# MESSRS ASHOK LEYLAND LTD v. THE STATE OF MADRAS

- **Citation:** [1962] 1 S.C.R. 607
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** S. K. Das, J. L. Kapur, M. Hidayatullah, J. C. Shah, T. L. Venkatarama Aiyar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/messrs-ashok-leyland-ltd-v-the-state-of-madras-2153
- **Pages:** 11

## Headnote

Sales Tax-Inter-State sales before the enactment of the Sales
Tax Laws Validation Act-Such sales taxed on the footing of sales
inside the State-Sales found to be inter-State sales-Validity of
assessment after the passing of that Act-Madras General Sales Tax
Act, I939 (Mad. 9 of I939), ss. 2 (h), 22-Sales Tax Laws Validation Act, I956 (7 of I956), s. 2-Constitution of l ndia, Art. 286.
The appellant firm had its factory in the State of Madras,
where it manufactnred, assembled and sold motor vehicles, spare
parts and accessories. For the assessment year 1952-53, the
sales tax authority computed the appellant's taxable turnover of
sales for that year excluding a sum which represented the value
of vehicles etc., sold outside the State of Madras, but on revision,
the taxable turnover was increased by including a sum which
related to certain transactions with dealers outside the State of
Madras on the ground that the sales covered thereby were made
within the State of Madras and were therefore liable to tax
under the Madras General Sales Tax Act, 1939. The appellant
claimed that these sales were in the course of inter-State trade
and commerce and not liable to sales tax by reason of the provisions of Art. 286(2) of the Constitution of India. The matter
was taken up to the Supreme Court and in the meantime, the
Sales Tax Laws Validation Act, 1956, had been passed by Parliament. The question was whether the transactions in question,
even if they were considered as having taken place in the course
of inter-State trade, came within the protection of the Validation
Act of 1956 and, therefore, the assessment in the present case
was valid. The appellant contended (1) that the Validation Act
was applicable only when the law of the State imposed, in
express terms. a tax on the sale or purchase of any goods in the
course of inter-State trade or commerce, and (2) that the new
s. 22 inserted in the Madras General Sales Tax Act, 1939, by
Madras Act r of 1957, which operated retrospectively from
January 26, 1950, talked of sales in which the goods were delivered for consumption in the State of Madras, and, therefore,
the Validation Act did not operate on sales of an inter-State
character other than such sales.
Held: (1) that the effect of the Sales Tax Laws Validation
Act, 1956, was to liberate the State laws from the fetter placed
on them by Art. 286(2) of the Constitution of India and enable
such laws to operate on their own terms. Consequently, the
transactions in question were liable to tax under the provisions
March a8,
Messrs Ashok
Leyland Ltd.
v.
The State of
Madras
608
SUPREME COURT REPORTS
[1962)
of the Madras General Sales Tax Act, 1939, and it was not
necessary to provide in that Act in express terms that it was
taxing sales in the course of the inter-State trade.
M. P. V. Sundararamier & Co. v. The State of Andhra Pradesh and Another, [1958] S.C.R. 1422, relied on.
(2) that the transactions in question came within the definition of sale in s. z(h) of the Madras General Sales Tax Act, 1939,
and the power to tax conferred on the State by the charging
section, s. 3, was not affected by s. 22 in view of sub-s. (2)
therein.
CrvIL APPELLATE JURISDICTION:
Civil Appeal No.
446 of 1958.
Appeal from the judgment and order dated April
18, 1956, of the High Court of Judicature at Madras
in Tax Revision Case No. 93 of 1955.
M. G. Setalvad, Attorney-General of India, S. Swaminathan and K. L. Mehta, for the appellants.
V. K. T. Chari, Advocate-General of Madras, M. M.
Ismail and T. M. Sen, for the respondent.
N. A. Palkhivala, J. B. Dadachanji, S. N. Andley,
Rameshwar Nath and P. L. Vohra, for the Intervener
(Tata Loco & Engineering Co. Ltd., Bombay).
1961. March 28.
The Judgment of the Court was
delivered by
. "
•
s. K. Das J.
S. K. DAS, J.-This is an appeal on a certificate
granted by the High Court of Madras. The firm of
Messrs. Ashok Leyland Ltd., Ennore, is the appellant
before us.
For brevity and convenience, we shall
hereinafter refer to the

## Text

JI'
•
•
..
1 S.C.R. SUPREME COURT REPORTS
607
MESSRS ASHOK LEYLAND LTD.
v.
THE STATE OF MADRAS
(S. K. DAS, J. L. KAPUR, M. HIDAYATULLAH, J. C.
SHAH and T. L. VENKATARAMA AIYAR, JJ.)
Sales Tax-Inter-State sales before the enactment of the Sales
Tax Laws Validation Act-Such sales taxed on the footing of sales
inside the State-Sales found to be inter-State sales-Validity of
assessment after the passing of that Act-Madras General Sales Tax
Act, I939 (Mad. 9 of I939), ss. 2 (h), 22-Sales Tax Laws Validation Act, I956 (7 of I956), s. 2-Constitution of l ndia, Art. 286.
The appellant firm had its factory in the State of Madras,
where it manufactnred, assembled and sold motor vehicles, spare
parts and accessories. For the assessment year 1952-53, the
sales tax authority computed the appellant's taxable turnover of
sales for that year excluding a sum which represented the value
of vehicles etc., sold outside the State of Madras, but on revision,
the taxable turnover was increased by including a sum which
related to certain transactions with dealers outside the State of
Madras on the ground that the sales covered thereby were made
within the State of Madras and were therefore liable to tax
under the Madras General Sales Tax Act, 1939. The appellant
claimed that these sales were in the course of inter-State trade
and commerce and not liable to sales tax by reason of the provisions of Art. 286(2) of the Constitution of India. The matter
was taken up to the Supreme Court and in the meantime, the
Sales Tax Laws Validation Act, 1956, had been passed by Parliament. The question was whether the transactions in question,
even if they were considered as having taken place in the course
of inter-State trade, came within the protection of the Validation
Act of 1956 and, therefore, the assessment in the present case
was valid. The appellant contended (1) that the Validation Act
was applicable only when the law of the State imposed, in
express terms. a tax on the sale or purchase of any goods in the
course of inter-State trade or commerce, and (2) that the new
s. 22 inserted in the Madras General Sales Tax Act, 1939, by
Madras Act r of 1957, which operated retrospectively from
January 26, 1950, talked of sales in which the goods were delivered for consumption in the State of Madras, and, therefore,
the Validation Act did not operate on sales of an inter-State
character other than such sales.
Held: (1) that the effect of the Sales Tax Laws Validation
Act, 1956, was to liberate the State laws from the fetter placed
on them by Art. 286(2) of the Constitution of India and enable
such laws to operate on their own terms. Consequently, the
transactions in question were liable to tax under the provisions
March a8,
Messrs Ashok
Leyland Ltd.
v.
The State of
Madras
608
SUPREME COURT REPORTS
[1962)
of the Madras General Sales Tax Act, 1939, and it was not
necessary to provide in that Act in express terms that it was
taxing sales in the course of the inter-State trade.
M. P. V. Sundararamier & Co. v. The State of Andhra Pradesh and Another, [1958] S.C.R. 1422, relied on.
(2) that the transactions in question came within the definition of sale in s. z(h) of the Madras General Sales Tax Act, 1939,
and the power to tax conferred on the State by the charging
section, s. 3, was not affected by s. 22 in view of sub-s. (2)
therein.
CrvIL APPELLATE JURISDICTION:
Civil Appeal No.
446 of 1958.
Appeal from the judgment and order dated April
18, 1956, of the High Court of Judicature at Madras
in Tax Revision Case No. 93 of 1955.
M. G. Setalvad, Attorney-General of India, S. Swaminathan and K. L. Mehta, for the appellants.
V. K. T. Chari, Advocate-General of Madras, M. M.
Ismail and T. M. Sen, for the respondent.
N. A. Palkhivala, J. B. Dadachanji, S. N. Andley,
Rameshwar Nath and P. L. Vohra, for the Intervener
(Tata Loco & Engineering Co. Ltd., Bombay).
1961. March 28.
The Judgment of the Court was
delivered by
. "
•
s. K. Das J.
S. K. DAS, J.-This is an appeal on a certificate
granted by the High Court of Madras. The firm of
Messrs. Ashok Leyland Ltd., Ennore, is the appellant
before us.
For brevity and convenience, we shall
hereinafter refer to the firm as the assessee. The
State of Madras through the Commercial Tax Officer,
Saidapet, is the respondent before us.
·
The assessee is a firm with its factory at Ennore in
the State of Madras, where it manufactures, assembles and sells motor vehicles and spare parts and accessories thereof, through an elaborate organisation
spread over several States. It is, perhaps, necessary
to indicate briefly the organisational set up in order
to appreciate the point on which the case was heard
in the High Court and argued before us.
The system
..
"1'
of distribution of its motor vehicles, spare parts and
.l
1 S.C.R. SUPREME COURT REPORTS
609
accessories at one uniform price to consumers in the
various States which the assessee adopted, consisted of
the appointment of a distributor (called a dealer) with
a definite territorial jurisdiction, both inside and outside the State of Madras. To every such dealer it
granted the sole right of selling the products of the
firm within the territory allotted to him. If the territory of the dealer was outside the Stat.e of Madras,
the agreement entered into by the dealer provided for
the delivery of the products of the firm by consignment, by rail or steamer or road transport. The agreement specifically stipulated that the dealer must not
canvass or sell the products outside the territory
allotted to him, and in the event of infringement or
breach of the undertaking by the dealer, the assessee
was entitled to terminate the agreement forthwith.
On such termination, the assessee reserved the right
to call upon the dealer to return all or any of the products remaining unsold at the date of such termination. The case set up by the assessee was that a substantial number of motor vehicles and accessories
thereof were consigned to the dealers in other States
either by rail or steamer; but due to want of such
transport facilities, a number of vehicles were also
transported by road.
In the year relevant to the assessment year 1952-53,
the total turnover of the assessee in respect of all its
sales came to Rs. 1,43,67,007 odd.
The Deputy Commercial Tax Officer, Madras, computed the taxable turnover of the assessee for that year by excluding the sum
of Rs. 1,12,21,707 odd which represented the 'value
of vehicles, spare parts, etc., sold outside the State of
Madras and consigned by rail or steamer or transported by road. The balance of Rs. 31,45,299 odd was
determined to be the net assessable turnover of the
company. The tax levied thereon was a sum of
Rs. 1,45,655-13-3 and this sum wall duly paid by the
assessee.
· Sometime thereafter, the Commercial Tax Officer,
Madras, purporting to act under the powers of revi-
, sion given to him by s. 12 of the Madras General Sales
77
Messrs, Ashok
Leyland Ltd.
v.
TAe State of
1kf adras
S. K. Das].
Messrs Ashok
Leyland Ltd,
v.
The State of
1Vladras
S. K. Das J.
610
SUPREME COURT REPORTS
[1962)
Tax Act, 1939 (Madras Act IX of 1939), hereinafter
called the Act, called upon the assessee to produce its
books of account for the purpose of satisfying himself
as to the legality or propriety of the assessment made.
After scrutinising the accounts and other records produced by the assessee, the Commercial Tax Officer
issued a notice proposing to revise the assessment by
including a sum of Rs. 42,98,068 odd on the ground
that the delivery of motor vehicles, etc., in respect of
sales covered by the aforesaid sum was made within
the State of Madras and was therefore liable to tax
under the Act. The assessee submitted its objection
to the revision of the assessment and contended that
on the sum of Rs. 42 lacs odd the assessee was not
liable to pay sales tax as the transactions were in the
course of inter-State trade and commerce. This objection was, however, overruled by the Commercial Tax
Officer except to a very small extent.
From that decision of the Commercial Tax Officer,
an appeal was taken to the Sales Tax Appellate Tribunal, Madras, and the assessee contended in that
appeal that the revision of the assessment by the
Commercial Tax Officer was without jurisdiction and
that the inclusion of Rs. 42 lacs odd in the taxable
turnover was contrary to the provisions of Art. 286
of the Constitution. The Tribunal rejected the plea of
absence of jurisdiction, but held on merits that the
sum of Rs. 12,48,403 odd representing the value of
vehicles driven away on their own motive power
through the assessee's own drivers to the places of
businuss of the non-resident dealers was not liable to
sales tax.
The assessee then preferred a revision to the High
Court of Madras under s. 12B(l) of the Act and repeated the contention that the sales in question were in
the course of inter-State trade and commerce and not
liable to sales tax by reason of the provisions of
Art. 286(2) of the Constitution. In the High Court
the liability to tax was challenged by the assessee in
respect of the following four items only:
(1) A sum of Rs. 1,43,072 odd which represented •
the value of vehicles delivered ex-factory to the
I
I S.C.R. SUPREME COURT REPORTS
611
dealer's drivers. The vehicles were driven away by
those drivers after temporary registration of the
vehicles in the name of the dealer, outside the State
of Madras.
(2) A sum of Rs. 28,01,357 odd which represented
the value of vehicles delivered to the drivers of the
dealers, which were driven away under the trade
number of the dealers, outside the State of Madras.
(3) A sum of Rs. 7,866 odd which represented
the value of spare parts or other accessories delivered along with the cars.
(4) A sum of Rs. 15,000 which represented the
value of spare. parts consigned to the dealers. These
were delivered to the dealers outside the State of
Madras and tl).e consignments were sent by rail or
steamer.
The High Court repelled the contention of the assessee
in respect of the first three items aforesaid, holding
that they fell outside the purview of the ban imposed
by Art. 286(2) of the Constitution. It modified the
order of the Tribunal with respect to the fourth item,
as in its view that item came within the scope of
Art. 286(2).
The assessee then moved the High Court
and obtained the necessary certificate under Art. 133
of the Constitution.
When the learned Attorney-General appearing for
the assessee opened the appeal, he submitted in the
forefront of his argument that the High Court was in
error in holding that the transactions coming under
the three items (1), (2) and (3) above were outside the
ban imposed by Art. 286(2) of the Constitution, and
contended that the transactions were within the purview of the ban. We then drew his attention to the
Sales Tax Laws Validation Act, 1956 (hereinafter called
the Validation Act), and asked him to consider the question whether the transactions in question came within
the protection of the Validation Act, an aspect of the
case which does not appear to have been considered
in the High Court. The argument before us then
centered round the question whether the assessment in
~ respect of the three items came within the protection
of the Validation Act, and it was conceded by the
Messrs Ashok
Leyland Ltd.
v.
The State of
Madras
S. K. Das J.
Messrs Ashok
Leyland Ltd.
v.
The State of
Madras
S. K. Das J.
612
SUPREME COURT REPORTS
[1962]
learned Attorney-General that if it did, no other question would survive and it would be unnecessary to
determine in this appeal tμe true scope and effect of
Art. 286(2) of the Constitution and whether the
transactions in question came within the ban imposed
thereby. On behalf of an' intervener (Tata Locomotive & Engineering Co. Ltd., Bombay) we have been
pressed to decide, on merits, whether the transactions
under consideration here come within the ban of
Art. 286(2) of the Constitution, on the ground that
such decision will be of assistance in a pending case to
which the intervener is pa.rty.
We do not think that
we can do so for the benefit of the intervener. The
intervener has no right to ask us to decide a question
which does not fall for decision if the Validation Act
applies; for it is conceded that if the" Validation Act
applies, that will be decisive of the whole appeal.
We must, therefore, rejeot the plea of the intervener.
We proceed now to consider the main point argued
in this appeal, namely, whether the Validation Act
applies to the transactipns in question. It is convenient to read here s. 2, which is the relevant section, of the Validation Act:
"Section 2. Notwithstanding any judgment, decree
or order of any court, no law of a State imposing
or authorising the imposition of, a tax on the sale
or purchase of any goods where such sale or purchase took place in the course of inter-State trade
or commerce during the period between the 1st day
of April, 1951, and the 6th day of September, 1955,
shall be deemed to be invalid or ever to have been
invalid merely by reason of the fact that such sale
or purchase took place in the course of inter-State
trade or commerce; and all such taxes levied or
collected or purporting to have been levied or
collected during the aforesaid period, shall be
deemed always to have been validly levied or
collected in accordance with law".
It will be noticed at once that the transactions under
consideration in the pre~ent appeal came within the
period mentioned in the Validation Act, being
...
transactions of a period between April •l, 1951, and
'
I S.C.R. SUPREME COURT REPORTS
613
March 31, 1952.
Indeed, this is not disputed before
us. It is also clear that the wording of s. 2 is general
and wide enough to take in "the sale or purchase of
any goods where such sale or purchase took place in
the course of inter-State trade or commerce during the
period between the 1st day of April, 1951, and the
6th day of September, 1955." The section states in
effect that notwithstanding any judgment, decree or
order of any court, no law of a State imposing a tax
on the sale or purchase of goods referred to therein
shall be deemed to be invalid or ever to have been
invalid merely by reason of the fact that such sale or
purchase took place in the course of inter-State trade
or commerce.
The learned Attorney-General has
advanced two arguments in support of his contention
that the Validation Act does not apply to the
transactions under consideration here. His first argument is that the Validation Act applies only when
the law of the State imposes, in express terms, a tax
on the sale or purchase of any goods in the course of
inter-State trade -or commerce. He emphasises the
expression "where such sale or purchase took place in
the course of inter-State trade or commerce" occurring
in the section and from that expression he has drawn
the inference that the law must in express terms say
that it is taxing transactions in the course of interState trade and commerce.
His second argument is
that by reason of s. 22 of the Act inserted by the
amending Act of 1957, being Madras Act I of 1957,
the Act imposes no tax on transactions under consideration in this appeal; it merely imposes a tax on
transactions which are generally known as Explanation
sales referable to the Explanation to Art. 286( 1 )(a),
such as were considered in the decision of this Court
in M. P. V. Sundararamier & Co. v. The State of
Andhra Pradesh & Another (1).
We shall consider
these two arguments one after the other.
It appears to us that the first argument does not
correctly reflect the true scope and effect of s. 2 of the
Validation Act. It is necessary, perhaps, to advert
to the circumstances which led to the enactment of
(1) [1958] S.C.R. 14n
Messrs Ashok
Leyland Ltd.
v.
The State of
Madras
S. /{_ Das ].
Messrs Ashok
Leyland Ltd.
v.
The State of
Madras
S. K. Das ].
'
614
SUPREME COURT REPORTS
(1962)
the Validation Act.
The true meaning and scope of
the Explanation to Art. 286(1) of the Constitution
came up for consideration before this Court in
The State of Bombay and Another v. The United Motors
(India) Ltd. and Others (1). It was therein held by the
majority that though the sales falling within the
Explanation would, in fact,· be in the course of interState trade, they became intra-State sales by the fiction
introduced by the Explanation and were liable to be
taxed by the State within which the goods were
delivered for consumption. ' Then, came the decision
in The Bengal Immunity Company Limited v. The State
of Bihar and Others (2) where this Court held, again by
a majority, that the sales falling within the Explanation being inter-State in character, could not be taxed
by reason of Art. 286(2) utjless Parliament lifted the
ban, that the Explanation .to Art. 286(1)(a) controlled
only that clause and did not limit the operation of
Art. 286(2), and that the law in this respect had not
been correctly laid down in the United Motors' case (2).
The decision in The Bengal Immunity's case (2) was
rendered on September ,6, 1955.
The Sales Tax
Validation Ordinance No. UI of 1956 was promulgated
on January 30, 1956, and ,that was later replaced by
the Validation Act.
The constitutionality of the
Validation Act was challenged before this Court and
in M. P. V. Sundararamier'.s case (3) this Court upheld
its validity, though the sales referred to in the arguments in that case were Explanation sales.
The Validation Act is l~gislation by Parliament, and
it lifts the ban imposed by Art. 286(2).
Clause (2) of
Art. 286 as it stood before the Constitution (Sixth
Amendment) Act, 1956, "'.as in these terms:
"(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."
In M. P. V. Sundararamier's case (3) this Court
observed:
(1) [1953] S.C.R. 1069.
(2) [1955] 2 s.c.R. 603.
(3) [1958] s.c. 1422.
•
•
)
'
'
1 S.C.R. SUPREME COURT REPORTS
615
"Section 2 of the impugned Act which is the only
substantive enactment therein makes no mention of
any validation. It only provides that no law of a
State imposing tax on sales shall be deemed to be
invalid merely because such sales are in the course
of inter-State trade or commerce.
The effect of
this provision is merely to liberate the State laws
from the fetter placed on them by Art. 286(2) and
to enable such laws to operate on their own terms.
The true scope of the impugned Act is, to adopt the
language of this Court in the decisions in the United
Motors case (1) and The Bengal Immunity Company's
case ('), that it lifts the ban imposed on the States
against taxing inter-State sales and not that it validates or ratifies any such law."
It should be obvious that in 1939, long before the
coming into force of the Constitution, the Act could
not have said in express terms that it was taxing sales
in the course of inter-State trade. What we have to
see is that the fetter under Art. 286(2) having been
removed, does the Act operating on its own terms
affect the transactions in question even though they
be in the course of inter-State trade? If it does, the
assessment is no longer liable to challenge on the
ground of the ban imposed by Art. 286(2).
This brings us to the second argument of the learned Attorney -General. One has merely to see the definitions of 'sale' and 'turnover' and s. 3, the charging
section, to come to the conclusion that the Act operating on its own terms makes the transactions under
consideration in this appeal liable to sales tax. Explanation (2) to the definition of 'sale' says:
"The sale or purchase of any goods shall be
deemed, for the purposes of this Act, to have taken
place in this State, wherever the contract of sale or
purchase might have been made-
(a) if the goods were actually in this State at the
time when the contract of sale or purchase in respect thereof was made, or
(b) in the case the contract was for the sale or
purchase of future goods by description, then, if the
(1) [1953] S.C.R. 1069.
(2) [1955] 2 S.C.R. 603.
z96r
Messrs Ashok
Leyland Ltd.
v.
Thi State of
111 adras
S. J(. Das ].
Messrs Ashok
Leyland Ltd.
v.
The State oj
Madras
S. K. Das].
616
SUPREME COURT REPORTS
[1962]
goods are actually produced in this State at any
time after the contract of sale or purchase in respect thereof was made."
There can be no doubt that the Explanation brings
the transactions in question within the definition of
'sale' under the Act. The point now is-does s. 22 Qf
the Act make any differenQe?
We are clearly of the
opinion that it does not. A little history of that section is necessary here. Section 22 of the Act, as it
stood before the amending Act of 1957, was inserted by
the Adaptation of Laws (Fourth Amendment) Order,
1952, made by the President in exercise of the powers
conferred on him by Art. 372(2) of the Constitution.
The section was then almost a verbatim reproduction
of Art. 286(1) and (2) of the Constitution. The effect
of the section as it stood then, was considered in
M. P. V. Sundararamier's case (1) and it was held that _
it had a positive content and the Explanation in the
context of s. 22 (as it the~ stood) authorised the State
of Madras to impose a tax on sales falling within its
purview. Then came the Validation Act in 1956,
which lifted the ban imposed by Art. 286(2). In 1957
new s. 22 was inserted in the Act with restrospectivo
effect from January 26, 1950, and old section 22 was
repealed. The new section reads:
·
"Section 22. Sale or purchase deemed to have taken
place inside the State ir; certain cases-
(1) Any sale or purQhase which took place on or
before the 6th day of September, 1955, shall be
deemed to have· taken place inside the State if the
goods have actually been delivered as a direct result
of such sale or purchase for the purpose of consumption in the State, notwithstanding 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, and
be subject to tax under this Act accordingly ..
(2) The provisions of this section shall not affect
the liability to tax of any sale· or purchase under
any other provision .of this Act."
The argument of the learned Attorney-General is that
{I) [1958] S.C.R. 1422.
•
(
'
... -
. ..
1 S.C.R. SUPREME COURT REPORTS
617
the new section which operates retrospectively from
January 26, 1950, talks of sales in which the goods
are delivered fol' consumption in the State of Madras;
in other words, of Explanation sales only; therefore, the Act does not operate on sales of an interState character other than Explanation sales. We
are unable to agree. :First of all, sub-s. (2) of new
s. 22 makes it qmte clear that the section does not
affect the liability to tax of any sale or purchase
under any other provision of the Act. Secondly, after
Parliament had lifted the ban imposed by Art. 286(2),
it was unnecessary to repeat the provisions of that
Article in the Act and old s. 22 in so far as it repeated Art. 286(2) became otiose. Therefore, new s. 22
has not the effect of subtrncting something from the
power to tax conferred on the State by the charging
section, s. 3, read with the definition of 'sale' in s. 2(h).
To repeat what we have said earlier: after the removal
of the fetter of Art. 286 (2), the Act operating on its
own terms makes the transactions in question liable
to tax, and new s. 22 makes no difference to that
position.
For these reasons, we are unable to accept as correct
the arguments advanced on behalf of the assessee. In
our- view, the Validation Act applies and the assessment on the transactions in question cannot now be
challenged on the ground alleged by the assessee. The
appeal fails and is dismissed with costs.
Appeal dismissed .
78
r96r
Messrs A sh oh
Leyland Ltd,
v.
The State of
Madras
S. K. Das].