Judgment :- 1. The petitioner is the Cochin Coal Company Ltd., a private company incorporated under the Indian Companies Act, 1913, and having its Registered Office at Fort Cochin in the Madras State. The activities of the company in so far as they relate to the controversy before us are summed up as follows in Para.4 and 6 of the affidavit filed in support of the petition: "4. The petitioner company purchases coal from Calcutta through Messrs. Macheill and Barry Limited Calcutta who are the Managing Agents for various coal mining companies. The Coal Commissioner for India with his office in Calcutta allots quantities of coal for purchase by the Petitioner Company. The coal so purchased is taken to Cochin by ships and stacked at the Candle Island in Madras State. 6. The subject matter of the petition accompanying relates to sales of coal to steamers arriving and berthed in Travancore-Cochin State waters of the Cochin Harbour to be stored in the ships' bunkers and exported outside the territorial waters of Travancore-Cochin State for consumption on the High Seas." and the course of dealing will be clear from the following extract from Para.7 to 10 of the said affidavit: 7. These steamers have their respective teamer Agents. Whenever any coal is required for any steamer the Agent for the steamer places an order with the petitioner company for sale to the steamer of a specified quantity of coal. 8. When orders are accepted by the Petitioner Company at Fort Cochin the Transporting Contractor is given a delivery order to the Company's stores at Candle Island. The Steamer Agents also hand over to the Contractor shipping bill and export permit. 9. On the strength of the delivery order and other records the Contractor takes delivery of the quantity authorised from the stores and delivers the same trimmed into the ship's bunker getting a receipt therefor from ship's Officers. 10. Payments for goods so sold to the steamers is received by the Petitioner company at their office in Fort Cochin." 2. Ext. P1 is the original of an order dated 19.2.1952 placed by the Malabar Steamship Co., Ltd., Mattancherry, Travancore-Cochin. "S.S. Janaki - bunkering coal. We confirm our telephone conversation of this morning when we requested you to supply the above ship 30 tons of bunker coal and we trust you would arrange for the supply accordingly. Ext. P1 is the original of an order dated 19.2.1952 placed by the Malabar Steamship Co., Ltd., Mattancherry, Travancore-Cochin. "S.S. Janaki - bunkering coal. We confirm our telephone conversation of this morning when we requested you to supply the above ship 30 tons of bunker coal and we trust you would arrange for the supply accordingly. We are passing the necessary papers and will be sent to you before today evening. Your bill for cost may be sent to us for payment as usual." and Exts. P2 and P3 are specimen forms of the Shipping Bill and the Application to Export. 3. Ext. P9 is a letter from Messrs. William Goodacre & Sons, Limited, Alleppey, Travancore-Cochin, dated 12.7.1951. "S.S. ' Tobata Maru'. The above vessel is arriving Cochin on the 24th instant with 5000 Tons rice for discharge. Her detention at Cochin will be about 3 days. She requires 500 Tons bunker coal and we shall be glad to be advised if you would undertake to replenish the vessel with this quantity if so at what rate per ton. On hearing from you we shall place the order with you." 4. Apparently the Cochin Coal Company Ltd., replied that only 200 tons could be supplied. The next letter is Ext. P10 dated 23.8.1951; "I have to thank your letter of 21st instant and I am very much obliged to you indeed for reserving 200 tons bunker Coal for S.S. 'Tobata Maru'. Your assistance is very much appreciated." and Ext. P11 dated 25.7.1951 and Ext. P12 dated 27.7.1951 are the two letters which followed Ext. P10; Ext. P11. "S.S. Tobata Maru." The above vessel arrived here yesterday and is anchored in the stream awaiting wharf berth. We shall be glad if you will please arrange to supply 200 tons bunker coal to this vessel, at your early convenience. Shipping Bill duly passed at the Custom, will be sent to you as early as possible. Ext. P12. "S.S. Tobata Maru." With reference to our letter of 25th instant, we send you herewith duplicate and triplicate copies of Shipping Bill No. 964 duly passed by the Customs, covering 200 tons bunker call, to be supplied to this vessel. Kindly advise us for what period we should apply for Customs overtime." 5. Ext. Ext. P12. "S.S. Tobata Maru." With reference to our letter of 25th instant, we send you herewith duplicate and triplicate copies of Shipping Bill No. 964 duly passed by the Customs, covering 200 tons bunker call, to be supplied to this vessel. Kindly advise us for what period we should apply for Customs overtime." 5. Ext. P13 is the receipt given by the Chief Engineer and Commander of S.S. "TOBATA MARU" on 29.7.1951: "Received from the Cochin Coal Co. Ltd., Cochin, 200 (Two hundred) Tons Bengal Coal trimmed into Bunkers." Ext. P14 is the Bill sent to Messrs. William Goodacre & Sons, Limited. Ex Candle Island Stacks. "Bill No. 7 "S.S. TOBATA MARU." To Cost of 200 (two hundred) tons Bengal Coal supplied to the above vessel as per receipt attached, in duplicate, @ Rs. 83/-per ton T.I.B. Sales Tax @ Rs. 1-9-0%. Rs. 16,600 0 0 263 710 Rs. 16,863 710 (Rupees sixteen thousand eight hundred and sixty three, annas seven and pies ten only.) E. & O.E. COCHIN, 30th July, 1951. For THE COCHIN COAL CO. LTD." and Ext. P15 is the covering letter that accompanied the Bill: S.S. "TOBATA MARU." As desired in your letter dated 25th July we have supplied the above vessel with 200 tons Bengal Coal and enclose our Bill No. 7 of date for Rs. 16863-7-10, in duplicate, and shall be glad to receive payment in settlement. Please also find enclosed triplicate copy of the shipping bill No. 964 of 27.7.1951 relating to the above duly endorsed by the Chief Engineer of the vessel.' Exts. P16 to P20 relate to a similar supply in March 1952 to S.S. Bharatamata in pursuance of an order placed by its Agents, The Malabar Spices Company, Mattanchery, Travancore-Cochin. 6. Please also find enclosed triplicate copy of the shipping bill No. 964 of 27.7.1951 relating to the above duly endorsed by the Chief Engineer of the vessel.' Exts. P16 to P20 relate to a similar supply in March 1952 to S.S. Bharatamata in pursuance of an order placed by its Agents, The Malabar Spices Company, Mattanchery, Travancore-Cochin. 6. On the strength of the documents and affidavits filed on behalf of the Cochin Coal Co., Ltd. we have no hesitation to hold that the goods moved from the Candle Island in the Madras State to the ships berthed in the Travancore-Cochin waters of the Port of Cochin in pursuance of an agreement to sell, that the property in the goods passed in the said waters when the goods were delivered trimmed into bunkers and that the transactions have an inter-State character within the meaning of Art.286(2) of the Constitution as interpreted in the Bengal Immunity Case (1955) VI STC 446 and as reproduced in S.26 of the Travancore-Cochin General Sales Tax Act, 1125. 7. Art.286 of the Constitution reads: "(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase taken place - (a) outside the State, or (b) in the course of the import of the goods into, or export of the goods out of the territory of India. Explanation. For the purposes of sub-cl. Explanation. For the purposes of sub-cl. (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State, (2) Except in so far as Parliament may bylaw otherwise provide, no law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter-State trade or commerce: Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be levied until the thirty-first day of March, 1951. (3) No law made by the Legislature of a State imposing or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent." and the substance of the majority view in the Bengal Immunity Case (as summarised by Bhagvati, J., in (1955) STC 623 is: "The bans imposed by Art.286 on the taxing powers of the States are independent and separate and each one of them has to be got over before a State Legislature can impose tax on transactions of sale or purchase of goods. These bans have been imposed from different view-points, and, even though the transactions of sale or purchase may in conceivable cases overlap so far as these different view-points are concerned, each of those bans is operative and has to be enforced. These bans have been imposed from different view-points, and, even though the transactions of sale or purchase may in conceivable cases overlap so far as these different view-points are concerned, each of those bans is operative and has to be enforced. So far as Art.286(1)(a) is concerned, the Explanation determines by the legal fiction created therein the sites of the sale in the case of transaction coming within that category and when a transaction is thus determined to be inside a particular State it necessarily becomes a transaction outside all other States. The only relevant enquiry for the purposes of Art.286(1)(a), therefore, is whether a transaction is outside the State and once it is determined by the application of the Explanation that it is outside the State it follows as a matter of course that the State with reference to which the transaction can thus be predicated to be outside it can never tax the transaction. This ban is effective independently of the fact that the transaction may also have taken place in the course of inter-State trade or commerce or with reference to goods as have been declared by Parliament by law to be essential for the life of the community. The ban imposed under Art.286(2) is an independent and separate one and looks at the transactions entirely from the point of view of their having taken place in the course of inter-State trade or commerce. Even if such transactions may also fall within the category of transaction covered by Art.286(1)(a) and the Explanation thereto or Art.286(3), the moment Art.286(2) is attracted by reason of the transactions being in the course of inter-State trade or commerce, the ban under Art.286(2) operates and such transactions can never be subjected to tax at the instance of a State Legislature except in so far as Parliament by law may otherwise provide or such power of taxation is saved by the President's order contemplated in the proviso. The ban under Art.286(2) may be saved by the President's order but that does not affect or lift the ban under Art.286(2)(a) read with the Explanation." 8. As to when a sale could be regarded as one in the course of inter-State trade Venkatarama Ayyar, J., gave the following answer in (1955) VI STC 446 (583). The ban under Art.286(2) may be saved by the President's order but that does not affect or lift the ban under Art.286(2)(a) read with the Explanation." 8. As to when a sale could be regarded as one in the course of inter-State trade Venkatarama Ayyar, J., gave the following answer in (1955) VI STC 446 (583). "A sale could be said to be in the course of inter-State trade only if two conditions concur: (1) A sale of goods, and (2) a transport of those goods from one State to another under the contract of sale. Unless both these conditions are satisfied, there can be no sale in the course of inter-State trade." and quoted with approval the following passage from Rottschaefer on Constitutional Law: "The activities of buying and selling constitute inter-State commerce if the contracts therefor contemplate or necessarily involve the movement of goods in inter-State commerce." (1939 Edition). Bhagawathi, J., had to deal with the same question in Mohanlal Har Govind Das v. State of M.P. (1955) VI STC 687, a case in which the petitioners imported into the State of Madhya Pradesh finished tobacco from their suppliers in the Bombay State. The learned Attorney General appearing on behalf of the petitioners contended "that the transactions in question were in the course of inter-State commerce and were, therefore, within the ban of Art.286(2) and the State of Madhya Pradesh had no authority to impose or to authorise imposition of tax on these transactions". The judgment dealt with the contention as follows: "We are of the opinion that this contention of the learned Attorney-General is sound. It was in fact admitted by the respondents in their return that the petitioners imported tobacco from the State of Bombay in large quantities. The Bombay suppliers processed tobacco in their godowns situated within the State of Bombay and supplied the finished tobacco to the petitioners in Madhya Pradesh. The petitioners imported this finished tobacco into Madhya Pradesh from those suppliers who were carrying on business in the State of Bombay and there was of necessity, as a result of these transactions, the movement of the goods across the border. The petitioners imported this finished tobacco into Madhya Pradesh from those suppliers who were carrying on business in the State of Bombay and there was of necessity, as a result of these transactions, the movement of the goods across the border. As a result of the transactions entered into by the petitioners with these suppliers the finished tobacco which was supplied to the petitioners moved from the State of Bombay to the State of Madhya Pradesh and these transactions were, therefore, in the course of inter-State trade or commerce." 9. S.26 of the Travancore-Cochin General Sales Tax Act, 1125 (corresponding to S.22 of the Madras General Sales Tax Act, 1929) reads as follows: "(1) Notwithstanding anything contained in this Act, (a) a tax on the sale or purchase of goods shall not be imposed under this Act - (i) where such sale or purchase takes place outside the State of Travancore-Cochin; or (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of India; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March 1951, be imposed where such sale or purchase takes place in the course of inter-State trade or commerce except in so far as Parliament may by law otherwise provide. (2) The explanation to Cl. (i) of Art.286 of the Constitution of India shall apply for the interpretation of sub-cl. (i) of Cl. (a) of sub-s. (1)." and the Sales Tax Laws Validation Act, 1956, which replaced the Sales Tax Laws Validation Ordinance, 1956: "Notwithstanding any judgment, decree or order of any Court, no law of a State imposing, or authorising the imposition of tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter-State trade or commerce during the period between the 1st day of April, 1951 and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of inter-State trade or commerce; and all such taxes levied or collected or purporting to have been levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law. Explanation.- In this section, "law of a State" in relation to a State specified in Part C of the First schedule to the Constitution, means any law made by the Legislative Assembly, if any, of that State or extended to that State by a notification issued under S.2 of the Part C States (Laws) Act, 1950, (30 of 1950)." In view of S.26 it is not possible to say that the Travancore-Cochin General Sales Tax Act, 1125, imposed or authorised the imposition of a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter-State trade or commerce subsequent at any rate to the insertion of that section with effect from the 26th day of January 1950 by Act XII of 1951 and Ordinance No. IV of 1951 which it replaced. In view of this we must hold that the Sales Tax Laws Validation Act, 1956, and the Sales Tax Laws Validation Ordinance, 1956, which it replaced is of no avail as far as this State is concerned. 10. In the light of what is stated above this petition has to be allowed and it is hereby allowed with costs, advocate's fee Rs. 150/-. 11. According to the learned counsel for the petitioner the decisions of this court in (1954) V STC 58 and 462 (1955 KLT 898) require reconsideration and the view we should adopt is the one embodied in (1954) V STC 362 (Madras), (1956) VII STC 148 (Mysore), AIR 1956 Hyderabad 124, (1956) VII STC 510 (Hyderabad). We are unable to agree. 12. In (1954) V STC 462 the judgment quoted S.11 of the Travancore-Cochin General Sales Tax Act, 1125, "(1) No person who is not a registered dealer shall collect any amount by way of tax under this Act; nor shall a registered dealer make any such collection except in accordance with such conditions, and restrictions if any, as may be prescribed: Provided that Government may exempt persons who are not registered dealers from the provisions of this sub-section, if any, as may be prescribed; Provided that Government may exempt persons who are not registered dealers from the provisions of this sub-section until such date as may be prescribed. (2) Every person who has collected or collects any amount by way of tax under this Act on or after the date prescribed under the proviso to sub-cl. (1) shall pay over to Government all amounts so collected by him if they are in excess of the tax, if any, paid by him for the period during which collections were made and in default of such payment, the amounts may be recovered as if they were arrears of land revenue." and proceeded to deal with the contention urged as follows: "All that could be urged in favour of the petitioner's contention has been urged with success before the Madras High Court in (1954) V STC 382. After studying the judgment carefully and hearing Mr. K.K. Mathew on behalf of the petitioner we regret to say, with great respect, that we cannot find our way to adopt the conclusion reached in that decision. As we read the Act any amount collected by way of tax, that is, any amount that the petitioner obtained from his customers on the ground that it was the sales tax due on the transaction, whether such a tax was actually due on the sales or not - is a collection which had to be handed over to the State under the provisions of the Act. In other words, we see no reason to depart from the view that one of us has taken in ((1954) 6 STC 58)." We see no reason to depart from the conclusion reached in that case. 13. It was also submitted to us on behalf of the petitioner that even on the assumption that (1954) V STC 58 and 462 are correctly decided the petitioner will still escape liability as the facts and circumstance, of the case are different from those involved in those two decisions. We make it clear that the petitioner, if so advised, will be free to move this court afresh, if and when proceedings are commenced by the Department on the basis of the said decisions.