RAM NARAIN SONS LIMITED Vs. ASST COMMISSIONER OF SALES TAX

JUDGEMENT

(1.) THESE 3 appeals with certificate under article 132(1) of the Constitution involve the interpretation of the proviso to article 286(2) and raise a common question as to whether that proviso also saves the transactions of sale or purchase covered by the Explanation to article 286(1) (a) from the ban imposed therein.

(2.) THE Appellants in Civil Appeal No. 132 of 1955 are Messrs Ramnarain Sons Ltd., a firm registered as a As. `dealer` under the central Provinces and Berar Sales Tax Act, 1947, and carrying on business at Amravati and at other places in Madhya Pradesh. After the Cotton Control Order, 1949, came into force on the 12/09/1949, the Appellants entered into agreements with several mills situated outside Madhya Pradesh by which they undertook to purchase kapas in the various markets in Madhya Pradesh as their agents on their account and on their behalf THE kapas after purchase was to be ginned and pressed into bales and sent to the mills. All the expenses involved in the process were to be borne by the mills which were also to be credited with the sale proceeds of the cotton seeds and the Appellants were only entitled to commission on a percentage basis. THE Appellants worked as such agents for the period 1/10/1949 to 30/09/1950. By his order dated the 30/06/1953 the Assistant Commissioner of Sales Tax, Amravati, Respondent No. 1, included the transactions valued at Rs. 72,86,454-5-10 with the said mills in the Appellants' turnover and ordered the Appellants to pay Rs. 1,13,850-13-6 as sales tax on the said transactions. THE Appellants filed an appeal to the Commissioner of Sales Tax, Madhya Pradesh, Respondent No. 2, on the 30/07/1953. THE appeal was, however, entertained by the Deputy Commissioner of Sales Tax, Madhya Pradesh, Respondent No. 3, who ordered the Appellants to pay Rs. 25,000.00 by the 31/08/1953. THE Appellants thereupon filed a petition under Article 226, being Misc. Petition No. 265 of 1953, in the High court of Judicature at Nagpur, asking inter alia for the quashing of the order of 30/06/1953, passed by Respondent No. 1 and for consequential reliefs. THE Respondents filed a return denying the contentions of the Appellants and praying for the dismissal of the petition with costs.

(3.) THE learned Attorney-General appearing for the Appellants before us contended that so far as the post-Constitution period is concerned, the position is governed by our judgment in THE Bengal Immunity Co. Ltd. v. THE State of Bihar delivered on the 6/09/1955. He urged that the bans imposed on the powers of the State Legislatures to levy taxes on the sale or purchase of goods in the several clauses of article 286 are independent and separate and that the transactions of sale or purchase referred to in the various clauses must be looked at from different viewpoints. Even if a transaction might fall within the category of inter-State sale or purchase and the President's order under the proviso to article 286(2) might enable the State to levy any tax on such sale or purchase which was being lawfully levied by the State immediately before the commencement of the Constitution, such transaction had also to surmount the ban imposed under article 286(1) (a) and the Explanation thereto so that, if, as a direct result of such sale, the goods were actually delivered for the purpose of consumption in another State, the exporting State ,(to use the phraseology of the Nagpur High court) or the title-State (to use the phraseology adopted in some of the judgments in THE Bengal Immunity Co.'s Appeal) would not be entitled to levy a tax on such sale the transaction being fictionally outside the State by reason of the Explanation and therefore coming within the ban of article 286(1)(a).