1954 (5) TMI 17 - SUPREME COURT

Whether the power to impose a tax on the sale of goods under Entry 48 includes a power to impose a tax on forward contracts?

Held that:- The power conferred under Entry 48 to impose a tax on the sale of goods can therefore be exercised only when there is a sale under which there is a transfer of property in the goods, and not when there is a mere agreement to sell. The State Legislature cannot, by enlarging the definition of "sale" as including forward contracts, arrogate to itself a power which is not conferred upon it by the Constitution Act, and the definition of "sale" in Section 2(h) of Act XV of 1948 must, to that extent, be declared ultra vires. For the same reason, Explanation III to Section 2(h) which provides that forward contracts "shall be deemed to have been completed on the date originally agreed upon delivery", and Section 3B which enacts that, "Notwithstanding anything contained in Section 3, the turnover of any dealer in respect of transactions of forward contracts, in which goods are not actually delivered, shall be taxed at a rate not exceeding rupees two per unit as may be prescribed", must also be held to be ultra vires. Appeal dismissed.