Judgment

RAMASWAMI, J. : These appeals are brought, by special leave, from the judgment of the Allahabad High Court dated November 30, 1962 in Miscellaneous Sales Tax Reference No. 144 of 1958 and other connected references.

2. The appellants are manufacturers and dealers of oil in the Province of Uttar Pradesh and they have their own depots outside the Province. For the financial year 1948-49 and the subsequent period from April 1, 1949 to January 25, 1950, the appellants had sent their goods to their depots outside the Province of Uttar Pradesh, for example to Calcutta in the State of West Bengal before any contract of sale in respect of the goods was made. After the goods had reached the depots outside the Province of Uttar Pradesh, they were sold to various parties. The Sales Tax Officers of Uttar Pradesh assessed the outside sales of all the appellants to sales tax under the Uttar Pradesh Sales Tax Act 15 of 1948, hereinafter called the Act . It appears that this category of sales roughly amounted to more than one crore of rupees in the case of the appellants and the sales tax was levied at the rate of 3 pies per rupee subject to a rebate under S. 5 of the Act and certain other adjustments. Aggrieved by the assessments, the appellants took the matter in appeal under Section 9 of the Act. The appeals were heard by various Appellate Officers called Judge, Appeals. Some of the Appellate Officers held that the assessment was properly made, while some others took the view that the assessments made for outside sales were improper and the assessment order should be quashed. The parties aggrieved by the appellate orders filed revisions before the revising authority called Judge, Revisions, under Section 10 of the Act. By his judgment dated July 10, 1957 the Judge, Revisions, held that the out-of-State sales would be taxable (1) if the goods were in existence in the Province of Uttar Pradesh at the time when the contracts for sale were made, and (2) if the goods were manufactured after the contracts for sale were made in respect of them and were subsequently appropriated towards those contracts. He further held that sales of goods which were not only manufactured but also exported before any contracts for sale were made would not be taxable. Under S. 11 of the Act, the Commissioner of Sales Tax applied to the Revising Authority for making a reference of the case to the High Court. By its order dated January 23, 1958 the Revising Authority drew up a statement of the case and referred to the Allahabad High Court the following two questions of law for determination:

"(1) Whether clause (ii) of the Explanation II to Section 2 (h) U. P. Sales Tax Act provides for taxing sales in which goods were manufactured or produced in U. P. but for which the contract for sale was made after the goods had left the State?

2. If the reply to the above is in affirmative, whether this provision is ultra vires?"

By its judgment dated November 30, 1962, the High Court answered the first question in the affirmative and the second question in the negative.

3. It is necessary at this stage to refer to the relevant statutory provisions which were in force during the material period. Section 99 of the Government of India Act, 1935 authorised a Provincial Legislature, subject to the provisions of that Act to make laws for the Province or for any part thereof. Section 100 (3) of that Act provided that, subject to the two preceding sub-sections, the Provincial legislature had, and the Federal Legislature had not, power to make laws for any province or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule to that Act. The matter enumerated in Enty 48 in List 11 was "Taxes on the sale of goods and on advertisements". It was in exercise of this legislative power that the Uttar Pradesh State Legislature enacted Act 15 of 1948 which came into force on April 1, 1948. Section 3 of the Act provides as follows :-

"3. Liability to t