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TMI Blog1996 (3) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Collectors of Customs of Bombay and Calcutta had filed writ petitions in their respective High Courts and the High Courts of Bombay and Calcutta had granted stay of collection of sales tax on the proceeds of sale of confiscated goods under the Customs Act, 1962. Deciding, for the said reason, to move this Court in the petition they, i.e., the Union of India and others have averred that Collectors of Customs exercise statutory duties and functions of administering Customs Act, 1962 which is enacted by the Union Legislature on the subject of customs duties and other ancillary subjects. The subject of "customs duties" is enumerated under entry 83, List I of the Seventh Schedule to the Constitution of India. While administering the said Act, petitioners, as enjoined by law, make disposal of confiscated contraband goods as well as unclaimed goods. In doing so, they discharge the sovereign function of the Union. They are not engaged in any business. The transaction of disposal of goods is involuntary and not voluntary sales in the course of business or otherwise. It is a process of recovering Government revenue. Thus, when engaged in the transaction of disposal of goods which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt of India to the exclusion of any other court. He (the learned Advocate-General) has contended that the State has not out-stepped its legislative limitations in extending the definition of a "dealer" to transactions of sale of goods by the Central Government or any other State Government whether or not in the course of business and accordingly extending the meaning of sale with all its grammatical variations and cognate expressions as transfer of the property in goods by one person to another in the course of trade or business by identifying the Central Government and the State Governments as dealers transferring the property in goods whether or not in the course of business. Parties would have spared the court of the exhaustive exercise of travelling through several provisions of the Constitution of India, entering into the question whether the lis in the instant proceeding is in the teeth of article 285 of the Constitution of India or not and whether article 131 of the Constitution of India is attracted and thus court's jurisdiction under article 226 of the Constitution of India is barred for the reason of the dispute being one between the Central Government and the State Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, article 131 of the Constitution is not attracted. "Subject to" has received different meanings and there are occasions when courts have found this expression inter-changeable with the expression "notwithstanding". Black's Law Dictionary, sixth edition, has to say that "subject to" means liable, subordinate, subservient, inferior, obedient to, governed or affected by, provided that, provided, answerable for. P. Ramanatha Aiyar in the Law Lexicon, reprint edition 1995, carries for "subject to" the following: "The effect of the words 'subject to' in a deed is to introduce condition or proviso. The use of the words 'subject to' in a transfer of property subject to an existing agreement was construed to mean subject not only to the disadvantages imposed by such agreement but also to the advantages given thereby". The expression "subject to the provisions of the Evidence Act" has been interpreted in a judgment of the Patna High Court in Bigna Kumhar v. King-Emperor AIR 1926 Pat 440 almost 70 years ago as it was then found in section 288 of the Criminal Procedure Code, 1898. The contention before the court was that the evidence before the committing Magistrate was not admissible at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the jurisdiction of the superior courts. Although this feeling may owe its origin to the contests for jurisdiction between the various courts in former times, when the Judges' emoluments depended mainly upon fees, 'the well-known rule that a statute should not be construed as taking away the jurisdiction of the courts in the absence of clear and unambiguous language to that effect' now rests on a reluctance to disturb the established state of the law or to deny to the subject access to the seat of justice. 'The proper Tribunals for the determination of legal disputes in this country are the courts and they are the only Tribunals which, by training and experience, and assisted by properly qualified advocates, are fitted for the task.' ". Maxwell has also pointed out, "The fact that jurisdiction is conferred on one authority does not necessarily take away jurisdiction which another already possesses in the same matter.......". In a reference under Article 143 of the Constitution of India AIR 1965 SC 745 the Supreme Court, while delivering its opinion on article 212 of the Constitution and privileges which are referable to article 194 of the Constitution stated as follows: "Let us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by a competent authority notwithstanding the repeal of article 395; and the expression 'other' in the article can only apply to provisions other than those dealing with legislative competence. ................... But the real question is whether the said impugned law is inconsistent with the provisions of the Constitution other than those dealing with its legislative competency. The words 'subject to the other provisions of the Constitution' mean that if there is an irreconcilable conflict between the pre-existing law and a provision or provisions of the Constitution, the latter shall prevail to the extent of that inconsistency. An article of the Constitution by its express terms may come into conflict with a pre-Constitution law wholly or in part; the said article or articles may also, by necessary implication, come into direct conflict with the pre-existing law. It may also be that the combined operation of a series of articles may bring about a situation making the existence of the pre-existing law incongruous in that situation. Whatever it may be, the inconsistency must be spelled out from the other provisions of the Constitution and cannot be built up on the supposed p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer of the High Court under article 226 of the Constitution. The view that we have taken has also the support of another fiveJudge Bench decision of the Supreme Court in Mysore State Electricity Board v. Bangalore Woollen, Cotton and Silk Mills Ltd. AIR 1963 SC 1128 in which the expression "subject to the provisions of this Act" has been given the meaning that if there are any provisions in the Act which operate in the matter, those provisions will prevail or at least will be available. One other aspect, however, which one cannot miss is the meaning the words "dispute between the Government of India and one or more States or between the Government of India and any State or States on one side and one or more other States on the other or between two or more States" should receive. In a Constitution Bench decision in State of Bihar v. Union of India AIR 1970 SC 1446 the Supreme Court, dealt with a case of the plaintiff that due to the negligence or deliberate action of the servants of a Government of India undertaking there was a short delivery of iron and steel material ordered by the plaintiff, one of the undertakings of the State of Bihar, in connection with the construction work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of this Court under article 131 is at an end. The framers of the Constitution do not appear to have contemplated the contingency of a party to an adjudication by this Court under article 131 not complying with the declaration made. Our law is not without instances where a court may be called upon to make an adjudication of the rights of the parties to an agreement or an award simpliciter on the basis of such rights without passing a decree........ ...........The express words of clauses (a), (b) and (c) exclude the idea of a private citizen, a firm or a corporation figuring as a disputant either alone or even along with a State or with the Government of India in the category of a party to the dispute. There is no scope for suggesting that a private citizen, a firm or a corporation can be arrayed as a party by itself on one side and one or more States including the Government of India on the other. Nor is there anything in the article which suggests a claim being made by or preferred against a private party jointly or in the alternative with a State or the Government of India. The framers of the Constitution appear not to have contemplated the case of a dispute in which a privat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , disabilities, etc., flowing therefrom. Any dispute which may arise between a State in the capacity of an employer in a factory, a manufacturer of goods subject to excise duty, a holder of a permit to run a stage carriage, a trader or businessman carrying on business not incidental to the ordinary functions of Government, a consumer of railway services, etc., like any other private party on the one hand and the Union of India on the other cannot be construed as a dispute arising between the State and the Union in discharge of their respective executive powers attracting article 131 of the Constitution. It could never have been the intention of the framers of the Constitution that any ordinary dispute of this nature would have to be decided exclusively by the Supreme Court. It is well to remember that the constitutional proposals of the Sapru Committee advocated the strengthening of the position of the Federal Court in India and widening its jurisdiction on the original side so that the Federal Court could act as an interpreter and guardian of the Constitution and as a Tribunal for the determination of the disputes between the constituent units of the Federation. The Joint Committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on the sale of a property belonging to the Central Government or any State Government will be too slender a foundation for the postulate that in such a controversy arising under the provisions of the A.P. General Sales Tax Act the dispute is one falling under article 131 of the Constitution. The requirement in article 131, we have already noticed, is that the dispute must involve a question whether of law or fact on which the existence or extent of a legal right depends. Legal rights of the Government of India in respect of the properties belonging to it are in no way affected by the imposition of the tax under the A.P. General Sales Tax Act. It is not a dispute arising between the Union of India and the State of Andhra Pradesh in the context of the constitutional relationship that exists between them and the powers, rights, duties, immunities, liabilities, disabilities, etc., flowing therefrom. It is pure and simple dispute in which the Government of India is being charged to a tax as a dealer in goods as defined under the A.P. Observations seems to be from State of Mysore v. Union of India AIR 1968 Mys. 237. General Sales Tax Act and thus is sought to be taxed as a trader or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provide, be exempt from all taxes imposed by a State or by any authority within a State." Learned counsel for the petitioner has urged that the expression "property" in this article has been used in a perfectly general sense and would, therefore, include such activities of the Government of India which are relatable to property including the transfer of property by it. The exemption of property of the Union from State taxation as envisaged under article 285(1), for the Union, is extended to the property and income of a State under article 289(1) in these words: "The property and income of a State shall be exempt from Union taxation." Answering a reference under article 143 of the Constitution, the Supreme Court delivered its majority opinion in these words In re Sea Customs Act (1878), Section 20(2) AIR 1963 SC 1760: "It is important to notice that while extending the exemption from Union taxation to a State it is not only the property but income of the State is also included in the exemption under article 289(1). Article 285 does not mention income. It mentions only property." The Supreme Court bestowed its attention to the words of article 289 and also its complementary art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h taxes which are in any way related to property. Therefore, it is urged that the exemption is not merely from taxes directly on property as such but from all taxes which impinge on property of a State even indirectly, like customs duties, or export duties or excise duties. It is true that List I contains no tax directly on property like List II, but it does not follow from that that the Union has no power to impose a tax directly on property under any circumstances. Article 246(4) gives power to Parliament to make laws with respect to any matter for any part of the territory of India, not included in a State notwithstanding that such matter is a matter enumerated in the State List. This means that so far as Union territories are concerned Parliament has power to legislate not only with respect to items in List I but also with respect to items in List II. Therefore, so far as Union territories are concerned, Parliament has power to impose a tax directly on property as such. It cannot therefore be said that the exemption of States' property from Union taxation directly on property under article 289(1) would be meaningless as Parliament has no power to impose any tax directly on pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law otherwise provides, prevent any authority within a State from levying any tax on any property of the Union to which such property was immediately before the commencement of this Constitution liable or treated as liable, so long as that tax continues to be levied in that State'. It will in our opinion be permissible in view of clause (2) to read clause (1) of article 285 when it speaks of all taxes as relating to taxes of the nature of taxes directly on property. We have already pointed out, when dealing with the general considerations which should govern the interpretation of article 289(1) that the power of the Union would be crippled if article 289 is interpreted as exempting the property of a State from all Union taxes. We have also pointed out that even though the taxes may be collected and levied by the Union, there are provisions in Part XII for the assignment or distribution of many Union taxes to the States. There are also provisions for grants-in-aid by the Union from the Consolidated Fund of India to a State. In these circumstances it would in our opinion be in consonance with the scheme of the Constitution relating to taxation to read article 289(1) as laying down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a State, whether movable or immovable and exempts it from Union taxation. Even so, we find no warrant for interpreting clause (1) of article 289 as if it exempts all property of a State from all Union taxation. We are therefore of opinion reading article 289 and its complementary article 285 together that the intention of the Constitution-makers was that article 285 would exempt all property of the Union from all taxes on property levied by a State or by any authority within the State while article 289 contemplates that all property of the States would be exempt from all taxes on property which may be leviable by the Union. Both the articles in our opinion are concerned with taxes directly either on income or on property and not with taxes which may indirectly affect income or property. The contention therefore on behalf of the Union that these two articles should be read in the restricted sense of exempting the property or income of a State in one case and the property of the Union in the other from taxes directly either on property or on income as the case may be, is correct." The relevant part of the opinion where a mention is made to article 285(1) and (2) along with article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f two learned Judges whereas the reference is answered by a Bench of nine learned Judges of the Supreme Court. Learned counsel for the petitioner has made an attempt before us to argue that the opinion of the Supreme Court under article 143 is not the law declared by the court for the purposes of article 141 thereof. We do not, however, detain ourselves to deal with this aspect more than reiterating what the Supreme Court has specifically said about its opinion under article 143(1) of the Constitution is that while it is open to the Supreme Court to re-examine the question already decided by it and to overrule if necessary, "it would be strange that a decision given by this Court on a question of law in a dispute between two private parties should be binding on all courts in this country but the advisory opinion should bind no one at all even if as in the instant case it is given after issuing notice to all interested parties after hearing everyone concerned who desired to be heard and after a full consideration of the question raised in the reference". Observations in Ahmedabad St. Xaviers College Society v. State of Gujarat AIR 1974 SC 1389 that even if the opinion given in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Act suitably in the light of the said judgments in order to safeguard the revenue of the State and to validate the imposition of penalty and that amongst the amendments which were being made was that the definition of "dealer" was proposed to be amended in the light of the judgment in the case of Orient Paper Mills Ltd. v. State of Madhya Pradesh [1971] 28 STC 532 (MP) so as 'to include the Central Government or a State Government selling goods not during the course of business'. In this context, it is pertinent to note that for a person to be a dealer within the meaning of clause (d), he must be one who carries on the business of buying, selling, supplying or distributing goods and the definition as originally enacted included within its scope the Central Government or a State Government or any of their departments which carried on such business. This definition was retrospectively amended by the 1971 Act, and the reference to the 'Central Government or a State Government or any of their departments' in sub-clause (i) of clause (d) was omitted from that sub-clause and Explanation II was added which expressly provided that 'the Central Government or a State Government or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It has, however, always been pointed out that it is not the character of the seller which is important to know whether he is a dealer or is dealing in goods in course of the business. It is his act in dealing in goods which is relevant and inferences are drawn from such dealings by him only and not by knowing who he is. We are, however, not required to proceed with this line of investigation of the matter as the law itself has taken all such transactions of sale by the Central or the State Governments within its ambit and the issues in this behalf are answered in full by the Supreme Court in Vrajlal Manilal & Co. v. State of Madhya Pradesh [1986] 63 STC 1; AIR 1986 SC 1085. We find no merit in the writ petition. It is dismissed but without costs. After the judgment is delivered, Sri P. Innayya Reddy, learned Standing Counsel for the Central Government, made an oral prayer for leave to appeal to the Supreme Court and for suspension of the above judgment. We do not find that the case involves a substantial question of law of general importance which needs to be decided by the Supreme Court. Hence, leave to appeal to the Supreme Court is rejected. The prayer for suspension of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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