1. In these matters the petitioner is the Ashoka Marketing Ltd., a company incorporated under the Indian Companies Act. It has its head office at Dalmianagar in the State of Bihar, and a branch office in Calcutta. The Calcutta branch has been registered as a dealer under the Bengal Finance (Sales Tax) Act, 1941. The petitioner is the sole selling agent of Messrs Rohtas Industries Ltd., which carries on business in the manufacture and production inter alia of cement, cardboard, paper, sugar, chemical and other commodities at Dalmianagar in the State of Bihar. This application relates to transactions in which goods were manufactured at Dalmianagar and sold to parties in West Bengal and the goods were despatched from Dalmianagar to West Bengal. It is not disputed that the goods were meant for consumption in West Bengal. That these transactions were in the course of inter-State trade and commerce is not disputed. But they come under the Explanation to Article 286(1) of the Constitution. In other words, they are within the category which has been described as 'Explanation sales'. The respondents claim to levy sales tax on the said transactions and have called upon the petitioners to file their returns and to be assessed for payment of sales tax (Matter No. 153 of 1956 is for the period 1950-51 and the Matter No. 146 of 1957 is for the period 1952-53). The petitioner disputes the right of the respondents to levy sales tax upon the transactions which are admittedly inter-State sales. The facts are similar to the facts in Matter No. 161 of 1955 (Indian Standard Wagon Co., Ltd. v. Commercial Tax Officer etc.  9 S.T.C. 553 in which the position has been investigated. As a matter of fact, there have been common sets of arguments in Matter No. 161 of 1955 and a number of matters, including these applications, except for the fact that in these two applications Mr. S. Roy on behalf of the petitioner has taken an additional point that there has been an infringement of his client's right under Article 19(1)(g) of the Constitution. It has been agreed that the reasons given in my judgment in Matter No. 161 of 1955 with regard to the common points need not be repeated herein. I shall, therefore, only briefly refer to the same. So far as facts are concerned, the main difference between Matter No. 161 of 1955 and these matters are that the sales herein are Explanation sales. While in Matter No. 161 of 1955, I had to consider whether the sales were inter-State sales, it is not necessary to do so in these cases. It is admitted that the transactions constitute inter-State trade and commerce but it comes within the Explanation that used to be appended to Article 286(1) of the Constitution. The position in law is briefly as follows :
Before the Constitution came into existence, taxation of sales of goods was a Provincial subject. It is now a State subject. But before the Constitution came into being, the Provinces promulgated laws regarding taxation on sale of goods, consisting not only of intra-Provincial sales, but also sales that took place between the different Provinces. There was no law regulating taxation of inter-Provincial trade or commerce. The Sale of Goods Act which is a Central Act, regulated the law in respect of the sale of goods, but it did not contain any provision determining the situs of a sale. In other words, it provided as to how sales were to be made, when a contract of sale would be deemed to be concluded and what were its incidents, but it did not provide as to 'where' a sale or a contract of sale would be deemed to have taken place. The different Provinces took upon themselves to include within the net of taxation, sales and purchases between different Provinces, which would now be called inter-State sales and such provisions were valid provided the Province concerned had some connection or nexus with the transactions. The result was that the same transaction could be, and often was, taxed more than once and by more Provinces than one. This kind of double taxation was detrimental to the development of trade and commerce and that is why Article 286 was introduced in the Constitution. Under Article 286(2), taxation by any State of inter-State sales was banned. But Parliament was given the right to lift the ban, that is to say, enable the States to tax inter-State sales. So far as the Bengal Finance (Sales Tax) Act, 1941, is concerned, Section 2(g) contains the definition of sale. In that definition, a 'sale' means any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of a contract but does not include a mortgage, hypothecation, charge or pledge. Then there are several Explanations, of which Explanation (2) is important and runs as follows : A sale shall be deemed to have taken place in West Bengal if the goods are actually delivered in West Bengal as a direct result of such sale for the purpose of consumption in West Bengal, notwithstanding the fact that under the general law relating to sale of goods, the property in the goods has, by reason of such sale, passed in another State.
2. This is more or less the same as the Explanation to Article 286(1) of the Constitution. As I have mentioned above, the Constitution banned the taxation of inter-State sales. In order to bring the State Act in line with the Constitution, there was introduced into it, Section 27, which states that notwithstanding anything contained in the State Act, a tax shall not be levied on the sale or purchase in the course of inter-State trade or commerce, except in so far as Parliament might by Jaw otherwise provide. Also, it was provided that the Explanation to clause (1) of Article 286 of the Constitution shall apply for the interpretation of Sub-clause (1) of Clause (a) of Sub-section (1). The question soon arose as to whether the ban on the taxation of inter-State sales included a ban on Explanation sales. This controversy culminated in . the Supreme Court decision, State of Bombay v. United Motors (India) Ltd. A.I.R. 1953 S.C. 252 It was held there that Article 286(1)(a) read with the Explanation prohibits taxation on sales involving inter-State elements, by a State, except the State in which the goods are delivered for the purposes of consumption therein. It was further held that the operation of Clause (2) of Article 286 stands excluded as a result of the legal fiction indicated in the Explanation to Clause (1) and the State in which the goods are actually delivered for consumption can impose a tax on inter-State sales or purchases. This decision was delivered on 30th March, 1953. The result was that individual States started levying sales tax on goods which might have come from outside the State but were delivered inside the State for consumption therein. This position of affairs continued until 6th September, 1955, when the matter again came to be considered by the Supreme Court in Bengal Immunity Co. v. State of Bihar A.I.R. 1955 S.C. 661. By the majority decision in this case, the previous decision in The United Motors case, A.I.R. 1953 S.C. 252 was disapproved. It was held that the Explanation to Clause (1) of Article 286 could not legitimately be extended to Clause (2), nor could it be read as curtailing or limiting the ambit of that clause. It was held that except in so far as Parliament by law may provide otherwise, no State could by law impose, or authorise the imposition of, any tax on sales or purchases, when such transactions took place in the course of inter-State trade or commerce, irrespective of the fact whether such sales do or do not fall within the Explanation. The result was that during the period between 1st April, 1951, and 6th September, 1955, when The Bengal Immunity Co. judgment, A.I.R. 1955 S.C. 661 came to be delivered, the States had been realising taxation on inter-State sales which came within the Explanation, against the law. It was found that the States would have to refund enormous amounts and their budgetary provision would naturally be upset. In order to remedy this, the President promulgated the Sales Tax Laws Validation Ordinance (No. III of 1956) on 30th January, 1956. This was later on replaced by the Sales Tax Laws Validation Act (VII of 1956) (hereinafter called the 'Validation Act') which came into force on 21st March, 1956. Section 2 of the Act runs as follows:
Notwithstanding any judgment, decree or order of any Court, no law of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter-State trade or commerce during the period between the 1st day of April, 1951, and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of inter-State trade or commerce; and all such taxes levied or collected or purporting to have been levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law.
3. We have already seen that the transactions with which we are concerned in this application are Explanation sales, that is to say, the goods have been sold from Bihar to purchasers in Bengal and transported across the border. The goods were delivered in the State of West Bengal for consumption therein. If The United Motors case, A.I.R. 1953 S.C. 252 held the field, then such sales would be included in the net of taxation. But according to The Bengal Immunity Co.'s case, A.I.R. 1955 S.C. 661 they would be excluded, unless they have been validated under the Validation Act. It has been the object of this and several other applications, which are being heard together, to establish that notwithstanding the Validation Act, such sales do not come under the net of State taxation. In other words, it is argued that the Validation Act has not altered the situation and that Explanation sales are still untaxable because they are in the course of inter-State trade and commerce. This contention has not been put forward only in this State; cases have been fought out in practically all the States in India. The argument advanced has been that the Validation Act only validated the imposition of a tax, provided that there was an existing law in the State to that effect. In practically all the States, the taxation laws initially attempted to include such sales within the net of taxation but after the passing of the Constitution, they had to introduce provisions similar to Section 27 of the Bengal Act, exempting the taxation of inter-State sales and bringing the law in line with the Constitution. Thus, the Acts originally included a power to levy taxation in such cases, but read with the exempting section were prevented from doing so. The short question is as to whether in view of these facts it could be said that there was in the States any 'existing' law for taxation of inter-State sales and, particularly, Explanation sales. One group of cases, following a decision of the Bombay High Court, Dialdas Parmanand Kripalani v. P.S. Talwalkar and Ors.  7 S.T.C. 675 held that it could be said that there was an existing law, and the position was that although there was a law, a ban had been put because of the provisions contained in the Constitution, and this ban had been removed by Parliament by the Validation Act. Therefore, during the period covered by the Validation Act, such transactions could be taxed. Another group of cases, headed by a Madras case, Government of Andhra v. Nooney Govindarajulu  8 S.T.C. 297 and certain decisions of the Travancore-Cochin High Court, held to the contrary, namely, that the various State laws read with the exemption could not be said to contain any existing law for the taxation of inter-State sales including Explanation sales. All these conflicting decisions were considered in the recent Supreme Court case, M. P. V. Sundararamier & Co. v. State of Andhra 1958 S.C.A. 492. The majority judgment in the case was delivered by Aiyar, J., who has dealt with the matter exhaustively. He has accepted the view contained in the Bombay group of cases, and has dissented from the other group. The decision of Aiyar, J., in the several cases mentioned above, consisted of transactions in the nature of Explanation sales. Thus, the decision is particularly applicable to the facts of the present case and the several other cases dealing with Explanation sales. It was held that the provisions in the Madras Sales Tax Act were to be construed so as to come to the conclusion that there was an existing law for the taxation of Explanation sales. But a ban had been imposed by Section 22 thereof, which ban had been lifted by Parliament by virtue of the Validation Act. Thus, such transactions came within the net of taxation, for the period covered by the Validation Act. It is true that the particular cases before the Supreme Court turned on the provisions of the Madras Act, but the Bombay Act was also referred to and the provisions of the Bombay Act are very near to the provisions contained in the Bengal Act. In any event, the reasoning, and the principles laid down are fully applicable to the matters involved in these applications. As I have stated, the Explanation to Section 2 of the Bengal Act brings into the net of taxation the transactions with which we are concerned in this case, which have all arisen within the period covered by the Validation Act. The only question that is to be considered is as to whether by virtue of Section 27 of the Act, it could be said that there was an existing law in the State which enabled such taxation to be levied, and which has been validated by the Validation Act. For the reasons given by Aiyar, J., in the judgment cited above, and the other reasons discussed by me in my judgment in Matter No. 161 of 1955, Indian Standard Wagon Co., Ltd. v. Commercial Tax Officer  9 S.T.C. 553., delivered to-day, I must hold that the attempted taxation of the transactions which are the subject-matter of these applications, are lawful by reason of the Validation Act. I have mentioned above that Mr. Roy on behalf of the petitioners in this case has argued an additional point, namely, that the Validation Act is void as infringing the fundamental right of the petitioner under Article 19(1)(g) of the Constitution. That provision in the Constitution gives a fundamental right to citizens to practise any occupation, trade or business. It is argued that this fundamental right can only be infringed if there is any law which imposes a reasonable restriction on the exercise of such right in the interest of the general public. Mr. Roy argues that the attempt to tax such transactions retrospectively was so unreasonable that many companies or firms faced with such unreasonable restrictions would go out of business and, therefore, the Validation Act might be said to infringe the provisions of Article 19(r)(g) of the Constitution, and is not saved by exception 6, Mr. Roy is at once confronted by the Supreme Court decision which has declared the Validation Act as being intra vires. He, however, argues that this point was not raised or discussed in the Supreme Court case. The interesting question arises as to whether, if the Supreme Court declares a. certain Act to be intra vires, it could be re-argued on grounds which had not been taken or considered in the Supreme Court decision, and whether a State High Court could come to the conclusion contrary to that of the Supreme Court. In my opinion, the position is that a Supreme Court decision declares the law of the land and as such should be considered to have a seal of finality. Where the Supreme Court has deliberately left open a point, that is another matter, but where it has come to a decision as to whether an Act was intra vires the Constitution, such an Act cannot be challenged before a State High Court even on a ground which had not been considered by the Supreme Court, or not raised before it. If such was not the case, there could be no finality. In other words, if a declaration by the Supreme Court that an Act was intra vires was not the last word upon the subject, then there would be a prevailing sense of uncertainty, and there would be no sense in Article 141 of the Constitution to the effect that the law declared by the Supreme Court shall be binding on all Courts within the territory of India. However, I shall deal with Mr. Roy's argument because in my opinion, it does not affect the result. Mr. Roy's argument is shortly as follows : He says that the Validation Act was an unreasonable restriction on the fundamental rights of the petitioner to carry on its business for the following reasons : Firstly, it is said that this is a retrospective legislation and there is an attempt to levy taxation retrospectively which has been condemned in all civilised countries. He has referred me to two American cases, United States v. Percy Hudson 299 U.S. 498 : 81 L. Ed. 370 and Thomas W. White v. Mary Adelaide Pon 296 U.S. 98 : 80 L. Ed. 80.. According to him the unreasonableness comes in this way. Sales tax is payable by the ultimate purchaser, but is realised from the dealer. If a dealer is a registered dealer, he may pass on the burden of taxation to the next purchaser in the chain of transactions until it reaches the ultimate consumer. He says that in retrospective taxation a trader would not know that he would be liable to pay taxes and, therefore, he has not taken any protection for its realisation from his purchaser. A registered dealer in order to get exemption would have to take declaration forms from the purchasers. Since, however, he knows that no such taxation is payable, he has not taken any declaration forms, and yet years afterwards he is suddenly confronted with the fact that he will have to pay sales tax on such transactions. It would be impossible in most cases to get hold of the purchasers once more, and either to get declaration forms or to make them pay taxes. He says that during the period covered by the Validation Act, the transactions amounted to lacs and a person would have to bring out moneys out of his own pocket, while he has had no opportunity of safeguarding his interests. This is a very attractive argument, and there is no doubt that if all the facts were such as stated, there is an element of unreasonableness in the imposition of a retroactive levy of taxation. But if we look into the matter closely, it is evident that the objection taken is quite divorced from the facts of the case. Let us recall what happened in these cases. When The United Motors case, A.I.R. 1953 S.C. 252 came to be determined, individual States were attempting to tax Explanation sales. The United Motors judgment, A.I.R. 1953 S.C. 252 upheld the power of the State to impose taxes on Explanation sales. Right up to the time that The Bengal Immunity decision, A.I.R. 1955 S.C. 661 came to be delivered, everybody knew or ought to have known that taxes were payable, because until that decision came into existence everybody was proceeding upon that footing, the matter having been decided by the highest authority of the land. It is only after The Bengal Immunity case, A.I.R. 1955 S.C. 661 was decided, that this view had to be altered. The Validation Act is for the period between these two judgments. Remembering these facts, it is apparent that the objection has no legs to stand upon and is divorced from reality. Mr. Roy's argument is that the trader entering into Explanation sales did so on the footing that no tax was payable. This is exactly contrary to the real facts of the case. Between these two decisions, everybody was proceeding upon the footing that the tax was payable, and if a trader did not take the precautions necessary under the Act for protecting his own interest, namely, taking declaration forms or realising the sales tax from his constituents, then the blame is entirely his own. In other words, the grounds made for establishing the unreasonableness of the restriction are entirely imaginary and have no existence in reality. On the other hand, the reasons prompting Parliament to validate transactions between the two Supreme Court decisions is understandable and is based upon what it deems reasonable and to be for the benefit of the general public. After all, nobody can be blamed for having followed the decision of the Supreme Court, the highest authority in the land. If State Governments had realised the taxes or made budgetary provisions on the footing thereof, no blame could attach to them and it was necessary to protect the State Governments as far as possible and this is what is being sought to be done by the Validation Act. I might mention that as a matter of fact, as appears from the record, the petitioner realised a large amount of sales tax from its purchasers. In my opinion, therefore, Mr. Roy has been unable to establish that any unreasonable restriction has been put upon the right of a citizen to carry on the trade or business of his choice. The question of hardship alone can scarcely be a ground for setting aside a law relating to taxation, and it has now been held beyond doubt that a legislature can pass retrospective legislation. However, I need not deal with the question whether the law relating to retroactive taxation is constitutional or not. That point may be determined on a suitable occasion. For these reasons, and for the reasons set out in my judgment in greater detail in Matter No. 161 of 1955 (Indian Standard Wagon Co., Ltd. v. Commercial Tax Officer etc.  9 S.T.C. 553.) delivered today, I must hold that these applications fail. The Rules must be discharged. Interim orders vacated. No order as to costs.
4. In these and all the other matters in which judgment had been delivered today, all parties have agreed that where assessments have not been made, the respondents would allow the petitioners to file returns or supplementary returns within one month from the date of this judgment and that the assessment will be made thereafter upon a consideration of such returns. Where, however, assessments have already been made, nothing in this judgment will affect such assessments excepting the fact that the petitioners will be entitled to take such steps in respect thereof as may be open to them in law.