# THE TATA IRON & STEEL CO., LTD v. THE STATE OF BIHAR - **Citation:** [1958] 1 S.C.R. 1355 - **Court:** Supreme Court of India - **Decided:** 1958 - **Bench:** S. R. Das C. J, Venkatarama Aiyar, S. K. Das, A. K. Sarkar, Viv!An Bose J - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-tata-iron-steel-co-ltd-v-the-state-of-bihar-1420 - **Pages:** 29 ## Headnote Sales Tax-Provincial legislation imposing tax in certain circumstances-Validity-Power of Provincial Legislature-Retrospective levy, legality of-Theory of territorial nexus, if applicable -Bihar Sales Tax Act, 1947 (No. XIX of 1947) as amended by Bihar Sales Tax (Amendment) Act, 1948 (VI of 1949), ss .. 4(1), 2(g). The appellant company, carrying on business as manufacturer of iron and steel, with its factory and works ·at J amshedpur in Bihar, was assessed to sales tax for two periods prior to the Constitution, under the Bihar Sales Tax Act, 1947 (No. XIX of 1947). enacted by the Bihar Legislature in exercise of its exclusive power under the Government of India-Act, 1935. The company used to send its goods from J amshedpur to various parts of India. In the railway receipt the company itself figured as the consignee, it paid the freight and the receipt was sent either to its branch offices or bankers to be handed over to the purchaser when he paid the price. From the amounts shown as gross tum-over in the two returns for the two periods, the company claimed deduction of certain amounts, being the valuable consideration for the goods manufactured in Bjhar but sold, delivered and consumed outside, on the ground that in none of the transactions in respect of the said sums did property in the goods pass to the purchasers in Bihar. The appellant claimed further deductions on account of the railway freight paid by it. The Sales Tax Officer disallowed both the claims and added the amounts of sales tax realised by the ap~Jlant from its purchasers to the taxable turnover. The company appealed against the orders of assessment, but the Commissioner of Sales Tax dismissed its appeals. The Board of Revenue, in revision. confirmed the orders of the Commissioner with certain modifications and remanded the matters ·to the Sales Tax Officer. On the appellant's application for reference of certain questions of law, the Board referred them to the High Court. One of them related to the legality of adding the Sales Tax to the tum-over and was answered in favour of the appellant and the respondent did not appeal. The other questions decided by the High Court against the appellant related to the vires ·of the Act and the validity of retrospective levy of sales tax under s. 4(1) of the Act. The appellant's contentions in the appeals were that the tax levied under s. 4(1) read with s. 2(g) second .proviso, cl. (II), of the Act, was not,a sales tax within the meaning of Entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935, but was in the nature of excise duty 1958 February 19. 1356 SUPREME COURT REPORTS (1958] 1938 which a rrovincial legislature had no power to impose, that the theory o territorial nexus was inapplicable to sales tax and, in Th• Tata Iron & any case, there was no real or sufficient nexus in the present cases Steel Co., Ltd. and that retrospective levy of the sales tax under s. 4(1) of the v. Act destroyed the indirect nature of the tax, thus making it a Th• Statt of Bihar direct tax on the dealer which could not be passed on to the consumer: Held, (per Das, C.J., Venkatarama Aiyar, S. K. Das and A. K. Sarkar, JJ., Bose, J. dissenting), that the contentions raised on behalf of the appellant must be negatived. The provisions of s. 4(1) read withs. 2(g), second proviso, of the Bihar Sales Tax Act, as amended by the Bihar Sales Tax (Amendment) Act, 1948, (VI of 1949), were within the legislative competence of the Legislature of the Province of Bihar. Both before and after the amendment, the word 'sale' as used in s. 4( 1) and as defined by s. 2(g) of the Act, meant the transfer of property in the goods sold. The second proviso added by the amending Act did not extend that meaning so as to include a contract of sale. What it actually did was to lay down certain circumstances in which a sale, although completed elsewhere, was to be deemed to have taken place in Bihar. Those circumstances did not constitute the sal ## Text _Characters 0–39,804 of 64,940. This is a partial read: ask again with offset=39804 for what follows._ S.C.R. SUPREME COURT REPORTS 1355 THE TATA IRON & STEEL CO., LTD. v. THE STATE OF BIHAR (S. R. DAS C. J., VENKATARAMA AIYAR, S. K. DAS, A. K. SARKAR and VIV!AN BOSE J.J.) Sales Tax-Provincial legislation imposing tax in certain circumstances-Validity-Power of Provincial Legislature-Retrospective levy, legality of-Theory of territorial nexus, if applicable -Bihar Sales Tax Act, 1947 (No. XIX of 1947) as amended by Bihar Sales Tax (Amendment) Act, 1948 (VI of 1949), ss .. 4(1), 2(g). The appellant company, carrying on business as manufacturer of iron and steel, with its factory and works ·at J amshedpur in Bihar, was assessed to sales tax for two periods prior to the Constitution, under the Bihar Sales Tax Act, 1947 (No. XIX of 1947). enacted by the Bihar Legislature in exercise of its exclusive power under the Government of India-Act, 1935. The company used to send its goods from J amshedpur to various parts of India. In the railway receipt the company itself figured as the consignee, it paid the freight and the receipt was sent either to its branch offices or bankers to be handed over to the purchaser when he paid the price. From the amounts shown as gross tum-over in the two returns for the two periods, the company claimed deduction of certain amounts, being the valuable consideration for the goods manufactured in Bjhar but sold, delivered and consumed outside, on the ground that in none of the transactions in respect of the said sums did property in the goods pass to the purchasers in Bihar. The appellant claimed further deductions on account of the railway freight paid by it. The Sales Tax Officer disallowed both the claims and added the amounts of sales tax realised by the ap~Jlant from its purchasers to the taxable turnover. The company appealed against the orders of assessment, but the Commissioner of Sales Tax dismissed its appeals. The Board of Revenue, in revision. confirmed the orders of the Commissioner with certain modifications and remanded the matters ·to the Sales Tax Officer. On the appellant's application for reference of certain questions of law, the Board referred them to the High Court. One of them related to the legality of adding the Sales Tax to the tum-over and was answered in favour of the appellant and the respondent did not appeal. The other questions decided by the High Court against the appellant related to the vires ·of the Act and the validity of retrospective levy of sales tax under s. 4(1) of the Act. The appellant's contentions in the appeals were that the tax levied under s. 4(1) read with s. 2(g) second .proviso, cl. (II), of the Act, was not,a sales tax within the meaning of Entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935, but was in the nature of excise duty 1958 February 19. 1356 SUPREME COURT REPORTS (1958] 1938 which a rrovincial legislature had no power to impose, that the theory o territorial nexus was inapplicable to sales tax and, in Th• Tata Iron & any case, there was no real or sufficient nexus in the present cases Steel Co., Ltd. and that retrospective levy of the sales tax under s. 4(1) of the v. Act destroyed the indirect nature of the tax, thus making it a Th• Statt of Bihar direct tax on the dealer which could not be passed on to the consumer: Held, (per Das, C.J., Venkatarama Aiyar, S. K. Das and A. K. Sarkar, JJ., Bose, J. dissenting), that the contentions raised on behalf of the appellant must be negatived. The provisions of s. 4(1) read withs. 2(g), second proviso, of the Bihar Sales Tax Act, as amended by the Bihar Sales Tax (Amendment) Act, 1948, (VI of 1949), were within the legislative competence of the Legislature of the Province of Bihar. Both before and after the amendment, the word 'sale' as used in s. 4( 1) and as defined by s. 2(g) of the Act, meant the transfer of property in the goods sold. The second proviso added by the amending Act did not extend that meaning so as to include a contract of sale. What it actually did was to lay down certain circumstances in which a sale, although completed elsewhere, was to be deemed to have taken place in Bihar. Those circumstances did not constitute the sale, but only located the situs of the sale. Sales Tax Officer, Pilibhit v. Messrs. Budh Prakash Jai Prakash, [1955] 1 S.C.k. 243, distinguished. Nor was it correct to contend that the tax levied under s. 4 ( 1) read with s. 2(g) of the Act was in the nature of excise duty. Under cl. (ii) of the second proviso to s. 2(g) of the Act the producer or manufacturer became liable to pay the tax not because he produced or manufactured the goods but because he sold them. Province of Madras v. Boddu Paidanna and Sons. [1942] F.C.R. 90 and Governor General v. Province of Madras, (1945) L.R. 72 I.A. 91, referred to. There can be no doubt that the theory of territorial nexus does apply to sales tax legislation. Although sales tax can be levied only on a completed sale, this theory has its use in indicating the circumstanees in which the tax may be enforced in a particular case. One or more of the several ingredients of a sale may furnish the connection between the taxing State and the sale. State of Bombay v. United Motors (India) Ltd., [1953] S.C.R. 1069, Poppatlal Shah v. The State of Madras, [1953] S.C.R. 677 and The State of Bombay v. R. M. D. Chamarbaugwala, [1957] S.C.R. 874, relied on. Bengal Immunity Co. Ltd. v. The State of Bihar, [1955] 2 S.C:R. 603, considered. Case law reviewed. S.C.R. SUPREME COURT REPORTS 1357 As in a sale of goods, the goods must necessarily play an 1958 important part, the circumstances mentioned in the proviso to s. 2(g) of the Act, namely, the presence of the goods in Bihar at The Tata Iron & the date of the agreement of sale or their production or manuSteel Co., Ltd. facture there must be held to constitute a sufficient nexus between v. the taxing province aild the sale wherever that might take place. The State of Bihar Governor General v. Raleigh Investment, [1944] F.C.R. 229, relied on. Province. of Madras v. Boddu Paidanna and Sons, [1942] F.c..R. 90, distinguished. It would not be correct to contend that the theory of nexus might lead to multiple taxation or obstruct inter-State trade. Article 286(2) of the Constitution and the relevant entries in the Legislative List are a complete safeguard to any such contingency. Although as a matter of economic theory, sales tax may be an indirect tax realisable from the consumer, it need not be legally so and is not so ui1.der the Bihar Sales Tax Act, 1947, which imposes the primary liability on the seller. A buyer, moreover, is not bound to pay sales tax over and above the agreed sale price unless he is by contract bound to do so. There can, therefore, be no scope for the argument that the retrospective enforcement of the tax under s. 4 ( 1 ) of the Act could destroy the character of the taX or that it was beyond the legislative competence of the Bihar Legislature. Love v. Norman Wright (Builders) Ltd., L.R. (1944) 1 K.R. 484, referred to. Per Bose, J.-Sales tax can be imposed only on the sale. lt is, therefore, wrong to look to the goods or the agreement to 3ell or any other elements that constitute a sale in order to impose the tax. A State can tax a sale of goods that takes place within its boundary. It has no power to tax extra-territorially, and since a completed sale can have only one situs no State Legislature can· be allowed to break up a sale into its component parts, which are separate and distinct from the sale itself, and by an application <;if the theory of nexus claim that the sale wholly took place within 1t. The nexus can only be in respect of the entire sale, wherever it may take place and not of its several parts. CIVIL APPELLATE JURISDICTION : Civil Appeals Nos~ 412 and 413 of 1956. Appeals by special leave from the judgment and order dated October 17, 1955, of the Patna High Court in M.J.C. No. 577 of 1953, made on reference by the Board of Revenue, Bihar in Appeals Nos.· 495 and 496 of 1952. 1358 SUPREME COURT REPORTS [1958] 1958 M.C. Setalvad, Attorney-General for India, Rajeshwari Prasad and S. P. Varma, for the appellant. The Tata Iron &: Steel co., Ltd. Mahabir Prasad, Advocate-General for the State of v. Bihar and R. C. Prasad, for the respondent. The State of Bihar 1958. February 19. The Judgment of Das, C.J., Venkatarama Aiyar, S.K. Das and Sarkar, JJ. was delivered by Das C.J. Bose, J. delivered a separate judgment. Das c. J. DAS C.J.-These two appeals, which have been filed with the special leave granted by an order made by this Court on April 3, 1956~ and which have been consolidated together by the same order, are directed against the judgment pronounced by the Patna High Court on October 17, 1955, in Miscellaneous Judicial Case No. 577 of 1953, deciding certain questions referred to it by the Board of Revenue, Bihar under s. 25 of the Bihar Sales Tax Act, 1947 (No. XIX of 1947) hereinafter referred to as the 1947 Act. The said references arose out of two orders passed by the Board of Revenue in revision of two sales tax assessment orders made against the appellant company. The appellant company is a company incorporated under the Indian Companies Act. Its registered office is in Bombay; its factory and works are at Jamshedpur in the State of Bihar and its head sales' office is in Calcutta in the State of West Bengal. It has store yards in the States of Madras, Bombay, West Bengal, Uttar Pradesh, Hyderabad, Madhya Pradesh, Punjab and Andhra. It carries on business as manufacturer of iron and steel and is a registered dealer under the 1947 Act, the registration No. being S.C. 905. Its course of dealing is thus described in the judgment under appeal :- "The intending purchaser . has to apply for a permit to the Iron and Steel Controller at Calcutta, who forwards the requisition to the Chief Sales Officer of the asscssee working in Calcutta. The Chief Sales Officer thereafter makes a "works order" and forwards it to Jamshedpur. The "works order" mentions the complete specification of the goods required. S.C.R. SUPREME COURT REPORTS 1359 After the receipt of the "works order" the Jam19ss shedpur ·factory initiates a "rolling" or "manu- - facturing" programme. After the goods are manu- The Tata Iron . & f: d h J h d f: d h . . Steel Co., Lrd. acture , t e ams e pur actory sen s t e mvo1ce v. to the Controller of Accounts who prepares the The state of Bi/Jar" forwarding notes, and on the basis of these forwarding · notes, railway receipts are prepared. The goods are Das c. J. loaded in the wagons at Jamshedpur and despatched to various stations, by the consignee in the railway receipt is the assessee itself and the freight also is paid by the assessee. The railway receipts are sent either • to the branch offices of the assessee or to its bankers, and after tlie purchaser pays the amount of.consideration, the railway receipt is delivered to him. These facts are admitted and the correctness of these facts are not disputed by the State of Bihar." The appellant company was separately assessed for two periods : (1) from July 1, 1947 to March 31, 1948, and (2) from April 1, 1948 to March 31, 1949. For the first period the appellant company filed a return under s. 12(1) of the 1947 Act before the Sales Tax Officer showing a gross turnover of Rs. 12,80,15,327-8-5. From this gross turnover the appellant company claimed to deduct a sum of Rs. 2,88,60,787-13-0 being the amount of valuable consideration for the goods manufactured at Jamshedpur in the State of Bihar but sold, delivered and consumed outside that State on the ground that in none of the transactions in respect of the said sum did the property in the goods pass to the purchasers in the State of Bihar. The appellant company further claimed a deduction of Rs. 1,10,87,125-13-0 on account of railway freight, actually paid by it for the despatch of the goods. The Sales Tax Officer, by his assessment · order dated July 22, 1949, disallowed both the claims for deduction and on the other hand added a sum of Rs. 13,66,496-11-0, being the amount of sales tax realised by the appellant company from its purchasers, to its taxable turnover and assessed the appellant company to sales tax amounting to Rs. 15,31,374-5-9. For the second period the appellant company filed a return showing a gross turnover of Rs. 21,64,45,450-0-0. 1360 SUPREME COURT REPORTS [1958) 19ss From this gross turnover the appellant company - claimed a deduction of Rs. 10,71,66,233-11-0 being r;~ ~a:; 171~ & the amount of valuable consideration for goods manu- ,. ;·· · factured at Jamshedpur in the State of Bihar, but The srare of Bihar sold, delivered and consumed outside that State on the Das C.J. • same ground as hereinbefore mentioned. The appellant company also claimed a deduction of Rs. 40,89,973-9-0 on account of railway freight actually paid by it for the despatch of the goods. The Sales Tax Officer by his assessment order dated September 24, 1949, disallowed both the claims and added the sum of Rs. 22,37,919-4-0, being the amount of sales tax realised by the appellant company from its purchasers, to its taxable turnover and assessed the appellant company to sales tax amounting to Rs. 28,30,458-6-0. Against these two assessment orders the appellant company preferred two appeals under s. 24 of the 1947 Act to the Commissioner of Sales Tax of Chota Nagpur who, on April 29, 1950, dismissed both the appeals. The appellant company went up to the l3oard of Revenue on two revision applications against the two orders of the Commissioner. The Board of Revenue, by its order dated August 30, 1952, confirmed the orders of the Commissioner with certain modifications and remanded the cases to the Sales Tax Officer. The appellant company applied under s. 25 of the 1947 Act to the Board of Revenue in Reference Cases Nos. 495 and 496of1952 for reference of certain questions. of law to the High Court. By a common order dated October 5, 1953, made in the said two references the Board of Revenue referred the following questions of law to the High Court for it<; decision : "(I) Is the Bihar Sales Tax Act, 1947, as amended jn· 1948, ultra vires the Provincial Legislature in view of the extended meaning of the expression taxes . on sale of goods given in the Act in the light of the provisions of the Government of India Act, 1935? (2) Are the provisions of section 2(g) of the 1947 Act ultra vires the Provincial Legislature? S.C.R. SUPREME COURT REPORTS 1361 (3) Is it legal to include sales tax in the taxable 19ss turnover of an assessee like the petitioner ? (4) Was the Bihar Sales Tax (Amendment) Act The Tata Iron & Steel Co., Ltd. of 1948 legally extended to Chotanagpur ? v. (5) Were the levy and collection of saleS' taxes The state of Bihar for periods prior to the 26th January 1950, under th.e Sales Tax Act then in force rendered illegal by the Das c. 1· provisions of the Constitution ? (6) Was the Commissioner, who passed orders, in appeal, after the Constitution came into force, bound to decide the appeal according to the provisions of the Constitution in respect of taxes levied or sought to be levied for periods prior to the 26th January, 1950. when the Constitution came into force ?" Out of these six questions, question No. 3 was decided in favour of the appellant company and the respon-:- dent State has not preferred any appeal against that decision or questioned its correctness. Question No. 4 was not pressed before the High Court and does not survive before us.. Questions Nos. 1, 2, 5 and 6 were decided against the appellant company and the two consolidated appeals are directed against the High Court's decision on these questions. It will be noticed that questions Nos. 1 and 2, in effect, raise the same problem, namely, as to the vires of the 1947 Act and questions Nos. 5 and 6 are concerned with the validity of the retrospective levy of sales tax by reason of the amendment of s. 4 of the 1947 Act. The following points, as formulated by the learned Attorney-General appearing for the appellant company, have been urged before us in support of these appeals : · . "(1) The tax levied under s. 4(1) read with s. 2(g), second proviso, cl. (ii), is not a tax on sale within the meaning of Entry 48 in List II of the Seventh Schedule to the Government of . India Act. 1935. (2) The doctrine of nexus is not applicable. to sales tax. (3) In any event the nexus in the present case -is not real and sufficient but is illusory. · 1362 SUPREME COURT REPORTS (1958] 1958 (4) Having regard to the provisions of the law - mentioned above, the tax levied is in the nature of The Tara Iron & duty of excise rather than a tax on sale. Steel Co. Ltd. (5) Th t t" 1 b f th ; e re rospec ive evy y reason o e The state ;I Bihar amendment of s. 4(1) destroys its character as a sales tax and makes it a direct tax on the dealer Das c. J. instead of an indirect tax to be passed on to the consumer." In order to appreciate the arguments that have been advanced before us on the points noted above, it is necessary to refer to the relevant statutory provisions, which were in force at the material times. Section 99, of the Government of India Act, 1935, authorised a Provincial Legislature, subject to the provisions of that Act, to make laws for the Province or for any part thereof. Section 100(3) of that Act provided that, subject to the 'two preceding sub-sections, the Provincial Legislature had, and the Federal Legislature had not, power to make laws for any Province or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule to that Act. The matter enumerated in Entry 48 in List II was as follows: "Taxes on the sale of goods and on advertisements." It is in exercise of this legislative power that the Provincial Legislature of :Sihar passed the 1947 Act which received the assent of the Governor General on June 21, 1947, and came into force on July I, 1947, by virtue of a notification made in the official gazette under s. I (3) of the said Act. The relevant portion of s. 4(1) of the 1947 Act, which was the charging section, was, prior to its amendment hereinafter mentioned, expressed in the following terms :- · "Subject to the provisions of sections 5, 6, 7 and '8 and with effect from such date as the Provincial Government may, by notification in the official ~azette, appoint, being not earlier than 30 days after the date of the said notification, every dealer whose gro~s turnover during the year immediately preceding the commencement of this Act on sales which had taken place both in and outside Bihar exceeded Rs. 10,000 shall be liable to pay tax under this Act SUPREME · COURT REPORTS 1363 1958 on sales which have taken place in Bihar after the date was notified." The Tata Iron & It should be noted that, although the 1947 Act came Steel co., Ltd. into force on July 1, 1947, by virtue of a notification v. B"h published in the official gazette under S. 1(3) thereof, The Stare::._{ .I ar the charging section quoted above did not come into .Das c. 1. operation because, by its own terms, it required a further notification in the official gazette to bring it into effect. For some reason, not apparent on the record, the. Provincial Government. .did not .issue any notification as contemplated by s. 4(1). To cure this omission Ordinance III of 1948 was promulgated by the Governor amending s. 4(l)(a) of the 1947 Act. Section 4(1 ), as amended, read as follows :- "Subject to the provisions of sections 5, 6, 7 and 8 and with effect from the commencement of this Act, every dealer, whose turnover during the year immediately preceding the date of such commence~ ment, on sales which·have taken·-pface·both··ill"···arrd outside Bihar exceeded Rs. 10,000, shall be liable to pay tax under this Act on sales which have taken place in Bihar on and from the date of · such commencement." On March 22, 1949, Ordinance III of 1948 was replaced by Bihar Sales Tax (Amendment) Act, 1948 (VI of 1949) hereinafter referred to as the amending Act. Section 16 of this amending Act provided that the substituted s. 4(1) should form part of the 1947 Act and should always be deemed to have formed part thereof with effect from its commencement, that is to say, from July l; 1947, as hereinbefore mentioned. Two things should be· noted, namely, (l) that the person sought to be charged was every dealer Whose gross "turnover" during the specified period · on "sales" which had taken place both in and outside Bihar exceeded Rs. 10,000 and (2) that the liability to pay tax was on "sales" which had taken place in Bihar on and from the date .of such commencement. This takes us back to s. 2(g) which defines "sale 0 • The material part of the defi.mtion of "sale", previous 1958 1364 SUPREME COURT REPORTS [1958} to the amendment made by the amending Act, read as follows : TheTata/ro11& "'S I, . h II. . I .. Steel co LM a e means, wit a its grammatica variations v." · and cognate expressions, any transfer of property in The Stott of Bilw goods for cash or deferred payment or other valuable Das C.J. consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge or pledge : Provided ................................................................... . Provided further that notwithstanding any thing to the contrary in the Indian Sale of Goods Act, 1930 (III of 1930), the sale of any goods which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in section 4 of that Act is made, shall, wherever the said contract of sale is made, be demed for the purpose of this Act to have been made in Bihar. " ................ ; .................................................................. . Section 2 of the amendin$ Act amended s. 2(g) of the 1947 Act by substitutmg a new proviso to cl. (g) for the original second proviso thereto. The material part of s. 2(g), thus amended, read as follows : " 'Sale' means, with all its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods involved in the execution of contract but does not include a mortgage, hypothecation, charge, or pledge : Provided ................................................................ . Provided further that notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930 (III of 1930), the sale of any goods- (i) which are actually in Bihar at the time when, in respect thereof, the contract of sale as defined in section 4 of that Act is made, or (ii) which are produced or manufactured in Bihar by the producer or manufacturer thereof, shall, wherever the delivery or contract of sale is made, he S.C.R. SUPREME COURT REPORTS 1365 deemed for the purposes of this Act to have taken 1958 place in Bihar. " The Tata Iron & •...••••••••••••••.•.••.••..•••...•.•••••• ················•··.················ S IC L d The amending Act by s. 3 substituted for .the old tee v~·· 1 • sub-s. (1) of s. 4 of the 1947 Act the followmg sub- The State of Bihar section, namely : "(1) Subject to the provisions of sections 5, 6, 7 Das. c. J. and 8 and with effect from the commencement of this Act, every dealer whose gross turnover during the year immediately preceding the date of such com- , mencement, on sales which have taken place both in and outside Bihar exceeded Rs. 10,000 shall be liable to pay tax under this Act on sales which have taken place in Bihar on and from the date of such commencement: provided that the tax shall· not be payable on sales involved in the execution of a contract which is shown to the satisfaction of the Commissioner to have been entered into by the dealer concerned on or before the 1st day of October, 1944." - Although the amending Act received the assent of the Governor General on March 15, 1949, it came into force on October 1, 1948, as provided ins. (2) thereof. Section 16 of the amending Act, however, provided that the amendment made by s. 3 should form part and should be deemed always to have formed part of the 1947 Act as if the said Act had been enacted as so amended from the commencement thereof, that is to say, from July 1, 1947. The 1947 Act was further amended in 1951 by Bihar Act VII of 1951 and again in 1953 by Bihar Act XIV of 1953, but we are not, in the present case, concerned with those amendments. Although the charging section, namely, s. 4(1), as amended, operates from July 1, 1947, the definition of "sale", as amended, became operative only from October 1, 1948. Therefore, the definitio11 of "sale", as it stood prior to the amendment, was applicable to all sales made by the appellant throughout the first period hereinbefore mentioned, i.e., the period from July 1, 1947 to March 31, 1948 and also to those made during the period from April l, 1948 to October 1, 1948, which was only a portion of the second 1366 SUPREME COURT REPORTS [1~581 t9ss period hereinbefore mentioned and the amended defiTh< Tata Iron & nition' applied to all sales made by the appellant S I during .the remaining port_ ion ofthe second period; i.e., tee Co., Ltd. fi v. rom October 1, 1948 to March 31, 1949. Tile State 01 Bihar Bearing in mind the relevant provisions of the· 1947 Act as they stood both before and after the amendDas C. J, ment and the period of their applicability we now proceed to consider the points urged before us by the learned Attorney General appearing for the appellant company. Re. Points Nos. 1 and 4 : It will be convenient to take up those two points together for they have been dealt with together by the learned Attorney General. The validity of s. 4(1) read with s. 2(g), second proviso, is challenged in two ways. In the first place it is urged that s. 100(3) of the Government of India Act, 1935 read with Entry 48 in List II of the Seventh Schedule thereto authorised the Legislature of Bihar to make a law with respect to tax on the sale of goods. "Sale of Goods", ·as a legal topic, has well defined and well understood implications both in English and Indian Law. The English Common Law relating to sale of goods ·has been codified in the English Sale of Goods Act, 1893. IJ?. India the matter was originally governed by the provisions of Chapter VII of the Indian Contract Act, 1872. Those provisions have since been replaced by the Indian Sale of Goods Act, Act III of 1930. Our attention has been drawn to s. 4 of the Indian Sale of Goods Act which clearly makes a distinction between a sale and an agreement for sale. It is pointed out that that section groups "sales" and "agreements to sell" under the single generic name of "contract of sale", following in this respect the scheme of English Sale of Goods Act, 1893, and that it treats "sales" and "agreements to sell" as two separate categories, the vital point of distinction between them being that whereas in a sale there is a transfer of proP€lrtY in goods from the seller to the buyer, there is none in an agreement to sell. It is then urged, on the authority of a decision of this Court in the Sale Tax Officer, Pilibhit v. Messrs. Budh Prakash S.C.R. SUPREME COURT REPORTS 1367 Jai Prakash (1) that there having ·thus existed at at'it.? . the time of the enactment of the Government of India Th r. --l . & Act, 1935, a well defined and well established distin~- s~eel":;,., ··~~d. · tion between a "sale" and an "agreement to sell" 1t v. would be proper to interpret the expression "sale of The State of Bihar goods" in Entry 48 in the sense in which ·it was used - in legislation both in England and in India and to Das c. J. hold that it authorised an imposition of a tax only when there was a completed sale . involving the transfer of title in the goods sold. Reference is then made to the decision of the Federal Court in the case of Province · of Madras v. Boddu Paidanna and Sons (2) where the Federal Court at page 101 observed that in the case of sales tax the liability to tax arose "on the occasion of a sale" which Patanjali Sastri C. J. in his judgment in the Sate of Bombay v. United Motors (India) Ltd. (3) described as "the taxable event." The argument is that the Bihar Legislature could only make a law imposing a tax on the sale of g19ods, that is to say, on a concluded sale involving the transfer property in the goods sold from the seller to the buyer as contemplated by the Sale of Goods Act. The Bihar Legislature could not, by giving an extended difinition to the word "sale" extend its legislative power under Entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935, so as to impose a tax on anything. which is short of a sale. For our present purpose no exception need be taken to the proposition thus formulated and indeed in Budh Prakash Jai Prakash~s case (') this Court struck down . that part of the definition of "sale" in s. 2(h) of the Uttar Pradesh Sales .Tax Act, 1948, which enlarged the definition of "sale" so as to include "forward contracts". But is. the position the same here ? We think not. It will be noticed. that s. 4(1) imposed on the dealer the liability to pay a tax on "sale" as defined in s. 2(g). Both before and after the amendment of s. 2(g) the principal part of the definitiqn meant the transfer of the property in goods. All that the second proviso did was not to extend the (1) [1955] I S.C.R. 1143, 1147. (II) [19411] F.C.R go. (3) [1953] S.C.R. 1o69, 1088. 1368 SUPREME COURT REPORTS {1958] 1958 definition of "sale", but only to locate the "sale" in ].• ~-1 certain circumstances mentioned in that proviso in ne ,ata ron & Bih Th b . fJi b"Ji . d 4(1) . d sreel co Lt, ar. e as1s o a 1 ty un er s. remame as v." "· before, namely, to pay tax on "sale". The fact of 11,. stat• of Blhar the goods being in Bihar at the time of the contract of Das C. J. sale or the production or manufacture of goods in Bihar did not by itself constitute a "sale" and did not by itself attract the tax. The taxable event •still remained the "sale,. resulting in the transfer of ownership in the thing sold from the seller to the buyer. No tax liability actually accrued until there was a concluded sale in the sense of transfer of title. It was only when the property passed and the "sale" took place that the liability for paying sales tax under the 1947 Act arose. There was no enlargement of the meaning of "sale" but the proviso only raised a fiction on the strength of the facts mentioned therein and deemed the "sale" to have taken place in Bihar. Those facts clid not by themselves constitute a "sale" but those facts were used for locating the situs of the :sale in Bihar. It follows, therefore, that the provi- -sions of s. 4(1) read with s. 2(g), second proviso, were well within the legislative competency of the Legislature of the Province ofBihar. The vires of s. 4(1) read with s. 2(g), second proviso, is also questioned on the ground that it is in reality not a tax on the sale of goods but is in substance a