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1959 DIGILAW 7 (PAT)

Burn And Co. Ltd. v. State Of Bihar

1959-01-07

R.K.CHOUDHARY, V.RAMASWAMI

body1959
Judgment 1. In this case the assessee is an incorporated Company carrying on the business of iron and steel manufacture and exporting the manufactured articles, with its head office in the town, of Calcutta and having its factory for manufacturing the above commodities at Burnpur in the State of West Bengal. For the period from 26-1--1950 to 31-3-1951 the assessee was ordered to pay a sum of Rs. 57,533 and odd as Sales tax by the Superintendent of Commercial Taxes, Central Cirde, Patna, with regard to the articles which were sold and delivered for consumption within the territorial limits of Bihar. For the period from 1-4-1951 to 31-3-1952 the assessee was ordered to pay as sales tax a sum of Rs. 36,204 and odd by me Superintendent Commercial Taxes, Central Circle, with regard to sale of goods and machinery which were delivered for consumption within the territorial limits of Bihar. It was objected on behalf of the assessee before the taxing authorities that the sales made by the assessee were made in the course of inter-State trade and commerce and so taxation was barred under the provisions of Article 286(2) of the Constitution. This argument was rejected by all the taxing authorities. At the instance of the High Court the Board of Revenue has stated a case on the following question of law: "Whether in the facts and circumstances of the case the petitioner, namely, Messrs. Burn and Company Limited, can be lawfully taxed with regard to sale of goods delivered for consumption in the State of Bihar for the assessment period in question, in view of the provisions of Article 286(2) of the Constitution." 2. With regard to the period from 1st April, 1951 to 31st March, 1952, which is the subject-matter of Miscellaneous Judicial Case No. 616 of 1956, learned counsel on behalf of the assessee conceded that the point is covered by the decision of this Court in Tobacco Manufacturers (India) Ltd. V/s. Commissioner of Sales Tax, Bihar, AIR 1957 Pat 288 . and the ban imposed by Article 286 (2) of the Constitution has been surmounted by Central Act 7 of 1956, and the taxation has been validly imposed. 3. and the ban imposed by Article 286 (2) of the Constitution has been surmounted by Central Act 7 of 1956, and the taxation has been validly imposed. 3. With regard to the period from 26-1-1950 to 31-3-1951, which is the subject-matter of Miscellaneous Judicial Case No. 615 of 1956, learned counsel for the assessee made the submission that there was no lawful imposition of sales tax because of the ban under Article 286(2) of the Constitution which operated with regard to this period. We do not accept the argument of learned counsel on this point as correct. Article 286 of the Constitution, as it stood before the Sixth Amendment of the Constitution read in the following terms; "286. Restrictions as to imposition of tax on the sale or purchase of goods. -- (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 takes 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-clause (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 by law otherwise provide, no law of a State shall impose, or authorise the importation 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. XX X x" 4. XX X x" 4. It is clear that the proviso to Article 286(2) empowers the President to direct that any tax on the sale or purchase of goods lawfully imposed by the State immediately before the commencement of the Constitution shall, notwithstanding the provisions of Article 286 (2) of the Constitution, continue to be levied until 31-3-1951. 5. In exercise of the authority conferred by the proviso to Article 286(2), the President promulgated the Sales Tax Continuance Order, 1950, which is reproduced below: "In exercise of the powers conferred by the proviso to Clause (2) of Article 286 of the Constitution of India, the President is pleased to make the following order, namely: 1. (i) This order may be called the Sales Tax Continuance Order, 1950. (ii) It shall come into force at once. 2. Any tax on the sale or purchase of goods which was being lawfully levied by the Government or any State immediately before the commencement of the Constitution of India, shall, until the thirty-first day of March, 1951, continue to be levied notwithstanding that the imposition of such tax is contrary to the provisions of Clause (2) of Article 286 of the said Constitution." In view of the Sales Tax Continuance Order promulgated by the president, it is clear that the tax imposed upon the assessee for the period from 26th January, 1950 to 31st March, 1951 is not liable to attack on the ground that there is a violation of the provisions of Article 286(2) of the Constitution. 6. "A point was raised, however, on behalf of the assessee that under the definition of sale in the Bihar Sales Tax Act, as it stood during the relevant period, the assessee was not liable to be taxed with regard to the transactions for which he has been taxed in the present case by the Sales Tax authorities. 6. "A point was raised, however, on behalf of the assessee that under the definition of sale in the Bihar Sales Tax Act, as it stood during the relevant period, the assessee was not liable to be taxed with regard to the transactions for which he has been taxed in the present case by the Sales Tax authorities. Learned counsel drew our attention to the provisions of Sec.2(g) of the statute, as it stood on the Relevant date, which reads as follows: " sale means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge or pledge: Provided that a transfer of goods on hire-purchase or other instalment system of payment shall, notwithstanding the fact that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale: Provided further that notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930 (III of 1930), the sale of any goods- (i) which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in Sec. 4 of that Act is made, or (ii) which are produced or manufactured in Bihar by the producer or manufacturer thereof, shall, wherever the delivery or contract of sale is made, be deemed for the purposes of this Act to have taken place in Bihar: x x x x" The point taken by learned counsel was that in all these transactions the title to the purchaser passed outside the limits of the State of Bihar and so the taxing authorities had no jurisdiction to levy sales tax with regard to these transactions. But the question raised by learned counsel on behalf of the assessee, in our opinion, is outside the scope of the question which has been referred to the High Court by the Board of Revenue in this case. But the question raised by learned counsel on behalf of the assessee, in our opinion, is outside the scope of the question which has been referred to the High Court by the Board of Revenue in this case. The question moreover depends upon investigation of facts as to in whose name the Railway Receipt was endorsed, whether the Railway Receipt was handed over by the Bank to the consumer against cash payment inside Bihar and where title passed to the purchaser in each of the transactions for which the tax has been imposed. These questions of fact have not been investigated before any of the Sales Tax Authorities, and, in any case, the point taken by learned counsel is outside the scope of the question referred to by the Board of Revenue. We cannot, therefore, permit the assessee to raise this point at this stage. 7 For the reasons already given, we hold that on the facts and circumstances of the case, the assessee has been lawfully taxed with regard to the sale of goods delivered for consumption in the State of Bihar for the assessment periods in question. We accordingly answer the question of law referred to the High Court in favour of the State of Bihar and against the assessee in both these cases. The assessee must pay the costs of the reference. There will be a consolidated hearing fee of Rs. 250.00 for both these cases.