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TMI Blog1962 (7) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 15(a) of the Central Sales Tax Act and the explanation thereto. That section as it stood at the material time was as follows: "15. Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State.-Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely: (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall be levied only in respect of the last sale or purchase inside the State and shall not exceed two per cent. of the sale or purchase price; Explanation.-The expression 'last sale or purchase inside the State' means the transaction in which a dealer registered under the sales tax law of the State- (i) sells to or purchases from another such dealer declared goods for use by the purchaser in the manufacture of goods for sale or for use by the purchaser in the execution of any contract; or (ii) purchases declared goods from another such dealer for sale to a dealer not registered under the sales tax law of the State or to a consume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Sales Tax Act, 1956, in its section 15. Sri Hari Swarup then argued that the word "tobacco" in section 7 of the Additional Duties of Excise (Goods of Special Importance) Act of 1957 includes hand-made biris, and as such the restrictions imposed on the levy of sales tax under a sales tax law of a State by section 15 of the Central Sales Tax Act would apply in the case of sale of such biris. He argued that the word tobacco is defined in section 2(c) of that Act. The definition is to the effect that the word tobacco shall have the same meaning as in item No. 9 of the First Schedule to the Central Excises and Salt Act, 1944. He referred me to that item of the First Schedule of that Act. There tobacco is described as meaning "any form of tobacco whether cured or uncured, and whether manufactured or not, and includes the leaf, stalk and stems of the tobacco plant, but does not include any part of a tobacco plant while still attached to the earth." He then referred me to the definition of the word "manufacture" in section 2(f)(i) of that Act. The definition is as follows: "(f) Manufacture includes any process incidental or ancillary to the completion of a manufactured product; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tobacco in the definition portion of the item. Sri Hari Swarup then went on to argue that the sale of hand-made biris by the two manufacturers and the importer in these petitions were merely the first sales and not the last sales and were not assessable in the hands of the petitioners, and if assessable at all, were assessable at a rate not exceeding 2 per cent. and not at the rate prescribed in the notification namely at one anna per rupee or 6.25 per cent. Sri Hari Swarup argued that in his affidavit he had sworn that the sales by the petitioners were first sales in the series of sales and not the last sales. He further argued that in the counter-affidavits filed on behalf of the State it was admitted that the sales were by the manufacturers and the importer and it was not denied that they were not the last sales in the sense of sales to consumers. It was, therefore, submitted that it should be taken for granted that the tax having been levied on sales other than the last sales the levy was invalid and the orders should be quashed on that ground also. To meet this point Sri Shanti Bhushan, the learned standing counsel, invited my attention to the explanation of the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds, having regard to the facts in the present cases, he has argued that even though the levy at one anna per rupee or 6.25 per cent. may be bad to the extent of the excess between the amount levied over a levy calculated at 2 per cent., the amount of the levy up to 2 per cent. is not invalid. I see force in this submission also. The restriction in section 15 is only that the sales tax under the sales tax law of a State shall not be levied at a rate in excess of 2 per cent. It follows that the excess portion of the levy will have to go, but that portion of the total levy, which does not exceed two per cent., will be valid and will (i) that the sale should be by one registered dealer to another registered dealer, and (ii) that the sale should be for use by the purchaser in the manufacture of goods for sale or for use by the purchaser in the execution of any contract. These ingredients required investigation into questions of fact, namely, whether the dealers to whom sales had been made were or were not registered, and whether or not the purchasers had made the purchases for use as provided for in the explanation. In the absence of investigation into these questions of fact, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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