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TMI Blog1955 (9) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate-General of Madhya Pradesh (M. Adhikari and I.N. Shroff, Advocates, with him), for the State of Madhya Pradesh. M.C. Setalvad, Attorney-General of India, G.K. Daphtary, Solicitor-General of India, G.S. Pathak, Senior Advocate (J.B. Dadachanji, A.P. Sen, Rameshwar Nath and Rajinder Narain, Advocates, with them), for the petitioners. -------------------------------------------------- The Judgment of the Court was delivered by BHAGWATI, J.- The petitioners are a firm carrying on business on a very large scale of making and selling bidis having their head office in Jabalpur in the State of Madhya Pradesh. They are registered as "dealers" for the purpose of the Central Provinces and Berar Sales Tax Act, 1947. In the course of their said business, the petitioners import tobacco from the State of Bombay in very large quantities after it is blended in that State by the vendors with. various other types of indigenous tobacco by an elaborate process. This finished tobacco, after its import within the State of Madhya Pradesh is rolled into bidis which are exported to various other States, largely to the State of Uttar Pradesh. The dealers in the State of Uttar Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to authorise the imposition of such a tax and that the action of the State authorities contravened the provisions of Article 286(2) of the Constitution. The respondents filed a return denying the contentions of the petitioners and submitted that the petitioners by purchasing tobacco which was entered in their registration certificate as raw material for the manufacture of bidis for sale by actual delivery in Madhya Pradesh for consumption in that State made themselves liable to pay the tax by exporting bidis to other States and thus utilising it for a different purpose under section 4(6) of the Act. They admitted that the petitioners imported tobacco from the State of Bombay in large quantities but stated that the tobacco, after its arrival in the petitioners' bidi factories, was cleaned, sieved and blended. A few more facts relevant for the decision of this petition may be stated in this context. Not only the petitioners but also the dealers in Bombay who sell or supply tobacco to the petitioners are registered as "dealers" for the purpose of the Central Provinces and Berar Sales Tax Act, 1947. The petitioners are the holders of a certificate of registration, No. LDG/53 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o go into the other contentions. We are of the opinion that this contention of the learned Attorney- General is sound. It was in fact admitted by the respondents in their return that the petitioners imported tobacco from the State of Bombay in large quantities. The Bombay suppliers processed tobacco in their godowns situated within the State of Bombay and supplied the finished tobacco to the petitioners in Madhya Pradesh. The petitioners imported this finished tobacco into Madhya Pradesh from these suppliers who were carrying on business in the State of Bombay and there was of necessity, as a result of these transactions, the movement of the goods across the border. As a result of the transactions entered into by the petitioners with these suppliers the finished tobacco which was supplied to the petitioners moved from the State of Bombay to the State of Madhya Pradesh and these transactions were, therefore, in the course of inter-State trade or commerce. The only answer which was made by the learned Advocate-General of Madhya Pradesh was that Shri Shah Chhaganlal Ugarchand Nipani and Shri Maniklal Chunanlal Baroda were themselves dealers holding registration certificates No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch activities may in such event be said to be carrying on business in Madhya Pradesh and would come within the definition of "dealer" given in section 2 (c) of the Act. When we come, however, to section 8 which deals with the registration of dealers, that section requires that a dealer while being liable to pay tax under the Act shall not carry on business as a dealer unless he has been registered as such and possesses a registration certificate. The liability to pay tax under the Act is thus postulated and unless and until a person is liable to pay such tax he need not get himself registered as a dealer. All the trans- actions entered into by a registered dealer, however, do not necessarily import a liability to pay tax under the Act because, whenever the question arises in regard to his liability to pay any tax under the Act, such liability would have to be determined in spite of his being a registered dealer with reference, inter alia, to the provisions of section 27-A of the Act which incorporates within its terms the bans which have been imposed on the powers of the State Legislatures to tax under Article 286(1)(a) and (2) of the Constitution. If, therefore, a dealer who has g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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