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TMI Blog1965 (12) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... ATULLAH M., RAMASWAMI V. AND SATYANARAYANA RAJU P. JJ. M.C. Setalvad, Senior Advocate (D.N. Gupta with him), for the respondent. S.V. Gupte, Solicitor-General of India, Raja Jaswant Singh, Advocate-General for the State of Jammu and Kashmir N.S. Bindra, Senior Advocate (R.H. Dhebar and R.N. Sachthey with them), for the appellants Nos. 1 and 2. -------------------------------------------------- The judgment of the Court was delivered by RAMASWAMI, J. -This appeal is brought on a certificate against the judgment of the Division Bench of the High Court of Jammu and Kashmir at Srinagar dated July 10, 1962, holding that the respondent is not liable to pay sales tax for the period from January, 1955, to May, 1959, under the Jammu and Kashmir Motor Spirit (Taxation of Sales) Act, 2005 (1948 A.D.). The Director-General of Supplies, Delhi, entered into a contract with the General Manager, Caltex (India) Ltd. at Bombay (hereinafter called the respondent) for the supply of petrol, HSD and power Kero to the State Mechanized Farm at Nandpur located in the State of Jammu and Kashmir. In pursuance of this contract the respondent directed its depot at Pathankot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd allowed the cross-objection of the respondent, holding that the appellants were not entitled to levy sales tax for the entire period from January, 1955, to May, 1959, and accordingly quashed the assessment of sales tax dated October 3, 1960. It is necessary, at this stage, to indicate the legislative development in the State of Jammu and Kashmir which provides the setting for the questions to be investigated in this case. Article 286 of the Constitution, as it was originally enacted, read as follows: "(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes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. Explanation .-For the purposes 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 pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Constitution applicable. Exceptions Modifications Part XII Articles 264 and 265, Clause (2) of Article 267, Articles 268 to 281, Clause (2) of Article 283, Articles 286 to 291, 293, 295, 296 and 297. 1. Article 266 shall apply only in so far as it relates to the Consolidated Fund of India and the Public account of India. 2. Articles 282 and 284 shall apply only in so far as they relate to the Union or the Public account of India. 3. Articles 298, 299 and 300 shall apply only in so far as they relate to the Union or the Government of India." But Article 286 was applied to the State of Jammu and Kashmir by the Constitution (Application to Jammu and Kashmir) Order, 1954, which came into force on 14th day of May, 1954. In The Bengal Immunity Company Ltd. v. State of Bihar [1955] 2 S.C.R. 603; 6 S.T.C. 446., this Court held that the operative provisions of the several parts of Article 286, namely clause (1) (a), clause (1) (b), clause (2) and clause (3), were intended to deal with different topics and one cannot be projected or read into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ways mentioned in clause (1). (3) Any law of a State shall, in so far as it imposes, or authorises the imposition of, a tax on the sale or purchase of goods, declared by Parliament by law to be of special importance in inter-State trade or commerce, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify." By clause (2) of Article 286 as amended, Parliament was authorised to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in clause (1), namely, outside the State or in the course of the import into, or export out of the territory of India. By the Constitution (Sixth Amendment) Act, Parliament was entrusted with power under Article 269(3) to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce; and to effectuate the conferment of that power in the Seventh Schedule, Entry 92A was added in the First List and Entry 54 in the Second List was amended. The Parliament enacted, in exercise of that power, the Central Sales Tax Act (Act 74 of 1956) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of sale. Unless both these conditions are satisfied, there can be no sale in the course of inter-State trade." In the present case, both these conditions have been satisfied and the transactions of sale made between the parties were unquestionably in the course of inter-State trade. Indeed, the Solicitor-General on behalf of the appellants did not seriously challenge the finding of the High Court on this point. We proceed to consider the next question, viz., whether the respondent was liable to pay sales tax for the period from January 1, 1955, to September 6, 1955, in view of the lifting of the ban under the Sales Tax Laws Validation Act, 1956. On behalf of the respondent Mr. Setalvad put forward the argument that the Sales Tax Laws Validation Act by itself did not empower any State to levy any tax on sales or purchases in the course of inter-State trade but it merely liberated the Sales Tax Acts of several States from the fetter imposed by clause (2) of Article 286 of the Constitution and left the State Act to operate in its own terms. It was submitted that if there was no law in a State empowering the levy of a tax on sales or purchases in the course of inter-State tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this Act shall be granted to any person who does not hold a licence for the storage of dangerous petroleum under the Petroleum Act, 1898, and if any such licence granted under that Act is cancelled, suspended or is not renewed any licence granted under this Act to the holder thereof shall be deemed to be cancelled, suspended or not renewed, as the case may be." It was contended on behalf of the respondent that no tax could be levied under the Act unless the assessee has his place of business or storage of motor spirit within the State of Jammu and Kashmir. It was pointed out that no retail dealer was permitted to carry on business as a retail dealer of motor spirit unless he holds a licence for storage of petroleum under the State Petroleum Act. It is admitted that the respondent had no storage depot or place of business within the State of Jammu and Kashmir at the material time. It is also conceded that the respondent did not hold any licence for storage of petrol within the State. Mr. Setalvad therefore contended that the appellants were not authorised to levy sales tax under the provisions of the Act. We are unable to accept this contention as correct. The charging section-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s measured by means of dipping rods and approved by the indenting officer and was then delivered to Nandpur farm. In this state of facts it was contended by the Solicitor-General that the property in the petrol passed to Nandpur farm inside the State of Jammu and Kashmir. It was submitted that the sales were, therefore, liable to be taxed under section 3 of the Act for the period from January 1, 1955, to September 6, 1955, when the ban was removed. On behalf of the respondent Mr. Setalvad said that there was appropriation of the goods to the contract at the bulk depot of the respondent at Pathankot and therefore the property in the goods passed to the Nandpur farm at Pathankot outside the State of Jammu and Kashmir. No such argument appears to have been advanced on behalf of the respondent before the High Court which decided the case on the assumption that there was appropriation of the goods to the contract at Srinagar when the petrol was transferred from the tank-lorries of the respondent for delivery to Nandpur farm and measured by means of dipping rods and approved by the indenting officer. The question as to passing of title of goods is essentially a question of fact and we mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to September 6, 1955, and to allow the taxing authorities to enforce the statute with respect to the sales taking place in this period and also prevent them by grant of a writ from imposing the tax with regard to sales for the exempted period. In other words, the assessment for the period from January 1, 1955, to September 6, 1955, can be separated and dissected from the assessment of the rest of the period and the High Court was in error in holding that the assessment for the entire period was invalid in toto. The view that we have expressed is borne out by the decision of this Court in The State of Bombay v. The United Motors (India) Ltd. [1953] S.C.R. 1069 at p. 1097; 4 S.T.C. 133. For these reasons we allow this appeal in part and order that the respondent should be granted a writ in the nature of mandamus directing the appellants not to realise sales tax with regard to transactions of sale between the period from September 7, 1955, to May, 1959, but the respondent will not be entitled to any writ with regard to transactions of sale between January 1, 1955, to September 6, 1955. The appeal is accordingly allowed to this extent but the parties will bear their own costs. Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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