MOHANLAL HARGOVINDAS Vs. STATE OF M P

JUDGEMENT

(1.) This petition under Articles 226 and 227 of the Constitution is directed against two notices dated 5th December 1958, one for the period 7th November 1953 to 26th October 1954 (Annexure III) and another for the period 27th October 1954 to 5th September 1955 (Annexure IV), by which the Deputy Commissioner of Sales Tax, Jabalpur (respondent 3), who had entertained the petitioner's appeals against the assessment of sales tax on their turnover for the two periods proposed to tax the turnover of certain transactions made during those periods, which were said to be liable to tax under Section 4(6) of the Central Provinces and Berar Sales Tax Act, 1947 (hereinafter, called the Act) but were not taxed by the assessing authority.

(2.) The facts giving rise to this petition may be briefly stated. The petitioners carry on the business of manufacturing and selling bidis on a large scale. They have their head office at Jabalpur where they are registered as a dealer for purposes of the Act. In the course of their business, they import from the State of Bombay large quantities of tobacco. They had thus imported from that State tobacco worth Rs. 84,29,580/15/-during the period 7th November 1953 to 26th October 1954 and worth Rs. 1,38,27,630/12/6 during the period 27th October, 1954 to 14th November 1955. In the usual course, the tobacco, after being imported into this State, was rolled into bidis which were largely exported to various other States for sale and consumption in those States. The Sales Tax Authorities threatened to tax the aforesaid purchase of tobacco under Section 4(6) of the Act and obliged the petitioners to file on that basis their refurns for two periods, 3 May 1954 to 29 July 1954 and 30 July 1954 to 26th October 1954.

(3.) Being aggrieved by the action taken against them, the petitioners moved the Supreme Court under Article 32 of the Constitution for the issuance of a writ of mandamus or any other suitable writ to restrain the respondents from enforcing the provisions of the Act and other consequential reliefs. In Petition No. 67 of 1955, D/-20-9-1955, M/s. Mohanlal Hargovind Das v. State of Madhya Pradesh, (1955) 2 SCP 509: ((S) AIR 1955 SC 786) their Lordships observed: "All the transactions entered into by a registered dealer, however, do not necessarily import a liability to pay tax under the Act because, whenever the question arises in regard to his liability to pay any tax under the Act, such liability would have to be determined in spite of his being a registered dealer with reference, inter alia, to the provisions of Section 27-A of the Act which incorporates within its terms the bans which have been imposed on the powers of the State Legislatures to tax under Article 286 (1) (a) and (2) of the Constitution. If, therefore, a dealer who has got himself registered as dealer under the provisions of Section 8(1) of the Act is sought to be made liable in respect of transactions of sale effected by him he could claim exemption from such liability if the transactions of sale or purchase took place in the course of inter-State trade or commerce after the 31st March, 1951, except In so far as Parliament may by law otherwise provide. In the case before us there was no such provision made by Parliament and the transactions in question were all after the 31st March, 1951, with the result that the ban imposed by Article 286 (2) was in operation and if the transactions took place in the course of inter-State trade or commerce not only were Shri Chhaganlal Ugarchand Nipani and Shri Maniklal Chunanlal Baroda exempt from the liability to pay the tax on these transactions but the petitioners also were similarly exempt. No liability, therefore, could be imposed either for Sales Tax or for Purchase Tax within the terms of the Act on these transactions which as above stated took place in the course of inter-State trade or commerce." (pp. 515-516 (of SCR): (P. 789 of AIR)). Their Lordships, therefore, issued a writ in the following terms: "The respondents will be restrained from enforcing the Central Provinces and Berar Sales Tax Act, 1947, and its provisions against the petitioners and from imposing a tax in respect of the transactions in question and in particular from imposing a tax on the purchase price or goods purchased on the declarations under Rule 26 being goods specified in the registration certificate as intended for use as raw material in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State but utilised for any other purpose under the provisions of Section 4(6) of the Act."