Somnath Iyer, J.
1. The questions of law arising in these Writ petitions are common and so can be disposed of by a common judgment.
2. The material facts are these: The petitioners are registered dealers in the State of Mysore and they carry on a trade either in hides and skins or in copra and coconuts or in oil seeds. All these goods are declared goods as defined by explanation to Section 5 (4) of the Mysore Safes Tax Act, which will be referred to in this order as the State Act, and, as stated in the third item of the fourth schedule to that Act, the point of levy of sales tax is the purchase by the last dealer in the State. Similarly, item 5 (b) in that schedule states that in respect of coconut and copra, the first of the earliest of purchasers in the State is liable to pay the tax. Item 5 (d) of that schedule makes the first of the earliest of the successive purchasers in the State liable to pay sales tax on oil seeds.
3. In respect of hides and skins, Item 3 was subjected to an amendment which came into force on October 1, 1964 and from that date the last purchaser became liable to pay sales tax.
4. The petitioners purchase the declared goods to which we have referred and send them either to the State of Bombay or to the State of Madras for sale on what is described as the consignment basis. What they really do is to send the goods to their agent In the other State so that he could sell the goods to a person in that State on their behalf.
5. In respect of the purchases made by the petitioners in respect of the periods commencing with the assessment year 1959-60 and ending with the assessment year 1965-66, the commercial tax officer made assessments of the taxable turnover and taxed all the purchases made by them.
6. The prayer in these writ petitions is that we should quash those assessments and in support of that prayer, Mr. Srinivasan advanced the contention that the assessments are unsustainable since Section 5 (4) of the State Act is an unconstitutional piece of legislation. The three grounds on which he supported his argument are firstly that that subsection was void since it offended against Article 14 of the Constitution, secondly that it transgressed the provisions of Article 301 of the Constitution, and thirdly that it was repugnant to the provisions of Section 15 of the Central Sales Tax Act, which will be referred to in this order as the Central Act.
7. Section 5 (1) of the State Act states that every dealer shall pay for each year tax on his taxable turnover at the rates specified in that Section, and, Sub-section (4) of that Section which was subjected to the impeachment of unconstitutionality reads:
'5 (4) Notwithstanding anything contained in Sub-section (1) a tax under this Act shall be levied in respect of the sale or purchase of any of the declared goods mentioned in column (2) of the Fourth Schedule at the rate and only at the point specified in the corresponding entries of columns (4) and (3) of the said Schedule On the dealer liable to tax under this Act on his taxable turnover of sales or purchases in each year relating to such goods.
Provided that where tax has been paid in respect of the sale or purchase of any of the declared goods under this sub-section and such goods are subsequently sold in the course of inter-State trade or commerce, the tax paid under this Act shall be refunded to such person in such manner and subject tosuch condition as may be prescribed.
Explanation: The expression 'declared goods' means goods declared under Section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) to be of special importance in inter-State trade or commerce.' Section 15 of the Central Act, to Section 14 of which the explanation refers reads:
'15. 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 not exceed three per cent of the sale or purchase price thereof, and such tax shall not be levied at more than one stage;
(b) where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State.' Clause (a) of this Section has no relevanceto the present discussion and it will be observed that Clause (b) corresponds to the first proviso to Section 5 (4) or the State Act, That proviso incorporates the same provision which Section 15(b) of the Central Act contains.
8. Mr. Srinivasan who made the criticism that Section 5 (4) became unconstitutional by reason of the first proviso to that sub-section placed dependence in support of that contention on three pronouncements of this Court. In Munshi Abdul Rahiman & Bros. v. The Commercial Tax Officer, I Circle, Hubli, (1967) 20 STC 89 (Mys) this Court made the elucidation that the right to receive a refund of the State tax in respect of declared goods created by Section 15(b) of the Central Act is acquired the moment the goods are sold in the course of inter-State trade, and that the payment of the Central Sales Tax under the Central Act was not a condition precedent to such refund. In Bhandari Rajmal Kusalraj v. The State of Mysore, (1967) 11 Law Rep 877 (Mys) this Court made the enunciation that if there was an inter-State sale of declared goods but the State tax had not been paid, it was not permissible for the assessing authority to demand the State Tax with respect to the declared goods and to embark upon the unmeaning formality of making a refund of it either under Section 15(b) of the Central Act or under the first proviso to Section 5 (4) of the State Act. In Mallick Hashirn & Co. Bijapur v. The Commercial Tax Officer, Bijapur, 17 Law Rep 298=(AIR 1969 Mys 303), it was explained by this Court that the right to a refund was an absolute right and that that right could not be defeated by the prescription by a rule of a period of limitation for the presentation of an application in a particular form for that purpose.
9. On the basis of these three pronouncements, the argument constructed by Mr, Srinivasan was that in effect the purchaser of declared goods inside the State of Mysore became absolved from the liability to pay sales tax at the purchase point in respect of those declared goods if there was an inter-State sale of those declared goods subsequently. It was maintained by him that in truth the State tax in respect of the purchases in that situation ceases to be exigible and could not be demanded.
10. On the basis of this postulate, we were asked to say that Section 5 (4) subjected persons who did not make inter-State sales or declared goods but who either consumed those goods inside the State or sent those goods for sale on a consignment basis outside the State to hostile discrimination. It was asserted that since those dealers who made inter-State sales of declared goods could receive the refund of the State Tax paid by them and were also not liable to pay any tax under the Central Act, those who did not make any inter-State sales wereliable to pay the State tax although in every relevant respect the two categories of dealers were similarly situate.
11. It is true as Mr. Srinivasan contends that a dealer who purchases declared goods in the State of Mysore but makes an inter-State sale of those goods gets a refund of the State Tax paid by him at the purchase point and is also not liable to pay any Sales Tax under the Central Act, The exoneration from the liability to pay Central tax in that situation is the consequence of the pronouncement of the Supreme Court in the State of Mysore v. Yeddalam Lakshminarasimhaiah Setty & Sons, : 2SCR129 In which it is explained that since the tax under the Central tax is payable only on sales and the State tax is payable only at the purchase point and that since Central Tax is payable only if State tax would have become payable had the sale taken place inside the State as provided by Sections 8 and 9 of the Central Act, Central tax would not be payable in respect of a sale of that description.
12. But, the argument that under the proviso to Section 5 (4) of the State Act which as we have already observed is a mere reproduction of Section 15(b) of the Central Act, the State tax has to be refunded when there is an inter-State sale of declared goods, does not support the argument that the State tax was not exigible in respect of the declared goods when they were purchased by the person who made a subsequent inter-State sale of those goods. Such purchase tax is charged by Sub-section (4) of Section 5 and so it has to be paid. But, when there is a subsequent inter-State sale, the tax so payable has to be paid back to the dealer if he has paid it, and, the enunciation made by this Court that if it had not been paid when there was a subsequent inter-State sale it could not be demanded so that there need not be the unmeaning formality of a payment and a refund, does not obliterate the charge created by Section 5 (4).
The imposition of the tax by that subsection does not disappear by reason of the proviso which merely gives effect to clause (b) of Section 15 of the Central Act in order to clothe the dealer who has made an inter-State sale with the right to either seek B refund of the tax if it has been paid or to contend that since there has been a subsequent inter-State sale, he should not be called upon to pay the tax the refund of which could be claimed by him. We should not, therefore, understand the enunciation made by this Court in the three pronouncements to which Mr. Srinivasan asked our attention in manner suggested. Those pronouncements do not say that the charge under Section 5 (4) stands effaced when there is a subsequent inter-State sale.
13. But, it was nevertheless maintained that the dealers who sent their goods to another State from the State of Mysore on a consignment basis so that those goods maybe sold in that State through the agent appointed by them in that State, were subjected to some kind of hostile discrimination. The postulate placed before us was that a dealer who made an inter-State sale and another who made a sale on consignment basis were equals and similarly situate and that, while the dealer who made an inter-State sale could obtain a refund of the State tax and was not liable to pay any tax under the Central Act one who made a sale on consignment basis became liable not only to pay the purchase tax inside the State but also became liable to pay sales tax in the other State in which the goods were sold if under its provisions tax was payable on the sale.
It was asserted that since in the two kinds of sales there was a movement of goods from one State to another and there was a sale of those goods whatever may the point of time at which there was such a sale and there was a transmission of the title to those goods by the owner in the State of Mysore to the purchaser in the other State, the mere fact that the sale in the one case was an inter-State sale and the sale in the other was a sale on a consignment basis did not introduce any dissimilarity between the two transactions which, it was argued, were, in truth, similar to one another.
14. We do not- agree. An inter-State sale is a transaction which in material respects is distinct from a sale on a consignment basis as it is called. In the case of an inter-State sale what causes the movement of the goods is the inter-State sale whereas n the case of a sale on a consignment basis the goods are moved from one State into another so that after they are taken into the other State there may be a sale of thosegoods either by the dealer himself or by his agent on his behalf. The point of time at which the title in the goods passes from the seller to the buyer is not the same in the one case as it is in the other, and, al-though it may be that in the ultimate analysis the goods of the dealer in this State become the goods of the dealer in the other States at some point of time or the other, there is the essential distinction between the two transactions and that distinction is the well recognised distinction between a transaction which takes place in the course of an inter-State trade or commerce and one which takes place in some other way.
15. So, the sale in the course of inter-State trade or commerce to which Section 15(b) of the Central Act and the first proviso to Section 5 (4) of the State Act refer falls within an entirely different classification between which and a sale which takes place on a consignment basis there is an intelligible differentia which has a rational relationship to the purpose of the relevant statutory provisions whose main object is to promote inter-State trade and commerce.
16. Moreover, Section 15(b) of the Central Act makes provision for a refund when there is the subsequent inter-State sale and all that the first proviso to Section 5 (4) of the State Act does is to incorporate the provision contained in Clause (b) of Section 15 of the Central Act Mr. Srinivasan intimated us that he does not in the cases before us challenge the validity or constitutionality of Section 15(b) of the Central Act on the ground that it makes a hostile discrimination against persons who did not make subsequent inter-State sales. And that being so, the challenge to the constitutionality of Section 5 (4) of the State Act becomes difficult for the petitioners.
17. We are also of the opinion that the fact that the proviso authorises a refund only in the case where there is a subsequent sale in the course of an inter-State trade or commerce cannot invalidate the provisions of Section 5 (4) of the State Act which charges tax on all sales or purchases of declared goods inside the State without discrimination between the sellers and the purchasers who fall within the same classification.
18. We must, therefore, negative the argument founded on Article 14 of the Constitution.
19. We should next address ourselves to the argument constructed on Article 801 of the Constitution. We were asked to say that Section 5 (4) of the State Act which when read with the first proviso to it imposes a purchase tax only on dealers who make sales on consignment basis hampers trade commerce and intercourse which takes place in the form of a sale on consignment basis, and is therefore repugnant to Article 301 of the Constitution.
20. We have already repelled the argument that it is not correct to think that Section 5 (4) of the State Act imposes a tax only on the purchases of goods which are subsequently sold on consignment basis. It charges the tax alike on all purchases of declared goods such as those with which we are concerned in the cases before us.
21. But, it was contended that whereas the movement of goods of which there is a subsequent inter-State sale is free and unrestricted, that of goods which are sold on consignment basis is not so, since when those goods are purchased the petitioners had to pay the purchase tax which however it was unnecessary for them to pay after they made a subsequent inter-State sale also.
22. But, it is now clear from the pronouncement of the Supreme Court in the State of Madras v. N. K. Nataraja Mudaliar, 22 STC 376 = (AIR 1969 SC 147) that the imposition of a tax on a sale or purchase under a law like the State Act does not by itself directly and immediately restrict or hamper the flow of trade and that before an appeal could be made to Article 301 it should be established that such imposi-tion directly and immediately restricts or hampers the flow of trade.
23. It is obvious that the imposition of the purchase tax by Section 5 (4) with respect to the purchase of declared goods at the rates specified in the fourth schedule to the State Act does not either directly or immediately restrict or hamper the flow of trade in manner suggested to us. That tax has to be paid when the declared goods are purchased inside the State and the fact that it is so payable does not to any extent directly or immediately impede the course of the trans-action which takes place in the course of the sale on a consignment basis which the petitioners made or make in the other States Article 301 cannot, therefore, constitute a proper foundation for the denunciation of Section 5(4) of the State Act.
24. What remains to be considered is whether as contended before us there was a repugnancy between Section 15(a) of the Central Act and Section 5(4) of the State Act. The only argument presented before us in this context was that the provisions of the State Act are such as would make it possible for the purchasers of declared goods inside the State liable to taxation at more than one point in disobedience to Section 15(a) of the Central Act which provides that the tax payable under any State Law in respect of any sale or purchase of declared goods shall not be levied at more than one stage. It was contended before us that in the case of the purchase of declared goods such as those made by the petitioners before us there was the possibility of the levy of tax under the State Law at more than one stage. That possibility, it was argued arises from the fact that there was no machinery in the provisions of the State Act which would make it possible for a purchaser of declared goods from an unregistered dealer to ascertain whether tax in respect of those goods had been levied at some other antecedent stage when those goods have been purchased by some other registered dealer.
In support of this submission, our attention was asked to the decision of the Supreme Court in Bhavani Cotton Mills Ltd., v. State of Punjab : 3SCR577 in which the Section 5 of the Punjab General Sales Tax Act was struck down on the ground that there was a possibility of plurality of tbe levy of sales tax under its provisions in disobedience to Section 15(a) of the Central Act. In reinforcement of this submission, our attention was asked to the observations of the Supreme Court in one part of the judgment in which the difficulty of a registered dealer purchasing goods from an unregistered dealer in the matter of the ascertainment of the information whether in respect of those goods sales tax had been paid at some other antecedent stage was explained. In that context, the Supreme Court pointed out that havingregard to the machinery of the provisions of Punjab General Sales Tax Act it was 'difficult if not impossible' for a registered dealer in that situation to ascertain whether the goods have been subjected to tax at some other antecedent stage and they therefore made it necessary for the purchasing registered dealer to disclose in his return the turnover with respect to every commodity which he had purchased whether or not tax had been levied at some other anterior stage.
25. But, it will be observed that the real, basis of the decision of the Supremo Court was that the Punjab General Sales Tax Act did not prescribe the stage at which the sales tax which it imposed could be levied, unlike the Mysore Sales Tax Act under which the impugned assessment in the cases before us were made.
26. That what was the real feature of the Punjab General Sales Tax Act on which rested the pronouncement of the Supreme Court was subsequently explained by the Supreme Court in Rattan Lal v. Assessing Authority, W. P. No. 133 of 1968 (SC) in which the Supreme Court said this:
'This court in its majority judgment did not consider that the second proviso to Section 5 (1) by its mere declaration prevented the levy of tax at more than one stage. The difficulty, however, remained that the Act itself did not indicate the stage at which the tax was to be levied and because under Section 15(1) of the Central Act there could be no liability for payment of tax unless this stage was so stated in the Act or the rules thereunder. It was pointed out that a dealer would have to show in his return all purchases of cotton and pay the tax with his return. There was nothing which would have enabled the dealer to know whether the tax had already been paid by another dealer and to exclude from his return those transactions. The dealer could not take a chance as heavy penalties were provided.' When there was an amendment to the Punjab General Sales Tax Act for the removal of the imperfections which were pointed in the case of : 3SCR577 , there was again a challenge to the amended Act which failed on the ground that the amended Act did specify the stage at which the sales tax imposed by it could be levied.
27. But, Mr. Srinivisan contended that the real reason why Section 5 of the Punjab General Sales Tax Act was struck down by the Supreme Court was that Section 5 (2) (a) (vi) of that Act made the plurality of the levy possible.
28. We do not think so. Although there was a discussion of the provisions of that part of Section 5 in the judgment of the Supremo Court in : 3SCR577 since that part of that Section states that that part of the turnover relating to goods which had been sold within aperiod of six months after the closure of the assessment year could be deducted from the taxable turnover and that therefore the dealer who purchased those goods after the expiry of that period and another who made a purchase of those goods again could both be subjected to the payment of tax for the reason that the Act itself did not prescribe the stage at which the levy had to be made, the real ground on which the challenge to Section 5 vested and succeeded was the omission by the Act to specify the stage of the levy. That was how the judgment of the Supreme Court in : 3SCR577 was also understood by the High Court of Punjab and Haryana in Niamat Rai Milkh Raj Ahuja v. State of Punjab, (1968) 22 STC 365 (Punj) in which it is observed:
'The next contention of Mr. Srinivasan was that 'taxable turnover' is defined by Section 5 (2) of the Punjab Act after giving certain deductions and one of them Doing under Section 5 (2) (a) (vi). Since Section 5 (2) (a) (vi) has not been amended, taxable turnover cannot be ascertained with the consequence that no purchase tax can be levied. Therefore, it is maintained that the infirmity which was pointed out by the Supreme Court decision in : 3SCR577 still persists. In my opinion, this contention is not sound. The real basis of the Supreme Court decision was that no stage had been fixed for the levy of the tax and therefore, it was not possible to determine who was liable for it under the Act.'
29. But, the argument that Section 5 (4) read with the first proviso to it authorises a plurality of the levy in contravention of Section 15(a) of the Central Act was founded by Mr. Srinivasan on Section 6-A of the State Act which incorporates the rule as to burden of proof. Sub-section (2) of that Section reads:
'(2) Notwithstanding anything contained in this Act or in any other law, a dealer in any of the goods liable to tax in respect of the first sale or first purchase in the State shall be deemed to be the first seller or first purchaser, as the case may be, of such goods and shall be liable to pay tax accordingly on his turnover of sales or purchases, relating to such goods, unless he proves that the sale or purchase, as the case may be, of such goods had already been subjected to tax under this Act.'
30. There are two reasons why we should not accept the argument founded on this sub-section. The first is, as Mr. Srinivasan had to admit, there is indeed no plea on behalf of the petitioners that they were not the purchasers who were liable to pay the tax under Section 5 (4) of the State Act read with the fourth schedule of it. If there had been a repudiation of the fact that they were the persons under the State Act who were liable to pay the sales tax forthe reason that they were not either the first purchasers, or the last purchasers in the case of some of the goods, and the assessing authority had depended on the presumption which is enjoined by Section 6-A of the State Act, it would have been possible for Mr. Srinivasan to ask us to examine the validity of the provisions of Section 6-A which throws the onus on the dealer to prove that he is not the person liable to pay the Tax.
31. But, since that was not how the impugned assessments were made in these cases, we will not be right in investigating the validity or the constitutionality of that Section. Moreover, the provisions of Section 5 (4) which as they stand and on their own language do not authorise as such any plurality of levy, do not become invalid by reason of the rule of evidence which Section 6-A of the State Act incorporates. If the rule of evidence which is embedded in Section 6-A (2) is bad is indefensible, what we should do is to strike down that sub-section. The invalidity of that sub-section, if it is invalid, does not contaminate Section 5 (4) which otherwise is a perfectly constitutional piece of legislation.
32. At one stage, Mr. Srinivasan pointed Out that there is a distinction between a case where the last purchaser is liable to pay the tax under the State Act and another in which the earliest of the purchasers is fastened with the liability to pay the tax, and, in support of this submission he depended upon tha decision of the Supreme Court in Writ Petition No. 133 of 1968 (SC). Our attention was asked to the observations in the judgment in that case that a dealer who is the last purchaser has all the knowledge which is necessary for him to have with respect to the question whether he is the last purchaser or not so as to prepare his turnover accurately and without any difficulty and on the basis of this elucidation Mr. Srinivasan constructed the argument that as a corollary it should follow that to the case of a dealer who purchases goods in respect of which the point of levy is the first sale or the first purchase the difficulty of the dealer who is the last purchaser continues to remain in the same condition fa which it was under the Punjab General Sales Tax Act which was struck down by the Supreme Court in Bhawani Cotton Mills case : 3SCR577 .
But, in the case of W. P. No. 133 of 1968 (SC) the Supreme Court discussed only the question whether the last purchaser who is liable to pay the tax under the relevant statute can plead a difficulty that he is not in a position to prepare his taxable turnover with accuracy and correctness and pointed out that no such difficulty could be pleaded. The fact that the Supreme Court said so does not mean that a registered dealer who is the last purchaser of goods in respect of which the point of levy is the firstpurchase is necessarily in a difficulty in respect of the preparation of the return which he has to produce. Even in the case of a registered dealer who purchases goods from an unregistered dealer, we do not think that it can be reasonably contended that it is Impossible for him to ascertain whether those goods have been subjected to any tax at some anterior point of time. All that he has to do is to make reasonable enquiries which if he makes can reveal to him all the information that is necessary for him to gather, for the preparation of a proper return.
33. But, it was said that while Rule 26(9) of the Mysore Sales Tax Rules, 1957, does incorporate a machinery for the ascertainment of the question whether tax had been paid in respect of goods taxable at the point of the first sale or first purchase in the State In the form of a declaration in Form 82 to which it refers which the registered dealer who sells the goods to him must make, there Is no corresponding machinery with respect to a dealer who purchases those goods from an unregistered dealer. But, Rule 26 (9) (a) which does state that the registered dealer who sold the goods in that way to the dealer who purchases those goods must make the declaration, contains no provision for the enforcement of the duty on the part of the registered dealer which it makes imperative.
84. We dismiss these writ petitions, but,we make no directions in regard to costs.
85. Petitions dismissed.