# STATE OF MAHARASHTRA ETC v. THE CENTRAL PROVINCES MANGANESE ORE CO. LTD

- **Citation:** [1977] 1 S.C.R. 1002
- **Court:** Supreme Court of India
- **Decided:** 1976-10-29
- **Case number:** CIVIL APPEAL Nos. 450-453 OF 1976
- **Bench:** A. N. Ray, M. H. Beg, P. N. Shinghal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-maharashtra-etc-v-the-central-provinces-manganese-ore-co-ltd-6884
- **Pages:** 15

## Headnote

Sales Tax-Central Provinces and Berar Sales Tax Act, 1947, s. 2(g), Expln.
11-Goods within State at the time of contract of sale, mixed up outside State
and the mixture sold-"Sale' if taxable.
.
Inte1:pretation of Statutes-Provision in Act substituted by a11other--A~tnd
i11g provision void-Effect.
Words and Plzrases-'Substit11ted; meaning of.
Section 2(g)
of the Central Provinces and Berar Sales Tax
Act~ 1947
defines 'sale' and Explanation II to the sub-section provides that notwithstanding
anything to the contrary in the Indian Sale of Goods Act, 1930, the sale ot any
goods which are actually in the State at the time when the contract of sale, as
defined in that Act in respect thereof is made, shall, wherever the contract of
sale is made, be deemed for the purpose of this Act to have taken place in the
State.
The Amending Act of 1949 substituted for this
Explanation
another
Explanation but as the amendment did not receive the assent of the GovernorGeneral under S. 107 of the Government of India Act, 1935, it was void.
The assessee owned manganese ore mines in the State and was entering into
contracts at places outside the State for the despatch abroad of manganese ore
through different ports.
The contracts contained specifications of strengths of
manganese ore to he supplied with permissible percentages of other ingredients
an admixtures.
The assessee arranged for the transport of various grades of
menganese ore in railway wagons from one or more of the mines, and the order
in which trucks were loaded and unloaded was so arranged that the required
average consistency or strength of manganese ore specified in the contracts was
obtained in the course of such ·unloading. The assessee described the particular
type of conglomerate as 'Oriental mixture.'
The assessee contended (1) that the original Explanation II was validly repealed by the Amending Act and since no substitution of the n~w provision had
taken place, only the repeal survived, and that, therefore neither the old unamended provision nor its replacement were in operation, with the result that
the Sales after the date of amendment were· not subject to sales tax, and (2)
even assuming that the unamended provision was in force, 'Oriental Mixture',
as a taxable commodity came into existence only after the ores got mixed up
in the process of unloading and not before so that, its sale could not be taxed
as 'goods which are actually in the State',
at the time when contracts were
entered into.
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The High Court on a reference held 'the first ~ontention against the assessee
and the second in favour of the assessee.
Both sides appealed to this Court.
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Dismissing the appeals of the assessee and allowing ti:e appeals: of the
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State.
HELD : (1) As the period involved is preconslitution period, Art. 286 of
Constitution, which is not retrospective in operation would not help the assessee
even though the assessment was after the Constitution came into force. [1007 Fl
(2) There was no repeal of the existing Explanation when 'substitntion' by
means of the amending Act failed to he effective and so the sale could be taxed
under it. [1012 A-BJ
(a) The question is one of gathering the intent from the use of words in the
..
enacting provisions seen in the light of the procedure gone through, and from
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the nature of the action of the authority which functions. [1010 BJ
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"·.
MAHARASHTRA V. C. P. MANGANESE (Beg, J.)
1003
(b) The word 'substitution' does not necessarily or always
connote two
A
severable steps, one of repeal and another of· a fresh enactment, even if it
implies two steps. The natural meaning of the word 'substit!ltion' is to i~dic.ate
that the process cannot be so split up. If the process descnbed as substttution
fails,
it is totally ineffective so as to leave in tact what was sought to be displaced. It could not be inferred tha~ what was intended was that in case the
substitution failed or proved ineffe~tive, some repeal, not mentioned at ~II, was
brought ab

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1002
STATE OF MAHARASHTRA ETC.
v.
THE CENTRAL PROVINCES MANGANESE ORE CO. LTD.
October 29, 1976
[A. N. RAY, c. J., M. H. BEG AND P. N. SHINGHAL, JJ.]
Sales Tax-Central Provinces and Berar Sales Tax Act, 1947, s. 2(g), Expln.
11-Goods within State at the time of contract of sale, mixed up outside State
and the mixture sold-"Sale' if taxable.
.
Inte1:pretation of Statutes-Provision in Act substituted by a11other--A~tnd
i11g provision void-Effect.
Words and Plzrases-'Substit11ted; meaning of.
Section 2(g)
of the Central Provinces and Berar Sales Tax
Act~ 1947
defines 'sale' and Explanation II to the sub-section provides that notwithstanding
anything to the contrary in the Indian Sale of Goods Act, 1930, the sale ot any
goods which are actually in the State at the time when the contract of sale, as
defined in that Act in respect thereof is made, shall, wherever the contract of
sale is made, be deemed for the purpose of this Act to have taken place in the
State.
The Amending Act of 1949 substituted for this
Explanation
another
Explanation but as the amendment did not receive the assent of the GovernorGeneral under S. 107 of the Government of India Act, 1935, it was void.
The assessee owned manganese ore mines in the State and was entering into
contracts at places outside the State for the despatch abroad of manganese ore
through different ports.
The contracts contained specifications of strengths of
manganese ore to he supplied with permissible percentages of other ingredients
an admixtures.
The assessee arranged for the transport of various grades of
menganese ore in railway wagons from one or more of the mines, and the order
in which trucks were loaded and unloaded was so arranged that the required
average consistency or strength of manganese ore specified in the contracts was
obtained in the course of such ·unloading. The assessee described the particular
type of conglomerate as 'Oriental mixture.'
The assessee contended (1) that the original Explanation II was validly repealed by the Amending Act and since no substitution of the n~w provision had
taken place, only the repeal survived, and that, therefore neither the old unamended provision nor its replacement were in operation, with the result that
the Sales after the date of amendment were· not subject to sales tax, and (2)
even assuming that the unamended provision was in force, 'Oriental Mixture',
as a taxable commodity came into existence only after the ores got mixed up
in the process of unloading and not before so that, its sale could not be taxed
as 'goods which are actually in the State',
at the time when contracts were
entered into.
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The High Court on a reference held 'the first ~ontention against the assessee
and the second in favour of the assessee.
Both sides appealed to this Court.
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Dismissing the appeals of the assessee and allowing ti:e appeals: of the
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State.
HELD : (1) As the period involved is preconslitution period, Art. 286 of
Constitution, which is not retrospective in operation would not help the assessee
even though the assessment was after the Constitution came into force. [1007 Fl
(2) There was no repeal of the existing Explanation when 'substitntion' by
means of the amending Act failed to he effective and so the sale could be taxed
under it. [1012 A-BJ
(a) The question is one of gathering the intent from the use of words in the
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enacting provisions seen in the light of the procedure gone through, and from
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the nature of the action of the authority which functions. [1010 BJ
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MAHARASHTRA V. C. P. MANGANESE (Beg, J.)
1003
(b) The word 'substitution' does not necessarily or always
connote two
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severable steps, one of repeal and another of· a fresh enactment, even if it
implies two steps. The natural meaning of the word 'substit!ltion' is to i~dic.ate
that the process cannot be so split up. If the process descnbed as substttution
fails,
it is totally ineffective so as to leave in tact what was sought to be displaced. It could not be inferred tha~ what was intended was that in case the
substitution failed or proved ineffe~tive, some repeal, not mentioned at ~II, was
brought ab0ut and remained effecUve so as td create what may be described as
a vacuum in the statutory law on the subject-matter.
The term 'substitution'
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when it occurs without anything else in the language used or in the context of
it or in the surrounding facts and circumstances, means, ordinarily, that unless
the substituteu provision is there to take its place, in law and in effect, the preexis-ti~g provision continues. [1009 H, 1010 A-G]
( c) In the present case, the whole legislative process termed substitution was
abortive, because, it did not take effect for want of the assent of the GovernorGenernil
Considering thel actual procedure, even if the Governor had assented
to• the substitution, yet the amendment would have been effective as a piece of
valid fogislation only when the assent of the Governor-General had aJso been
accorded to it. It could not be said that what the Legislature intended or what
the Go1ern011 had assented IQ consisted of a separate repeal and a fresh enactment. The two results were to follow from one and the same effective legislative process. [1010 CD]
(d) It is easier to impute an intention to an executive rule-inaking authority
to repeal altogether, in any event, what is sought to be displaced by another
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rule, because the repeal as well as replacement arn capable; of being achieved
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and inferred from a bare issue of fresh instructions on the same subject. In the
case of a Jcrjs]ative provision sought to be amended by a fresh enactment, the
procedure for enactment is far more elaborate and formal.
A
repeal and a
repbcement ,,f a legislative provision by a fresh enactment can only take place
after such elaborate procedure bas been followed in toto. Even the analogy of
a merger of an order into another which was meant to be its substitute could
apply only where there is a valid substitute. [1011 C-F, !OJ 2 A-Bl
Koteswar Villa! Kamath v. K. Ranf?appa Balica & Co. AIR 1969 SC
504
& 509rl 9691 (3) SCR 40. (Ji) 47 Firm A .T.B. Mehtab Majid & Co. v. State of
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Madras [1963] Suppl. 2 SCR 435 and B.N. Tewari v. Union of India & Or;.
(1965] 2 SCR 421 explained.
Shrirani" Gu/abdas v. Board of Re1·e11ue, Madhya Pradesh & Am·. (1952) 3
STC 343 @ 367 approved.
3., The present case is n?t one of !J1ixing _various i~greclients at a 'mixing
works , and the product which comes mto existence bemg sold as a separate
commercial commodity in the market. The goods got mixed up in the process
of unloading without employing any mechanical or chemkal process of manuF
facturc.
The mere fact that the specifications in the contracts were satisfied
when they got so mixed up is not a good enough ground for holding that a new
proouct has been manufactured.
The mere giving of the new name 'Orienta•!
mixture by the assessee to, whatl.is really the same product is not the manufacture
of a new product. [1013 A-D, G-H, 1014 A-BJ
J'//e State of Mar1ras v: Bell Mark Tobacco Co. (1967) 19 STC 129,
Tfle
State of Maaras v. Swasthik Tobacco Factory (1966) 17 STC 316 and Anwarkhan Md1boob Co. v. The State of Bombay (Now Maharashtra) & Ors. ( 1960)
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11 STC 698 and Slw11j Bros Cl: Co. v. The State of West Bengal (1963) 14 STC
878 referred to.
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Shaw Wallace & Co. Ltd. v. The State of Tamil Nadu (1976) 37 STC 522
explained.
Nilciri Ceylon Tea Supplying Co. v. The State of Bombay (1959) 10 STC
500 approved.
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 446-449 of
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1976.
Appeals by Special Leave from the judgment and Orders dated.
14-1338SCij76
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1004
SUPREME COURT REPORTS
(1977] 1 S.C.R •.
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7-4-1969 and 25-1-1972 of the Bombay High Court (Nagpur Bench)
m S.T.R. Nos. 17 to 20 of 1964 and
CIVIL APPEAL Nos. 450-453 OF 1976.
Appeals by Special Leave from the judgment and order dated
28-1-1972 of the Bombay High Court (Nagpur Bench) in G.S.T.
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Reference Nos. 17-20/64.
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V. P. Raman, 4.ddl. Sol. General for India, S. B. Wad and M. N
Shroff for Appellants in CAs. 450 to 453/76.
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G. L. Sanghi, A. S. Bobde, M. L. Vaidya, V. A. Bobde, A. G.
Meneses, !. B. Dadachanji, K. J. John, 0. C. Mathur and Ravinder
Narain for the Respondents in CAs. 446-449/76 and Appellant~ in C.
As. 450-453/76
The Judgment of the Court was delivered; by
BEG, J.-The eight appeals before us by special leave arise out of
four Sale "Tax References, under Section 23 ( 1) of the Central Provinces and Berar Sales Tax Act, 1947, (hereinafter referred to as
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'the Act'). Six common questions arose here relating to assessments
for different periods on identically similar facts stated below.
Five
of these were decided by a Division Bench of the Bombay High Court.
As it answered the main question determining liability to pay the
sales tax under the Act against the State, there are four appeals against
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it by the State.
The sixth question, which was one of law only, was
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referred by the Division Bench to a Full Bench, and, this was deterE
mined in favour of the State.
There are, therefore, four appeals by
the assessee against the Full Bench decision.
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M/s. Central Provinces Manganese Ore Co. Ltd., the assessee,
has its Head Office in London.
It carries on business on an extensive scale. It owns 22 manganese ore mines in Madhya Pradesh from
where manganese ore, after being excavated, is sent mostly abroad
through different ports. The Company is a registered dealer under
the Act.
It used to enter into contracts at places outside Madhya
Pradesh for the despatch of what came to be known, in the special
parlance of this company's business,
as "Oriental Mixture''. But,
the contracts contain specifications only of• strengths of manganese
ore to be supplied with permissible percentages of other ingredients
as admixtures.
The term "Oriental Mixture" was •evidently employed by the Company itself to describe a particular type of conglomerate
which the unloading at one place of 'various types of manganese ore
produced.
The required average consistency or strength of manganese ore specified in the contracts, which did not contain a reference
to any "Oriental Mixture", was said to be obtained in the course of this
mechanical process of transportation when various grades of manganese ore were heaped together.
These grades of manganese ore were
transported, in railway wagons, from one or more mines, and, it
appears that the order in which trucks were loaded in goods trains and
unloaded was als9 so. arranged that the mixture came into existence,
as described above, in the mere process of unloading at the port.
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MAHARASHTRA V. C. P. MANGANESE (Beg, J.)
1005
But, this procedure did not seem to involve a process of "ManufacA
ture", as that term is ordinarily understood, to which the assessee could
be said to have subjected its manganese ore.
The case of the assessee company was that the "Oriental Mixture"
as a taxable commodity came into existence only after the ores got
mixed up in the process of unloading and not before so that it could not ·
be taxed as "goods in existence" in Madhya Pradesh at the time when
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contracts relating to these goods were made.
This is the crucial and _
simple question, largely one of fact, which resulted in considerable
ar'gt1ment before the High Court and before us also.
Other questions
'appear to be su_bsicliary.
Nevertheless, we have to conside4: them
before coming to the crucial question which is :
Is the process describe<'t above one of "manufacture" so that a new kind of goods,
known as "Oriental Mixture", came into existence at the port where
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manganese ore trucks were unloaded?
As the High Court pointed out, the periods involved in the four
references before it were not governed by the provisions of the Constitution.
They related to the following period :
1. Reference No. 17 of 1964 for the period 1st January, 1947
to 30th September, 1947.
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2. 'Reference No. 18 of 1964 for the period 1st October, 1947 to
31st December. 1948.
3. Reference No. 19 of 1964 for the period 1st January, 1949
to 31st December, 1949.
4. Reference No. 20 of 1964 for the period 1st January,
1950
to 25th January, 1950.
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We, therefore, agree with the High Court's view that Article 286 of
the Constitution, which is _not retrospective in operation, could not help
the assessee merely because it was there at the time of assessment. _
The next question to be considered, which was referred to the
Full Bench, flows from Explanation (II) to Section Q(g) of the Act
which was amended by the C.P. & Berar Sale
Tax (Amendment)
Act No. XVI of 1949, came into force on 11th April, 1949.
Hence,
the law, as found afte.r: the amending Act, could apply, if valid, only
to the last two references.
But, the question which arose, on the
assumption that the amendment was ineffective,
was
whether the
unamended law ~mid be applied at all after the purported amendment.
Section 2(g) of the Act, with its two explanations, before it was
amended, may be reproduced here in toto. It reads as follows :
"2 (g) 'sale'
with all
its grammatical variations and
cognate expressions means any transfer of property in goods
for cash or deferred payment or other valuable consideration,
including a trans_fer of property in goods made in course of
the execution of a contract, but does not include a mortgage,
hypothecation, charge or pledge :
Explanation (I) : A transfer of goods on hire-purchase or
other instalment system of payment shall,
notwithstanding
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1006
SUPREME COURT REPORTS
[1977] 1 S.C.R.
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that the seller r~tains a title to any goods as security for payment of the pnce, 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 define in that Act
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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".
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Section 2 of the Amending Act of I 949 provided :
2. In section 2 of the Central Provinces and Berar Sale~
Tax Act 194 7 (hereinafter referred to as the said Act),
(a) in clause (g) for Explanation (II) the following
shall be substituted :-
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 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".
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The submission made on behalf of the assessce, which was accepted
by the High Court was that, as the amendment did not receive the
assent of the Governor General under Section 107 of the Govt. of India
Act, it was void.
It was, however, also urged, on behalf of the
assessee. that a repeal of the Previously existing section did not require
the assent of the Governor General at all. The argument was that the
original provision was validly repealed, but, as no substitution of the
new provision could take place, because th~ assent of the Governor
General was not obtained, only the repeal survived. The result of ac·
ccpting such a submission would be that the substituti~n will have to be
split up into two distinct enactments; firstly, a repeal of the original
section 2(g) of the Act; and, secondly, the substitution of the new
provision for the repealed one.
The assessee's argument was that two
processes, one of repeal and another of substitution, are necessarily
implied in such an amendment as the one before us.
It was urged that
both had received the assent of the Governor, but, since the substituted
provision alone required the assent of the Governor General, which was
not obtained, a repeal, which was assented to by the Governor, stood
on its own separate footing.
Thus, the result was said to be a repeal
simpliciter without the ~pactment of the fresh provision meant to replace
it.
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MAHARASHTRA V. C. P. MANGANESE (Beg,!.)
1007
It was submitted that the High Court, after finding the substituted
provisions of section 2 (g) of the Act to be invalid, had erred in holding;
that the repeal was also ineffective. It was contended that such a view
resulted in attributing to the legislature an intention conuary to that
which it had unmistakably expressed by repealing the unamended provision.
It was urged that the repeal, which was clearly intended, must
be held to be valid.
According to this submission, neither the old
unamended provision nor the replacement of it were in operation during
the last two assessment periods.
Of course, this argument assumes
that the repeal and the new enactment are separate.
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In Shriram Gulabdas_y. Board of Revenue, Madhya Pradesh &
A,1.r. (') which was cited before us, it was held, on the question argued
before us (at p. 366-367) :
•
" ...... we have already shown that the second Explanation in clause (g) of Section 2, which makes an agreement of
sale taxable even though the sale may have taken place outside
.the province, is not ultra vires the Provision Legislature. We
must make it clear that our a~nswer to this question is in the
affirmative, free from considerations arising under Article 286.
We have shown that the necessary power to make the unamended Explanation did exist in the State Legislature; but
we have also made it clear that by virtue of Article 286 the
Explanation can no longer be enforced because under the present Constitution the sales tax can only be collected at the
market and where the goods are delivered for consumption.
We may also state that the amended Explanation II is not validly enacted because it makes drastic changes in the rules as
found in the Sale of Goods Act without obtaining the assent
of the Governor-General.
The effect of the amended Explanation going out would be to rehabilitate the old Explanation
as it cxiisted because the amendment being unconstitutional
will fail to work any change in the law (See the opinion given
by one of us, Hidayatullah, J., in Laxmibai v. The State (l.L.R.
1951) Nag. 563, 608, 610 (F.B.)".
No question relating to the enforcement of the Sales-tax by any col-
]ection to be made after the Constitution came into force was raised in
the cases before us.
Only questions relating to taxability arise here.
As we have already indicated, Article 286 does not stand in the wav
of taxability.
Thi:. wa! held to be the correct position in the case of
Shriram Gulabdas (Supra). It was also clearly held there that the
result of the in~alidity of the amended explanation was to leave the law
unal~red as it stood before the am(:_ndment. We approve of this pronouncement made long ago on this very question.
It was urged on behalf of the1 assessee that the case of Shriram
Gulabdas (supra) contained what was merely an observation with regard
to the "rehabilitation" of the pre-existing law as that question was not
directly under consideration there. It was also submitted that this observation must be deemed to have been over-ruled by subsequent pronouncements of this Court.
(I) (1952) 3 S.T.C. 343. 367.
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SUPREME COURT REPORTS
[1977] 1 &.C.R.
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The passage cited above by us occurs in answering the fifth question
considered there which was framed as follows :
"(v) Whether Explanation II to clause (g) of Section 2,
which makes an agreement of sale taxable even though the sale
may have taken placed outside the Province, ultra vires of
the Provincial Legislature ?"
Other questions framed indicate that it was not only the validity of the
provision, both before and after its amendment, which was directly
considered and pronounced upon, but the application of the concept of
sale under the unamended law and its effects were also under consideration.
Therefore, we think that the decision was directly on a quest~n
which necessarily arose for determination before the Court on that occasion.
We think that the view that the unamended law was in oper\tion
was not a mere obiter dictum. It was necessary to decide that question
before other questions could be determined.
We give out own reasons
below for accepting the correctness of the view taken then.
The following passage was also cited from Koteswar Vittal Kamath
v. K. Rangappa Baliga & Co. (at p. 509) :
"Learned counsel for the respondent, however, urged that
the Prohibition Order of 1119 cannot, in any case, be held
to have continued after 8th March, 1950, if the principle laid
down by this Court in Firm A. T. B. Mehtab Majid & Co. v.
State of Madras, (1963) Supp. 2 SCR 435-(AIR 1963 SC
928) is applied.
In that case, rule 16 of the Madras General
Sales Tax (Turnover and Assessment) Rules, 1939, was impugned.
A new R. 16 was substituted for the old Rule 16
by publication on September 7, 1955, and this new rule was
to be effective from 1st April, 1955.
The Court held that the
new Rule 16(2) was invalid because the provisions of that
rule contravened the provisions of Article 304(a) of the Constitution.
Thereupon, it was urged before the Court tlrnt, if
the impugned rule be held to be invalid, the old Rule.16 gets
revived, so that the tax assessed on the basis of that rule will
be good.
The Court rejected this submission by holding that :
'Once the old rul~ has been substituted by the new rule,
it ceases to exist and it does not automatically get revived when
the new rule is held to be invalid'.
•
On that analogy, it was argued that, if we hold that the
Prohibition Order of 1950 was invalid, the previous Prohibition Order of 1119 cannot be held to be revived.
This argu,
ment ignores the distinction between supersession of a rule, and
substitution of a rule. In the case of ( 1963) Supp. 2 SCR
435-(AIR 1963 SC 928) (supra), the new Rule 16 was
substituted for the old Rule 16.
The process of substitution
consists of two steps.
First, the old rule is made to cease to
exist, and, next, the new rule is brought into existence in its
place. Even if the new rule be invalid, the first step of the
~I) A.I.R. 1969 S.C. 504, 509 : [1969] 3 S.C.R, 40. 47,
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MAHARASHTRA V. C. P. MANGANESE (Beg, J.)
1009
old rule ceasing to exist comes into effect and it was for this
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reason that the Court held that, on declaration of the new
rule as invalid, the old rule could not be held to be revived".
In the above mentioned passage, this Court merely explained the
argument which was accepted in the case of firm A. T. B. Mehtab
Majid & Co. v. State of Madras(!). After doing so, it distinguished
the facts [n Koteswar's case (supra), relating to an alleged substitution
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of one Prohibition Order by a subsequent order which was found to be
invalid. It recorded its conclusion as follows (at p. 509) :
•
"In the case before us, there was no substitution of the
•Prohibition Order of 1950 for the Prohibition Order of 1119.
The Prohibition Order of 1950 was promulgated independently
~ the Prohibition Order of 1119, and because of the provisions of law it would have had the effect of making the Prohibition Order of 1119 inoperative if it had been a valid order.
If the Prohibition Order of 1950 is found·to be void ab initio.
it could never make the Prohibition Order of 1119 inoperative".
The argument before us is that since the word "substituted" is used
in the amending Act of 1949, it necessarily follows that the process
embraces two steps.
One of repeal and another of the new enactment.
But, this argument is basically different from the argument which prevailed in Koteswar's c.ase (supra) where a distinction was drawn between a "substitution" and "supersession". It is true that, as the term
substitution was not used there, the old rule was not held to have been
repealed.
Nevertheless, the real basis of that decision was that what
was called supersession was void (lb initio so that the law remained
what it would have been if no such legislative process had taken place
at all.
It was held that the void and inoperative legislative process did
not affect the validity of the pre-existing rule.
Apd, this is precisely
what is contended or by the State before us.
'
In the case before us although the word "substitution" is used in
the amending Act, yet the whole legislative process termed substitution
was itself abortive.
The whole of that process did not take effect as
the assent of the Governor-General, required by Section 107 Govt. of
India Act, was lacking.
Such ineffectiveness was the very reason why,
in the case of Sriram Gul!Jbdas (supra), it was held that the previous
law stood unaffected by the attempted legislation called substitution.
Moreover, the case of Shriram Gulabdas (supra) is a direct authority
on the very provisions now before us.
Other cases cited are on very
different legislative provisions.
We do not think that the word substitution necessarily or always
connotes two severable steps, that °is to say, onel of repeal and another
of a fresh enactment even if it implies two steps.
Indeed, the natural
meaning of the word "substitution" is to indicate that the process cannot
be split up into two pieces like this. If the process described as substitution fails, it is totally ineffective so as to leave intact what was sought
(1) [1963j Suppl. 2 S.C.R. 435.
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to be displaced. That seems to us to be the ordinary and natural meaning of the words "shall be substituted".
This part could n.ot become
effective without the assent of the Governor-General.
The State Governor's assent was insufficient.
It could not be inferred that, what was
intended was that, in case the substitution failed or proved ineffective,
some repeal,_ not mentioned at all, was brought about and remained
effective so as to create what may be described as a vacuum in the statutory law on the subject matter. Primarily, the question is one of gathering, the intent from the use of words in the enacting provision seen in
the light of the procedure gone through.
Here, no intention to repeal,
without a substitution, is deducible.
In other words, there could be no
repeal if substitution failed.
The two were a part and parcel
oi, • a
single indivisible process and not bits of a disjointed operation.
Looking at the actual procedure which was gone through, Vf: find
that, even if the Governor had assented to the substitution, yet the
amendments would have been effective, as a piece of valid legislation,
only when the assent of the Governor-General had also been accorded
to it.
It could not be said that what the Legislature intended or what
the Governor had assented to consisted of a separate repeal and a fresh
enactment. The two results were to follow from one and the same effective Legislative process.
The process had, therefore, to be so viewed
and interpreted.
-
Some help was sought to be derived by the citation of B. N. Tewari
v. Union of India & Ors.,(1) and the case of Firm A. T. B. Mehtab
Majid & Co v. State of Madras (supra). Tewari's case (supra) related
to the substitution of what was described as the "carry forward" rule
contained in the departmental instruction which was sought to be substituted by a modified instruction declared invalid by the Court. It was
held that when the rule contained in the modified instruction of 1955
was struck down the rule contained in a displaced instruction did not
survive.
Indeed, one of the arguments there was that the original "carry
forward" rule of 1952 was itself void for the very reason for which the
"carry forward" rule, contained in the modified instructions of 1955, had
been struck down.
Even the analogy of a merger of an order into another which was meant to be its substitute could apply only where there
is a valid substitution.
Such a doctrine applies in a case where a judgment of a Subordinate Court merges in the judgment of the AppeUate
Court or an order reviewed merges in the order by which the review is
granted.
Its application to a legislative process may be possible only
in cases of val id substitution.
The legislative intent and its effect is
gathered, inter alia, from the nature of the action of thi authority which
functions.
It is easier to impute an intention to an executive rule making authority to repeal altogether in any event what is sought tq be
displaced by another rule.
The cases cited were of executive instructions.
We do not think that they could serve as useful guides in interpreting a Legislative provision sought to be amended by a fresh enactment.
The procedure for enactment is far more elaborate and formal.
A repeal and a displacement of a Legislative provision by a fresh enactment can only take place after that elaborate procedure has been followed in toto. In the case of any rule contained in an executive instruction.
(1) [19651 2 S.C.R. 421.
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1MAHARASHTRA v. C. P. MANGANESE (Beg, J.)
l 011
on the other hand, the repeal .as well as displacement are capable of
A
being achieJted and inferred from a bare issue of fresh instructions on
the same subject.
.
In Mehtab Majid & Co's case (supra) a statutory role was held not
to have revived after it was sought to be substituted by another held to
be invalid.
This was also a case in which no elaborate legislative procedure was prescribed for a repeal as it is in the case of statutory enactment of statutes by legislatures.
In every case, it is a question of intention to be gathered from the language as well as the acts of the rulemaking or legislating authority in the context in which these occur .
• •
A principle of construction contained now in a statutory provision
made in England since 1850 has .been :
•
"Where an Act passed after 1850 repeals wholly or partially any former enactment and substitutes provision for the
enactment repealed, the repealed enactment remains in force
until the substituted provisions come into operation".
(See: Halsbury's Laws of England, Third Edn. Vol. 36,
P. 474; Craies on "Statute Law'', 6th Edn. p.386).
Although, there is no corresponding provision in our General Clauses
Acts, yet, it shows that the mere use of words denoting a substitution
does not ipso facto or automatically repeal a provision until the provision which is to take its place becomes legally effective. We have; as
explained above, reached the same conclusion by considering the ordinary and natural meaning of thi:J term "substitution" when it occurs
without anything else in the language used or in the context of it or in
the surrounding facts and circumstances to Load to another inference.
It means, ordinarily, that unless the s'ubstitutcd provision is there to .take
its place, in law and in effect, the pre-existing provision continues.
There is no question of a "revival".
This question of interpretation was referred separately to the Full
Bench of the Bombay High Court which drew a distinction between the
two meanings of the word "substituted"; firstly, where it involved a
direction as to what would have to be removed or repealed simultaneously with another as to what was to be substituted, so as to involve
two directions; and, second!y, where the "substitution" merely carried
one direction to m~dify. It is difficult to see how a single direction to
substitute would be effective without implying in it another to remove
what was to be displaced.
Perhaps more simply and correctly stated,
the difference between two meanings of the word "substituted" is one
where it stands for two separable legislative process and another where
it stands for one total or completed legislative procedure, including the
assent of the Governor-General, which would be covered by the words
"shall be substituted".
The Full Bench came to the conclusion that
in t~e context i1? which the words directing substitution occur, they d~
not imply that, 111 the event of the failure of the amendment, taken as
a whole, a repeal would survive.
To be able to "survive" a repeal
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had first to come into existence.
In the situation before us no repeal
came into legal existence .
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. The real question for determination is always one of the meaning
of words used in a purported enactment in a particular context.
We
think that the Full Bench of the High Court correctly held that there
was no repeal of the existing provision when "substitution'', by means
of an amendment, failed to be effective. It had also rightly distinguished some of the cases cited before it on the ground that, in those cases,
the process for substitution was interpreted to necessarily imply both a
repeal and re-enactment out of which only the repeal which took place
had survived when the re-enactment proved abortive.
• •
On the question whether the particular goods existed in Madhya ·
Pradesh at all at the time of the contracts, so that the contract ..!ould be
said to be referable to them, the High Court had observed :
" .... the question was whether Oriental Mixture
was
present in the former State of Madhya Pradesh when the
contracts of sale in respect of Oriental Mixture were made by
the applicant company. On this point, which was purely a
question of fact, the decision of the second appellate authority was final and that decision was that Oriental Mixture in
the form in which the contracts to sell that commodity were
made was present in the State of Madhya Pradesh at the
time when those contracts were made. Therefore, that point
was not open for decision before the Tribunal and it is not
necessary to dilate on the facts relating to that question".
It also said :
"In Commissioner of Sales. Tax, Eastern Division, Nagpur
v. Hesenali Adamji & Co. (1959) (10 STC 297), there was
no evidence that at the date when the agreement for sale was
made, the particular logs delivered thereunder were in Central
Provinces in the shape of logs at all, and a standing tree
which was in existence at the date of the agreement of sa1e
and out of which the logs were later on prepared cannot be
said to be the form of the commodity in respect of which the
agreement of sale was made.
The Tribunal relied on the
observations in the Judgment of the Supreme Court at page
310 which are to the effect that the goods must, at the date
of the contract, be there in the taxing State in the form in
which they are agreed to be sold. In that case, the agreement
of sale can be said to be in respect of those goods.
Here,.
as found by the second appellate authority, ore in the form
of Oriental Mixture was present in the taxing State when contracts of sale in respect of Oriental Mixture were made by
the Ht:ad Office of the applicant company".
After giving the findings set out above, on the question whether the·
goods existed in the State of Madhya Pradesh when they were sold and
whether the contracts were referable to these goods, the High Court
1
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MAHARASHTRA V. C. P. MANGANESE (Beg, J.)
1013
proceeded to consider the question ,,:.<1ether "Oiiental Mixture" itself
had come into existence in Madhya Pradesh or at the port where the
goods forming the "Oriental Mixture" became mixed up in the process
of unloading and transportation.
Apparently, what the High Court
had meant bv its earlier findings was not that the "Oriental Mixture"
was in exis:ei1cc in Madhya Pradesh, but that the ingredients which
went into its composition existed in Madhya Pradesh at the time when
the contracts were made. It had finally reached the conclusion that
the Mixture itself was formed at the port where the ingredients were
unloaded.
We.are unable to accept the High Court's reasoning that, while the
goods which went into the composition of the "Oriental Mixture"
existed in Madhya Pradesh when the contracts were made, yet, they
were not.taxable in Madhya Pradesh because the "Oriental Mixture"
came into existence at the port. In other words, it held that a mere
mixture of goods, even if it occurs in the process of unloading, converts the goods, which existed in Madhya Pradesh and were transported to the port, into separately identifiable commercial commodity
known as "Oriental Mixture".
As already· mentioned
above,
this
term is not used in the coQtracts but is a term employed by the firm
itself to indicate the specifications contained in the contracts of goods
ordered.
It is difficult to see what process of manufacture is
gone
through so as to bring a new category or genus .of commerci1ll __goods
into existence at the port.
The High Court had relied on cases where raw tobacco subjected
to various processes, such as sprinkling of jaggery juice or water on it
and allowing it to ferment for some time before cutting it up and packing it, was held to become a new commodity. These cases were : The
State of Madras v. Bell Mark Tobacco Co.('); The State of Madras v.
Swasthik Tobacco Factory( 2 ); Anwarkhan Mehboob Co. v. The State
of Bombay (Now Maharashtra) & Ors. (B).
Reliance was also placed on behalf of the assessee on Shaw Wallace
& Co. Ltd. v. The State of Tamil Nadu( 4 ), where it was held that goods
were actually subjected to a process of manufacturing v.-hen chemical
fertilisers and fillers like "China clay", "gypsum", and other ingredients,
were mixed at a "mixing works" of a company, by means of shovels,
so as to conform to a particular formula.
It was held there by this
Court that the resulting proddct was a commercially distinct commodity.
Several cases Qf manure mixtures are referred to in the case.
Now, in the case of manure mixtures, made.out of different ingredients,
~t ~ "!!!lxifig works", it can perhaps be said that a chemical process is
gone through.
In any case, the product which came into existence
was known and sold as a separate commercial commodity in the
market.
It required a process to be gone through at what were known
as mixing works of the company to convert it into that commodity.
On the other hand, in the case before us, it seems to us that what has
been "manufactured" by the assessee is the same "Oriental Mixture"
(!) (1967) 19 S.T.C. 129.
(2) (1966) 17 S.T.C. 316.
(3)
(1960) 11 S.T.C. 698.
(4) (1976)
3 S.T.C. 522.
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only if the term "manufacture" can be employed at all to anything done
by the assessee.
What is to be determined is whether tJ.tere has been
the manufacture of a new product which has a separate commercially
current name in the market. The mere giving of a new name by the
seller to what is really the same product is not the "manufacture" of a
new product. There is, it appears to us, no new process of the manufacture of goods at all by the assessee before us.
Again, cases in which logs of wood were cut in order to convert
them into planks[e.g. Shaw Bros & Co. v . . The State of West Bengal(')] could be of no a·ssis,tance in the case before us. That too could
be a process of "manufacture".
The High Court had also m!de a
passing reference to Nilgiri Ceylon Tea Supplying Co: v.