Back
1964 Supreme(MP) 88
High Court Of Madhya Pradesh
P. V. Dixit, C. J. and K. L. Pandey, J.
COMMISSIONER OF SALES TAX - Appellant
Versus
MOHAMMAD HUSSAIN RAHIM BUX - Respondents
Misc. Civil Case 179 Of 1963
Decided On : 07/30/1964
Headnote:(1) Constitution of India Art - 286 and 264 (b) (before amendment of 1956) - 'State' - interpretation of - word 'State' used in Art. 286 must be read otherwise than as limited by Art. 264 (b) - Art 286 applies to Part C States also.
In the context relating to the subject matter of Art. 286, the word "State" used therein must be read otherwise than as limited by Art. 264 (b) of the Constitution (before 1956 Amendment). [Para 10
Art. 286 as it was worded before amendment of 1956 clearly contemplated that the restrictions put by it on the Legislative power were in regard to all states and not to anyone state entirely independent of the other, and a commodity declared by parliament by law to be essential for the life of the community was essential for the life of the community throughout India and not for that of any particular state only. [Para 9
It is true that in the language itself of Art. 286, as it was before amendment of 1956, there were no words or expressions ruling out expressly or impliedly the applicability of Art. 264 (b), bat the context of its subject matter and its object afforded compelling and sufficient reason for departing from the restricted meaning given to the word 'state' by Cl. (b) of Art. 264.
In determining the question whether the context requires that the word 'state' used in Art. 286, should be read otherwise than as indicated in Art. 264 (b) the Court has not only to look at the words but also to look at the context, the collection and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances. If the framers of the constitution thought it necessary to put the restrictions on the legislative powers of the state for preventing impediment and discouragement in the free flow of trade within India regarded as one economic unit, for the free flow of foreign trade and for preventing commodities essential for the life of the community throughout India from being subjected to sales tax, then there is no ground whatsoever to differentiate a Part C State from a Part A or Part B State in the matter of restrictions put by Art. 286 on the legislative power of the State. AIR 1951 Vin. Pra. 8 and 1957 AC 436 and AIR 1920 PC 114 and AIR 1960 SC 971 and (S) AIR 1955 SC 661 and 1940 AC 613 and (1891) 1 QB 143 and (1948) 2 All. ER 995, Rel. on. [Para 9
(2) Sales Tax Laws Validating Act, 1956 - S. 2 - section had validated the laws of Part C State also - this is on basis that Art. 286 applies to Part C States also - Part C States (Laws) Act, 1950 - S. 2 - Constitution of India - Art. 286.
S. 2 of the Act which validated the State laws imposing or authorizing imposition of tax on sale or purchase of goods in the course of inter-state trade or commerce, validated the laws of Part C States also and that could be only on the basis that Parliament thought that Art. 286 applied to Part C States.
Explanation to the section states that law of a State in relation to a Part C State means any law made by the legislative assembly of the State or extended to that State by a notification issued under S. 2 of the Part C States (Laws) Act, 1950. [Para 10
(3) Constitution of India - Arts. 246 (4), 286 - Art, does not mean that the powers of Part C States legislature are left unobstructed.
Merely from the fact that Parliament possessed legislative power over Part C States and that Art. 286 did not impose any limitation on the legislative power of Parliament, it does not follow that the power of a Part C State's Legislature should be held to be untarmmelled. [Para 11
( 1 ) THIS is a reference tinder Section 44 (1) of the Madhya Pradesh General Sales tax Act, 1958, at the instance of the Commissioner of Sales Tax. The questions, which have been posed for our decision, are : "1. Whether Article 286 (1) (a) of the Constitution was applicable to the state of Vindhya Pradesh during the assessment period ? equivalent Citation:
( 2 ) WHETHER in the facts and circumstances of the case, the sales of Rs. 31,059-12-0 were liable to tax under the V. P. Sales Tax Ordinance No. II of 1949 ?
( 3 ) WHETHER in the facts and circumstances of the case the despatches of goods worth Rs. 4,01,255-4-0 to customers outside the State were liable to tax under the V. P. Sales Tax Ordinance No. II of 1949?" 2. The material facts are that in respect of the period of assessment from 1st April 1950 to 30th June 1950 the assessee-firm, which carries on the business of manufacture and sale of bidis with its head-office at Maihar, claimed that it was not liable to tax in respect of the sales of bidis of the value of Rs. 31,059-12-0 inasmuch as the bidis sold were delivered outside the former Vindhya Pradesh state for consumption; that the transactions of despatches of bidis of the value ofrs. 4,01. 255-4-0 from its head-office at Maihar to its various branches in Uttar pradesh were not sale transactions but merely transfer of goods from the head-office to its brandies; and that, therefore, it could not be assessed to sales tax in respect of those transactions. The Assistant Commissioner of Sales-tax, Rewa, rejected the first claim of the asses-see. He, however, accepted the latter claim and accordingly excluded the amount of Rs. 4,01,255-4-0 from the taxable turnover of the assessee. The Assistant Commissioner of Sales-tax did not, however, make any order for refund of sales-tax paid by the assessee on the amount of Rs. 4,01,255-4-0. The assessee then preferred an appeal before the deputy Commissioner of Sales-tax, Jabalpur. The Deputy Commissioner rejected the appeal holding that the former State of Vindhya Pradesh was a Part-C State; that Article 286 of the Constitution was not applicable to that State; that under the vindhya Pradesh Sales Tax Ordinance No. 11 of 1949 sales-tax on goods, delivered at a place outside the State of Vindhya Pradesh as a direct result of sale for purposes of consumption in that State, could validly be assessed; and that the transactions of despatches of bidis of the value of Rs. 4,01,255-4-0 from the assessee-firm's head-office at Maihar to places outside Vindhya Pradesh were not mere transfer of goods from head-office to the branches of the assessee-firm but were sale transactions assessable to tax under the Ordinance. 3. The assessee then preferred an appeal (No. 33 of 1961) before the Sales Tax tribunal, namely, the Board of Revenue, against the decision of the Deputy commissioner of Sales Tax. Relying on a decision of the Judicial Commissioner's court of the former State of Vindhya Pradesh in Firm Matadin Vishwanath v. V. P. Govt. , (1951) 2 STC 16 : (AIR 1951 Vin Pra 8) the Tribunal held that Article 286 of the Constitution was applicable to Part-C States and accordingly the sales tax authorities were not justified in assessing sales tax on bidis of the value of Rs. 31,059-12-0 sold and exported outside Vindhya Pradesh for purposes of consumption in outside places. On the question whether the despatches of bidis of the value of Rs. 4,01,255-4-0 from the assessee's head-office at Maihar to certain places outside, Vindhya Pradesh were as a direct result of sale transactions or whether they were merely transfer of goods from the head-office to the assessee firm's branches in Uttar Pradesh, the Tribunal did not express any opinion except making the general statement that transfer of goods from the head-office to branch outside Vindhya Pradesh would not amount to a sale transaction. In omitting to express opinion on this point, the Tribunal was undoubtedly influenced by the view it
