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TMI Blog1953 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... peration during the relevant period with which we are concerned, the assessment of sales tax, in our opinion, on the transactions during this period is illegal and not warranted by the provisions of the Act. - Criminal Appeal No. 92 of 1952 - - - Dated:- 30-3-1953 - PATANJALI SASTRI M. C.J. AND MUKHERJEA AND VIVIAN BOSE AND GHULAM HASAN AND BHAGWATI N.H. For the Appellant : B. Somayya (C. B. Pattabhi Baman, with him) For the Respondent : V. K. T. Chari, Advocate- General of Madras (V. V. Rahavan and Alladi Kuppuswami with him) M. C. Setalvad, Attorney-General for India (G. N. Joshi and P. A. Mehta, with him), B. K. P. Sinha JUDGEMENT MUKHERJEA, J.- This appeal, which has come before us on a certificate granted by the Madras High Court under Articles 134(1)(c) and 132 (1) of the Constitution, is directed against an appellate judgment of a Division Bench of the High Court of Madras, passed in Criminal Appeal No. 129 of 1952, by which the learned judges affirmed an order of the Seventh Presidency Magistrate, Madras, dated 25th February, 1952, convicting the appellant of an offence punishable under Section 15 of the Madras General Sales Tax Act and sentencin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head office in the city of Madras, its accounts were maintained there and the goods were delivered to the common carrier in that city, the sale, according to the respondent must be deemed to have taken place in Madras even though the property in the goods sold passed outside the Province. The High Court accepted this contention of the respondent State. In the opinion of the learned judges, the word sale has both a legal and a popular meaning. In the legal sense, it imports passing of property in the goods and it is in this sense that the word is used in the Sale of Goods Act. In the popular sense, however, it signifies the transaction itself which results in the passing of property. As the object of the Legislature in the Sales Tax Act is to impose a tax on the occasion of the sale, it is immaterial that the sale has been completed outside the Province. The place where the property passes is, it is said, a matter of no concern to the taxing authority and in such context the popular meaning of the word is more appropriate and should be adopted. The further contention raised on behalf of the appellant, that if this view was accepted, the sales tax would have to be regarded as b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al territorial nexus between such transactions and the taxing Province. This principle, which is based upon the decision of the judicial Committee in Wallace Brothers etc. Company v. Commissioner of Income-tax, Bombay(1), has been held by this Court to be applicable to sales tax legislation, in its recent decision in the Bombay Sales Tax Act case(2) and its The State of Bombay another v. United Motors (India) Ltd. others-Civil Appeal No. 204 of 1952 since reported at p. 133 infra. propriety is beyond question. As a matter of fact, the legislative practice in regard to sales tax laws adopted by the Provincial Legislatures prior to the coming into force of the Constitution has been to authorise imposition of taxes on sales and purchases which were related in some manner with the taxing Province by reason of some of the ingredients of the transaction having taken place within the Province or by reason of the production or location of goods within it at the time when the transaction took place. If in the Madras Sales Tax Act the basis adopted for taxation is the location of the place of business or of the goods sold, within the Province of Madras, undoubtedly it would be a v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he language gives no indication of the popular meaning of sale in which, according to the High Court, the word was used. It is to be noticed that there was no provision by way of explanation of this definition, in operation, at the material time to indicate in what cases a sale would be regarded as taking place within the Province of Madras, although the property in the goods sold did pass out- side the boundaries of the Province. Such explanations were added by the Madras Act XXV of 1947 and one of these explanations, namely, Explanation 2 provides as follows: Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this Province, wherever the contract of sale or purchase might have been made- (a) if the goods were actually in this Province at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this Province at any time after the contract of sale or purchase in respect thereof was made . ..... X X X X Extracts X X X X X X X X Extracts X X X X
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