DULAT, J. - (1.) ACTING under section 21 of the Bengal Finance (Sales Tax) Act, 1941, as extended to Delhi, the Chief Commissioner has referred three questions of law for our decision. The facts, out of which the questions arise, are these. The assessee-company, Messrs Martin Burn Limited, have their head office in Calcutta and branch offices in three other places including Delhi. The Delhi branch is registered as a dealer under the Bengal Finance (Sales Tax) Act, as extended to Delhi, and in respect of the assessment period, 1st November, 1951, to 31st March, 1952, and also for the financial years 1952-53 and 1953-54 returns of sales made by the Delhi office were filed with the assessing authority. It appears, however, that during that period certain sales had been made direct by the head office in Calcutta and also by some of the branches outside Delhi to certain parties in Delhi and, in consequence, the goods were actually sent to Delhi for consumption in Delhi. The assessing authority required that returns concerning all those sales should also be submitted and when those were submitted, the sales were added to the turnover of the Delhi branch and assessment made. The assessee objected to that course claiming that the sales made by the head office at Calcutta or by the branches outside Delhi were not liable to be assessed at Delhi, but this plea was overruled. The assessee then appealed but those appeals failed and so did the revision petitions taken first to the Sales Tax Commissioner and later to the Chief Commissioner.
(2.) IT was urged before the Chief Commissioner that the sales in dispute were inter-State sales and consequently not within the scope of the charging section of the Bengal Finance (Sales Tax) Act, as extended to Delhi. The learned Chief Commissioner, however, depending on the Sales Tax Laws Validation Act, 1956, held that those inter-State sales were also liable to be taxed in Delhi because, in his opinion, there was during the relevant time and within the meaning of the Validation Act a law in force in Delhi authorising the imposition of sales tax on such sales. This conclusion of the Chief Commissioner being unacceptable to the assessee, an application was made that the questions of law arising out of the dispute should be referred for decision to the High Court. Hence this reference. The questions of law are : "(1) Whether there was between the period, 1st April, 1951, to 6th September, 1955, a valid law in the State of Delhi authorising the imposition of sales tax on the sale or purchase of any goods being the subject of inter-State trade, and whether Explanation 2 to section 2(g) of the Bengal Finance (Sales Tax) Act amounts to such a provision ? (2) Whether section 27(1)(b) nullifies Explanation 2 to section 2(g), and the total effect of the two provisions is that no sales tax can be levied on sales taking place in the course of inter-State trade under the law as in force in Delhi ? (3) Whether the Sales Tax Laws Validation Act, 1956, is of assistance in protecting any provision authorising the imposition of a tax on sales or purchases taking place in the course of inter-State trade or commerce ?" It is agreed before us that the Sales Tax Laws Validation Act, 1956, is a valid piece of legislation, and the only question is whether it does validate the imposition of sales tax on the sales in dispute. Section 2 of the Sales Tax Laws Validation Act, 1956, which is really the only provision in it, says this - "2. 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. Explanation. - In this section, 'law of a State' in relation to a State specified in Part C of the First Schedule to the Constitution, means any law made by the Legislative Assembly, if any, of that State or extended to that State by a notification issued under section 2 of the Part C States (Laws) Act, 1950."
(3.) THE first question referred to us has arisen because the assessee's contention is that, in fact, there was in Delhi no law in existence imposing a tax on a sale in the course of inter-State trade or commerce, and, consequently, the Validation Act of 1956 has no application. The Bengal Finance (Sales Tax) Act, 1941, was extended to Delhi by a notification of Central Government and that notification was issued under section 2 of the Part C States (Laws) Act, 1950. The Bengal Finance (Sales Tax) Act defines "sale" in section 2 as "any transfer of property in goods supplied in the execution of a contract", and to this definition is added an Explanation which says :- "Explanation 2. - A sale shall be deemed to have taken place in the State of Delhi if the goods are actually delivered in the State of Delhi as a direct result of such sale for the purpose of consumption of the State of Delhi, notwithstanding the fact that under the general law relating to the sale of goods the property in the goods has by reason of such sale passed in another State." ;