DEPUTY CAIT Vs. COCHIN COAL CO LTD
HIGH COURT OF KERALA
COCHIN COAL CO. LTD.
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(1.)The respondent was assessed to sales tax under the General Sales Tax Act, 1125, on inter State sales effected between 1-4-1951 and 6-9-1955. The contention of the Department is that by virtue of the General Sales Tax (Amendment and Validation) Act, 1962 Act 9 of 1962 the inter State sales within that period can be taxed, and that the conclusion to the contrary reached by the Sales Tax Appellate Tribunal cannot be sustained. The petition words the question of law raised for our decision as follows:-
"Whether in the light of the amending Act 9 of 1962 the finding of the Tribunal is correct -
(2.)S.2 of the Sales Tax Laws Validation Act, 1956 Central Act 7 of 1956 said:
"Notwithstanding any judgment, decree or order of any court, no law of a State imposing, or authorising 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 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."
There can be no doubt that Central Act 7 of 1956 was intended to validate State Laws imposing or authorising the imposition of taxes on the sale or purchase of goods in the course of inter State trade or commerce. And there is the decision of the Supreme Court in The State of Kerala and others v. The Cochin Coal Company Ltd. 1951 (12) STC 1 to support the conclusion that S.26 of the General Sales Tax Act, 1125, imposes a tax on the sale or purchase of goods in the course of inter State trade or commerce, and that the taxation of such sales during the period between 1-4-1951 and 6-9-1955 is validated by the Central Act.
(3.)S.26 of the General Sales Tax Act, 1125 as it stood prior to the amendment effected by the General Sales Tax (Amendment) Act, 1957 Act 12 of 1957 read 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 clause (1) of Art.286 of the Constitution of India shall apply for the interpretation of sub clause (11 of clause (a) of sub-s.(1)."
The corresponding words of S.22 of the Madras General Sales Tax Act, 1939, came up for consideration in M. P. V. Sundararamier & Co. and others v. The S/ate of Andhra Pradesh and another 1958 (9) STC 298 . The Supreme Court said:
"When we find in such a statute a provision containing a prohibition followed by an Explanation which is positive in its terms, the true interpretation to be put on it is that while the prohibition is intended to prevent taxation of outside sales on the basis of the nexus doctrine, the Explanation is intended to authorise taxation of sales falling within its purview, subject of course to the other provisions of the Constitution, such as Art.286(2)."
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