Ramaswami, C.J. - (1.) In Miscellaneous Judicial Case No. 330 of 1955 the petitioner is an incorporated Company, manufacturing cigarettes and tobacco and having one of its factories at Monghyr. For the - financial year 1950-51 the petitioner was assessed to sales tax by the Superintendent of Sales Tax pf Monghyr by his order dated the 7th of May, 1952. By this assessment order the petitioner was assessed to sales tax to the extent of Rs. 7,46,876/1/3. The petitioner claimed that the following sales were not liable to tax: (1) sale of goods outside Bihar and consumed in the State of first destination to the extent of Rs. 3,79,01,221/11/11, and (2) sale of goods despatched outside Bihar and consumed in States other than the State of first destination to the extent of Rs. 84, 78,260/-. The petitioner claimed exemption under Article 286(2) of the Constitution. The claim was, however, rejected by the Superintendent of Sales Tax on the ground that the inter-state sales were taxable up to the 31st of March, 1951, by virtue of the President's Sales Tax Continuance Order, 1950. As a result, therefore, the petitioner was assessed to sales tax to the extent of Rs. 7,46,876/1/3. This amount included the tax of Rs. 7,10,185/12/-on the sale price of goods despatched outside Bihar and delivered for consumption in other States. The amount of sales tax was duly paid on behalf of the petitioner. An appeal was, however, taken on behalf of the petitioner to the Deputy Commissioner of Sales Tax against the order of assessment, but the appeal was dismissed. The petitioner filed an application in revision before the Board of Revenue, and on the 28th of August, 1953, the Board of Revenue allowed the revision application and held that the petitioner was entitled to exemption in respect of the sale price of goods despatched to places outside the State of Bihar. The relevant portion of the order of the Board of Revenue is to the following effect:-- "As regards the admitted despatches of goods outside the State after the 26th January, 1960 when the Constitution came into force, the learned lower Court has been, guided by the decision of the Board in the Bengal Timber case (Case No. 61 of 1952). But this ruling of the Board stands superseded by the subsequent decision of the Supreme Court in State of Bombay v. United Motors Co. Ltd., 1953 SCR 1069: (AIR 1953 SC 252) (A), According to the decision of the Supreme Court, no tax can be levied on despatches to places outside the State after the 26th January, 1950, and on this point the petitions are allowed, and the Sales Tax officer directed to recalculate the amount of tax payable by the assessee." On the 9th of October, 1953, the petitioner applied to the Superintendent of Sales Tax under section 15 of the statute for the refund of the amount of Rs. 7,10,185/12/-. Out of this amount a sum of Rs. 5,80,362/7/- was refunded to the petitioner by the respondents on the 21st of September. 1954. This amount was refunded by the respondents because they took the view that the petitioner was entitled to a refund of the amount of tax with regard to sales of goods consumed in the State of first destination; but the respondents did not refund the balance of Rs. 1,29,825/5/- because this amount of tax was with regard to goods consumed not in the State of first destination but in other States. On the 8th of December, 1953, the respondents filed an application for re view before the Board of Revenue, but the application was rejected by the Board of Revenue on the 25th of April, 1955, holding that in view of the judgment of the Supreme Court in 1953 SCR 1069: (AIR 1953 SC 252 (A) no further clarification was really required. The petitioner alleged that the amount of tax to the extent of Rs. l,29,823/5/- has been illegally realised and that there is a statutory obligation on the part of the respondents to refund this amount of tax to the petitioner. The petitioner has, therefore, prayed that a writ in the nature of mandamus should be issued commanding the respondents to refund to the petitioner the amount of Rs. 1,29,823/57-, being the amount of tax illegally realised.
(2.) In Miscellaneous Judicial Case No. 331 of 1955 the material facts are of similar character. The claim of the petitioner in this case is for a refund of a sum of Rs. 20,923/13/2 which was illegally realised as sales tax. The grounds on which this claim is based are exactly identical to those in Miscellaneous Judicial Case No. 330 of 1955.
(3.) The argument of the petitioner is that Article 286(2) of the Constitution prohibited taxation of sales or purchases of goods in the course of inter-State trade or commerce. It was submitted that the effect of the decision of the Supreme Court in 1953 SCR 1069: (AIR 1953 SC 252} (A) was that Article 286(1) (a) of the Constitution, read with the explanation thereto, prohibited taxation of sales or purchases involving inter-State elements by all States except the State in which the goods are delivered for the purpose of consumption therein. It was submitted that in a later decision in the Bengal Immunity Co. Ltd. v. State of Bihar 1955-6 S.T.C. 446 : '(AIR 19S5 SC 661) (B) the Supreme Court express ed the view that the prohibition on taxation of inter-State sales imposed by Article 286(2) had a greater and more powerful overriding effect. It was affirmed by the majority of the learn ed Judges of this case that the explanation to Article 286(1) (a) of the Constitution was meant to explain what an outside sale referred to in Sub-clause (1) (a) was and that it did not confer or enlarge the legislative powers of the States. It was further held that the explanation could not be legitimately extended to Clause (2) of Article 286, either as an exception or as a proviso there to. The decision of the majority of the learned Judges was that no State law can impose or authorise the imposition of any tax on sales or purchases When such sales, or purchases take place in the course of inter-State trade or commerce and irrespective of whether such sales of purchases do or do not fall within the explanation to Article 285 (1) (a) It was, however, submitted by the learned Government Advocate on behalf of the respondents that the effect of the Supreme Court's judgment in 1955-6 S.T.C. 446: (AIR 1955 SC 661) (B) has been overriden by the President's Sales Tax Continuance Order of 1950, which is in the following terms: "The Sales Tax Continuance Order, 1950. In exercise of the powers conferred by the proviso to Clause (2) of Article 286 of the Constitution of India, the President is pleased to make the following order namely,:-- 1. (i) This order may be called the Sales Tax Continuance Order, 1950. (ii) It shall some into force at once. 2. 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 the Constitution of India, shall, until the thirty first day of March, 1951, continue to be levied notwithstanding that the imposition of such tax is contrary to the provisions of Clause (2) of Article 286 of the said Constitution." The order of the President of course authorises the imposition of sales tax contrary to the provisions of Article 286(2) with regard to the period from the 26th January, 1950, to the 31st of March, 1951. The decision of the Supreme Court in the Bengal Immunity case (B) was pronounced on the 6th of September, 1955, and for the period from the 1st of April, 1951, to the 6th of September, ' 1955, the imposition of sales tax on the sales or purchases of goods in the course of inter-state trade has been validated by the Sales Tax Laws Validation Act, 1956 (Central Act No. 7 of 1956) This Act was promulgated on the 21st of March, 1956, Section 2 of this Act is to the following effect:-- "2. Validation of State laws imposing, or authorising the imposition of taxes on sales or purchases of goods in the course of inter-State trade or commerce. 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". On behalf of the petitioner reliance was, however, placed on the decision of the Supreme Court in Ram Narain Sons Ltd v Assistant Commissioner of Sales Tax (1955) 6 STC 627: ((S) AIR 1955 SC 765) (C) and it was submitted that neither the President's order nor the Central Act No. 7 of 1956 could lift the ban with regard to transactions covered by the explanation to Article 286(1) (a) of the Constitution. In my opinion, the argument addressed on behalf of the petitioner is fallacious, and the decision of the Supreme Court in (1955) 6 STC 627: ((S) AIR 1955 SC 765) (C) is of no assistance to the petitioner. The view taken by the Supreme Court in 1955-6 S. T. C. 627: ( (S) AIR 1955 SC 765) (C) was that the ban imposed by the several clauses of Article 286 on the taxing powers of the States" are independent and separate, and each one of these bans has to be separately surmounted before the State Legislature can Impose a tax on the transactions of sale or purchase of goods. It was further held by the Supreme Court that the Sales Tax Continuance Order of the President had the effect of lifting the ban under Article 286(2) and cannot be projected into the sphere of any other ban imposed by other clauses of Article 286. Once it is determined that the situs of the sale is outside the State by virtue of the explanation to Article 286(1) (a), the ban imposed by that Article attaches to that transaction and that ban cannot be lifted by the President's order. That is the ratio of the decision of the Supreme Court in 1955-6 S. T. C. 627; ( (S) AIR 1955 SC 765) (C). But the ratio of that decision has no application to the present case. We are concerned in the present case with two categories of sales. (1) Sales of goods despatched outside the State of Bihar and consumed in the State of first destination, and (2) sales of goods despatched outside the State of Bihar and consumed in States other than the State of first destination. With regard to the first category of sales, two bans or restrictions are attracted. The first ban is imposed by the explanation to Article 286(1) (a), because it fixes the situs of such sales outside the State of Bihar by means of a legal fiction; and because such sales are deemed to be outside sales, the State of Bihar has no legislative authority to tax such sales. The second ban is imposed by Article 286(2) against taxation of goods in inter-State commerce or trade. The second category of sales attracts only one ban, namely, the ban imposed by Article 286(2), and not the ban imposed by the explanation to Article 286(1) (a). It follows, therefore, that the second category of sales has only one hurdle to surmount, namely, the hurdle imposed by Article 286(2), and that hurdle has-been surmounted for the period in question by the President's order and, by Central Act No. 7 of 1956. As regards the first category of sales, 1955-6 S.T.C. 627: ( (S) AIR 1955 SC 765) (C) clearly demonstrates that there are two hurdles to surmount, and the President's order of 1950, or the Central Act No. 7 of 1956, are ineffectual and inoperative, because the ban imposed, by the explanation to Article 286(1)(a) has not been surmounted: In the present case, however, the petitioner has already been given relief by the Sales Tax Department with regard to the first category of sales. The application of the petitioner in both the Miscellaneous Judicial Cases, Nos. 330 and 331 of 1955, seeks relief with regard to the second category of sales. The principle of 1955-6 S. T. C. 627: ((S) AIR 1955 SC 765) (C) has, therefore, no application because that was a case dealing with the first category of sales. To put it in other words, there is only one ban to be surmounted in the present case, namely the ban imposed by Article 286(2) of the Constitution, and that ban has been surmounted by the President's order and the Central Act No. 7 of "1956. It follows, therefore, that the imposition of sales tax by the authorities on the second category of transactions is legally valid and the petitioner is not entitled to a refund of the amount of sales tax paid either in Miscellaneous Judicial Case No. 330 of 1955 or in Miscellaneous Judicial Case No. 331 of 1955.;