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TMI Blog1958 (5) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation to Article 286(1) of the Constitution. In other words, they are within the category which has been described as "Explanation sales". The respondents claim to levy sales tax on the said transactions and have called upon the petitioners to file their returns and to be assessed for payment of sales tax (Matter No. 153 of 1956 is for the period 1950-51 and the Matter No. 146 of 1957 is for the period 1952-53). The petitioner disputes the right of the respondents to levy sales tax upon the transactions which are admittedly inter-State sales. The facts are similar to the facts in Matter No. 161 of 1955 (Indian Standard Wagon Co., Ltd. v. Commercial Tax Officer etc.[1958] 9 S.T.C. 553.in which the position has been investigated. As a matter of fact, there have been common sets of arguments in Matter No. 161 of 1955 and a number of matters, including these applications, except for the fact that in these two applications Mr. S. Roy on behalf of the petitioner has taken an additional point that there has been an infringement of his client's right under Article 19(1)(g) of the Constitution. It has been agreed that the reasons given in my judgment in Matter No. 161 of 1955 with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of a contract but does not include a mortgage, hypothecation, charge or pledge. Then there are several Explanations, of which Explanation (2) is important and runs as follows: " A sale shall be deemed to have taken place in West Bengal if the goods are actually delivered in West Bengal as a direct result of such sale for the purpose of consumption in West Bengal, notwithstanding the fact that under the general law relating to sale of goods, the property in the goods has, by reason of such sale, passed in another State." This is more or less the same as the Explanation to Article 286(1) of the Constitution. As I have mentioned above, the Constitution banned the taxation of inter-State sales. In order to bring the State Act in line with the Constitution, there was introduced into it, section 27, which states that notwithstanding anything contained in the State Act, a tax shall not be levied on the sale or purchase in the course of inter-State trade or commerce, except in so far as Parliament might by law otherwise provide. Also, it was provided that the Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resident promulgated the Sales Tax Laws Validation Ordinance (No. III of 1956) on 30th January, 1956. This was later on replaced by the Sales Tax Laws Validation Act (VII of 1956) (hereinafter called the "Validation Act") which came into force on 21st March, 1956. Section 2 of the Act runs as follows: "Notwithstanding any judgment, decree or order of any Court, no law of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter-State trade or commerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of inter-State trade or commerce; and all such taxes levied or collected of purporting to have been levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law." We have already seen that the transactions with which we are concerned in this application are Explanation sales, that is to say, the goods have been sold from Bihar to purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.T.C. 297. and certain decisions of the Travancore-Cochin High Court, held to the contrary, namely, that the various State laws read with the exemption could not be said to contain any existing law for the taxation of inter-State sales including Explanation sales. All these conflicting decisions were considered in the recent Supreme Court case, M.P.V. Sundaramier Co. v. State of Andhra[1958] 9 S.T.C. 298; 1958 S.C.A. 492. The majority judgment in the case was delivered by Aiyar, J., who has dealt with the matter exhaustively. He has accepted the view contained in the Bombay group of cases, and has dissented from the other group. The decision of Aiyar, J., in the several cases mentioned above, consisted of transactions in the nature of Explanation sales. Thus, the decision is particularly applicable to the facts of the present case and the several other cases dealing with Explanation sales. It was held that the provisions in the Madras Sales Tax Act were to be construed so as to come to the conclusion that there was an existing law for the taxation of Explanation sales. But a ban had been imposed by section 22 thereof, which ban had been lifted by Parliament by virtue of the Val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that this point was not raised or discussed in the Supreme Court case. The interesting question arises as to whether, if the Supreme Court declares a certain Act to be intra vires, it could be re-argued on grounds which had not been taken or considered in the Supreme Court decision, and whether a State High Court could come to the conclusion contrary to that of the Supreme Court. In my opinion, the position is that a Supreme Court decision declares the law of the land and as such should be considered to have a seal of finality. Where the Supreme Court has deliberately left open a point, that is another matter, but where it has come to a decision as to whether an Act was intra vires the Constitution, such an Act cannot be challenged before a State High Court even on a ground which had not been considered by the Supreme Court, or not raised before it. If such was not the case, there could be no finality. In other words, if a declaration by the Supreme Court that an Act was intra vires was not the last word upon the subject, then there would be a prevailing sense of uncertainty, and there would be no sense in Article 141 of the Constitution to the effect that the law declared by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation sales. The United Motors judgment(1) upheld the power of the State to impose taxes on Explanation sales. Right up to the time that The Bengal Immunity decision(2) came to be delivered, everybody knew or ought to have known that taxes were payable, because until that decision came into existence everybody was proceeding upon that footing, the matter having been decided by the highest authority of the land. It is only after The Bengal Immunity case [1955] 6 S.T.C. 446; A.I.R. 1955 S.C. 661. was decided, that this view had to be altered. The Validation Act is for the period between these two judgments. Remembering these facts, it is apparent that the objection has no legs to stand upon and is divorced from reality. Mr. Roy's argument is that the trader entering into Explanation sales did so on the footing that no tax was payable. This is exactly contrary to the real facts of the case. Between these two decisions, everybody was proceeding upon the footing that the tax was payable, and if a trader did not take the precautions necessary under the Act for protecting his own interest, namely, taking declaration forms or realising the sales tax from his constituents, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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