1954 (4) TMI 44 - HC - VAT and Sales Tax

Issues Involved:
1. Whether despatches of goods after the Act came into force against orders received prior to the Act are in law sales within section 2(g) of the Act.
2. Whether goods despatched outside the State can be regarded as sales within section 2(g) of the Act read with Explanation II.
3. Whether these provisions are ultra vires the State Legislature.
4. Whether the packing expenses and dharmada charges could be held to form part of "sale price" as defined in section 2(g) of the Act, and be included in the taxable turnover.
5. Whether assessment of sales tax violates the provisions of Article 286 of the Constitution of India and whether the proviso to section 22(1) of the Act is ultra vires of the State Legislature.
6. Whether the reference under section 23(1) of the Act could be made by a single Member when the order under sub-section (5) of section 22 of the Act is passed by a Division Bench of the Board of Revenue.

Detailed Analysis:

Issue 1: Despatches of Goods After the Act Came into Force Against Orders Received Prior to the Act
The court examined the proviso to section 4, which states that the tax shall not be payable on sales made in the course of the execution of a contract entered into before the commencement of the Act. The court found that the sales in question were not made in pursuance of any contract as defined by section 2(b) of the Act. Therefore, the proviso to section 4 was deemed inapplicable. The court decided this issue in the affirmative.

Issue 2: Goods Despatched Outside the State
The court referred to the case of Shriram Gulabdas v. Board of Revenue, which held that Explanation II to section 2(g) as it originally stood was intra vires. The court found that the assessee had accepted offers of customers outside the State against stocks in Madhya Pradesh and despatched goods accordingly. As per the precedent, such sales were regarded as sales within section 2(g) of the Act read with the Explanation. This issue was decided in the affirmative.

Issue 3: Ultra Vires of State Legislature
The court found no material to take a view different from the precedent set in Shriram Gulabdas's case, which held that Explanation II to section 2(g) was intra vires. Therefore, this issue was decided in the negative.

Issue 4: Inclusion of Packing Expenses and Dharmada Charges in Sale Price
The court noted that the sale price included charges for anything done by the dealer in respect of the goods at the time of or before delivery. The court found that the packing charges, hamali, and cartage were rightly included in the sale price. However, the dharmada charge was not a charge for anything done by the dealer in respect of the goods and could not be included in the sale price. Therefore, question 4(a) was decided in the affirmative, and 4(b) in the negative.

Issue 5: Violation of Article 286 and Ultra Vires of Proviso to Section 22(1)
The court held that the provision for taxation of sales outside the State was valid according to the law then in force and was not retrospective as per Article 286 of the Constitution. Regarding the proviso to section 22(1), the court stated that the right of appeal is not an inherent right and can be limited by the Legislature. Hence, both parts of this issue were decided in the negative.

Issue 6: Reference by a Single Member
The court examined whether the proceedings under section 23(1) directly affected the revenue of the State and whether they should be heard by a Bench of two Members. The court found no material to show that the Advocate-General or Government Advocate appeared in the proceedings under section 23(1). Therefore, this issue was decided in the negative.

Conclusion:
The court decided questions (1), (2), and 4(a) in the affirmative and questions (3), 4(b), 5(a), 5(b), and (6) in the negative. The assessee was ordered to pay the costs of the reference, with a consolidated counsel's fee of Rs. 150 for Miscellaneous Civil Cases Nos. 153 and 105 of 1953. The reference was answered accordingly.

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