- (1.) The appellant is a company dealing in various kinds of machinery. It has its place of business in Calcutta, in the State of West Bengal. Between January 26, 1950 and September 30, 1951, it sold diverse machinery to various parties in the State of Bihar. In respect of these sales the appellant was assessed to sales tax under the Bihar Sales Tax Act, 1947. These appeals arise out of such assessments, but, as will be seen later, the dispute now is much narrower than what it was in the beginning.
(2.) Before proceeding further we may briefly refer to the procedure of the sale. The price payable for the goods was F. O. R. Calcutta and it is not in dispute that the property in them passed to the purchaser as soon as the appellant put the goods on the railway at Calcutta. It has however been found and is no longer in dispute, that the actual delivery of the goods was given to the purchasers in Bihar for consumption there. The arguments in this Court have proceeded on the basis accepted by both sides, that the sale were in the course of inter-State trade and were of the kind contemplated in the explanation in Art. 286(1) of the Constitution before its amendment by the Constitution (Sixth Amendment) Act, 1956. In this judgment we shall be concerned with Art. 286 as it stood before the amendment.
(3.) The contention of the appellant before the Superintendent of Sales Tax, Patna, who was the assessing authority, was that the sales were inter-State sales and, therefore, the Bihar Act could not tax such sales in view of cl. (2) of the Art. 286 though they were within the explanation to cl. (1) of that article. It was contended that so far as the Bihar Act purported to tax such sales, it was invalid. The Superintendent of Sales Tax rejected this contention relying on the case of Bengal Immunity Company Ltd. v. State of Bihar , ILR 32 Pat 19 : (AIR 1958 Pat 87) which held that sales of the variety described in the explanation to cl. (1) (a) of Art. 286 could be taxed by the law of the legislature or the State where the goods were actually delivered for consumption in spite of the ban imposed by cl. (2) of that article on State Legislature taxing sales made in the course of inter-State trade. He, therefore, held that the Bihar Act could validly tax the appellant's sales even though they were inter-State sales. The appellant appealed from this decision to the Deputy Commissioner of Sales Tax, Bihar. By the time that authority heard the appeal the judgment of this Court in the State of Bombay v. United Motors (India) Ltd., 1953 SCR 1069 : (AIR 1953 SC 252) had been delivered. This judgment confirmed the view taken in the Patna case earlier mentioned. It said that cl. (2) of Art. 286 does not affect the power of the State in which delivery of goods is made for consumption there to tax inter-State sales or purchases and that the effect of the explanation was that the transaction mentioned in it were outside the ban imposed by Art. 286(2). In view of this judgment, the Deputy Commissioner dismissed the appeal. A further revision application by the appellant to the Board of Revenue, Bihar, also failed. Before the decision by the Board of Revenue, however, this Court had decided in the appeal from the judgment in the Patna case, earlier mentioned, that the United Motors case, 1953 SCR 1069 : (AIR 1953 SC 252) had been wrongly decided and that until Parliament by law made under Art. 286(2) provided otherwise, a State could not imposed or authorise the imposition of any tax on sales or purchases of goods when such sales or purchases took place in the course of inter-State trade or commerce notwithstanding that the goods under such sales were actually delivered in that State for consumption there : see ILR 32 Pat 19 : (AIR 1953 Pat 87). Curiously however this case escaped the attention of the learned member of the Board of Revenue Bihar, for if he had noticed it he would not have based himself on the United Motors case, 1953 SCR 1069 : (AIR 1953 SC 252) as he had done The appellant thereafter moved the Board of Revenue under S. 25 of the Bihar Act for referring two questions to the High Court for decision and a reference was accordingly made. The present appeal is against the judgment of the High Court given on the reference.;