The Explanation to Section 2(g) of the Sales Tax Act, 1947 is not ultra vires the Provincial Legislature, but the amended Explanation II to Section 2(g) is not validly enacted.

This miscellaneous civil case aries out of sales tax proceedings. The applicants are a partnership firm of bidi manufactures. The firm is situated at Tumsar, tahsil and district Bhandara, and is a registered dealer for purposes of Section 10 of the Sales Tax Act. In the present proceedings before the Sales Tax Officer, Bhandara, for the assessment of the tax for the quarter ending with 12th November, 1947, (the year of the applicants being from Divali to Divali) the applicants showed Rs. 1,29,279-12-0 as the total turnover of the firm. The firm claimed exemption for the whole of this sum on the ground (i) that they had sent goods worth Rs. 1,01,746-2-0 to their own shop at Muzaffarpur in Bihar, and (ii) that they sold goods worth Rs. 27,533-10-0 to registered dealers in Bihar.

2. This contention of the firm was not accepted they were charged sales tax on the entire turnover stated over. The applicants thereupon appealed to the Commissioner of Sales Tax, Madhya Pradesh, with on result. They also applied for revision of the order to the Board of Revenue, but without success.

3. The applicants then applied under Section 23 of the Central provinces and Berar Sales Tax Act, 1947, requesting the Board to refer certain questions of law for decision by this Court. That application was rejected. The applicants moved this Court and the Honourable the Chief Justice directed the Board of Revenue to state the case and to refer the following question for decision by this Court. The questions are as follows :-

(i) Whether the sending of goods to Muzaffarpur shop belonging to the assessee constitutes a sale within the meaning of the Sales Tax Act ?

(ii) Whether the sending of goods to persons outside the limits of this State constitute a sale within the meaning of the Act ?

(iii) Whether the sending of goods to customers outside this State, to whom railway receipts were sent through a bank, constitutes a sale within the meaning of the Act ?

(iv) Whether the sending of goods to salesmen out of the Province amounts to a sale within the meaning of the Act ? and

(v) Whether Explanation II to clause (g) of Section 2, which makes an agreement of sale taxable even though the sale may have taken place outside the Province, is ultra vires of the Provincial Legislature ?

4. Before dealing with the questions involved in this reference, it is necessary to see how the Act is constructed. The preamble to the Act states that it is an Act to levy a tax on the sale of goods in the Central Provinces and Berar. The Act begins by defining certain terms for the purposes of the Act. Of these we are concerned with the definitions of "dealer", "goods","sale", "taxable quantum" and "turnover" in the present reference. It is not necessary to quote all the definition clauses relating to the above terms. "Dealer" has been defined to include both a principal and an agent in reference to the business of selling or supplying goods, whether on remuneration, commission or otherwise. "Goods" have been defined to include all kinds of movable property other than actionable claims, stocks, shares or securities.

5. The definition of "sale" will have to be considered in its various parts and it can be conveniently quoted here :-

"'Sale' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge;

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"Explanation (II). - Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made, shall, wherever the said contract of sale is made, be deemed for the purpose of this Act to have taken p