# India Copper Corporation Ltd v. The State of Blhar, 12 S.T.C. S6

- **Citation:** [1970] 1 S.C.R. 743
- **Court:** Supreme Court of India
- **Decided:** 1969-08-01
- **Bench:** J.C. Shah, Acting C.J, V. Ramaswami, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/india-copper-corporation-ltd-v-the-state-of-blhar-12-s-t-c-s6-4689
- **Pages:** 10

## Headnote

Constitution of India, Art. 285(1)(c)-Sales
outside
the
StateWhether burden of proof on dealer to show consumption in
delivery
State-Assessment Order-Comprehensive order covering sales
taxable
and those not taxable-If severable.
The appellant, a dealer in pulses in Vijayawada in Madras State made
certain sales outside the State durin.~ the assessment year 1949-50.
The
appellant claimed exemption from sales tax of sales effected outside the
State during the year but the Deputy Commercial Tax Officer disallowed
the claim. A first appeal and a revision petition to the Board of Revenue
v.:ere unsuccessful.
The appellant thereafter brought a suit for the ·re•
covet)' of tax collected from him with interest contending that part of sates
effected outside the State could not be taxed under Art. 285(1(a) of the\
Constitution. The Trial Court held that the assessment to tax of the sales
during the period from April I, 1949 to January 25, 1950 could not be
impeached but the sales from January 26 to March 31 outside the State
\\'ere not liable to sales-tax; as there \Vas a sirg1e order of assessment 'for
the whole year, the entire assessment was illegal.
Jn aopeal to the High Court. and upon a direction from that Court,
the Trial Court gave a finding that deliveries of the goods \\'ere not made
for ptfrposes of consumotion within the delivery State only.
The High
Cour~. therefore. aHo\vcd the apoeal holding that the appellant could not
claim the benefit under Article 286( 1) (a) in the absence of evidence as
to how the whole-salers disriosed of the goods after obtaining delivery and
therefore the entire turn-over for the year 1949-50 would be assessable
to tax.
Jn the appeal to this Court. it was contended inter-alia (i) that the
High Court was in error in holding that the burden of proof was on the
appellant to show that there was not only delivery of goods for consumption within the delivery States but there was actual consumption of goods
in those States; (ii)
th~ assessment must be treated as an indivisible one
and if a part of the ~ssessment was illegal, the entire assessment must be
deemed to be infected and treated as invalid.
HELD : Allowing the appeal,
(i) The part of the tu1rnover which related to sales from January 26,
1960 to March 31, 1960 was not liable to sales-tax and the levy of salestax from the appellant to this extent was illegal.
It was rightly contended that the appellant did not carry the burden
of showing that there was not only delivery of goods for consumption
within the States but that the ,goods were actually
consumed in
those
States. [749 CJ
India Copper Corporation Ltd. v. The State of Blhar, 12 S.T.C. S6
relied upon.
. 744
SUPREME COURT REPORTS
[1970] l S C.R .
(ii) In the p·resc.:nt case rhough there ,, .. as J single order of as!'>cssment
for the pcrioJ fron1 April I, 1949 lo 1\-f'Jrch 31. 1950, the asscssn1cnt
cculd he split up and dissected and the itcn1.;; of sales separated and taxed
for different pcrioJs.
It \\"JS 1X>ssiblc tv a<;ccrtain the turnover of the
appellant for !he pre-Constitution and post-Constitution pcrio~s fro1n the
fij:?urc\ furni!ihcJ in the plaint by the appellant himself. lt y,·a~. therefore.
open to the Court in these circumstances to s~vcr the illegal part of the
asscssn1cn1 and give a declaration "·ith regard tn the illegal part alone
ins1ead of declaring the entire asSC!l'>rnent void.
[7:'~ BJ
Case J.1-w referred to.
CIVIL APPELLATE JURISDICTJO);: Civil Appeal l\o. 145 l of
1968.
A
B
Appeal from the judgment and decree dated March 11. 1965 c
of the Andhra Pradesh High Court in A.S. Nos. 93 and 169 of
1957.
Rajes/11mra Rao and B. Part/w'illrathi, for the appellant.
D. M1111ikan11iah and A. V. Ji. Nair, for the respondent.

## Text

1 ,,, ••
743
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KURAPATI VENKATASATYANARAYANA & OTHERS
B
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v.
THE STATE OF ANDHRA PRADESH
August 1, 1969
[J.C. SHAH, ACTING C.J., V. RAMASWAMI AND A. N. GROVER, ;;,J
Constitution of India, Art. 285(1)(c)-Sales
outside
the
StateWhether burden of proof on dealer to show consumption in
delivery
State-Assessment Order-Comprehensive order covering sales
taxable
and those not taxable-If severable.
The appellant, a dealer in pulses in Vijayawada in Madras State made
certain sales outside the State durin.~ the assessment year 1949-50.
The
appellant claimed exemption from sales tax of sales effected outside the
State during the year but the Deputy Commercial Tax Officer disallowed
the claim. A first appeal and a revision petition to the Board of Revenue
v.:ere unsuccessful.
The appellant thereafter brought a suit for the ·re•
covet)' of tax collected from him with interest contending that part of sates
effected outside the State could not be taxed under Art. 285(1(a) of the\
Constitution. The Trial Court held that the assessment to tax of the sales
during the period from April I, 1949 to January 25, 1950 could not be
impeached but the sales from January 26 to March 31 outside the State
\\'ere not liable to sales-tax; as there \Vas a sirg1e order of assessment 'for
the whole year, the entire assessment was illegal.
Jn aopeal to the High Court. and upon a direction from that Court,
the Trial Court gave a finding that deliveries of the goods \\'ere not made
for ptfrposes of consumotion within the delivery State only.
The High
Cour~. therefore. aHo\vcd the apoeal holding that the appellant could not
claim the benefit under Article 286( 1) (a) in the absence of evidence as
to how the whole-salers disriosed of the goods after obtaining delivery and
therefore the entire turn-over for the year 1949-50 would be assessable
to tax.
Jn the appeal to this Court. it was contended inter-alia (i) that the
High Court was in error in holding that the burden of proof was on the
appellant to show that there was not only delivery of goods for consumption within the delivery States but there was actual consumption of goods
in those States; (ii)
th~ assessment must be treated as an indivisible one
and if a part of the ~ssessment was illegal, the entire assessment must be
deemed to be infected and treated as invalid.
HELD : Allowing the appeal,
(i) The part of the tu1rnover which related to sales from January 26,
1960 to March 31, 1960 was not liable to sales-tax and the levy of salestax from the appellant to this extent was illegal.
It was rightly contended that the appellant did not carry the burden
of showing that there was not only delivery of goods for consumption
within the States but that the ,goods were actually
consumed in
those
States. [749 CJ
India Copper Corporation Ltd. v. The State of Blhar, 12 S.T.C. S6
relied upon.
. 744
SUPREME COURT REPORTS
[1970] l S C.R .
(ii) In the p·resc.:nt case rhough there ,, .. as J single order of as!'>cssment
for the pcrioJ fron1 April I, 1949 lo 1\-f'Jrch 31. 1950, the asscssn1cnt
cculd he split up and dissected and the itcn1.;; of sales separated and taxed
for different pcrioJs.
It \\"JS 1X>ssiblc tv a<;ccrtain the turnover of the
appellant for !he pre-Constitution and post-Constitution pcrio~s fro1n the
fij:?urc\ furni!ihcJ in the plaint by the appellant himself. lt y,·a~. therefore.
open to the Court in these circumstances to s~vcr the illegal part of the
asscssn1cn1 and give a declaration "·ith regard tn the illegal part alone
ins1ead of declaring the entire asSC!l'>rnent void.
[7:'~ BJ
Case J.1-w referred to.
CIVIL APPELLATE JURISDICTJO);: Civil Appeal l\o. 145 l of
1968.
A
B
Appeal from the judgment and decree dated March 11. 1965 c
of the Andhra Pradesh High Court in A.S. Nos. 93 and 169 of
1957.
Rajes/11mra Rao and B. Part/w'illrathi, for the appellant.
D. M1111ikan11iah and A. V. Ji. Nair, for the respondent.
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought by certificate from
the judgment of the High Court of Andhrn Pradesh dated March
11, 1965 in A.S Nos. 93 and 169 of 1957.
The appellant was a firm of dealers in pulse> at Vijayawada.
It was sending pulses like green gram and t-1ack gram to other
States viz. : Bombay, Bengal, Madras and Kcrab by rJil in the
course of their business.
The consignments \\'Cre addressed to
'self and the railway receipts were endorsetl in favour of F·1nks
for delivery against payments.
The purchasers obtained tile railway receipts after payments and took delivery of the good<.
The
total turnO\er of the business of the appellant for the year 1949-50
was Rs.
17,05, 144-2-2.
Of the said turnover a sum of
Rs. 3.61.442-7-3 represented the turnover of saies ~ffected outside
the then Madras State.
For the assessment year
l 94n-50 the
Deputy Commercial Tax Officer collected sales tax on the total
turnover without exempting the value of the sales effected outside
the State.
The appellant was permitted to pay sales tax under
r. 12 of the Madras General Sales Tax ITurno,·cr and As;e<sment) Rules.
The appellant submitted monthly retnrns and
paid sales tax without claiming any such exemption till the end of
January, 1950.
But in the returns for the months of February
and March, 1950 the appellant claimed exemption on sales effected outside the State.
The apptllant submitted
a
consolidated
return Ex. A-18 to the Deputy Commercial Tax Ofhcer on March
30,
1950 claiming
exemption
in
respect
of
a
sum
of
Rs. 10,37,334-7-9 being the value of the sales effected outside the
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KURAPATI v. A. P. STATE (Ramaswami, J.)
745
State for the period commencing from April 1, 1949 and ending
January 31, 1950 .. "The Deputy Commercial Tax Officer fixed
the taxable turnover of the appellant at Rs. 17,05,144-2-2 and
issued a notice E.x. A-23 dated October 24, 1950 to show cause
why the appellant 'should not be assessed accordingly.
The appellant was thereafter held liable to pay tax amountmg to
Rs. 26 642-14-0 on a net turnover of Rs. l 7,05, 144-2-2. The
appell;nt prefeit:ed an appeal to the Commercial Tax Officer and
a revision petition to the Board of Revenue, Madras but was unsuccessful.
The· appellant, therefore brought a suit for the recovery of Rs. 21,270-13-0 being the amount of tax illegally collected from him togeth~r with interest, contending that the sales
effected outside the State could not be taxed under Art. 285 ( 1 )-
(a) of the Constitution of India. The State of Madras contested
the suit on the grou11d that the sales were taxable as they fell within the purview of explanation 2 to s. 2(h) of the Madras General Sales Tax Act, 19 3 9 hereinafter referred to as the Act) . The
Subordinate Judge held that for the period from April 1, 1949 to
January 25, 1950 ~he appellant was not entitled to impeach the
assessment on the turnover relating to sales outside the State. As
regards the period from March 26, 1950 to March 31, 1950 the
Subordinate Judge took the view that the part of the turnover
relating to outside sales was not liable to salestax but as there was
a single order of assessment for the entire period the entire
assessment was illegal.
Again the judgment of the Subordinate
Judge both the appellant and the respondent filed appeals A.S.
No. 93 of 1957 and A.S. No. 169 of 1957 to the High Court of
Andhra Pradesh.
But its order dated April 18, 1960 in Appeal
No. 169 of 1957 the High Court called for a finding from the
trial court as to whether the appellant was able to prove the facts
entitling him to invoke the explanation to Art. 286(l)(a). By
its order dated July 21, 1962 the trial court submitted a finding to
the effect that ~n view of the decision of the Supreme Court in
India Copper Corporation Ltd. v. The State of Bihar(') the burden of proof was not on the appellant and that the finding will have
to be given in its favour.
But by its order dated March 5, 1963
the High Court directed the Subordinate Jridge to record a finding
after considering the evidence adduced by the appellant as to
whether the goods in question were delivered for consumption
within the delivery States. In its order dated March 22, 1963
the trial court, after considering the evidence given by the appellant's witnesses came to the conclusion that the deliveries were not
made for purposes of consumption within the delivery States only.
The High Court by a common judgment dated March 11, 1965 iin
A.S. No. 93 and 169 of 1957 held that the appellant ·could not
claim the benefit under Art. 286 ( 1 )(a) of the Constitution in the
(1) 12S.T.C.56.
746
SUPREME COURT REPORTS
[1970) l SC.R.
absence of evidence as to how the wholesalers disposed of the
goods after obtaining delivery and therefore the entire turnover
for the year 1949-50 would be assessable to tax.
In the resJ!t
A.S. No. 169 of 1957 filed by the respondent was allowed and
A.S. No. 93 of 1957 filed by the appellant was dismissed.
The Madras General Sales Tax Act, 1939 was enacted in
exercise of the legislative authority conferred upon the Provincial
Legislatures by Entry 48 of List II read with s. 100(3) of the
Government of India Act, 1935. The explanation to s. 2(h) of
this Act is as follows :
"Ngtwithstanding anything to the contrary in the
Indian Sale of Goods Act, ! 930 the sale or purchase of
any goods shall be deemed, for the purpose of this Act,
to have taken place in this Province, wherever the contract of sale or purchase might have been made.
(a)
(b)
If the goods were actually in this Province at the
time when the contract of sale or purchase in
respect thereof was made or,
in case the contract was for the sale or purchase
of future goods by description, then, if the goods
arc actually produced in this Province at
any
time after the contract of sale or purchase in
respect thereof was made."
Cnder Entry 48 of List II of the Government of India Act,
1935_ the Provincial Legislatures could tax sales by selecting some
fact or circumstances which provided a territorial nexus with the
taxing power of the State even if the propertY in the goods sold
passed outside the Province or the delivery under the contract of
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sale took place outside the Province.
Legislation
taxing sales
F
depending solely upon the existence of a nexus, such as production
or manufacture of the goods, or presence of the goods in the Province at the date of the contract of sale, between the sale and the
legislating Province could competently be enacted
under the
Government of India Act, 1935.
[see Tata Iron & Steel Co.
Ltd. v. The State of Bihar(') and Poppat/a/ Shah v. Th~ State of
G
Madras(')].
By Art. 286 of the Constitution certain fetters were placed
upon the legislative powers of the States as follows :
"( 1) No law of a State shall impose, or authorise
the imposition of. a tax on the sale or purchase 0f
H
goods where such sale or purchase takes place--
-----·- ·--
(!) [195HJ S.C.R. 1155.
(2) [19511 S.C.R. 677.
...
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KURAPAt'I v. A. P. STATE (Ramaswami, J.)
747
(a) ou~ide the State; or
(b) in the course of the import of the goods into,
or export of the goods out of, the territory of
India.
Explanation.-For the purposes of sub-clause (a),
a sale or purchase shall be deemed to have taken place
in the State in which the goods have actually been ·
delivered as a direct result of such sale or purchase for
the purpose of consumption in that State, notwithstanding the tact that under the general law relating to sale of
goods the property in the goods has by reason of such
sale or purchase passed in another State.
(2) Except in so far as Parliament may by law
otherwise provide, no law of a State shall impose, or
authorise the imposition of, a tax on the sale or purchase
of any goods where such sale or purchase takes place in
the course of inter-State trade or commerce;
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 Govermr.rnt of any State
immediately before the commencr;r.u;nt of this Constitution shall, notwithstanding that the imposition of such
tax is contrary to the provisions of this clause, continue
to be levied until the thirty-first day of March, 1951.
(3) No law made by the Legislature of a State
imposing, or authorising the imposition of, a tax on the
sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of
the community shall have effect unless it has been
reserved for the consideration of the President and has
received his assent."
Therefore, by incorporating s. 22 of the M:idras Act read with
Art. 286, notwithstanding the amplitude of the power otherwise
granted by the charging section read with the definition of 'sale',
a cumulative fetter of triple dimension was imposed upon 'the
taxing power of the State.
The Legislature of the Madras State
could not since January 26, 1950. levy a tax on sale of goods
taking place outside the State or in the course of import of the
goods into, or export of the goods out of, the territoI'y of India or
on sale Qf any goods where such sale took place in the con~ of
inter-State trade or commerce.
By the Explanation to Art.
286(1)(a) which is incorporated bys. 22 of the Madras Act a
sale is deemed to take place in the State in which the goods are
actually delivered as a direct result of such sale for the pnrpose
748
SUPREME COURT REPORTS
[1970] I SC.R.
of conswnption in that State even though under the Jaw relating
to sale of goods the property in the goods has by reason of such
sale pa~sed in a,riothcr State. In the State of Bombay and Anr. v.
The United Motors (India) Ltd.(') it was held that since the
enactment of Art. 286( 1 )(a) a sale described in the Explanation
which may for convenience be called an "Explanation sale"
is
taxable by that State alone in which the goods sold are actually
delivered as a direct result of sale for the purpose of consumption
in that State.
With a view to impose restrictions on the taxing power of the
States· under the pre-Constitution statutes, amendments were made
in those statutes by the Adaptation of Laws Order.
As regards
the Madras Act the President issued on July 8, -1952 the Fourth
Amendment inserting a new section, s. 22 in that Act.
It runs
as follows :
-
"Nothing contained in this Act shall be deemed to
impose or authorise the imposition of a tax on the sale
or purchase of any goods where such sale or purchase
takes place-
( a) (i) outside the State of Madras, or
(ii) in the course of import of the goods into the
territory of InC:ia or of the export of the
goods out of such territory, or
(b) except in so far as Parliament may by law otherwise provide, after the 31st March, 1951, in the
course of inter-State trade or commerce, and the
provisions of this Act shall be read and construed
accordingly.
Explanation :-For the purposes
of cl. (a) (i) a
sale or purchase shall be deemed to have taken place in
the State in which the goods have actually been delh·crcd
as a direct result of such sale or purchase for the purpose of consumption in that State. notwiffistanding the
fact that under the general law relating to sale of goods
the property in the goods has by reason of such sale or
purchase passed in another State."
By this amendment the same restrictions were engrafted on the
pre-Ceonstitutien statute a<; were imposed by Art. 286 of the Constitution upon post-Constitution statutes.
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As regards the sales for the period from
April,
1949 to
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January 25, 1950 it was admitted before the Deputy Commercial
(I) [1953! S.C.R. 1069.
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KURAPATI v. A. P. STATE (Ramaswami, l.)
749
Tax Officer that the goods were actually in the Madras State at
the time the contract of sale was concluded. It was for this reason that the Deputy Commercial Tax Officer negatived th~ claim
which the appellant maqe in respect of those sales. It appears
that in the trial court the appellant challenged the constitutional
validity of explanation. t() s. 2(h) of the Act. But in view of the
decision of this Court in the T;ata Iron & Steel Co's case(') am~
Poppatlal Shah's qase(2) counsel on behalf of the appel!ant did
not ser.iously disp1\te the validity of the assessment in regard to
sales from April It 1949 to January 25, 1950.
f,,' -.
With regard to the period from January 26, 1950 to March
31, 1950 the contention of the appellant is that the High court
was in error in holding that the burden of proof was on the
appel!ant to show that there was not only delivery of goods for
consumption v.(ithin the delivery States but there was actual consumption of the goods in those States. In our opinion the argument is wel!-fo\iinded and must be accepted as correct. In India
Copper Corpotati(/n's case(') it was pointed out by this Court
that if the goods.,were as a direct result of a sale delivered outside
the State of Bihar for the purpose of consumption in the State of
first delivery, the. assessee would be entitled to the exemption from
sales tax by virtue of the Explanation to Art 286(1)(a) of the
Constitution ahd it would not be necessary for the assessee to
prove further that the goods so delivered were actually consumed
in the State of first destination.
In the present case the Subordinate Judge has, upon a consideration of the evidence adduced by the parties stated in his
report dated June 27, 1962 that the intention of the appel!ant was
that the sale and. delivery should be for the purpose of consumption in the delivery States. It is true that in his subsequent report
dated March 22, 1963 the Subordinate Judge gave a different
finding.
But it .is obvious that the subsequent report of the Subordinate Judge is vitiated because the principle laid down by this
Court in India Copper Corporation's case(8 ) has not been taken
into account.
Having regard to the evidence adduced by the
appellant in this case we are satisfied that the part of the turnover
which related to sale from January 26, 1950 to March 31, 1950
was not liable to sales tax and the levy of sales tax from the appellant to this extent is illegal.
The next question arising in this appeal is whether the assessment order of the Deputy Commercial Tax Officer for the year
1949-50 is illegal in its entirety notwithstanding the 'fact that the
State Government had a right to levy sales tax on outside sales
(I) [1958] S.C.R. 1355.
(2) [1953JS.C.R. 677.
(3) 12 S. T.C. 56.
750
SUPREME COURT REPORTS
[1970j I S.C.R.
which were effected pnor to January 26, 1950.
It was argued
for the appellant that the assessment must be treated as one and
indivisible and if a pan of the assessment is illegal the entire
assessment must be deemed to be infected and treated as invalid.
In support of this argument reference was made to the decision
of this Court in Ram Narain Sons Ltd. v. Assistant Comm1ssi0Mr
of Sales Tax(') in which this Court observed as follows:
"The necessity for doing so is, however, obviated
by reason of the fact that the assessment is one composite whole relating to the pre-Constitution a> well as the
post-Constitution periods and is invalid in 1010.
There
is authority for the proposition that when an assessment
consists of a single undivided sum in respect of the totality of the property treated as assessable, tltc wrongful
inclusion in it of certain items of property which
by
virtue of a provision of law were expressly exempted
from taxation renders the assessment invalid i11 toro."
The Court cited with approval a passage from the judgment of the
Judicial Committee in Bennett & White
(Calgary)
Ltd. and
Municipal District of Sugar City No. 5(').
"When an assessment is not for an entire sum, but
for separate sums, dissected and earmarked each of them
to a separate assessable item, a Court can sever the
items and cut out one or more along with the sum attributed to it, while affirming the residue.
But where the
assessment consists of a single undivided sum in respect
of the totality of property treater! as assessable, and when
one component (not dismissiblc as 'de minimis') as on
any view not assessable and wrongly included, it would
seem clear that such a procedure is barred, and the
assessment is bad wholly.
That matter is covered by
authority.
In Montreal Light, Heat & Power Consolidated v. City of Westmount( 1 ) the Court (see especially per Anglin, C.J) in these conditions held that an
assessment which was bad in part was infected throughout, and treated it as invalid.
Here their Lordships are
of opinion. by parity of reasoning, that the assessment
was invalid in toto."
Applying the principle to the special facts arc circumstances of the
case the Court set aside the orders of assessment and directed that
the case sho:ild be remanded to the Assessment Officer for reassessment of the appellants in accordance with law.
The same
principle was applied but with a different result in the later case
(I) 6 S.T.C. 627 at 637.
(2) [ 19S 11 A.C. 786 a1 p. 816,
(3) 11926) S.C.R. (Can) 515.
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KU RAP AT! V, A. P. STATE (Ramaswami, J.)
7 51
the State of Jammu & Kashmir v.
Caltex
(India) Ltd. (') in
which the question arose as regards the validity of an assessment
of sales tax of all retails sales of motor spirit. The Petrol Taxation Officer assessed the respondent to pay sales tax for the period
January 1955 to May, 1959 under s. 3 of the Jammu & Kashmir
Motor Spirit (Taxation of Sales) Act, 2005.
The respondent
applied under s. 103 of the Constitution of Jammu & Kashmir and
a single Judge of the High Court held that the respondent was
liable to pay sales tax only in respect of the sales which took place
during the period January to September, 1955 and issued a writ
restrainnig the appellants from levying tax for the period October,
1955 to May, 1959.
On appeal a Division Bench of the High
Court quashed the assessment for the entire period.
On appeal
to this Court it was held that though there was
one order of
assessment for the period January 1, 1955 to
May
1959 the
assessment could be split up and dissected and the items of sale
could be separated and taxed for different periods.
It was pointed out that the sales tax was imposed in the ultimate analysis on
receipts from individual sales or purchases of goods effected during the entire period, and, therefore, a writ of mandamus could
be issued directing the appellant not to realise sales tax with
regard to transactions of sale during the period from September
7, 1955 to May, 1959.
A similar question arose for determination in an
American
case [Frank Rattarman v. Western Union Telegraph Co. (2)]. The
question in that case was "whether a single tax, assessed under
the Revised Statutes of Ohio, section 2778, upon the receipts of
a telegraph company which receipts were derived partly from
inter-state commerce and partly from commerce within the State
but which were returned and assessed in gross and without separation or apportionment, is wholly invalid, or invalid only in the
proportio1n and to the extent that the said receipts were derived
from interstate commerce''. It was held unanimously
by the
Supreme Court of the United States that the assessment was not
wholly invalid but it was invalid only in proportion to the extent
that such receipts were derived from interstate commerce. It was
observed that where the subjects of taxation can be separated so
that that which arises from interstate commerce cain be distinguished from that which arises from commerce wholly within the
State, the Court wilJ act upon this distinction, and will restrain
the tax Ol\ interstate commerce. while permitting the State to collect that upon commerce wholly within its own territory.
The
principle of this case has been consistently followed in American
cases: [see Bowman v. Continental Company(")].
This
case
has been cited with approval by this Court in The State of Bombay
(!) 17 S.T.C. 612.
(2) 127 U.S. 411.
(3) 250 U.S. 642.
Ll5Sup. C. I./69-4
752
Sl;PRE!\!E COURT REPORTS
[ 1970] I S.C.R.
v. The United Motors (lndia) Ltd.(') wherein it was observed
that the same principle should be applied in dealing with taxing
statutes in this country also.
In the present case we are of opinion that though there is a
single order of assessment for the period from April 1, 1949 to
March 31, 1950 the assessment could be split up and dissected
and the items of sale separated and taxed for different
periods.
It is quite easy in this case to ascertain the turnover of the appellant for the pre-Constitution and pnst-Constitution periods for
these figures are furnished in !he plaint by the appellant himself.
It is open to the Court in these Circumstances to sever the illegal
part of the assessment and give a declaration with regard to that
part alone instead of declaring the entire assessment void.
For
these reasons we hold that the appellant should be granted a
declaration that the order of assessment made by the Deputy Commercial Tax Officer for the year 1949-50 is invalid to the extent
that the levy of sales tax is made on sales relating to goods which
were delivered for the purpose of consumption outside the State
for the period from January 26, 1950 to March 31,' 1950.
The
result is that the appellant is entitled to a refund of the amount
illegally collected from him for the period from January 26, 1950
to March 31, 1950.
The trial court has already found that the
appellant is entitled to claim exemption with regard to turnover
for this period to the extent of Rs. 3,34,107-15-6 and the tax
payable on this sum is Rs. 5,220-7-0.
The appellant is. therefore, entitled to a decree for the refund of Rs. 5,220-7-0.
The
appellant is also entitled to interest at 6% per annum from the
date of suit till realisation of this amount.
For these reasons we allow this appeal and set aside the
judgment of the Andbra Pradesh High Court dated March 11,
1965 in A.S. Nos. 93 and 169 of 1957 and allow this appeal to
the extent indicated above.
There will be no order with regard to costs.
A
B
c
I>
E
F
R.K.P.S.
Appeal allowed.
G
.-!J
(I) (t9SJJ S.C.R. 1069 at 1097.
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