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TMI Blog1990 (3) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... as the 1956 Act and the 1948 Act respectively). Pro forma respondents 5 and 6 in RN-525 of 1989 and applicants 3 to 6 and pro forma respondents 6 to 8 in RN-573 of 1989 are the buyers. By our order No. 8 dated January 22, 1990, we allowed the prayer of respondents 7 and 8 in RN-573 for being transposed as applicants. 3.. The case of the applicants is that by virtue of notifications published by the Government of Uttar Pradesh under the 1956 Act and the 1948 Act, no tax is payable for a specified number of years by the applicant-company on sales of generators manufactured in that State. The company has its authorised dealers in West Bengal and other States. Sales of these generators take place in two ways. The company sells the generator sets to its authorised dealers on principal-to-principal basis and then those dealers sell the sets to their customers in the similar manner. In respect of such sales the dealers recover sales tax under the relevant State Act. The company has no concern with such sales by the dealers to their customers. The company also sells generator sets directly to customers. The mode of such sales is that the intending buyers send their orders in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seized generators were released in terms of interim orders dated October 5, 1989 and December 7, 1989 on furnishing security of Rs. 2,000 and Rs. 5,000 respectively in RN-525 and 573 of 1989 and proceedings for imposition of penalty were also stayed. 7.. The first limb of the case of the applicants is that the impugned sales were concluded sales within the State of Uttar Pradesh and if at all, are exigible to tax in that State. But all these sales are enjoying exemption from payment of sales tax under the State Act of Uttar Pradesh and also under the Central Sales Tax Act, 1956, in Uttar Pradesh. No tax, it is claimed, is exigible in the State of West Bengal under either the State Act or the Central Act. That being the position, the applicants contend that no permit was at all required for importation of these notified goods under the 1941 Act, as no question of evasion of tax was involved as far as the State of West Bengal is concerned. This claim was resisted on behalf of the Revenue. It is claimed that such sales were not concluded within the State of Uttar Pradesh and even if so, importation of these goods was subject to the regulations laid down in section 4B of the 1941 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary for a sale to be deemed to have taken place in the course of inter-State trade or Commerce, that the covenant regarding inter-State movement must be specified in the contract itself. It would be enough if the movement was in pursuance of and incidental to the contract of sale: see State Trading Corporation of India Limited v. State of Mysore [1963] 14 STC 188 (SC). 9.. In the case of English Electric Co. [1976] 38 STC 475 (SC), it was held that though the company carried on business at different branches, it was one entity, and that when the Bombay branch of the company forwards a Bombay buyer s order to the principal factory of the company at Madras and instructs them to despatch the goods direct to the buyer and the goods are sent to the buyer under those instructions, it would not be a sale between the factory and the Bombay branch which was merely acting as the intermediary between the Bombay buyer and the Madras factory and it was the factory which, pursuant to the covenant in the contract of sale, caused the movement of goods from Madras to Bombay. It was also held that the inter-State movement of the goods from Madras to Bombay was the result of the contract of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax law of the State for any such purpose. 12.. It was contended by Mr. Bajoria that in the above view of the matter, no permit could be demanded or was required to be obtained or produced for importation and transportation of such goods. But Mr. D. Majumdar, learned State Representative, submitted that the provisions of sections 4A and 4B of the 1941 Act and the relevant Rules requiring permit are applicable to these importations in order to ensure that evasion of tax under the 1941 Act does not take place, in case the goods are subjected to subsequent sales within the State of West Bengal. Mr. Majumdar could not oppose Mr. Bajoria s contention to the extent that these provisions cannot be used for the purpose of enforcing payment of tax under the Central Act of 1956. 13.. We are upholding the submission of Mr. Bajoria that the authorities in the State of West Bengal have no jurisdiction to exercise powers under the State Act of 1941 including the provisions of sections 4A and 4B, thereof and the 1941 Rules for the purpose of enforcing payment of tax under the 1956 Act. But we do not find any substance in the contention that the said powers cannot be exercised even for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso to article 304(b), such a restriction becomes void and unconstitutional. Mr. Majumdar, on the contrary, referred to our judgment dated September 13, 1989, in Dhanpat Oswal s case (RN-406 of 1989) and submitted that rule 91 can be availed of in such cases and that these were merely regulatory measures for ensuring that evasion of tax does not take place and, therefore, these provisions do not amount to restriction under article 301 or 304 and also that in order to be so, there must be a direct and immediate restriction on the freeflow or movement of goods in the course of inter-State trade. 15.. True, we had an occasion to consider rule 91 and the judgment of S.C. Sen, J., in [1986] 63 STC 416 (Cal) [E.I.T.A. (India) Ltd. v. D. Dutta] in Dhanpat Oswal s case (RN-406 of 1989 decided on September 13, 1989). But, Mr. Bajoria rightly submitted that the other grounds on which he has now challenged and dissected rule 91 were not urged before us in that case. The facts of that case were also basically different. In that case, Dhanpat Oswal, a Sikkim-based businessman, who was not a registered or certified dealer in West Bengal, transported big cardamom (also a notified goods under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in rule 89(2) the words are the quantitative limit . In mathematical concept, zero is a quantity and also a limit. Therefore, it is permissible to specify zero as the quantitative limit. 18.. Rule 91 is reproduced below for better appreciation of its criticism: Notwithstanding anything contained in rules 89, 89A and 90, the Commissioner or any officer appointed under section 3 to assist him, who has been authorised by the Commissioner in that behalf, may, for good and sufficient reason to be recorded in writing, authorise any person or organisation or philanthropic and charitable institutions or diplomatic personnel to transport any consignment of notified goods exceeding the quantity prescribed in subrule (2) of rule 89 from any railway station, steamer station, airport in West Bengal or any other place notified under section 4B or across or beyond the area of a notified place. In the instant cases, the applicant-company made inter-State sales to individual buyers and despatched the goods to the addresses of the buyers according to the terms of the contracts of sale. Unlike rules 89, 89A and 90, no form of permit is prescribed and no particulars to be furnished are s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia opposed these suggestions and we cannot persuade ourselves to accept any of these. We feel that it is not possible to do either. 20.. Moreover, rule 91 was aimed at supplementing or filling the void left by rules 89, 89A and 90 and does not appear to have been designed to stand on its own like any of those rules. The opening words of rule 91 are a pointer to this, namely, notwithstanding anything contained in rules 89, 89A and 90 . So, we are of the firm opinion that no rule has been framed and no condition has been prescribed, as required by section 4B, in order to regulate transportation of such goods by such persons as in the instant cases. That being the position, two opposite consequences tend to and actually ensue. Either transportation of such goods by such persons like the applicant-company is permit-free, or a restriction has been imposed on such transportation. If the first alternative is adopted, section 4B and the rules framed thereunder become valid and constitutional. If the second one is adopted, those provisions become void and unconstitutional, being violative of articles 301 and 304(b). The settled modern theory is that a provision shall be presumed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 416 (Cal) (E.I.T.A. (India) Ltd. v. D. Dutta), [1989] 73 STC 353 (SC) (State of Bihar v. Harihar Prasad Debuka), AIR 1954 SC 224 (Dwarka Prasad Laxmi Narain v. State of Uttar Pradesh) and AIR 1967 SC 1189 (State of Mysore v. Sanjeeviah) and an unreported decision of S.C. Sen, J., of the Calcutta High Court* in the case of Lohia Machines Ltd. We have kept in view the principles laid down or followed, as the case may be, in those decisions. We, however, do not feel that detailed reference to those decisions are necessary for the purpose of this judgment. 23.. We cannot part with these cases without adverting to another aspect. The State respondents have tried to show and actually contended that these transportations in the names of casual or individual buyers (who are not dealers) were really not so and were actually purchases by Vijay Pincha or M/s. Hind Electricals but only using their names. Except in the case of Nandini Ganguly, the learned advocate for the applicants, seriously opposed this allegation and contention. Mr. Bajoria, however, said that he was not representing Nandini Ganguly and the applicants were not interested in getting back the generator set transported in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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