(g) the principal part of the definition meant the transfer of the property in goods. All that the second proviso did was not to extend the definition of "sale", but only to locate the "sale" in certain circumstances mentioned in that proviso in Bihar. The basis of liability under S. 4(1) remained as before, namely, to pay tax on the "sale". The fact of the goods being in Bihar at the time of the contract of sale or the production or manufacture of goods in Bihar did not by itself attract the tax. The taxable event still remained the "sale" resulting in the transfer of ownership in the thing sold from the seller to the buyer. No tax liability actually accrued until there was a concluded sale in the sense of transfer of title. It was only when the property passed and the "sale" took place that the liability for paying sales tax under the 1947 Act arose. There wa