# 352 SUPREME COURT REPORTS [1963) SUPP. M/S. WILLIAM JACKS & CO. LTD v. THE ST ATE OF BIHAR - **Citation:** [1963] Supp. 2 S.C.R. 352 - **Court:** Supreme Court of India - **Decided:** 1963 - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/352-supreme-court-reports-1963-supp-m-s-william-jacks-co-ltd-v-the-st-ate-of-2775 - **Pages:** 11 ## Headnote 1962 352 SUPREME COURT REPORTS [1963) SUPP. M/S. WILLIAM JACKS & CO. LTD. v. THE ST ATE OF BIHAR (S. K. DAS, J. L. KAPUR, A. K. SARKAR, M. HIDAYATULLAH and RAGHUBAR DAYALJJ.) Saks Pa:x:-8ak8 in the ooum of inter-state tra&-property passed in Calcutta-Actual delivery given to purchaser in Bihar far consumption-whether taz could be levied under Bihar Act-Whether the Bales Pa:x: Continuance Order, 195J saves 8Uch taz-Deftnitian of sale in the Bihar Sales Paz Act-Whether the sale wmea within lhed,,ftnition-Canstitution of India, Art. 206 (1) and (2), Bihar Bales Pa:x: Act, 1947 (Bihar 19 of 1947) ss. 25, 33-Pke Bale.< Paz Continuance Order, 1950-Phe Sales Paz Laws Validation Act, 1956 (VII of 1956). Between January 26, 1950, and September 30, 1951, the appellant had sold from Calcutta various goods to parties in Bihar. These sales had been made in the course of interState trade and were of species mentioned in the explanation to cl. (I) of Art. 286 of the Constitution on which, in view of the provisions of cl. (2) of that Article as it stood then and as interpreted by this Court in Bengal Immunity Co. Ltd. v. State of Bihar, no tax could be imposed by a State law. The respondent State had however before the decision by this Court in the Bengal Immunity Co. case imposed tax on these sales under the Bihar Sales Tax Act, 1947, relying on other decisions since overruled which interpreted the explanations to Art. 286 (I} in a different manner. The appellant objected to this imposition. On the question being referred to the High Court the rtspondent sought to justify the tax on other grounds. It contended that the sales made between January 26, 1950, and March 31, 1951, could be legally taxed under the Act because of cl. (2) of the Sales Tax Continuance Order, 1950, made under the proviso to Art. 286 (2) of the Conslitution and the sales made between April I, )951, and September 30, 1951, could he "° taxed because of the provisions of the Sales Tax Validation Act, 1956. The High Court accepted the respondents' contention. On appeal to this Court the decision oftheHighCourtregarding the sales between April I, 1951, and September 30, 1951, was not challenged. 2 S.C.R. SUPREME COURT REPORTS 353 Held, the Sales Tax Continuance Order of 1950 only 1962 authorised the continuation after the commencement of the M 1,. William 1..,11 of the Constitution and up to March 31, 1951, of "any tax Iii Co. Lid. on the sale or purchase of goods which was being lawfully y, levied by the Government of any State immediately before the n. Si.11 •I 81/uJr commencement of the Constitution" notwithstanding the bar imposed against such imposition by Art. 286 (2) of the. Consti• tution. The tax on the sales made by the appellant between January 26, 1950, and March 31, 1951, were not of the variety which was immediately before the commencement of the Con· stilution being lawfully levied by any law of the State of Bihar. The contention of the respondent that the sale defined in the Act included these sales and were therefore being taxed U11.dcr it from beforeJanuary 26, 1950, was not tenable. Section 33 of the Act read with the decision of thi1 Court in M. P. V. Sundararamier di Oo . . v. TTt• Slate of Andhra Praduh might on the ban under Art. 236 being lifted be construed as authorising the imposition of a tax on these sales does not affect the question in the present case for this section was introduced into the Act by the adaptation of Laws (Third Amendment) Order, 1951, and came into force from January 26, 1950, and could not thereforebe a law levying a tax immediately before the commencement of the Constitution. M. P. V. Sund~raramier di Oo v. TM State of Andhra Pradesh, (1958] S. C. R. 1422 considered CIVIL APPELLATE JuRISDIOTION : Civil Appeal Nos. 112 to 113 of 1962. Appeal from the judgment and order dated September 21, 1959, of the Patna High Court in Civil Misc. Judi. Case No. 593 of 1957. Rajeshwur Prasad and R. P. Verma, for the appellant. A. V. Viswana ## Text 1962 352 SUPREME COURT REPORTS [1963) SUPP. M/S. WILLIAM JACKS & CO. LTD. v. THE ST ATE OF BIHAR (S. K. DAS, J. L. KAPUR, A. K. SARKAR, M. HIDAYATULLAH and RAGHUBAR DAYALJJ.) Saks Pa:x:-8ak8 in the ooum of inter-state tra&-property passed in Calcutta-Actual delivery given to purchaser in Bihar far consumption-whether taz could be levied under Bihar Act-Whether the Bales Pa:x: Continuance Order, 195J saves 8Uch taz-Deftnitian of sale in the Bihar Sales Paz Act-Whether the sale wmea within lhed,,ftnition-Canstitution of India, Art. 206 (1) and (2), Bihar Bales Pa:x: Act, 1947 (Bihar 19 of 1947) ss. 25, 33-Pke Bale.< Paz Continuance Order, 1950-Phe Sales Paz Laws Validation Act, 1956 (VII of 1956). Between January 26, 1950, and September 30, 1951, the appellant had sold from Calcutta various goods to parties in Bihar. These sales had been made in the course of interState trade and were of species mentioned in the explanation to cl. (I) of Art. 286 of the Constitution on which, in view of the provisions of cl. (2) of that Article as it stood then and as interpreted by this Court in Bengal Immunity Co. Ltd. v. State of Bihar, no tax could be imposed by a State law. The respondent State had however before the decision by this Court in the Bengal Immunity Co. case imposed tax on these sales under the Bihar Sales Tax Act, 1947, relying on other decisions since overruled which interpreted the explanations to Art. 286 (I} in a different manner. The appellant objected to this imposition. On the question being referred to the High Court the rtspondent sought to justify the tax on other grounds. It contended that the sales made between January 26, 1950, and March 31, 1951, could be legally taxed under the Act because of cl. (2) of the Sales Tax Continuance Order, 1950, made under the proviso to Art. 286 (2) of the Conslitution and the sales made between April I, )951, and September 30, 1951, could he "° taxed because of the provisions of the Sales Tax Validation Act, 1956. The High Court accepted the respondents' contention. On appeal to this Court the decision oftheHighCourtregarding the sales between April I, 1951, and September 30, 1951, was not challenged. 2 S.C.R. SUPREME COURT REPORTS 353 Held, the Sales Tax Continuance Order of 1950 only 1962 authorised the continuation after the commencement of the M 1,. William 1..,11 of the Constitution and up to March 31, 1951, of "any tax Iii Co. Lid. on the sale or purchase of goods which was being lawfully y, levied by the Government of any State immediately before the n. Si.11 •I 81/uJr commencement of the Constitution" notwithstanding the bar imposed against such imposition by Art. 286 (2) of the. Consti• tution. The tax on the sales made by the appellant between January 26, 1950, and March 31, 1951, were not of the variety which was immediately before the commencement of the Con· stilution being lawfully levied by any law of the State of Bihar. The contention of the respondent that the sale defined in the Act included these sales and were therefore being taxed U11.dcr it from beforeJanuary 26, 1950, was not tenable. Section 33 of the Act read with the decision of thi1 Court in M. P. V. Sundararamier di Oo . . v. TTt• Slate of Andhra Praduh might on the ban under Art. 236 being lifted be construed as authorising the imposition of a tax on these sales does not affect the question in the present case for this section was introduced into the Act by the adaptation of Laws (Third Amendment) Order, 1951, and came into force from January 26, 1950, and could not thereforebe a law levying a tax immediately before the commencement of the Constitution. M. P. V. Sund~raramier di Oo v. TM State of Andhra Pradesh, (1958] S. C. R. 1422 considered CIVIL APPELLATE JuRISDIOTION : Civil Appeal Nos. 112 to 113 of 1962. Appeal from the judgment and order dated September 21, 1959, of the Patna High Court in Civil Misc. Judi. Case No. 593 of 1957. Rajeshwur Prasad and R. P. Verma, for the appellant. A. V. Viswanatha Ra,•tri, D. P. ,Singh R. K. G·1rg, R. 0. Agarwal an:!. M. K. &mamurthi, for the respondent. 1962. November 21. The Judgment of the Court was delivered by . . SAR~AR, J;-The appellant is a company dealmg m various kmds of machinery. It has its place M/1. Willianl lt1tb IY C.. Ud. •• Tiu S111" of BiMr 354 SUPREME COURT REPORTS [1963] SUPP. of business in Calcutta, in the State of West Bengal. Between January 26, 1950 and September 30, 1951, it sold diverse machinery to various parties in the State of Bihar. In respect of these sales the appellant was assessed to sales tax under the Bihar Sales Tax Act, 194 7. These appeals arise out of such assessments but, as will be seen later, the dispute now is much narrower than what it was in the beginning. Before proceeding further we may briefly refer to the procedure of the sale. The price payable for the goods was F. O. R. Calcutta and it is not in dispute that the property in them passed to the purchaser as soon as the· appellant put the goods on the railway at Calcutta. It has however been found and is no longer in dispute, that the actual delivery of the goods was given to the purchasers in Bihar for consumption there. The arguments in this Court have proceeded on the basis accepted by both sides, that the sales were in the course of inter-State trade and were of the kind contemplated in the explanation in Art. 286(1) of the Constitution before its amendment by the Constitution (Sixth Amendment) Act, 1956. In this judgment we shall be concerned with Art. 286 as it stood before the amendment. The contention of the appellant before the Superintendent of Sales Tax, Patna, who was the assessing authority, was that the sales were interState sales and, therefore, the Bihar Act could not tax such sales in view of cl. (2) of Art. 286 though they were within the explanation to cl. ( l) of that Article. It was contended that so far as the Bihar Act purported to taK such sales, it was invalid. The Superintendent of S&les Tax rejected this cont~ntion relying on the case of Bengal Immunity Company Ltd. v. The State of Bihar (1) which held that sales of the variety drscribed in the explanation to cl. (l)(a) of Art. 286 could be taxed by the law of the legislature of the State where the goods were actually delivered for consumption inspite of the ban imposed by (I) (1952) I.L.R. 82 Pat, 19. .. 2 S.C.R. SUPREME COURT REPORTS 355 cl. (2) of that Article on State legislatures taxing sales made in the course· ·of inter-State trade. He, therefore, held that the Bihar Act could validly tax the appellant's sales even though they were interState sales. The appellant appealed from this decision to the Deputy Commissioner of Sales Tax, Bihar • By the time that authority heard the appeal the judgment of this Court in the 8tat,e of Bomhay v. The Unit,ed Motors (1) had been delivered. This judgment confirmed the view taken in the Patna case earlier mentioned. It said that cl. (2) of Art. 286 does not affect the power of the State in which delivery of goods is made for consumption there to tax inter·State sales or purch'llies and that the effect of the explanation was that the transactions mentioned in it were outside the ban imposed by Art. 286(2). In view of this judgment, the Deputy Commissioner dismi!!Sed the appeal. A further revision application by the appellant to the Board of Revenue, Bihar, also failed. Before the decision by the Board of Revenue, however, this Court had decided in the appeal from the judgment in the Patria case, earlier mentioned, that the Uni.red Motors ca8e (') had been wrongly decided and that until )>arliament by Jaw made under Art. 286(2) provided otherwise, a State could not impose or authorise tl:).e imP,OSition, of any. tax on sales or purcha>es of goods. when such sales or purchases took place in the,. cqurse of inter-State trade or commerce notwithstanding that tlie goods under such sales were !lCtually delivered in that State for consumption there:.see Bengal Immunity Company Ltd. v. Strite of Bihar ('). Curiously however this case escaped the attention pf the learned member of the Board of Revenue, Biliar, for if he had noticed it he would not have based himself on the Unit,ed Motor11 case (') as he had dorie. The appellant thereafter moved the Board of Revenue under s. 25 of the Bihar Act for referring two questions to th«" High Court for decision and a reference was accordingly made. <•> (1953) s.c.R. 1069. (2) 11955) 2 S.C.R. 603. 1961 M/t. William Jdl & Co.Ltd. v. Tu Stat1 ot BU.a Sarkar,. I. 1902 M/1. William Jab 81 Co. Lti. Y. Tli1 Stot1 of Bihar S.,k.,., J. 356 SUPREME COURT REPORTS [1963)SUPP. The present appeal iS against the judgment of the High Court given on the reference. There are two appeals before u.~. They arise out of two assessment orders made in r~pect of two different periods. The High Court heard the two references together and dealt with them by one judgment. The questions framed iu each case were in identical terms and perhaps, therefore, were not confined to the period with which each case was concermd. A3 we have said l'arlier, two questions had been referred to the High Court but the appellant has not in this Court challenged the answer ~iven by the High Court to the second question. We are, therefor<', concerned in tht'Se appeals only with the first question which is in these terms : "Whether the sales by the petitioner of (sic.) goods which were actually delivered in Bihar as a direct result of such sales for the purpose of consumption in Bihar during the period January 26, 1950 to September 30, 1951, were sales which took place in the course of interState trade or commerce within the meaning of Article 286(2) of the Constitution of India (as it stood prior to the passing of the Constitution (Sixth Amendment) Act, 1956) and as such were not liable to the levy of Bihar Sales· Tax, or whether in view of the s'.lbsequent pa'ISing by Parliament of the Sales Tax Laws Validation Act, 1956 (Act VII of 1956) such sales became liable to the levy of Bihar Sales Tax for any part of the above period, say from April 1, 1951, up to September 30, 1951." The High Court answered this qu"Stion in these words: "A3 regards the first question, it is clear that for the period from the January 26, 1950, to March 31, 1951, the assessment .. - 2 S.C.R. SUPREME COURT REPORTS 357 is covered by the Sales Tax Continuance Order, 1950, promulgated by the President, and the assessment of the tax for this period is not liable to be attacked on the ground that there is a violation of the provisions of Article 286(2) of the Constitution. For the second ,period, namely, from April 1, 1951, to September 30, 1951, the assessment is covered by the provisions of the Sales Tax Laws Validation Act, 1956, and the imposition of sales-tax for this period also is legally valid." The question in this appeal is whether the High Court was right in its view that the assessment between January 26, 1950 to March 31, 1951 is covered by the Sales Tax Continuance Order, 1950. There is no dispute now that the Sales Tax Validation Act, 1956 validated the collection of the tax on sales made during the period (rom April 1, 1951 to September 30, 1951. In view of the judgment of this Court in the Bengal Immunity Company case (') a dispute as to whether the sales by the appellant could be taxed by a Bihar law was no longer open .. It was because of this that the dispute took a different tum and was based on the Sales Tax Continuance Order, 1950. The contention of the appellant is this : The Sales Tax Continuance Oder, 1950 was made in exercise of the powers conferred by the proviso to cl. 2 of Art. 286 of the Constitution. That proviso was in these terms : "Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the (I) ( 1955] 2. S.C.R. 603, 1162 M/1. WUli .. ., Jdl Ill c;.. Lii . •• TM 511114 of Bih•• s.,rr.r, J. 1912 M/1. Williom lads e