KAILASH NATH Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) This petition under Art. 32 of the Constitution raises the question as to whether the 1st respondent, the State of Uttar Pradesh illegally and unauthorisedly levied sales tax on the 2nd petitioner firm, under the Uttar Pradesh Sales Tax Act (U. P. Act XV of 1948) with regard to the cloth manufactured by the 2nd petitioner, with a view to exporting such cloth outside the territories of India, by customers of the 2nd petitioner called "indentors."

(2.) The 1st petitioner is the Director of Messrs Cawnpore Textiles Limited, a Public Limited Company, having its registered office in Kanpur, the 2nd petitioner being the Company itself, whose business is the manufacture of cotton cloth an yarn intended for sale in India, as also for export abroad. In the course of that business, the 2nd petitioner sells quantities of cloth to persons styled as Indentors who after dyeing and hand-printing them, export them overseas."

(3.) During the assessment years 1952-53, 1953-54 and 1954-55, the petitioner had sold quantities of cotton cloth to constituents of theirs who thereafter printed such cloth with hand made apparatus and exported them over seas as hand printed cloth. Such customers are known as indentors who had placed orders with the petitioners for the manufacture of cloth. The modus operandi followed by the indentor in the transaction of business is to the following effect:-