TATA ENGINEERING AND LOCOMOTIVE CO LIMITED AUTOMOBILE PRODUCTS OF INDIA STATE TRADING CORPORATION OF INDIA LIMITED Vs. STATE OF BIHAR MOHD SHARFUDDIN SALES TAX OFFICER BOMBAY COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) These writ petitions have been placed for hearing before us in a group, because they raise a common question of law in regard to the validity of the demand for sales tax which has been made against the respective petitioners by the Salestax Officers for different areas. The facts in respect of each one of the writ petitions are not the same and the years for which the demand is made are also different; but the pattern of contentions is uniform and the arguments urged in each one of them are exactly the same. Broadly stated, the case for the petitioners is that the appropriate authorities purporting to act under the different Sales Tax Acts are attempting to recover from the petitioners salestax in respect of transactions to which the petitioners were parties, though the said transactions are not taxable under Art. 286 of the Constitution. Article 286(1)(a) provides that 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 outside the State and the argument is that the sales in question are all sales which took place outside the State and as such, are entitled to the protection of Art. 286(1)(a). The authorities under the respective Sales Tax Acts have rejected the petitioners' contention that the transactions in question are inter-State sales and have held that Art. 286(1)(a) is not applicable to them. A similar finding has been recorded against the petitioners under Art. 86(2). The petitioners' grievance is that by coming to this erroneous conclusion, a tax is being levied against them in respect of transactions protected by Art. 286(1)(a) and that constitutes a breach of their fundamental rights under Art. 31(1). It is this alleged infringement of their fundamental rights that they seek to bring before this Court under Art. 32(1). It has been urged on their behalf that his right to move this Court under Art. 32(1) is itself a fundamental right, and so, under Art. 32(2) an appropriate order should be passed letting aside the directions issued by the Sales Tax Authorities calling upon the petitioners either to pay the sales-tax, or to comply with other directions issued by them in that behalf.

(2.) For dealing with the points raised by these writ petitions, it is not necessary to set out the facts in respect of each one of them. For convenience we will refer to the facts set out by the Tata Engineering and Locomotive Co. Ltd., the petitioner in W. Ps. Nos. 112 and 113 of 1961. The petitioner is a company registered under the Indian Companies Act, 1913 and carries on the business of manufacturing, inter alia, Diesel Truck and Bus chassis and the spare parts and accessories thereof at Jamshedpur in the State of Bihar. The Company sells these products to dealers, State Transport Organisations and others doing business in various States of India. The registered office of the petitioner is in Bombay. In order to promote its trade throughout the country, the petitioner has entered into Dealership Agreements with different persons. The modus adopted by the petitioner in carrying on its business in different parts of India is to sell its products to the dealers by virtue of the relevant provisions of the Dealership Agreements. Accordingly, the petitioner distributes and sells its vehicles to dealers, State Transport Organisations and consumers in the manner set out in the petition. The petitioner contends that the sales in respect of which the present petitions have been filed were effected in the course of inter-State trade and as such, were not liable to be taxed under the relevant provisions of the Sales Tax Act. The Sales Tax Officer, on the other hand, has held that the sales had taken place within the State of Bihar and were intra-State sales and such, were liable to assessment under the Bihar Sales Tax Act. In accordance with this conclusion, further steps are threatened against the petitioner in the matter of recovery of the sales tax calculated by the appropriate authorities. The petitioner is a company and a majority of its share-holders are Indian citizens, two of whom have joined the present petitions.

(3.) The petitioners in W. Ps. Nos. 79 and, 80/1962 are the Automobile Products of India Ltd. and Anr. The majority of the share-holders of this company are also citizens of India and one of them has joined the petitions.