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TMI Blog1954 (11) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... the conditions specified in that rule. The petitioner has been denied the deduction under rule 7(1)(k) read with rule 20 (2) on the ground that he sold the cocoanut oil manufactured by him not within but outside the State of Travancore-Cochin, and his attempt in this petition is to challenge the validity of that denial. 3.. The main question for determination, therefore, is whether the sale price of the cocoanut oil sold outside the State can be considered as part of his turnover for purposes of the Travancore-Cochin General Sales Tax Act, 1125, and the rules framed thereunder. The relevant portions of the definition of the terms "sale" and "turnover" as given in section 2 of the Act read as follows: "(j) 'sale' with all its grammatical variations and cognate expres- sions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred pay- ment or other valuable consideration and includes also a transfer of property in goods involved in the execution of a works contract, but does not include a mortgage, hypothecation, charge or pledge; Explanation (2)-Notwithstanding anything to the contrary in the Sale of Goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 286 of the Constitution of India shall apply for the interpretation of sub-clause (i) of clause (2) of sub-section (1)." 5.. Article 286 provides that "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 in the circumstances specified in that article and what section 26 has done according to the petitioner is to incorporate into the Act that restriction on the imposition of a tax on such sale and purchase of goods by a specific provision and not to amend the definition of the term "sale" in section 2(j) by confining it to those cases alone in which a sales tax can be collected by the State without violating the provisions of Article 286 of the Constitution. The words "Notwithstanding anything contained in this Act" with which section 26 opens give considerable force to the contention that the ambit of the definition has been left untouched by the introduction of that section by the Amending Act of 1951 and we propose to assume that the contention has to be sustained. 6.. The definitions given in section 2 of the Travancore-Cochin General Sales Tax Act, 1125, however, will app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (k) of the Turnover and Assess- ment Rules provides that all amounts, which a registered manufacturer of groundnut oil, (other than refined groundnut oil) and cake may be entitled to deduct from his gross turnover under rule 18 subject to the conditions specified in that rule, shall be deducted for ascertaining the net turnover on which the assessment is levied. That is clear from the opening words of rule 5. The object, therefore, of rule 5 is to arrive at the taxable net turnover. To determine the net turnover, certain deductions are allowed under that rule, and sub-rule (k) of rule 5(1) relates to the groundnuts and groundnut oil. Rule 18(2) provides: 'Every such manufacturer shall be entitled to a deduction under clause (k) of sub-rule (i) of rule 5 equal to the value of the groundnut and/or kernel purchased and converted by him into oil and cake pro- vided that the amount for which the oil is sold is included in his turnover.' The object of rule 5 being to determine the taxable net turnover, the turnover of the sale of the oil, which is contemplated by rule 18 (2), is the taxable turnover from which the purchase turnover of the groundnuts from which the oil was extracted sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subject to tax under the Sales Tax Act. If the purchases were made outside the State of Madras, these purchases would not come within the scope of rule 4(2); and if groundnut oil is extracted from groundnut on the purchase of which no tax was paid, the sales turnover of such oil would be liable to tax under the scheme of the Sales Tax Act, and rule 18(2) would not apply to the turnover of the oil so extracted from groundnut on the purchase of which no tax was paid." 8.. The only further question that arises for consideration is whether the provisions above-mentioned violate Part XIII of the Cons- titution by affording a concession when the sale of oil is made within the State and denying the same when it is effected outside the State. 9.. Article 301 provides that subject to the other provisions of Part XIII "trade, commerce and intercourse throughout the territory of India shall be free" and Article 303(1) provides that the Legislature of a State shall not have power "to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etimes obscure. If this declaration of liberty had not stopped short at the high-sounding words 'absolutely free', the pith and force of its diction might have been sadly diminished. But even if it was impossible to define precisely what it was from which inter-State trade was to be free, either because a common place definition forms such a pedestrian conclusion or because it needs an exactness of conception seldom achieved where Constitutions are projected, yet obmutescence was both unnecessary and unsafe. Some hint at least might have been dropped, some distant allusion made, from which the nature of the immunity intended could afterwards have been deduced by those whose lot it is to explain the elliptical and expound the unexpressed". (1) 9 Wheat 1. (2) 43 C.L.R. 422. and almost the last words of Latham, C.J., prior to his retirement in April 1952 was: "When I die, section 92 will be found written on my heart. It is quite time that some consideration was given to the possibility of doing something about section 92. When I say doing something, I mean doing something other than submitting to a series of judgments and endeavouring to work out a proposition which will be consistent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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