BACHAWAT, J. - (1.) THIS appeal raises a question of the constitutional validity and the legality of sales tax levied in respect of a sale of 1,800 wagons by the appellant to the Railway Board. By a letter dated 2nd July, 1951, the Director, Railway Board, New Delhi, placed with Martin Burn Limited, Calcutta, an order for 3,500 Broad Gauge, 4 wheeled, covered Wagons "CR" type against Railway Board's programme for 1952-53. The special terms of the order provided for delivery F.O.R. seller's works siding and for payment by F.A. & C.A.O., E.I. Railway. Messrs Martin Burn Limited are the managing agents of the appellant, Indian Standard Wagon Co., Ltd., as also of Burn & Co., Ltd. The order was accepted by Messrs Martin Burn Limited by their letter dated 28th July, 1951. The letter of acceptance was posted from Calcutta to New Delhi. The letter stated that against the order, 1,800 wagons were allocated to the appellant and the balance 1,700 wagons were allocated to Burn & Co. Ltd. The wagons were required by the Railway Board for different railways. Subsequent to the making of the contract and in the course of manufacture of the wagons the Railway Board information the sellers of the distribution by the Railway Board of the wagons to different railways. Similar communications seem to have been made by the Railway Board with regard to orders for wagons for the 1953-54 and 1954-55 programmes also. On the records there is a letter dated the 13/14th April, 1952, from the Joint Director, Mechanical Engineering, Railway Board, to Martin Burn Limited. This letter encloses several statements. One of such statements shows the distribution to the different railways of the rolling stock ordered against the 1952-53 programme on Messrs Martin Burn Ltd. The statement shows that 2,300 wagons were meant for the Western Railway. A footnote to the statement shows that 500 of these wagons were to be manufactured by Burn & Co. Ltd. and the balance 1,800 wagons were to be manufactured by the appellant. By a letter dated 25th July, 1952, the General Manager of the Western Railway informed Burn & Co. of the marking to be made on the 2,300 wagons meant for the Western Railway. The 1,800 wagons allocated to the appellant were in due course manufactured. During the accounting year ending 31st March, 1953, the appellant delivered 803 wagons to the buyers. The appellant in due course submitted a sales tax return for the year ending 31st March, 1953, in which exemption for the sale of the 803 wagons was claimed on the ground that they were sales to railways for consumption outside West Bengal. This claim for deduction of the sale of 803 wagons was disallowed by the Commercial Tax Officer and he made the assessment on the footing that the sale of these 803 wagons should be included in the total taxable turnover. An appeal from the order of assessment was dismissed. During the year ending 31st March, 1954, the appellant delivered the balance 997 wagons to the buyers. In due course, the appellant submitted sales tax return for the year ending 31st March, 1954, in which also exemption for the sale of 997 wagons was claimed. This claim was again disallowed and the assessment to sales tax was made on the footing that the sale of 997 wagons should be included in the taxable turnover. The legality of the levy of the sales tax was challenged by the appellant by a writ petition which was presented on 8th September, 1955. The principal challenge in that petition was with regard to the levy of sales tax on the sale of 1,800 wagons. There was also a challenge to one other minor item to which I shall advert later on. Sinha, J., issued a rule on 8th September. Subsequently the rule came up for hearing.
(2.) SINHA , J., repelled all the contentions urged before him against the constitutional validity and the legality of the sales tax and by his order dated 28th May, 1958, discharged the rule. The appellant has preferred the appeal from this order. Before Sinha, J., the imposition of the tax was challenged on the ground that it was violative of Article 286 of the Constitution. In this appeal Mr. Das sought to urge a new point, namely, that the tax was also in violation of Article 19(1)(g) of the Constitution. In my opinion, Mr. Das ought not to be allowed to raise this new point in this appeal. A plea of contravention of Article 19(1)(g) of the Constitution should be distinctly averred and taken in the petition. In the present writ petition the levy of the tax was not challenged on this ground. Sinha, J., in his judgment noted that no point had been taken in this matter about any violation of the petitioner's fundamental rights under Article 19(1)(g). This new point was not argued before Sinha, J., nor is it taken in the memorandum of appeal. In these circumstances, we have thought it fit not to allow Mr. Das to urge this new point before us.
(3.) WITH regard to the attack on the tax as being violative of Article 286, it is necessary to remember the facts of this case. The contract under which the sale was made was effected by correspondence. The offer was made by letter posted from New Delhi and the acceptance was made by letter sent by post from Calcutta to New Delhi. The Railway Board administers various railways including the Western Railway. The railways are all inter-State in character. The Western Railway has railways in several States other than the State of West Bengal and has its headquarters in Ajmer. The Railway Board has its headquarters in New Delhi and has local agents within the State of West Bengal. The seller, the Indian Standard Wagon Co. Ltd., carries on business within the State of West Bengal. It has its factory at Burnpore within the State. The wagons were manufactured at Burnpore. The contract provided for delivery F.O.R. works siding of the seller, at Burnpore. In accordance with the contract the wagons were delivered free on rail at Burnpore within the State of West Bengal. The deliveries were taken by the Railway Board through the Western Railway. It is admitted in the petition that the wagons were delivered to the Western Railway at the petitioner's works siding at Burnpore. The wagons were actually handed over to the Divisional Superintendent, Eastern Railway, Asansol, on behalf of the buyers. The property in the goods passed and the sale was completed at Burnpore as soon as the delivery was effected. Under the terms of the contract the payment was made within the State of West Bengal. All the wagons were marked with the letter "WR" and were required by the Railway Board for the Western Railway. Article 286 of the Constitution as it stood at the relevant time is as follows :- "(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 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." ;