RAJESWARI MILLS Vs. STATE OF MADRAS

JUDGEMENT

(1.) THE petitioner is a company engaged in the business of producing and selling cotton yarn. In the assessment to tax under the Madras General Sales-tax Act, 1939, an item of Rs. 1,34,426-80 was included in its taxable turnover on the ground that it represented the value of purchase of raw cotton from a Bombay dealer called C. A. Galiokotwala and Co. The petitioner contended that the said amount was not includible in the taxable turnover because there was no sale by galiokotwala and Co. to it and that, in any event, the purchase being in the course of import of cotton from Sudan, the levy of tax was prohibited by Article 286 of the indian Constitution. The department as wall as the Sales -tax Appellate Tribunal did not accept the objection of the assessee and hence this revision petition.

(2.) TWO contentions are urged before us. The first is that Galiokotwala and Co. , was only the assessee's agent. in the matter of the import of raw cotton from Sudan, and that there was no sale by that company to the asses see. The second is that the import itself was occasioned by the purchase and that the transaction was in the course of such import and was within the constitutional ban.

(3.) IN order to appreciate the true nature of the purchase of cotton effected by the assessee, it is necessary to refer to the statutory restrictions upon the import of raw cotton from outside India and also to the actual dealing between Galiakotwala and Co. , and tile assessee. The enactment that is relevant is the Imports and exports. (Control) Act 1947. Section 3 of the Act provides that the Central government may, by order published in the Official Gazette make provisions for prohibiting, restricting or otherwise controlling the import and export of goods of any specified description. In exercise of the powers Conferred by Section 3 referred to the Government of India promulgated the Imports (Control) Order, 1955. Section 3 (1) of the Order reads as follows: