# HIMMATLAL HARILAL MEHTA v. THE STATE OF MADHYA PRADESH AND OTHERS

- **Citation:** [1954] 1 S.C.R. 1122
- **Court:** Supreme Court of India
- **Decided:** 1954
- **Case number:** Civil Appeal No. 20 of 1952
- **Bench:** Mehr Chand Mahajan C. J, MuKHERJEA, S. R. Da>, VIVIAN BosE, Ghulam Hasan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/himmatlal-harilal-mehta-v-the-state-of-madhya-pradesh-and-others-249
- **Pages:** 7

## Headnote

[1954]
Coostitution of India, arts. 19(1) (g), 226, 286 (1) (a)-Central
Provinces and Berar Sales Ta:r Act (Act XX! of 1947), as amended
by Act XVI of
1949-Explanation II to section
2(g)-Whether
ultra vires
th~
Constitutian-Threat to use coercive rnachinery of
Act for realising tax-Whether infringement of fundarnental rights
under art. 19(J)(g) of the Constitution.
Held, (i) that explanation II to s.
2(g) of the Central
Pro·
vinces <ind Berar Sales Tax Act (Act XX! of 1947) as amended by
Central Provinces and Berar Act (Act XVI of 1949) is ultra vires
the State Legislature.
(ii) A
threat by the
State
to realize tax from the assessee
without the authority of law by using the coercive machinery of
the impugned Act is a sufficient infringement of his fundamental
right under art. 19(1) (g) and gives him a right to seek relief under
..art. 226 of the
Constitution.
The impugned
Act, requiring the
.assessee to deposit the whole of the tax before he can get the relief
provided by it, cannot be said to provide an adequate alternative
remedy.
The State of Bomba;· v. The United Motors (India) Ltd. ([1953]
S.C.R. 1069); Raleigh Investment Co. v. The Governor-General in
Council (L.R. 74 I.A. 50); Mohd. Yasin v. The Town Area Committee-
{[1952] S.C.R. 572) referred to.
CIVIL
APPELLATE
JURISDICTION : Civil
Appeal No.
20 of 1952.
Appeal under article 132(1)
India from the Judgment and
April, 1952,
of
the
High
.at
Nagpur in
Miscellaneous
1951.
of the
Constitution of
Order dated the
25th
Court
of
Judicature
Petition
No. 1623
of
N. P. Engineer (R. S. Dabir and I. N. Shroff, with
him) for the appellant.
T. L. Shevde,
Advocate-General of Madhya Pradesh,
(T. P. Naik, with him) for respondent No. 1.
S.C.R.
SUPREME COURT REPORTS
1123
V. K. T. Chari, Advocate-General of Madras (V. V.
Raghavan, with him) for the intervener.
1954. March 16. The Judgment of the Court was
deli1·ered by
MAHAJAN C. J.-This is an appeal
by leave
from
a judgment of the High Court of Judicature at Nagpur
dated
the
25th of April, 1952,
dismissing a petition
under article
226 of the Constitution of India filed
by
the appellant
questioning the
vires of
certain
provisions of the Central
Provinces and Berar Sales Tax
Act, 1947.
The appellant represents
a concern C. Parakh and
Company (India) Limited, a company registered
under
the Indian Companies Act, 1913, having its head
office
at
Bombay, and several
branches
in the
State
of
Madhya
Pradesh.
The main business
of the
appellant company is that of cotton.
The
head-office
of
the appellant at Bombay sells cotton bales to
several
mills and individuals under the control and the system
regulated by the
Textile
Commissioner at
Bombay,
and upon a contract of sale being completed the goods
after being ginned and pressed are sent from Khamgoan
and other places in the State of Madhya Pradesh
and
are actually deliver-ed in
Bombay and such other places
outside the State of Madhya Pradesh as directed by
the head office.
The cotton bales
are sent
by rail
under an insurance in favour
of the appellant,
and
are delivered to the buyer by tender of railway receipt
against the payment of price in Bombay.
Under the Central Provinces and
Berar
Sales Tax
Act, 1947 (Act XXI of 1947), cotton
was
declared
liable to sales tax on the 11th of April, 1949, and since
that date the appellant commenced
paying the tax in
respect of the purchases made by it,
and
continued
to pay it till the 31st
of
December, 1950.
For the
quarter ending on the 31st
of
March, 1951, the appellant declined to pay the tax in respect of 'the purchases
made during that quarter, realizing that it could
not
be made legally liable for the payment of this
tax
in
the State of Madhya Pradesh, the
transactions
done
or effected in
Madhya Pradesh
not
being "sales"
within that State.
Apprehending that the company
1954
Himmatlal
H arilal Mehta
v.
The State of
M adh)'a Pradeshand Others
Mahajan C. J.
1954
Himmatlal
•Harilal Mehta
v.
Tht State of
Madhva Pradesh
and Others.
Mahajan C. J.
1124
SUPREME C

## Text

1954
.March 16
1122
SUPREME COURT REPORTS
HIMMATLAL HARILAL MEHTA
v.
THE STATE OF MADHYA PRADESH
AND OTHERS.
[MEHR CHAND MAHAJAN C. J., MuKHERJEA,
S. R. DA>, VIVIAN BosE and
GHULAM HASAN JJ.]
[1954]
Coostitution of India, arts. 19(1) (g), 226, 286 (1) (a)-Central
Provinces and Berar Sales Ta:r Act (Act XX! of 1947), as amended
by Act XVI of
1949-Explanation II to section
2(g)-Whether
ultra vires
th~
Constitutian-Threat to use coercive rnachinery of
Act for realising tax-Whether infringement of fundarnental rights
under art. 19(J)(g) of the Constitution.
Held, (i) that explanation II to s.
2(g) of the Central
Pro·
vinces <ind Berar Sales Tax Act (Act XX! of 1947) as amended by
Central Provinces and Berar Act (Act XVI of 1949) is ultra vires
the State Legislature.
(ii) A
threat by the
State
to realize tax from the assessee
without the authority of law by using the coercive machinery of
the impugned Act is a sufficient infringement of his fundamental
right under art. 19(1) (g) and gives him a right to seek relief under
..art. 226 of the
Constitution.
The impugned
Act, requiring the
.assessee to deposit the whole of the tax before he can get the relief
provided by it, cannot be said to provide an adequate alternative
remedy.
The State of Bomba;· v. The United Motors (India) Ltd. ([1953]
S.C.R. 1069); Raleigh Investment Co. v. The Governor-General in
Council (L.R. 74 I.A. 50); Mohd. Yasin v. The Town Area Committee-
{[1952] S.C.R. 572) referred to.
CIVIL
APPELLATE
JURISDICTION : Civil
Appeal No.
20 of 1952.
Appeal under article 132(1)
India from the Judgment and
April, 1952,
of
the
High
.at
Nagpur in
Miscellaneous
1951.
of the
Constitution of
Order dated the
25th
Court
of
Judicature
Petition
No. 1623
of
N. P. Engineer (R. S. Dabir and I. N. Shroff, with
him) for the appellant.
T. L. Shevde,
Advocate-General of Madhya Pradesh,
(T. P. Naik, with him) for respondent No. 1.
S.C.R.
SUPREME COURT REPORTS
1123
V. K. T. Chari, Advocate-General of Madras (V. V.
Raghavan, with him) for the intervener.
1954. March 16. The Judgment of the Court was
deli1·ered by
MAHAJAN C. J.-This is an appeal
by leave
from
a judgment of the High Court of Judicature at Nagpur
dated
the
25th of April, 1952,
dismissing a petition
under article
226 of the Constitution of India filed
by
the appellant
questioning the
vires of
certain
provisions of the Central
Provinces and Berar Sales Tax
Act, 1947.
The appellant represents
a concern C. Parakh and
Company (India) Limited, a company registered
under
the Indian Companies Act, 1913, having its head
office
at
Bombay, and several
branches
in the
State
of
Madhya
Pradesh.
The main business
of the
appellant company is that of cotton.
The
head-office
of
the appellant at Bombay sells cotton bales to
several
mills and individuals under the control and the system
regulated by the
Textile
Commissioner at
Bombay,
and upon a contract of sale being completed the goods
after being ginned and pressed are sent from Khamgoan
and other places in the State of Madhya Pradesh
and
are actually deliver-ed in
Bombay and such other places
outside the State of Madhya Pradesh as directed by
the head office.
The cotton bales
are sent
by rail
under an insurance in favour
of the appellant,
and
are delivered to the buyer by tender of railway receipt
against the payment of price in Bombay.
Under the Central Provinces and
Berar
Sales Tax
Act, 1947 (Act XXI of 1947), cotton
was
declared
liable to sales tax on the 11th of April, 1949, and since
that date the appellant commenced
paying the tax in
respect of the purchases made by it,
and
continued
to pay it till the 31st
of
December, 1950.
For the
quarter ending on the 31st
of
March, 1951, the appellant declined to pay the tax in respect of 'the purchases
made during that quarter, realizing that it could
not
be made legally liable for the payment of this
tax
in
the State of Madhya Pradesh, the
transactions
done
or effected in
Madhya Pradesh
not
being "sales"
within that State.
Apprehending that the company
1954
Himmatlal
H arilal Mehta
v.
The State of
M adh)'a Pradeshand Others
Mahajan C. J.
1954
Himmatlal
•Harilal Mehta
v.
Tht State of
Madhva Pradesh
and Others.
Mahajan C. J.
1124
SUPREME COURT REPORTS
[1954]
may be subjected to the payment of the tax without
authority of law, an application was preferred in the
High Court of Judicature
at Nagpur praying for an
appropriate writ
or writs
which may secure
to
the
company protection from the impugned
Act ancf its
enforcement by the State. · It was alleged that
Explanation II to section 2(g) of the Central Provinces and
Berar Sales Tax Act, 1947, as further amended by Act
XVI of 1949 was ultra vires and illegal.
This petition, along with a reference in another case
(Miscellaneous Civil Case No. 258 of 1951 : A.LR. 1952
Nag. 378), was heard by a
Division
Bench
of the
Nagpur High Court and it was held that Explanation
II to section 2(g) of
the
Act was
not enforceable
because under the
Constitution sales tax could only be
collected in the
State where the goods were delivered
for consumption.
It was further held that
Explanation II as amended by the C. P. & Berar Act XVI of
1949 was not validly enacted
because
it made drastic
changes in the rules of the Sale of Goods
Act without
obtaining the assent of the Governor-General as required by section 107 of the
Government
of
India
Act,
1935.
It was observed that the mere production
of
the goods in a State is not enough
t(!;
make
the tax
payable unless the goods are appropriated
to a particular contract, and that to impose
the tax at that stage
would be tantamount to charging an excise
duty
and
not a tax on the sale of goods. In spite of these findings the High Court declined to issue a writ and dismissed the petition made to it under article 226
of
the Constitution on
the ground
that
a
mandamus
issues only to compel an authority
to do
or
abstain
from doing
some act, that it is seldom
ant1C1patory
and certainly never issues
where the
action
of the
authority is dependant on some action
of the petitioner
and
that in the present case the petitioner had not
even made his return and no demand for the tax could
be made from him.
·
In this appeal it was argued by
Shri
Noshirwan
Engineer, learned
counsel for the
appellant,
that an
illegal and unjust imposition operates
as
an illegal
restraint
on
trade and violates fundamental
right;
S.C.R.
SUPREME COURT REPORTS
1125
that the High Court having held that the
Constitution
by article 286 thereof made delivery of the goods
for
consumption the decisive factor for determining which
State should have the right of taxing such sales,
and
having thus found the provision of the
Explanation
to
the definition of "sale" unconstitutional,
should
have
issued a writ of mandamus restraining
the
respondent
State from enforcing that part of the Act.
To appreciate the contentions of the learned counsel
it is necessary to set out the relevant provisions
of the
Act which the High Court has declared ultra vires the
State Legislature.
Act XXI of 1947 defines
the expression "sale" in section
2(g) of the
Act in these
terms:-
" 'Sale' with all
its grammatical
variations
and
cognate expressions means any transfer of property
in
goods for cash or deferred payments or other valuable
consideration, including a transfer of property in goods
made in the course of the execution of a contract,
but
does not include a mortgage, hypothecation,
charge
or
pledge".
"Explanation (I)-"A transfer
of goods on hirepurchase or other instalment system of payment
shall,
notwithstanding that the seller retains a title
to any
goods as security for payment of the price, be deemed
to be a sale."
Explanation
( II)-"Notwithstanding
anything
to
the contrary in the Indian Sale of Goods Act, 1930, the
sale of any goods
which are actually
in the
Central
Provinces and
Berar at the time when the contract of
sale as defined in that Act in respect thereof is made,
shall, wherever the said contract
of
sale is made,
be
deemed for the purpose
of this
Act to have
taken
place in the Central Provinces and Berar."
This provision was amended by the
Central Provinces
and Berar Act XVI of 1949 which came into
force on
the 11th
of April, 1949, by which
Explanation II of
section 2(g) was amended as follows :-
Explanation
(II)_:_"Notwithstanding
anything
to
the contrary in
the Indian Sale of Goods Act, 1930,
the sale or purchase of any goods
shall be deemed
for
the purposes of this
Act, to have taken place in this
1954
Himmatlal
H arilal Mehta
v.
Tht State of
Afadh'J!a Pradesh
and Others.
Mahajan C. J.
1954
Himmatlal
Harilal Mehta
v.
The State of
Madhya P1 adesh
and Others.
Mahajan C. J.
1126
SUPREME COURT REPORTS
[1954]
Province-wherever
the
contract
of sale or purchase
might have been made-
.
(a) If the goods were actually in this
Province at
the time when the contract of sale or purchase in respect thereof was made, or
(b) In case, the contract was for the sale
or purchase of future goods by description, then, if the goods
are actually produced or found in this Province at any
time after the contract of sale or purchase in respect
thereof was made."
Certain amendments were made in the Act by Act
IV of 1951 which came into force on the 1st of April,
1951, but these
are not relevant
to
the
present
mqmry.
As pointed out above, the High Court held that the
new Explanation II was ultra vires the
State
Legislature and that the mere production of goods was
not
enough to make the tax payable unless
the goods
were
appropriated to a particular contract.
The
correctness of this view can no longer be questioned
by reason
of the majority decision of this court in The State of
Bombay v. The United Motors (India) Ltd.(1), wherein
it was held that article 286 ( 1) (a) of the Constitution
read with the
Explanation thereto and construed in
the light of article 301 and article 304
prohibits
the
taxation of
sales or purchases
involving
inter-State
elements, by all
States except the State in which the
goods are delivered for the purpose
of consumption
therein and that the view that the
Explanation does
not deprive the
State, in which the property
in the
goods passed, of its taxing power and that consequently
both the State in which the
property in the goods
passes and the State in which the goods
are delivered
for
consumption have
the
power to
tax,
is not
correct.
The learned Advocate-General of the State did not
in this situation,
and
very properly, challenge the
correctness of the decision of the High
Court on this
point, and conceded that the
Explanation was
clearly
ultra vires the
State
Legislature.
He however
contended that ·on the principle enunciated
by the Privy
(1) [1953]'8.C.R. rn6g.
J
•.
S.C.R.
SUPREME COURT REPORTS
1127
Council in
Raleigh Investment Co. v. The Got1ernorGeneral-in-Council('), jurisdiction to
question
assessment otherwise than by use of the machinery expressly
provided by
the
Act,
was
inconsistent
with
the
statutory obligation to pay, arising by virtue
of the
assessment and that
the liability to pay the sales
tax
under the
Act is a special liability
created
by the Act
itself which at the same time gives a special and particular remedy which
ought to be
resorted to,
and
therefore the remedy by a writ ought not to be allowed
to be used for evading
the
provisions
of
the Act,
especially a fiscal
Act. It was also said that the conditions requisite for the issue of a writ of
mandamus
were not present in the case
and that
it was
not
within the scope and purpose
of article 226
of the
Constitution to decide an academic question.
In our opinion, the contentions raised by the learned
Advocate-General are not
well founded.
It is
plain
that the
State
evinced an
intention that
it could
certainly proceed to apply the penal provisions
of the
Act against the appellant if it failed
to
make
the
return or to meet the demand and in
order
to escape
from such serious
consequences
threatened
without
authority of law, and infringing
fundamental
rights,
relief by way of a writ of mandamus
was
clearly
the
appropriate relief. In Mohd. Yasin v. The Town Area
Committee("), it was held by this court that a licence
fee on a business not only takes away the property
of
the licensee
but also
operates
as a restriction on his
fundamental right to carry on his business
and
there~
fore
if the imposition
of a licence
fee
is
without
authority of law it can be challenged
by way
of an
application
under article 32,
a fortiori
also
under
article 226.
These observations
have
apposite application
to
the
circumstances
of the
present
case.
Explanation II to section 2(g) of the Act having been
declared ultra vires,
any imposition of sales tax on the
appellant in
Madhya
Pradesh is without the authority
of law, and that being so a threat by the
State by
using the coercive machinery of the impugned Act to
(1) 741.A.50.
(2) [1952] S.C.R. 572.
\-~l\ S.G, ludi~(~S
19'4
Himmatlal
Harilal M1Alo
Y.
Th• Stat1 •f
Madhya Prade1l
and Others.
Mahajan C. :J.
19M
Himmatlal
Hmilal Mehl•
.v.
Thi Statt of
Mad~va Pradeih
and Others.
Mahajan C.J.
1128
SUPREME COURT REPORTS
[19541
realize it from the appellant is a sufficient infringe•
ment of his fundamental right under article 19(1) (g)
and it was clearly entitled to relief under article 226 of
the
Constitution.
The
contention
that
because a
remedy under the impugned Act was available to the
appellant it was disentitled to relief under article 226
stands negatived
by the decision of this court in The
State of Bombay v. The United Motors (India) Ltd.('},
above referred to.
There it was held that the principle
that a court will not issue a prerogative writ when an
adequate alternative remedy
was available
could not
apply where a party came to the court
with an allegation that his fundamental tight had
been
infringed
and sought relief under
article
226.
Moreover,
the
remedy provided by the
Act is of an
onerous
and
burdensome character.
Before the appellant can avail
of it he has to deposit the whole amount
of the tax.
Such a provision
can hardly
be described
as an
adequate alternative remedy.
For the reasons given above, we are of the opm1on
that the High Court, having held that
the Explanation II to section 2(g) of the Act Was ultra vires,
was
in error in dismissing the application on the ground
that it was not entitled to relief
under the provisions
of article 226 of the
Constitution.
In the result therefore we 11llow this
appeal with costs
and direct an
appropriate writ to issue restraining the first
respond·
ent from imposing or authorising
imposition of a tax
on the appellant
in exercise
of its authority
under
Explanation II held void.
Appeal allowed;
(1) (1953] S.C.R. 1069.