1. This is a reference under Section 25(1), Bihar Sales Tax Act (Act 19 of 1947). The assessee is a limited company, Messrs Indian Cable Co. Ltd. It was assessed to sales tax by the Superintendent of Sales Tax, Jamshedpur, under Section 13(2)(b) of the said Act for the year 1950-51.
The gross turnover of the assessee was determined at Rs. 2,05,85,205/10/6 which consisted of four categories of sales price, namely, (1) Rs. 35,55,358-4-0 representing goods sold and delivered to consumers outside Bihar for their direct consumption, (2) Rs. 57,11,316-11-6 representing goods sold and delivered to dealers outside Bihar for sales to consumers in those places, (3) Rs. 1,01,54,907-15-0 representing sales of 'goods made by the company's agents or secretaries at Calcutta, Madras, Delhi, Coimbatore, Karachi, Lahore and other places and (4) the rest representing goods sold to dealers in Bihar.
The taxable turnover was determined at Rs, 2,01,19,980/- out of which the amount of Rs. 1,91,59,760/- was assessed at three pies per rupee and the rest, namely, the amount of Rs. 9,60,220/15/-was assessed at six pics per rupee. The total assessment came to be Rs. 3,29,378-2-0. The applicant claimed a deduction on account of goods outside Bihar covered by the first three categories of sales price referred to above. The Superintendent of Sales Tax, however, refused to make a deduction of the above amount.
The assessee then filed an appeal before the Commissioner of Commercial Taxes which was heard by the Deputy Commissioner of Sales Tax. He accepted the contention of the assessee with regard to the first category of sale and, therefore, allowed a deduction of the amount covered by that item. With respect to the second category of sale, he held against the assessee.
With respect to the third category of sale, he held that if the amount actually represented sale price of goody lying from before in stock with the appellant's agents at Calcutta etc. the amount could not obviously be considered after the 26th of January, 1950 to be its turnover within the meaning of the Bihar Sales Tax Act for the purpose of the present assessment. On this finding he remanded the case to the Superintendent of Sales Tax for verification and exclusion of the amount from assessee's gross turnover if it is found to be correct. The assessee thereafter filed a revision application before the Board of Revenue but the application was not admitted.
The assessee filed an application before the Board of Revenue for making a reference to this Court on certain questions of law. It may be noted that the assessee also filed a review petition against the order of the Board of Revenue refusing to admit the revision application. At the time of hearing., however, the review application was withdrawn and the assessee pressed his application for reference on questions of law to this Court. This application was allowed and the following questions have been referred for the decision of this Court. They are:
(1) Whether the definition of sales as given in Section 2(g) as amended by the Bihar Sales Tax Act of 1948 is ultra, vires the Bihar Provincial Legislature under the Government of India Act of 1935; and,
(2) Whether under the facts and circumstances of the case the petitioner could be legally taxed for sales of goods delivered outside the State of Bihar after the 26th January, 1950.
2. It has been submitted by the Counsel of both the parties that the first question has not been accurately formulated and accordingly this question is recast as under:
"Whether the definition of sale as given in section 2(g) as amended by the Bihar Sales Tax Act of 1948 is ultra vires the Bihar Provincial Legislature to the extent it contravenes Article 28(3 of the Constitution of India."
3. Mr. Mitter appearing in support of the reference has contended that according to Article 286 of the Constitution of India the State of Bihar could not impose a tax with regard to the sales held outside Bihar. He has contended that the period of assessment in the present case is subsequent to the Constitution and, therefore, under the said Article the assessment with regard to sales outside Bihar was illegal.
4. Clause (1) of Article 286 states that "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."
An explanation is attached to this clause which runs as follows:
"For the purpose 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."
Clause (2) of that Article provides that
"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."
A proviso is added to this sub-clause which is to the following effect:
"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."
In pursuance of the above proviso, the President made an order called the Sales Tax Continuance Order of 1950 which provided 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 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.
5. The definition of sale as given in Section 2(g), Bihar Sales Tax Act, 1947, as amended by the Bihar Sales Tax Amendment Act, 1948 (Bihar Act 6 of 1949) is as follows:
"Sale" means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include' a mortgage, hypothecation, charge or pledge:
Provided that a transfer of goods on hire-purchase or other instalment system of payment shall, notwithstanding the fact that the seller retains a title to any goods as security for payment of the price, be deemed to be a sale:
Provided further that notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930 (3 of 1930), the sale of any goods-
(i) which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in section 4 of that Act is made, or
(ii) which are produced or manufactured in Bihar by the producer or manufacturer thereof, shall wherever the delivery or contract of sale is made, be deemed for the purposes of this Act to have taken place in Bihar:
Provided further that the sale of goods in respect of a forward contract, whether goods under such contract are actually delivered or not, shall be deemed to have taken place on the date originally agreed upon for delivery."
Relying on this definition, the Superintendent of Sales Tax held the assessee to be liable for assessment inasmuch as the goods sold were produced or manufactured in Bihar by the assessee. The contention of the assessee about the bar of imposition of tax under Article 286 of the Constitution was overruled by him on the ground that all sales of the company under the alleged claim were covered up by interstate trade within the meaning of Article 286(2) of the Constitution and was liable to be taxed, under the Bihar Sales Tax Act by virtue of the President's Sales Tax Continuance Order of 1950.
The question, therefore, to be considered is whether the definition of sale as given above is ultra vires to the extent it contravenes Article 286 of the Constitution of India and whether the assessee could be taxed for sales of goods delivered outside the State of Bihar after the present Constitution.
6. Mr. Mitter on behalf of the assessee has contended that the points arising for determination for answer of the above two questions are fully covered by four decisions of the Supreme Court, namely, --'The State of Bombay v. United Motors (India) Ltd.', 1953 SC 252 (AIR V 40) (A); -- 'Himmatlal Harilal v. State of Madhya Pradesh', 1954 SC 403 (AIR V 41) (B); -- 'Bengal Immunity Co. Ltd. v. State of Bihar', 1955 SC 661 ((S) AIR V 42) (C); and -- 'Ram Narain Sons Ltd. v. Asst. Commissioner of Sales Tax', 1955 SC 765 ((S) AIR V 42) (D) and they must be answered in favour of the assessee.
The learned Government Pleader appearing for the State of Bihar has frankly conceded that in view of those decisions the two questions referred to above have to be answered in favour of the assessee and against the State. In this view of the matter, it is not necessary to examine any more the validity of the argument advanced on behalf of the assessee.
On these decisions it is manifest that the definition of sale as given above is ultra vires the Provincial Legislature to the extent it contravenes Article 286 of the Constitution and the assessee could not legally be taxed in the present case for sales of goods delivered outside the State of Bihar after 26-1-1950. Both the questions referred to this Court for answer have to be and are, therefore, answered in favour of the assessee and against the State. In the circumstances of the case, however, there will be no order as to costs.
7. I agree.