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Pari Kameswara Rao and ors. Vs. State of Madras - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberTax Revn. Case Nos. 271, 272, 283, 333, 344, 348 and 364 of 1953
Judge
Reported inAIR1955AP129
ActsMadras General Sales Tax Act, 1939 - Sections 2; ;Government of India Act, 1935 - Sections 107; Sale of Goods Act, 1940
AppellantPari Kameswara Rao and ors.
RespondentState of Madras
Appellant AdvocateN. Rajeswara Rao, ;M.S.R. Sastry and ;G. Chandrasekhara Sastri, Advs.
Respondent AdvocateGovt. Pleader
Excerpt:
sales tax - constitutional validity - section 2 of madras general sales tax act, 1939, section 107 of government of india act, 1935 and sale of goods act, 1940 - constitutional validity of explanation added to section 2 (h) is put in issue - there should be real and sufficient territorial nexus between dealing subjected to tax and taxing province - as seen in earlier decisions adding explanation having extra-territorial operation is not ultra vires madras legislature - no conflict between provisions of sales of goods act and explanation added as former act does not fix situs of sale - sanction of governor general is essential only in cases falling under section 107 (2) - to fall within purview of section 107 provincial law must be traceable to concurrent legislative list - madras sales.....chandra reddy, j . (1) i agree with the conclusions reached by my learned brother that these revision cases should be dismissed. but having regard to the nature of the questions raised, i would like to give my reasons in support of it. the necessary facts are stated in his judgment and therefore not necessary to repeat them.(2) in these cases, the constitutionality of the explanation added to s. 2 (h) , madras general salex tax act (hereinafter called the act) by act 25 of 1947 is put in issue. the amendment came into force on 1.1.1948. section 2 (h) of the act defines a sale with all its grammatical variations and cognate expressions as 'every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable.....
Judgment:

Chandra Reddy, J .

(1) I agree with the conclusions reached by my learned brother that these revision cases should be dismissed. But having regard to the nature of the questions raised, I would like to give my reasons in support of it. The necessary facts are stated in his Judgment and therefore not necessary to repeat them.

(2) In these cases, the constitutionality of the explanation added to S. 2 (h) , Madras General Salex Tax Act (hereinafter called the Act) by Act 25 of 1947 is put in issue. The amendment came into force on 1.1.1948. Section 2 (h) of the Act defines a sale with all its grammatical variations and cognate expressions as

'every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, and includes also a transfer of property in goods involved in the execution of a worked contract, but does not include a mortgage by hypothecation, charge or pledge'.

The addition to this section which is impugned before us is in the following words :

'Explanation 2 : Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this State, wherever the contract of sale or purchase might have been made (a) if the goods were actually in this State at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description then, if the goods are actually produced in this State at any time after the contract of sale, or purcase in respect thereof was made.'

(3) The validity of this explanation is attacked on the grounds (1) that this is ultra vires the Madras Legislature as it is incompetent to a Provincial Legislature to enact a statute having an extra-territorial operation ; (2) that this explanation is repugnant to the provisions of the Indian Sale of Goods Act, and, therefore, void to the extent of the repugnancy for want of sanction of the Governor-General as required by S. 107, Government of India Act, 1935.

(4) On the first point, the ground of attack is that the explanation seeks to confer a power upon the State to impose tax on sales taking place outside the State, which is not within the sphere of the Provincial Legislature. In my opinion, this contention cannot prevail. It is an unexceptionable proposition that a Legislature cannot pass a legislation that would be binding on a territory outside its limits. But there is no question of extra territorial jurisdiction being conferred upon the State by this new explanation. Prior to the inauguration of the Constitution, the power of the Provincial Legislature to make laws for the Province of Madras was derived from S. 100 (3), Government of India Act, 1935, which recites thus :

'Subject to the two preceding sub-sections, the Provincial Legislature has and the Federal Legislature has not power to make laws for a Province or any part thereof with respect to any of the matters enumerated in List II in the said Schedule (hereinafter called the 'Provincial Legislative List.')

(5) The entry in the Provincial List which enabled the Provincial Legislature to enact a legislation for levying Sales Tax is No. 48 which speaks of taxes on sales of goods and on advertisements. This item does not restrict the power of the Legislature to make legislature for imposing tax on sales taking place within the boundaries of the Province. The point for consideration is whether by reason of entry No. 48, the Legislature of the Madras Province (as it was called before) was competent to undertake this legislation.

(6) The correct approach to a problem of this kind is indicated in -- 'Wallace Bros. & Co. Ltd. v. Commr. of Income-tax, Bombay'. AIR 1948 PC 118 (A). One of the questions debated there was whether Ss. 3, 4, 4 - A and 63. Income-tax Act, which enabled the income-tax Authorities to include the income arising without British India to make an assessment of income-tax on income including those arising without British India were valid. This was answered by the Privy Council in favour of the Income-tax Department in agreement with the High Court of Bombay and the department. In dealing with the contention that the relevant sections of the Income-tax Act having an extra-territorial operation was intra vires the Central Legislature. their Lordship remarked thus :

'There is no rule of law, that the territorial limits of a subordinate Legislature define the possible scope of its legislative enactments or mark the field open to its vision. The ambit of the power possessed by a subordinate legislature depend upon the proper construction of the Statute conferring those powers. No doubt, the enabling Statute has to be read against the background that only a defined territory has been committed to the charge of the Legislature. Concern by a subordinate Legislature with affairs or person outside its own territory may, therefore, suggest a querry whether the Legislature is in truth minding it own business. It does not compel the conclusion that it is not. The enabling Statute has to be fairly construed.'

In another part of the Judgment, it is stated :

'The resulting general conception as to the scope of the income-tax is that given a suffcient territorial connection between the person sought to be charged and the country seeking to tax him, income-tax may properly extend to that person in respect of his foreign income.'

These passages summarise succinctly the law on the subject, which bears a close analogy to the present one.

(7) The view enuciated in this case was accepted by the Supreme Court in -- 'Poppatlal Shah v. State of Madras', : 1953CriLJ1105 (B). There the right of the Madras Government to tax a sale which was completed within another province where the property in the goods passed, although the contract of sale was entered into within the former province was questioned on behalf of the assessee. It was urged that the Provincial Legislature functioning under the Government of India Act was not competent to pass an Act which was capable of operating upon sales concluded outside the Province and that, secondly, S. 2 (h), Madras General Sales Tax Act, did not authorise the levy of tax in respect of a transaction of sale whereby property in the goods sold passed outside the province.

The first one was rejected, but the second one found acceptance with their Lordships. In dealing with the first one, it was stated inter alia, by Mukherjee J. (as he then was) that it would be quite competent to enact a legislation imposing taxes on transactions concluded outside the Province, provided that there was, sufficient and real territorial nexus between such transactions and the taxing province. Lower down in the Judgment, it was remarked :

'As a matter of fact the legislative practice in regard to sales tax laws adopted by the provincial legislature prior to the coming into force of the Constitution has been to authorise imposition of taxes on sales and purchases which were related in some manner with the taxing province by reason of some of the ingredients of the transaction having taken place within the province or by reason of the production or location of goods within, it at the time when the transaction took place. If in the Madras Sales Tax Act the basis adopted for taxation is the location of the place of business or of the goods sold within the province of Madras, undoubtedly it would be a valid piece of legislation to which no objection on constitutional grounds could be taken. The controversy, therefore, narrows down to the short point as to what exactly has been adopted as the basis of the levy of sale tax by the Madras Legislature.'

According to this extract, the crux of the problem is whether there is any real and sufficient territorial, nexus between the dealing subjected to tax and the taxing province. Their Lordships also pronounced on the validity of the provisions now in these words :

'The presence of the goods within the province at the time of the contract would undoubtedly make the sale, if subsequently completed, a sale within the province by reason of the explanation added to Act 35 of 1947. But as this explanation was not in operation during the relevant period with which we are concerned, the assessment of sales tax, in our opinion, on the transactions during this period is illegal and not warranted by the provisions of the Act.'

(8) It may be mentioned that the tax which found the subject matter of enquiry in that case related to a period between 1.4.1947 and 31.12.1947 and as already pointed out, the explanation now assailed came into force only on 1.1.1948.

(9) After this authoritative pronouncement, it is futile to question the vires of explanation 2 to S. 2 (h), Madras General Sales Tax Act.

(10) I may also refer usefully to a passage in the Judgment of the Supreme Court in -- 'State of Bombay v. United Motors (India) Ltd.', : [1953]4SCR1069 (C) :

'In the case of sales tax, it is not necessary that the sale or purchase should take place within the territorial limits of the State in the sense that all the ingredients of a sale like the agreement to sell, the passing of title, delivery of the goods, etc., should have a territorial connection with the State Broadly speaking, local activities of buying or selling carried on in the State in relation to local goods would be a sufficient basis to sustain the taxing power of the State, provided of course such activities ultimately resulted in a concluded sale or purchase to be taxed. In exercise of the legislative power conferred upon them in substantially similar terms by the Government of India Act, 1935, the Provincial Legislature enacted Sales Tax laws for their respective provinces acting on the principle of territorial nexus referred to above, that is to say, they picked out one or more of the ingredients constituting a sale and made them the basis of their sales tax legislation.'

(11) The law as stated here puts the matter beyond all controversy and it is too late now to challenge the validity of, this explanation, 'Budh Prakash v. Sales Tax Officer, Kanpur', : AIR1952All764 (D), Sales Tax Officer, Pillibhit v. Budh Prakash', : [1955]1SCR243 (E), on appeal to the Supreme Court from the above and -- 'Bharat Sabaigrass Ltd v. Collector of Commercial Taxes, Orissa, Cuttack', : AIR1953Ori23 (F), cited for the petitioners are not really in point. They deal with cases of executory contracts and forward contracts, and cannot, therefore, have any bearing upon the present enquiry. Surely, the new explanation does not seek to clothe the State with power to tax executory contracts of sale, but only with levy of tax on completed sales. The explanation has to be read with the main provision defining the sale. For these reasons the first contention of the petitioners fail.

(12) This leads me to the controversy regarding the alleged repugnancy between the impugned provisions and the relevant Sections of the Sale of Goods Act. It is stated that this explanation makes a change in the notions as obtained from the Indian Sale of Goods Act and is opposed to the completion of sale as defined in the Indian Sale of Goods Act. Under this explanation, transfer of property is deemed to have taken place in the taxing province where the goods are produced despite the property in the goods passing in another State which is the situs of sale as provided under the Sale of Goods Act.

(13) To appreciate this argument, it is necessary to refer to Entry No. 48 of the Provincial List which confers authority on the Provincial Legislature to make laws for levy of taxes on the sale of goods and on advertisements. Thus the object of this entry is not to confer power on Provincial Legislatures to enact the legislation to deal with contracts of sales or sales as such. The pith and substance of this is to provide power to levy taxes on sale of goods and it does not entrench upon the province of the concurrent list and, therefore, there is no repugnancy to Sale of Goods Act.

It is certainly within the legitimate sphere of the Provincial Legislature to make the laws so long as it does not travel beyond the scope of Entry No. 48. That the Sale of Goods Act does not prescribe a situs of sale and consequently there can be no conflict in regard to this matter between S. 2, Madras General Sales Tax Act, and the material provisions of the Indian Sale of Goods Act is apparent from a statement in the Judgment of the Chief Justice Patanjali Sastri in : [1953]4SCR1069 (C).

'Neither the Sale of Goods Act nor the Common Law relating to the sale of goods has anything to say as to what the situs of a sale is, though certain rules have been laid down for ascertaining the intention of the contracting parties as to when and under what conditions' the property in the goods is to pass to the buyer. That question ofter raises ticklish problems for lawyers and courts, and to make the passing of title, the determining factor in the location of a sale or purchase would be to replace the old uncertainties and difficulties connected with the nexus basis with new ones'.

This question directly arose in the High Court of Madras in -- 'Louis Dreyfus & Co. Ltd. v. State of Madras', : AIR1954Mad932 (G). Satyanarayana Rao and Rajagopalan JJ., constituting the Bench ruled that there was no conflict between the 2nd explanation to S. 2 (h), Madras General Sales Tax, and the provisions of the Indian Sale of Goods Act, as the latter Act does not fix the situs of sale. In support of their conclusions, the learned Judges relied on the passage in the Judgment of the Supreme Court extracted above.

(14) In support of the theory of repugnancy, the counsel for the petitioners called in aid a passage in the judgment of Hidayathullah J., in -- 'Shriram Gulabdas v. Board of Revenue, M. P.', AIR 1952 Nag 378 at p. 384 (H):

'What we have stated here does not apply, however to the amended explanation for which no sanction of the Governor General was obtained. A reading of the amended explanation would show that it trenches substantially upon the existing rules embodies in the Sale of Goods Act. To change effectively those rules was not within the unconditional competence of the Provincial Legislature. They could only do so if the Bill had been assented to by the Governor General as required by Ss. 100 and 107 Government of India Act, 1935.

Admittedly the amending Act was not so assented to and consequently it fails to work any change. Further, the rules have been amended to make the transaction complete when the goods are produced in the province and not appropriated towards the contract already existing. That would be levying an excise duty from the manufacturer, because till the goods are appropriated towards the contract, the transaction of sale is not complete, and a tax purporting to be 'on the sale of goods' cannot be levied because no sale has taken place. This, however, does not arise in this case, but is applicable to the other case, which for other reasons, we have decided to reject'.

(15) Apart from how far these observations can have relevancy in the present context, and whether they could be reconciled to what was stated by the learned Judge earlier, they could not have much of force in the light of the rule stated by the Supreme Court in : [1953]4SCR1069 (C) and also : 1953CriLJ1105 (B). Further there is the direct decision of the Madras High Court referred to above, which is binding on us so long as it is not over-ruled. It follows that there is really no repugnancy between the present enactment and the Sale of Goods Act of the Central Legislature and the former can operate without any question of voidness.

(16) This contention can be rejected on another gound. The sanction of the Governor General is essential only in cases falling under S. 107 (2). Government of India Act, 1935. Sub-section (2) of S. 107 states :

'Where a provincial law with respect to one of the matters enumerated in the Concurrent Legislative List contains any provision repugnant to the provisions of an earlier Federal Law or an existing Indian Law with respect to that matter, then, if the provincial law having been reserved for the consideration of the Governor General or for the signification of His Majesty's pleasure, has received the assent of the Governor General or of His Majesty, the Provincial law shall in that province prevail, but nevertheless the Federal Legislature may at any time enact, further legislation with respect to the same matter'.

(17) In these cases admittedly the assent of the Governor General was not obtained, but this is not decisive of the matter. It remains further to consider whether the provincial law which is said to have violated S. 107 was enacted by virtue of its powers received from the concurrent list. I have already pointed out that it is by reason of entry No. 48 that the Madras General Sales Tax Act could be passed, whereas contracts which are dealt with in the Indian Sale of Goods Act come under entry No. 10 of the concurrent list. It is, therefore, seen that the two enactments deal with different subjects and in order to come within the purview of S. 107, Government of India Act, 1935, the provincial law must be traceable to the concurrent legislative list.

(18) Similar questions have been the subject matter of judicial review. It was held by the Privy Council in -- 'Megh Raj v. Allah Rakhia', AIR 1947 PC 72 (I), that where the provincial law false within the powers given to the province under the provincial list and does not depend upon any of the powers provided by the concurrent list, the question of repugnancy under S. 107, Government of India Act, 1935, does not arise. The ruling of the Federal Court in -- 'Lakhi Narayan Das v. Province of Bihar', AIR 1950 FC 59 (J). contains a decision which governs the present case. It was held that the to attract the applicability of S. 107, it has to be established that the impugned Act and the existing law must be in respect of the same subject matter and both of them must be covered by one of the entries in the concurrent list and secondly, there must be repuganncy between the two provisions. What follows from this is that if the subjects dealt with by the two enactments are different and the sources of the power of the legislature are traceable to two different lists, S. 107 cannot have any operation. These two authorities were followed by the Bench of the Mdaras High Court in : AIR1954Mad932 (G).

(19) It is not necessary to refer to the other decisions which state the law to the same effect. On these rulings the argument as to repugnancy cannot have any force and has to be repelled.

(20) In the circumstances, the appeals are dismissed with costs. Government Pleader's fee is fixed at Rs. 125/- in each case.

Umamaheswaram, J .

(21) These revision petitions are filed under S. 12 (b), Madras General Sales Tax Act, against the Orders of the Sales Tax Appellate Tribunal Madras, and they raise difficult and interesting questions of law. The main point that arises for consideration is whether the amendment introduced by Act 25 of 1947 to the definition of 'Sale' in S. 2 (h), Madras General Sales Tax Act, is ultra vires of the Madras Legislature, Explanation 2 to S. 2 (h) is in the following terms :

'Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930, the sale or purchase of any goods shall be deemed for the purposes of this Act to have taken place in this Province, wherever the contract of sale or purchase might have been made

(a) if the goods were actually in this Province at the time when the contract of sale or purchase in respect thereof was made, or

(b) in case the contract was for sale or purchase of future goods by description, then if the goods are actually produced in this province at any time after the contract of sale or purchase in respect thereof was made.'

The validity of the explanation was attacked on the ground that no sanction of the Governor General was obtained under S. 107 (2), Government of India Act, 1935 but the objection was negatived by the Sales TAx Appellate Tribunal. The grounds on which the learned Advocate for the petitioners challenged the validity are as follows : (i) that the effect of the explanation is to levy sales tax not on sale of goods but only on contracts of sale by reason of the existence of goods within the State. (ii) that this provision is repugnant to the provisions of the Sale of Goods Act, and therefore, should not prevail as the previous sanction of the Governor General was not obtained for enacting the amendment that was introduced in 1947.

Before dealing with those objections we might state that there is no dispute as regards the facts in all these Revision Petitions. The assessees who entered into contracts of sale in respect of goods within the Madras State, delivered them ougside the State of Madras by taking the Railway Receipts in their own names and by collecting the moneys by drawing hundies on Banks outside the State. In T. R. C. Nos. 271 and 272 of 1953 the year of assessment was 1947--48. In T. R. C. Nos. 283 & 333 of 1953 the year of assessment was 1948--49. In T. R. C. Nos. 344, 348 and 364 of 1953, the year of assessment was 1948-50.

There is no substance in the fist contention as, under the explanation no sales tax is sought to be levied on contracts of sales simpliciter. What the explanation provides is that the Madras State is entitled to collect Sales Tax if the goods are actually in the State at the time when the contract of sale or purchase is made in respect thereof. It does not levy tax on a mere executory contract which is not completed and which does not fructify in a sale involving transfer of property in the goods. Even though the contract of sale is entered into outside the State and the actual sale involving the transfer of property in goods takes place in another State, still the Madras State is entitled, by reason of the explanation, to levy tax, if the goods are within the State when the contracts of sale are entered into.

This position is conceded by the learned Government pleader, and he states that no sales tax is sought to be levied by reason of the explanation on the mere contracts of sale which are unaccompanied or followed by the sale of the goods i.e., the passing of the ownership or title in these goods. The decision of the Allahabad High Court in : AIR1952All764 (D), confirmed by the Supreme Court. : [1955]1SCR243 (E) has really no application to the present case. As already pointed out, the learned Government Pleader rightly conceded taht the liability to be assessed to Sales Tax arises only if there is a completed sale and not when there is only an agreement to sell (which can only result in a claim for damages) and that the State Legislature cannot enlarge the definition of sale, so as to include agreements to sell and arrogate to itself, a power which is not conferred upon it by the Government of India Act. 1925. In this view, the decision in : AIR1953Ori23 (F), which followed the decision in 'Budh Prakash v. Sales Tax Officer, Kanpur (D)', has equally no bearing.

(22) The next contention that prior to the Constitution it was incompetent for the Provincial Legislature to levy sales tax in respect of sales taking place outside the State is equally without force. Entry No. 48 in the Provincial Lists empowered the Provincial Legislature to levy taxes on the sale of goods and on advertisements and it does not suggest that a legislation imposing tax on sale of goods can be made only in respect of sales taking place within the boundaries of the province, Section 100 (3), Government of India Act, only enacts that a law could be passed by Provincial Legislature for the purpose of the province itself as pointed by Mukherjee J., (as he then was) in : 1953CriLJ1105 (B), which is in the following terms :

'It admits of no dispute that a provincial legislature could not pass a taxation statue which would be binding on any other part of India outside the limits of the province, but it would be quite competent to enact a legislation imposing taxes on transactions concluded outside the province provided that there was sufficient and a real territorial nexus between such transactions and the taxing province. This principle, which is based upon the decision of the Judicial Committee in AIR 1948 PC 118 (A), has been held by this court to be applicable to sales legislation in its recent decision in the 'Bombay Sales Tax Case', : [1953]4SCR1069 (C), and its propriety is beyond question'.

(23) The only question that arises, therefore, is whether under the explanation there is an suffcient and a real territorial nexus between the transaction of sale and the taxing province. A sale consists of a number of ingredients which are essential in the sense that, if any of them is missing, there is no sale. In the 'Bombay Sales Tax Case (C)', it has been pointed out that the following are some of the ingredients to constitute a sale (i), the existence of goods which form the subject matter of the sale, (ii) the bargain or contract which when executed will result in the passing of the property in the goods for a price, (iii) the payment or promise of payment of a price, (iv) delivery of the goods and (v) the passing of title.

The Madras Legislature has enacted that, if the goods forming the subject matter of the contract of sale are actually in the State when the contract of sale is made or in the case of the sale of future goods by description, if the goods are actually product in the State at any time after the contract of sale is made the sale shall be deemed to be made within the State. We are inclined to hold that the existence of the goods affords sufficient nexus and that the legislature was competent to impose a tax in respect of such a transaction whenever the actual sales take place. The learned Advocates for the petitioners drew out attention to the passage at p. 256 in : [1953]4SCR1069 (C), which is in the following terms :

'Whether the territorial nexus put forward as the basis of the taxking power in each case would be ascertained as sufficient was a matter of doubt not having been tested in a court of law'

and contended that the question left open in that decision falls to be determined in those cases. We might, however, point out that subsequently in Poppatlal Shah v. State of Madras (B)', the Supreme Court had to consider the effect of the explanation in dealing with a conviction based on S. 2 (h) as it stood prior to the he then was) are as follows :

'If in the Madras Sales Tax Act the basis adopted for taxation is the location of the place of business or of the goods sold, within the Province of Madras, undoubtedly it would be a valid piece of legislation to which no obtaken'.

After referring to the various ingredients or element covered by the expression 'sale of goods' Mukherjee J., (as he then was ) observed at p. 277 that

'the presence of the goods within the province at the time of the contract would undoubtedly make the sale, if subsequently completed a sale within the province by reason of the explanation added by Act 25 of 1947.'

As this explanation was not in operation during the relevant period with which the Supreme Court was concerned, it was held that the assessment of Sales Tax in respect of sales concluded outsid the State, was illegal and not warranted by the provinsions of the unamended Act. We do not agree with the argument of the learned Advocates for the petitioners, that the observations are only obiter dicta and ought not to be followed. We follow those observations and hold that explanation to S. 2 (h) was validly enacted.

(24) A more substantial contention raised on behalf of the petitioners is that the impugned provision is repugnant to the Sale of Goods Act and that under S. 107 (2), Government of India Act, the sale of goods should prevail over the Sales Tax Act as the assent of the Governor General was not obtained. As already pointed out, the amendment was made, in exercise of the powers conferred by item 48 of the Provincial List and not under item 18 of the Concurrent List dealing with 'contracts including partnerships, agency, contract of carriage and other special form of contract but not including contracts relating to agricultural land'. As the power of the Madras Legislature is derived from item 48 of List No. 2 and not item 16 of List No. 3. we are of opinion that no question of repugnancy between the Madras Sales Tax Act and the Sale of Goods Act arises.

This principle, namely, that if the power of legislation is derived from different lists. no question of repugnancy arises, is well settled and concluded by AIR 1947 PC 72 (I) and by the Federal Court in AIR 1950 FC 59 (J). Following those decisions we hold that as the subject matter of the two enactments are entirely different, no question of repugnancy under S. 107. Government of India Act, arises and the amendment is not invalid on the ground that the assent of the Governor General was not obtained. We are supported in this conclusion by a recent decision of the Madras High Court in : AIR1954Mad932 (G). We respectfully follow that decision as the identical question was considered therein.

(25) In this view, it is unnecessary to consider whether the provisions of the Sale of Goods Act are, in any way, affected altered or modified by the amendment. The petitioners contended that there is a difference regarding the situs under the provisions of the Sales Tax Act and the provisions of the Sale of Goods Act and that consequently the terms of S. 107, Government of India Art, are contravened. In : [1953]4SCR1069 (C), the Supreme Court observed as follows :

'Neither the Sale of Goods Act nor the common law relating to the sale of goods has anything to say as to what the situs of sale is, though certain rules have been laid down for ascertaining the intention of the contracting parties as to when or under what conditions the property in the goods is to pass to the buyer.'

Those observations were followed by the Bench of the Madras High Court in : AIR1954Mad932 (G) and their Lordships held that :

'In view of this, the argument that the provision in Explanation 2 to Sec. 2 (h) of the Sales Tax Act of 1947 is repugnant to the provisions of the Sale of Goods Act, must be repelled..............'

We, therefore, agree that under the Sale of Goods Act there is no provision fixing the situs of sale. The decisions in -- 'Commr. of Income-tax, Madras v. Mysore Chromite Ltd', : [1951]20ITR546(Mad) (K), confirmed by Supreme Court in -- 'Sha Mulchand & Co. v. Jawahar Mills Ltd.', : [1953]4SCR351 (L) and -- 'State of Madras v. Mysore Lachia Shetty & Sons Ltd', : AIR1954Mad1029 (M), were relied on by the learned advocates for the petitioners, in support of their contention that the observations in : AIR1954Mad932 (G), 'that there is no provision fixing the situs of sale under the Sale of Goods Act' are opposed to the conclusions of those two decisions. We are of opinion that there is no force in that contention as what was decided in those two cases was that on the particular facts by applying the provisions of the Sale of Goods Act, the property passed outside the Indian territory.

(26) Reliance was placed on the decision in AIR 1952 Nag 378 (H), in support of the contention that the explanation offends S. 107, Government of India Act.

(27) We have already dealt with the question that there is no repugancy and that the impugned explanation does not in any way trench upon the provisioins of the Sale of Goods Act. We wish to follow the decision of the Madras High Court reported in 'Louis Dreyfus & Co. Ltd. v. State of Madras (G)', in preference to the decision in 'Shriram v. Board of Revenue (H).

(28) In view of our conclusions that the explanation is intra vires, T. R. C. Nos. 271, 272, 283 and 333 of 1953 fail. In T. R. C. Nos. 344, 348 and 364 of 1953, the Sales Tax Appellate Tribunal exempted the transactions subsequent to 26-1-1950 and the revisions relate only for the period from 1-4-1949 to 26-1-1950, and they also stand dismissed. As so revision petitions have been filed by the State for the period from 26-1-1950 to 31-3-1950, it is unnecessary for us to consider the effect of our decisions in T. R. C. Nos. 283, 284, 285, 148 and 192 of 1953.

(29) Application dismissed.


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