- (1.) The only question canvassed before us in the above appeals, which have been heard together, is whether certain sales of goods made by Shri Ganesh Jute Mills, Ltd. (hereinafter referred to as the Mills) to the Government of India, Ministry of Industry and Supplies are to be deducted from the taxable turnover of the Mills so as to be exempt from sales tax demanded by the Commercial Tax Officer of the State of West Bengal. The relevant facts are stated below.
(2.) On the first of September 1948 the Government of India, Ministry of Industry and Supplies, in Calcutta, placed with the Mills, a confirmatory order in writing bearing No. Cal/J - 1/2001/103 for the supply to the Government of India, of a large quantity of hessian cloth of different descriptions at different prices therein mentioned. It was stipulated that the contract would be governed by the conditions of contract specified in Form WSB 133 as amended up-to date. It was specifically mentioned that the goods ordered were required to meet an international obligation of the Government of India and as such the execution of the contract in accordance with the programme of deliveries as given in the schedule attached thereto was essential. The agreed prices were stated to be exclusive of the Bengal Sales Tax and it was stipulated that the Government of India would arrange direct payment of sales tax to the Government of West Bengal if it was ultimately found that Sales tax was payable in respect of the contract. Pursuant to the aforesaid contract, the Mills supplied goods to the Government of India of the aggregate value of Rs. 2,10,040 calculated at the prices agreed upon.
(3.) The Commercial Tax Officer, Beadon Street, District II Charge, claimed that the aforesaid sales should be included in the taxable turnover of the Mills and assessed to sales tax. The Mills, on the other hand, claimed exemption under section 5 of the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941). The relevant portion of section 5 ran as follows : - "5. (1) The tax payable by a dealer under this Act shall be levied at the rate of one quarter of an anna in the rupee on his taxable turnover. 2. In this Act the expression "taxable turnover" means that part of a dealer's gross turnover during any period which remains, after deducting therefrom - (a) his turnover during that period on - (i) ..................... (ii) .................... (iii) sales to the Indian Stores Department, the Supply Department of the Government of India, and, any railway or water transport administration. (iv) ................. (v) ................. (vi) ................ (b) ..........................." The Mills further contended that if any sales tax was at all payable, the same was payable by the Government of India and not by them. The Commercial Tax Officer overruled both these objections and on 8-11-1950, he assessed the Mills to sales tax in respect of the supplies made by the Mills to the Government of India under the aforesaid contract and demanded a sum of Rs. 9,401-10-6.;