Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1961 Supreme(SC) 223

SUPREME COURT OF INDIA
28th April 1961.
S.K. DAS, J.L. KAPUR, M. HIDAYATULLAH, J.C. SHAH AND T.L. VENKATARAMA AYYAR, JJ.
Messrs. George Oakes (Private) Ltd. Appellant,
Versus
State of Madras, Respondent.
State of A.P., Assam, Maharashtra, Punjab and Rajasthan, Interveners.
Civil Appeals Nos. 280 and 281 of 1960.
Advocates appeared
Mr. R Ganapathy Iyer, Advocate and Mr. G. Gopalakrishnan, Advocate of M/s. Gagrat & Co., for Appellant; M/s M. M. Ismail and T. M Sen, Advocates for Respondent; M/s. D. V. Sastri and T. M. Sen, Advocates for Intervener No. 1 ; Mr. Naunit Lal, Advocate, for Intervener No. 2; Mr. S. M. Sikri, Advocate General, Punjab (Mr. D. Gupta Advocate, with him) for Intervener No. 3; Mr. S. M. Sikri, Advocate General, Punjab, Mr. N. S. Bindra Senior Advocate (Mr. D. Gupta, Advocate, with them) for Intervener No. 4; Mr. G. C. Kasliwal, Advocate-General. Rajasthan (M/s S.K. Kapur and D. Gupta Advocates, with him), for Intervener No. 5.

Advocates:
D.GUPTA, D.GUTPA, D.V.Sastry, G.C.KASLIVAL, G.GOPALAKRISHNAN, M.M.ISMAIL, N.S.BINDRA, NAUNIT LAL, R.Ganapathy Iyer, S.K.KAPOOR, S.M.Sikri, T.M.SEN

The State Legislature was competent to enact the impugned Act under entry 54 of the State List in the Seventh Schedule to the Constitution.

Headnote:
SALES TAX - Madras General Sales Tax Act (Madras Act IX of 1939) - Madras General Sales (Definition of Turnover and Validation of Assessments) Act (Madras Act XVII of 1954) - Validity - Whether the impugned Act is validly made under entry 54 of the State List in the Seventh Schedule to the Constitution.
Fact of the Case:

The appellants, Messrs. George Oakes (Private) Limited, are dealers in Ford motor cars, spare arts and accessories. For the two years 1951-52 and 1952-53 the appellants submitted their returns under the relevant provisions of the principal Act and claimed exemption from tax which regard to certain amount realised on transactions of sales which the appellants contended were inter State sales and hence exempt from tax under Art 286 of the Constitution as it stood at the relevant time. The Deputy Commercial Tax Officer, Madras, not only rejected the claim of exemption, but added to the turnover certain amounts which the appellants had collected by way of tax.
Finding of the Court:

The impugned Act is validly made under entry 54 of the State List in the Seventh Schedule to the Constitution.
Issues: Whether the impugned Act is validly made under entry 54 of the State List in the Seventh Schedule to the Constitution.
Ratio Decidendi: 1. The impugned Act seeks to enlarge the scope of the definition of turnover so as to include the amount collected by way of tax in the turnover by a deeming provision, and this the State Legislature was competent to enact under entry 54 of the State List. 2. The distinction drawn in Krishnaswamy Mudaliar's case, 1954-5 S T C 88 whether right or wrong on a question of construction only, is not material to the question of legislative competence. 3. The impugned Act cannot be held to be bad on the ground of legislative incompetence.
Final Decision: Appeal dismissed.

Judgment

S. K. DAS J. : These are two appeals on certificates granted by the High Court of Madras and consolidated by its orders dated March 22, 1957. They are from the judgment and orders of the said High Court dated April 20, 1956 and July 30, 1956 in two Tax Revision Cases, by which the High Court dismissed two petitions filed by the appellants under S. 12 B of the Madras-General Sales Tax Act (Madras Act IX of 1939), hereinafter called the principal Act., in the following circumstances.

2. Messrs. George Oakes (Private) Limited, appellants herein, are dealers in Ford motor cars, spare arts and accessories. For the two years 1951-52 and 1952-53 the appellants submitted their returns under the relevant provisions of the principal Act and claimed exemption from tax which regard to certain amount realised on transactions of sales which the appellants contended were inter State sales and hence exempt from tax under Art 286 of the Constitution as it stood at the relevant time. The Deputy Commercial Tax Officer, Madras, not only rejected the claim of exemption, but added to the turnover certain amounts which the appellants had collected by way of tax. The amounts so added for 1951-52 were- (a) Rs. 8,000/- to the net turnover assessable at 3 pies per rupee, and (b) Rs. 4,30,000/- to the turnover assessable at 9 pies per rupee. For 1952-53 the amounts so added were - (a) Rs. 30,132,000 add (b) Rs. 2,92,257 add respectively.

3. Aggrieved by the orders of the Deputy Commercial Tax Officer, the appellants preferred two appeals to the Special Commercial Tax Officer, Appeals, Madras City. These appeals were dismissed. The matter was then taken to the Sales Tax Appellate Tribunal by means of two appeals. By this time the Madras Legislature had passed the Madras General Sales (Definition of Turnover and Validation of Assessments) Act, 1954 being Madras Act No. XVII of 1954. This Act we shall refer to as the impugned Act in this judgment, because its constitutional validity is now the only question for decision these appeals. The Tribunal negatived the claim of the appellants arising out of the contention that some of the sale transaction in the relevant years were in effect inter-State sales and therefore exempt from tax; the tribunal declined to go into the second question of the constitutional validity of the impugned Act. We may state here, though nothing now turns upon this that the Tribunal held that when sales tax was included in the turnover, it was proper to tax the amounts so included at the minimum rate only, viz., 3 pies in the rupee under S. 3 (1) of the principal Act.

4. Thereafter the appellants filed two revision petitions to the High Court under S. 12 B of the principal Act. These were dismissed in limine. By the orders dated April 20, 1956 the High Court held that the contention as to some of the transaction being inter State sales was concluded by one of its earlier decisions, which came before us in Ashok Layland Ltd. v. State of Madras, Civil Appeal No. 446 of 1958 . In that appeal we delivered judgement on March 28, 1961 and held that the Sales Tax Laws (Validation) Act, 1956 applied and it was unnecessary to consider the true nature of the transactions which the appellants contended were inter-State sales. Learned Counsel for the appellants has conceded before us that that decision governs the present appeals, and the first question no longer survives.

5. As to the second question, the High Court by oversight did not deal with it in its orders dated April 20, 1956. When the matter was brought to the notice of the High Court, it said in its orders dated July 30, 1956 that the second question was also concluded by its decision in Sundararajan and Co. Ltd. v. State of Madras 1956-7 S T C 105 where the validity of the impugned Act was upheld.

6. When we heard these appeals, along with Civil Appeal No. 446 of 1958: we expressed the view that there was some divergence of opinion in the High Courts on the second question and the

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