1. These three petitions are under Article 226 of the Constitution for issue of a writ of prohibition or mandamus directing the opposite party, the Assistant Collector of Commercial Taxes, Central Circle, Orissa, not to assess the petitioners to sales tax, The three cases involve the same points of law and the facts are almost identical. They were heard together and arc disposed of in this judgment of ours. The petitioners are private Limited Liability Companies having their registered office at Mount Road, Madras.
The petitioner in O. J. C. No. 194 of 1954, carries on the business of selling automobile parts, accessories, tools and equipments; the petitioner in O. J. C. No. 196 of 1954, carries on the business of selling Perkins Automotive, Tractor, Marine and Industrial Dissel Engines and spare parts etc.; and the petitioner in O. J. C. No. 197 of 1954, carries on the business of selling motor cars and trucks, automobile parts and accessories. The petitioners-companies, which have been selling goods to purchasers in Orissa for some years were never taxed before. After the decision of the Supreme Court in the case of -- 'State of Bombay v. United Motors (India) Ltd.', AIR 1953 SC 252 (A), Government of Orissa issued a press note on 5-6-1954 calling upon the non-resident businessmen like the 'present petitioners, to get themselves registered and pay commercial taxes as their goods are delivered in the State of Orissa, for consumption as a direct result of the sale of such goods.
By the letter issued by the Assistant Collector, Commercial Taxes, Cuttack in the month of June, 1954 the petitioners were informed that the Government of Orissa had decided that the non-resident dealers are liable to pay sales tax with effect from 1-4-1953. The petitioners, therefore, were required to send returns for quarters ending on 30-6-1953 till 31-3-1954. They were also informed that the officer would be compelled to resort to penal provisions of the Orissa Sales Tax Act on failure on the part of the petitioners to comply with the requirements contained in the letter. _ There was some correspondence as between the petitioners and the Collector of Commercial Taxes, the petitioners pleading that under the provisions of the Orissa Sales Tax Act, they are not liable to be taxed while the Sales Tax authorities stuck to the view on the basis of the aforesaid decision of the Supreme Court that the petitioners are liable.
The petitioners, however, requested the Sales Tax authorities of Orissa to wait till an authoritative judicial pronouncement on the matter is made by the Orissa High Court. The petitioners, however, admit the position that their goods sold are actually delivered within the State of Orissa for the purpose of consumption within the State and consequently the explanation to Clause (1) of Article 286 of the Constitution, applies to their case with the result that the sales of their goods to purchasers in Orissa must be deemed to take place within the Orissa State. They further mate it clear that they do not claim exemption either on the ground that their sales have their extra-state situs or on the ground that their sales are interstate transactions. It is not contended by them that only the resident traders are taxable under the Orissa Act.
The petitioners, however, emphatically take their stand on the position that before they can be taxed, they must be 'dealers' within the definition of the term contained in the Orissa Sales Tax Act (Section 2(c)) which is an essential condition for taking any step for assessment under the provisions of the Orissa Sales Tax Act. In their petitions, they state' the facts that the petitioners-companies have no local agency in the Orissa State. Orders are no doubt secured for sales of goods of the petitioners-Companies by travelling canvassing agents from purchasers in Orissa but these canvassing agents have no power to accept any otter or finalise a contract. Contracts are finalised only at their respective registered offices in the city of Madras. It is strongly argued 011 behalf of the petitioners that under these circumstances, even though the goods are delivered for consumption within the State of Orissa as a direct lesult of sales, the petitioners are not dealers as they cannot be held to carry on business of selling in Orissa.
2. At the outset, it will be pertinent to quote Article 286, Clause (1) with the explanation attached to it:
'286(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place--
(a) outside the State; or
(b) in the course of the import of the goods into or export of the goods out of, the territory of India.
Explanation: For the purpose of Sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as' a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason or such sale or purchase passed in another State.'
The matter has been settled beyond all controversy by the decision of their Lordships of the Supreme Court in AIR 1953 SC 252 (A) that the explanation provides by means of a legal fiction that the State in which the goods sold or purchased are actually delivered for consumption therein is the State in which the sale or purchase is to be considered to have taken place notwithstanding the property in such goods passed in another State. The test of sufficient territorial nexus is thus replaced by a simpler and more easily workable test. Are the goods actually delivered in the taxing State, as a direct result of a sale or purchase, for the purpose of consumption therein? Then, such sale or purchase shall be deemed to have taken place in that State and outside all other States. The latter States are prohibited from taxing the sale or purchase; the former alone is left free to do so.
Multiple taxation of the same transaction bydifferent States is also thus avoided. It is important to note that it has been made clear by thisdecision that the latter State is left free to tax forsales or purchases but it derives the power not byvirtue of explanation to Article 286 but under Article 246(3) read with Entry 54 of List II, Schedule 7. Entry No. 54 of List II running as 'taxes on the saleor purchase of goods other than newspapers' is anexclusive subject for the States to legislate under Article 246(3) of the Constitution. That is to say, theState has got exclusive powers to legislate for imposing taxes on the sale or purchase of goodsother than newspapers. But in order to answerthe important question with which we are confronted, that is to say, whether the petitioners areliable to pay taxes, we are to examine whetherwithin the four corners of the provisions of SalesTax Act of Orissa the petitioners are made soliable.
It is contended by the learned counsel for the petitioners that merely because the sales according to the legal fiction took place within the State of Orissa, the petitioners cannot be held liable for payment of taxes for the aforesaid quarters unless the other essential requisite is fulfilled. That is to say, that the petitioners are carrying on the, business of selling their goods in Orissa. We agree with the contention of the learned counsel on an examination of the whole scheme of the Act that it is only a dealer who is made liable for taxes under the provisions of the Act.
The most important section is Section 4 which is the charging one. It runs thus;
'4(1). Subject to the provisions of Sections 5, 6, 7 and 8 and with effect from such date, as the State Government may, by notification, in the Gazette, appoint, being not earlier than thirty days after the date of the said notification, every dealer whose gross turnover on sales which have taken place in Orissa during the year immediately preceding the commencement of this Act exceeded Rs. 10,000 shall be liable to pay tax under the Act on sales effected after the date so notified.'
Section 5 provides for fixing the rates of the taxes' and further provides that a registered dealer will be exempt from payment of taxes in respect of goods sold to another registered dealer undertaking to re-sell the same goods in Orissa. Section 9 is another important section which provides that no dealer while being liable under Section 4 to pay tax under this Act shall carry on business as a dealer unless he has been registered un-der this Act and possesses a registration certificate. In Section 9A, it is further provided that apart from any quantum of turnover every dealer may apply in the prescribed manner for registration and the dealer who has been registered under the section shall be liable to pay tax under the Act so long as his registration remains in force.
Section 12 is the machinery for assessment of taxes providing for calling upon the registered dealers to furnish the returns and produce the evidence on a perusal of which the Sales Tax Officer will pass the order of assessment. Clause (5) of this section is important and should be quoted here:
'12(5). If upon information which has come into his possession, the Collector is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless without sufficient causes failed to apply for registration, the Collector shall, after giving the dealer a reasonable opportunity of being heard, assess, to the best of his judgment, the amount of tax, if any, due from the dealer in respect of such period and all subsequent periods and the Collector may direct that the dealer shall pay, by way of penalty, in addition to the amount so assessed, a sum not exceeding one and a half times that amount.'
We are definitely of the view, therefore, that the liability of the petitioners can be fixed under the provisions of the Act only if they are held to be dealers under the definition which runs as follows :
'2(c). 'Dealer' means any person who executes any contract or carries on the business of selling or supplying goods in Orissa, whether for commission, remuneration or otherwise and includes any firm or a Hindu joint family and any society, club or association which sells or supplies goods to its members;
Explanation: The manager or agent of a dealer who resides outside Orissa and who carries on the business of selling or supplying goods in Orissa shall, in respect of such business, be deemed to be a dealer for the purposes of this Act.'
The question is whether the petitioners carry on the business of selling or supplying goods in Orissa. There is no doubt that the transactions of sale are taking place in Orissa as decided by their Lordships of the Supreme Court and the position is accepted by the petitioners and it is further clear that the petitioners are the sellers in those transactions and are, therefore, selling goods in Orissa. Mr. V. Subramanyam, a leading Advocate of Madras, who appeared on behalf of the petitioners before us, cited' a number of decisions both English and Indian to clarify the meaning of the term 'carry on business' which is the same as 'exercising trade' as used in the English Acts.
The leading case on the subject is the case of -- 'Grainger and _ Son v. Gough', 1896 AC 325 (B). There, Louis Roederer, a wine merchant whose. chief place of business was in the Republic of France had engaged agents, the appellants in the case, for canvassing for orders for Roederer's wine in the United Kingdom and the appellants would receive a commission on all orders from Great Britain if executed. The appellants i.e. the agents of Roederer had not the powers to finalise the contracts on behalf of the principal as they were mere canvassers. On the findings, therefore, that no contract to sell wine was made by the appellants on behalf of Roederer in the United Kingdom, it was held that Roederer's agents, the appellants do not exercise a trade in the United Kingdom within the meaning of Income Tax Act. Their Lordships made a distinction between carrying on a trade with a country and carrying on a trade within a country.
It was further observed;
'It would equally prove that every merchant carries on business in every country to which his goods are exported. If all that a merchant does in any particular country is to solicit orders, I do not think he can reasonably be said to exercise or carry on his trade in that country. What is done there is only ancillary to the exercise of his trade in the countiy where he buys or makes, stores and sells his goods.'
Lord Buckmaster in the case -- 'Greenwood v. Smidth and Co.', (1922) 1 AC 417 (C) entirely agreed with the view expressed in the aforesaid decision. It is observed:
'Upon the facts so found I entertain no doubt that according to the decision of 'Grainger and Son v. Gougn (B)', there was no material before the commissioners to support their finding that the respondents exercised a trade within the United Kingdom.
The contracts in that case between the respondents and their customers were made in Copenhagen and the goods were shipped f.o.b. Copenhagen. The respondents were a Denish firm, resident in Copenhagen manufacturing and dealing in cement-making and other similar machinery which they exported all over the world. It was held that they did not exercise a trade within the United Kingdom and were not assessable to income-tax.
The same view was also expressed by their Lordships of the Privy Council in -- 'Lovell and Christinas v. Commr. of Taxes', (1908) AC 46 at p. 48 (D). We will quote one passage from the judgment of Sir Arthur Wilson:
'One rule is easily deducible from the decided cases. The trade or business in question in such cases ordinarily consists in making certain classes of contracts and in carrying those contracts into operation with a view to profit; and the rule seems to he that where such contracts, forming as they do the essence of the business or trade, arc habitually made, there a trade or business is carried on within the meaning of the Income-tax Acts, so as to render the profits liable to income-tax.'
It is important to note that emphasis is put upon the word 'habitually made' in order to constitute exercise of trade or carrying on business. The learned counsel has also referred to two Indian decisions of the Madras High Court enunciating the same principle. In the case of --'Pachaiammal v. Hindustan Co-operative Insurance Society Ltd., Madras', AIR 1941 Mad 270 (E), an insurance company had its head office at Calcutta and a branch office at Madras which did everything in connexion with the company's business, except entering into formal contracts of insurance and authorising payments in respect thereof. The power to accept proposals for policies was reserved entirely to the head office which alone had power to issue policies and authorise payments in respect thereto it was held that a company carries on business where it enters into contract relating to its business and not at places where it may have canvassers and agents for the purpose of obtaining offers of business and attending to matters ancillary thereto.
In this case, Leach C. J. and Horwill J., on a review of several English decisions have followed the principle laid down in -- 'Grainger and son v. Gough (B). They have also followed an earlier Madras decision in the case -- 'Municipal Council of Cocanada v. 'Clam' Line Steamers, Ltd.', AIR 1919 Mad 209 (F). In the above case, the respondent-company were assessed by the Municipality of Cocanada to pay tax for exercising its trade and carrying on business in Cocanada. It was found that the company were in the habit of loading and unloading goods at Cocanada but in view of the position that all the contracts with the shippers were effected in Madras it was held that the Municipality cannot impose any tax as the company cannot be held to be carrying on business or exercising trade in Cocanada where no contracts were entered into.
3. The principle well deducible from these cases is that if the proposed assessee is simply canvassing for orders and has no power to finalise contracts and the contracts are finalised not within the jurisdiction of the taxing State but in other countries, it cannot be held that the proposed assessee is carrying on business or exercising trade by mere canvassing for orders within the territory of the taxing State. The main point of distinction in the present cases from those cited above is, as we have already found, relying upon the decision of their Lordships of the Supreme Court, that sales are taking place within the State of Orissa and further that in these transactions of sale, the petitioners are the sellers and are selling their goods in Orissa as the goods are delivered for consumption in the State of Orissa as a direct result of the sales.
Here, not only as admitted by the petitioners, orders are secured from the purchasers in Orissa by the canvassing agents of the petitioners but the sales are completed in Orissa. The present cases, therefore, can never be covered by the decisions relied upon by the learned counsel appearing on behalf of the petitioners.
But there is a further element involved within the meaning of the term 'carrying on business', That is to say, a few stray and occasional cases of sales cannot lead us to find that the petitioners are carrying on business of selling their goods in Orissa. It. has further to be found that the petitioners are habitually or systematically selling their goods within the State of Orissa. On this point, indeed, we are confronted with a real difficulty on account of absence of materials on either side.
4. Mr. Venkat Subramanyam strongly urges that the transactions of the petitioners are simply to be deemed as sales within the meaning of Article 286's explanation and the new definition of sale as introduced in the Orissa Sales Tax (Amendment) Act, 1954 as the goods are delivered for consumption in Orissa. But nevertheless, they cannot be taken to be actual sales. This conception of sale contained in the explanation to Article 286 of the Orissa Amending Act is only legal fiction adopted for the purpose of fixing a single state situs for inter-state sale transactions giving such inter-state transactions a fiction in inter-state character. But according to him, for the purpose of determining whether the petitioners are carrying on business of selling their goods, we shall have to examine whether they are actual sales.
The learned counsel in this connexion has drawn our attention to an observation of Cave J., in --'R. v. Norfolk County Council', (1891) 60 LJ QB 379 (G):
'When you talk of a thing being deemed to be something you do not mean to say that it is that which it is to be deemed to be. It is rather an admission that it is 'not what it is to be deemed to be, and that, notwithstanding it is not that particular thing, nevertheless, for the purposes of the Act, it is to be deemed to be that thine'.
In Ex parte Walton; 'In re Levy', (1881) 17 Ch D 746 (H), James L. J. says:
'When a statute enacts that somthing shall be deemed to have been done, which in fact and truth was not done, the Court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to.'
He has further relied upon a passage appearing in the judgment of James L. J., in 'In re Coal Economising Gas Co.; Cover's case', (1875) 1 Ch D 182 (I).
'The Act says that an omission shall be deemed fraudulent. It provides that something which under the general law would not be fraudulent shall be deemed fraudulent; and we are dealing with a case of that kind. Where the Legislature provides that something is to be deemed other than it is, we must be careful to see within what bounds and for what purpose it is to be so deemed.'
In our view, this argument of the learned counsel to draw a distinction between a sale as a legal fiction and an actual sale for the purpose of the present cases, is not acceptable. In the amending Act of 1954, the explanation runs as follows:
Explanation.-- The sale of any goods actually delivered in the State of Orissa as a direct result of such sale for the purpose of consumption in the said State shall be deemed for- the purpose of this Act to have taken place in the said State, notwithstanding that under the general law relating to the sale of goods the property in the goods has, by reason of such sale, passed in another State.'
It is clear that such transactions as in the present cases shall be deemed to be sales for all purposes of this Act. In such transactions of sales, therefore, the petitioners are the sellers! and must, therefore, be held to be selling goods' as contemplated in the definition of a dealer.
5. In this connexion, we may refer to a decision of Rajamannar C. J. and Venkatarama Ayyar J., in -- 'Vakkan v. Govt. of Province of Madras', AIR 1953 Mad 86 (J). The direct question involved in that case as in the present, was whether the proposed assessee could be taken to be a dealer within the meaning of the Madras General Sales Tax Act. The assessee's principal place of business was in the Cochin State. He was also a resident of that place. He had large dealings with European firms in Fort Cochin (part of Madras State) to whom he sold yarn. The contracts of sales were made in Fort Cochin. The delivery of the goods was undertaken to be given to the buyers in Fort Cochin i. e., in the Madras State. Rajamannar C. J., after review of many of the English and Indian decisions held that the assessee must be held to be a person who carried on the business of buying and selling goods in the State of Madras and, therefore, he is a dealer within the meaning of Section 2 (b) of the Act.
The sales tax is a tax levied on the occasion of the sale of goods. The sales must be deemed to have taken place in Fort Cochin which is a part of the Madras State. The assessee was, therefore, rightly assessed under the Act as a dealer. Indeed, the undisputed fact before them was that the assessee had large scale of dealings with European firms in the State of Madras. The learned counsel for the petitioners, however, wanted to distinguish this case on the point that the definition of 'dealer' in the Madras Act is different from that in ours. There, 'dealer' means any person who carries on the business of buying and selling goods. There is no such term as in our Act that he carries on the business of buying and selling goods in Madras.
On a careful perusal of the judgment of their Lordships we find that the decision is not based on distinction on the point. On the contrary, on the facts found, their Lordships came to the conclusion that the assessee is held to be carrying on business in Madras in paragraph 17 of the report.
6. On consideration of the above decisions while we arc of the view that the petitioners are selling their goods in Orissa, we are confronted with the real difficulty to give a final decision on the point that the petitioners are dealers on account of the absence of materials to show that these transactions of sales are in a course of dealings of the petitioners. That is to say, whether they are not stray and occasional transactions but that the petitioners are habitually or in a systematic way delivering the goods in the State of Orissa for consumption as a direct result of the sales. The sales tax authorities will be in a better position to investigate into these facts after examining the returns and the relevant papers 'filed by the petitioners before them.
Against the order of assessment, if any, the petitioners, under the provisions of the Act itself have got their remedy by way of appeal or revision. They have the further remedy to apply to the revising authority under Section 24 of the Act to state a case to this Court, and if the application is rejected, they can approach this Court to call for a statement from the sales tax authority. In this view of the matter, therefore, we do not find that these are fit cases for issuing writs, but we may observe that the petitioners proceeded in a bona fide manner for obtaining a judicial pronouncement of this Court before submitting their returns to the Sales tax authorities. They had, therefore, sufficient causes for not applying for registration, as the decision of their Lordships of the Supreme Court, in 'AIR 1953 SC 252 (A)', alone is not sufficient for fixing the liability of the petitioners for taxation. But when there is still a further question to be determined that the petitioners are dealers within the meaning of the Act, it cannot be said that the petitioners wilfully avoided to get themselves registered so as to attract the penal provisions of the Act.
7. The Collector, therefore, should give the petitioners reasonable opportunities of being heard and after examining their cases in the light of our observations may proceed in accordance with law. We would accordingly dismiss the three petitions, but there will be no order as to costs.
8. I have had the advantage of going through the judgment prepared by my learned brother, and I think it necessary to add-just a few words giving my reasons for my concurrence.
9. The petitioners were served with notices under Section 11(1), Section 12(5), and Section 12(7), Orissa Sales Tax Act, and were charged with having 'wilfully failed' to apply for registration under Section 9 of the Act. On 5-6-1954, the Government of Orissa, in the Revenue Department issued a Press Note as follows:
'It is notified for the information of all Ex-Orissa dealers who are engaged in the business of selling goods in the State of Orissa within the meaning of the Explanation to Article 286(1)(a) of the Constitution that consequent upon the Supreme Court judgment in AIR 1953 SC 252 (A) pronounced on 30-3-1953, all such dealers are liable to pay tax to the State of Orissa at the rates prescribed under the Orissa Sales Tax Act and the rules framed thereunder, on all such sales as a result of which goods are actually delivered in the State of Orissa for the purpose of consumption in this State'.
The Press Note further says:
'It has been decided by the Orissa State Government that tax shall be levied on all such sales effected on or after the 1st day of January 1953'.
The Sales Tax Authorities appear to have taken the view that all Ex-Orissa dealers who have business connections with Orissa are liable to assessment under the Orissa Sales Tax Act. The soundness of this view is hotly contested by the petitioners who apprehend that as a result of the policy, adopted by the State Government they (the petitioners) are likely to be proceeded against under the penal provisions of the Act. The petitioners' contention is that the decision of the Supreme Court in the case cited above has no such effect as has been assumed by the Orissa Government and that they are not liable to pay tax merely because they had sent their goods to Orissa for sale.
It was next contended on behalf of the petitioners that the Act makes a 'dealer' chargeable to tax and not a mere seller. A dealer is undoubtedly a seller, but every seller is not a dealer liable to tax. It was finally contended that the legal fiction introduced by the Explanation to Article 286(1)(a) of the Constitution should be strictly confined in its application to the immediate purpose and scope of that provision and should not be so extended as to make a mere seller liable to tax under the Orissa Sales Tax Act.
10. Learned counsel for the petitioners covered a very wide field in the course of his arguments, and it is no disrespect to him to say that the fine distinctions made in some of the English cases cited before us, between 'trading with' and 'trading within' a country, are of academic interest, in view of the decision of the Supreme Court in AIR 1953 SG 252 (A).
In that case the Explanation to Article 286(1)(a) came up for interpretation and the learned Chief Justice observed as follows at p. 259:
'The effect of the Explanation in regard to Inter-state dealings is, in our view, to invest what in truth is an inter-state transaction with an Intrastate character in relation to the state of delivery ........When once, however, it is determined with the aid of the fictional test that a particular sale or purchase has taken place within the taxing state, it follows as a corollary that the transaction loses its Interstate character, and falls outside the purview of Clause (2) not because the definition in the Explanation is used for the purpose of Clause (2) but because such sale or purchase becomes in the eye of the law a purely local transaction. ........ The Explanation envisages sales or purchases under which out-of-state goods are imported into the State. That is the essential element which makes such a transaction Inter-State transaction by the operation of the legal fiction which blots out from view the Inter-State element, it is not logical to say that the transaction, though now became local and domestic in the eye of the law, still retains its Inter-State character.'
Having regard to this pronouncement, it must be taken as settled beyond doubt that the petitioners 'sold' the goods in Orissa once the delivery took place there, irrespective of other consideration having a bearing on the situs of the sale.
11. The question, however, still remains whether the petitioners can be brought under the taxing law enacted by the State. Section 4, Orissa Sales Tax Act makes every 'dealer' whose gross turnover exceeds Rs. 10,000/- liable to pay tax under the Act, and 'dealer' is defined in Section 2 (c) as meaning--
'any person who -executes any contract, or carries on the business of selling or supplying goods in Orissa, etc., etc.'
According to the definition, a dealer is a seller drapped with a legal phraseology. Before he is charged with tax it should be established that he 'carries on the business of selling or supplying goods in Orissa'. 'Business of selling' is a well-known legal term connoting habitual selling as distinct from spasmodic of isolated transactions. Whether a person carries on business as a dealer so as to attract the operation of the Act is essentially an inference to be drawn from facts. The Sales-tax authorities, however, appear to have overlooked the fact that the petitioners cannot be. called upon, to pay tax unless it is found that this legal requisite is fulfilled in each of these cases. The correspondence between the Sales-tax authorities and the petitioners shows that the petitioners have been contesting the soundness of the assumption made by the Sales-tax authorities that they are 'dealers' within the meaning of the Act.
It was clearly incumbent upon the authorities to determine this preliminary fact before invoking the penal provisions of Section 12 (5) and to give an opportunity to the petitioners to be heard on the point.
12. Another difficulty pointed out by learned counsel for the petitioners arises out of the statutory rules prescribing the procedure for registration of dealers. Chapter 4 of the Rules framed under Section 29 of the Act deals with' such registration. Rule 6 (4) says that
'the application for registration shall be made in Form II to the Assistant Sales-tax Officer or the Sales-tax Officer as the case may be, in whose jurisdiction the dealer's place or places of business are situated'.
The printed Form II shows that the dealer should declare that his place of business lies within the jurisdiction of a particular Sales-tax officer. 'Place of business' is defined as meaning 'any place where the dealer sells any goods, or keeps accounts of sales'. It is pointed out that the petitioners have their place of business in Madras where they have their office and keep their accounts, and that therefore, it is not possible for them to comply with the requirement in Form II and to mention 'any place of business' within the jurisdiction of a Sales-tax Officer in Orissa.
I do not think, however, that there can be any real difficult; in describing the 'place of business' having regard to the definition given to the expression as 'any place where the dealer sells any goods'. If the petitioners sell their goods inside Orissa State, every place where the delivery takes place would be a place of business for the purpose of Registration. In any case whatever difficulty might have existed formerly has now been removed by the creation of a Central Circle of the Sales-tax Department with headquarters at Cuttack, for dealing with assessment cases of Ex-Orissa dealers. If therefore it is found, as a fact, that the petitioners are 'dealers' within the meaning of the Act, the difficulty pointed out by the petitioners about registration would appear to be more imaginary than substantial.
13. It now remains to deal with the last contention raised on behalf of the petitioners. Learned counsel contended that the petitioners cannot be deemed to be 'dealers' in Orissa by reason of the legal fiction created by the Explanation to Article 286(1)(a) which determines the situs of the sale on the basis of delivery of goods. Under the law relating to sale of goods, it is said, the sale takes place in Madras where the petitioners have their place of business and where contracts of sale are concluded. It is only by means of the legal fiction created by Article 286, for the purpose of enabling the States to levy tax on sale of goods that the sale is deemed to take place in Orissa where delivery is effected. When a certain thing is deemed to be something whereas it is not in reality that something, the Act of the Legislature requires it to he treated as if it were. As was pointed out by James L. J., in (1875) 1 Ch D 182 (I)'.
'Where the Legislature provides that something is to be deemed other than that what it is, we must be careful to see within what bounds and for what purpose it is to be so deemed'.
In 'Hill v. East and West India Dock Co.', (1884) 9 AC 448 (K), Lord Blackburn explains the expression 'shall be deemed to have surrendered' as meaning
'shall be surrendered so far as is necessary to effectuate the purpose of the Act and no further'.
In 'State of Travancore-Cochin v. Shanmugha Vilas Cashewnut Factory, Quilon', AIR 1953 SC 333 at p. 342 (L), the Supreme Court defined the scope of the fiction as being limited to taking away the taxing power of all other States in relation to such sale or purchase even though the oilier ingredients which go towards the making up of a sale or purchase are to be found within these States, or even if under the general law the property in the goods passes in any of those States.
Das J., observed at p. 343 of the Report, as follows:
'The fiction of the Explanation cannot be extended to any purpose other than the purpose of taking away the taxing power of all States outside whose territories the sale or purchase is, by the fiction, deemed to take place. There its purpose ends, and it cannot be used for the purpose ot giving any taxing power to the delivery State, for that it is quite outside its avowed purpose'.
Relying on this observation it was contended by learned counsel that the legal fiction cannot be further extended so as to make the petitioners (sellers) prima facie liable to pay tax as is sought to be done by the State Government.
There is a difference between conferment of power on a Legislative body and the exercise of that power by the Legislature. In this case the Legislature have exercised the power to levy tax on sales by enacting the Orissa Sales Tax Act. The liability of a dealer is to be determined within the four corners of the legislative enactment. If, on a plain reading of the provisions of the Act, the petitioners cannot be brought within the net of taxation the fact that the transactions are deemed to have taken place within the State of Orissa can be of no assistance to the taxing authorities in imposing the levy.
But if I have understood the argument of learned counsel aright, we cannot even infer that the petitioners are 'sellers' within the State of Orissa because the legal fiction cannot be extended beyond the immediate purpose and scope of Article 286(1)(a). We are, however, unable to accept this extreme proposition. The very purpose of the Act would be defeated if we contemplate a sale without a seller. The purpose of the Act is to levy a tax on sales within the State. If by reason of the delivery of goods within the State of Orissa, a fictional sale takes place in Orissa it would be reasonable to infer that the person selling the goods becomes a seller in Orissa. It must therefore be held, as a necessary inference, that the petitioners are sellers in respect of their goods delivered in the State of Orissa.
14. But, as I have pointed out already, a further legal requirement has got to be investigatedand found namely whether the seller carries onthe business of selling, in other words whether heis a dealer in Orissa. This further fact has notbeen ascertained and the petitioners are entitled toprove that the sales transacted by them in Orissado not amount to the 'business or selling' and aretherefore not liable to be taxed. I would, therefore, agree with the order proposed by my learnedbrother that the taxing authorities should give anopportunity to the petitioners to be heard on thisquestion, and determine the preliminary fact as towhether they are dealers or not in Orissa. I amalso bound to observe that, in the circumstances,it cannot be said that the petitioners have wilfully failed to get themselves registered so as toattract the penal provisions of the Act.