# V. K. T. Chari, Advocate-General of Madras (V v. Raghavan and Alladi Kuppuswami with him) for the

- **Citation:** [1953] 1 S.C.R. 677
- **Court:** Supreme Court of India
- **Decided:** 1952-02-25
- **Bench:** PATANJALT SAsrnr O.J, MuKHERJEA, VrvrAN BosE, GHULAM HASAN aud BHAGWATI JJ
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/v-k-t-chari-advocate-general-of-madras-v-v-raghavan-and-alladi-kuppuswami-with-184
- **Pages:** 10

## Headnote

Maclras Sales Tax Act (IX of 1939), ss. 2, 3 (before amendment
of 1947)-" Sale within the vrovince", meaning of-Levy of tax on
sales where vroverty in the goods vassed outside the vrovince -Legal·
ity-Provincial Legislature-Territorial jurisdiction.
Under the Madras Sales Tax Act, 1939, as it stood before it
was amended by the '.\fadras Act XXV of 1947, the mere fact that
the contrnct of sale was entered into within \he frovjnce of
§§
1958
Habe6b
Mohamed
v,
Th• Stats of
Hyderabad.
Ghulam
Ha1an J.
1953
March 80.
678
SUPREME COUR'f REPOR'I.
18
(1953)
19b3
Madras did not make a transaction which was completed in another
province where the property in the goods passed, a sale within the
PoppJtlol Shah Province of Madras and no tax could be legally levied upon such a
v.
transaction under the provisions of the Act.
The State of
Madras.
•
Though a Provincial Leg:slature could not pass a taxation
statute which would be binding on any other part of India it was
quite competent for a province to enact a legislation imposing
taxes on transactions concluded outside the province provided
there was a sufficient and real territorial nexus between such
transactions and the taxing province.
The title and preamble, whatever their value might be as
aids to the construction of a statute, undoubtedly throw light on
the intention and design of the Legislature and indicate the scope
and purpose of the legislation itself.
It is a settled rule of construction that to ascertain the legislative intent all the constituent parts of a statute are to be taken
together and each word, phrase or sentence is to be considered in
the light of the general purpose and object of the statute.
Judgment of the Madras High Court reversed.
CRIMINAL APPELLATE
JUHISDIOTION:
Criminal
Appeal No. 92 of 1952.
Appeal under articles 132(1) and 134(1) (c) of the
Constitution of India from the Judgment and Order
da,ted the 29th August, 1962, of the High Court of
Judicature at Madras (Rajamauuar C.J. and Veukatarama Ayyar J.) in Criminal Appeal No. 129 of 1952
arisiugout of the.order dated the 25th February, 195\l,
of the Court of the VII Presidency Magistrate,
Egmore, Madras, in C. T, No. 1368 of the Calendar
for 1960.
B. Somayya (0. R. Pattabhi Raman, with him)
for the appellant .
V. K. T. Chari, Advocate-General of Madras (V. V.
Raghavan and Alladi Kuppuswami with him) for the
respondent.
M. 0. Setalvad, Attorney-General for India (G. N.
Joshi and P. A. Mehta, with him) for the Union of
India.
B. K. P. Sinha for the State of Bihar.
S. M. Sikri, Advocate-General of Punjab (M. L.
Sethi, with him) for the State of Punjab.
8.C.R.
SUPREME COUR1' REPOR'l'S
679
A. R. Somanatha Iyer, Advocate-General of Mysore
1958
(R. Ganapathy Iyer, with- him) for the t:)tate of
- 18
h
M
·
Poppa! al ha
ysore.
v.
K. B. Asthana for the State of Uttar Pradesh.
The Stat• of
T.
N. Subramanya
Iyer,
Advocate-General of
Travancore-Cochin (M. R. Krishna Pillai and Balakrishna Iyer, with him) for the State oi TravancoreCochin.
V. N. Sethi for the State of Madhya Pradesh.
Hajarnavis for Husain Kasam Dada (India) Ltd.
(Intervener No. 8).
1953.
March 30.
The Judgment of the Court
was delivered by
MuKH)'RJEA J.-Th~s appeal, which has come before us o~ a certificate grauted by the Madras High
Court under articles 134(1) (c) and 132(1) of the
Constitution, is ~irected agaimt an appellate judgment of a Division Bench of the High Court of
Madras, passed in Criminal Appeal No. 129 of 1952,
by which the learned Judges affirmed an order of the
Seventh Presidency Magistrate, Madras, dated February 25, 1952, convicting the appellant of an offence
punishable under section 15 of the Madras General
Sales 'fax Act and sentencing him to pay a fine of
Rs. 1,000; in default to snfler imprisonment for a
period of 3 months.
The appellant is a partner of a firm of merchants
called "Indo-Malayan Trading Company" which has
its head office in the city of Madras and carries on
the business of selling and purchasing groundnut oil,
sago a

## Text

S.C.R.
SUPREME COURT REPOR'I'S
677
this right iu favour of commuting the death sentence
to a sentence for life. The denial of this right in the
Hegulatiou is discriminatory ou the face of it aud
deprives the petitioner of a valuable right. I concede,
however, that this objectionable feature of the Regulation is severable from the other parts. I further
agree that the stage for the exercise of that right has
uot yet arisen, for the appeal of the petitioner is still
pending iu this court. If the appea,J is allowed, or
the sentence is reduced, uo question of the confirmation of the death sentence by the Nizam will arise.
If, however, the appeal is dismissed, it will be open
to the petitioner to claim this right. It would not be
desirable at this stage to express au opinion whether
this right is a substantive right which vests iu the
petitioner or oue relating to a mere matter of procedure, as that question will have to be considered aud
decided when the appropriate stage arrives.
I wou Id, therefore, agree iu dismissing the petition.
Petition dismissed.
Ageut for the petitioner: Rajinder Narain.
Agent for the respondent: G. H. Rajadhyaksha.
POPPATLAL SHAH
v.
1'HE scrATE OF MADRAS.
UNIO~ OF INDIA AND OTHERS-Iuterveuers.
[PATANJALT SAsrnr O.J., MuKHERJEA, VrvrAN BosE,
GHULAM HASAN aud BHAGWATI JJ.J
Maclras Sales Tax Act (IX of 1939), ss. 2, 3 (before amendment
of 1947)-" Sale within the vrovince", meaning of-Levy of tax on
sales where vroverty in the goods vassed outside the vrovince -Legal·
ity-Provincial Legislature-Territorial jurisdiction.
Under the Madras Sales Tax Act, 1939, as it stood before it
was amended by the '.\fadras Act XXV of 1947, the mere fact that
the contrnct of sale was entered into within \he frovjnce of
§§
1958
Habe6b
Mohamed
v,
Th• Stats of
Hyderabad.
Ghulam
Ha1an J.
1953
March 80.
678
SUPREME COUR'f REPOR'I.
18
(1953)
19b3
Madras did not make a transaction which was completed in another
province where the property in the goods passed, a sale within the
PoppJtlol Shah Province of Madras and no tax could be legally levied upon such a
v.
transaction under the provisions of the Act.
The State of
Madras.
•
Though a Provincial Leg:slature could not pass a taxation
statute which would be binding on any other part of India it was
quite competent for a province to enact a legislation imposing
taxes on transactions concluded outside the province provided
there was a sufficient and real territorial nexus between such
transactions and the taxing province.
The title and preamble, whatever their value might be as
aids to the construction of a statute, undoubtedly throw light on
the intention and design of the Legislature and indicate the scope
and purpose of the legislation itself.
It is a settled rule of construction that to ascertain the legislative intent all the constituent parts of a statute are to be taken
together and each word, phrase or sentence is to be considered in
the light of the general purpose and object of the statute.
Judgment of the Madras High Court reversed.
CRIMINAL APPELLATE
JUHISDIOTION:
Criminal
Appeal No. 92 of 1952.
Appeal under articles 132(1) and 134(1) (c) of the
Constitution of India from the Judgment and Order
da,ted the 29th August, 1962, of the High Court of
Judicature at Madras (Rajamauuar C.J. and Veukatarama Ayyar J.) in Criminal Appeal No. 129 of 1952
arisiugout of the.order dated the 25th February, 195\l,
of the Court of the VII Presidency Magistrate,
Egmore, Madras, in C. T, No. 1368 of the Calendar
for 1960.
B. Somayya (0. R. Pattabhi Raman, with him)
for the appellant .
V. K. T. Chari, Advocate-General of Madras (V. V.
Raghavan and Alladi Kuppuswami with him) for the
respondent.
M. 0. Setalvad, Attorney-General for India (G. N.
Joshi and P. A. Mehta, with him) for the Union of
India.
B. K. P. Sinha for the State of Bihar.
S. M. Sikri, Advocate-General of Punjab (M. L.
Sethi, with him) for the State of Punjab.
8.C.R.
SUPREME COUR1' REPOR'l'S
679
A. R. Somanatha Iyer, Advocate-General of Mysore
1958
(R. Ganapathy Iyer, with- him) for the t:)tate of
- 18
h
M
·
Poppa! al ha
ysore.
v.
K. B. Asthana for the State of Uttar Pradesh.
The Stat• of
T.
N. Subramanya
Iyer,
Advocate-General of
Travancore-Cochin (M. R. Krishna Pillai and Balakrishna Iyer, with him) for the State oi TravancoreCochin.
V. N. Sethi for the State of Madhya Pradesh.
Hajarnavis for Husain Kasam Dada (India) Ltd.
(Intervener No. 8).
1953.
March 30.
The Judgment of the Court
was delivered by
MuKH)'RJEA J.-Th~s appeal, which has come before us o~ a certificate grauted by the Madras High
Court under articles 134(1) (c) and 132(1) of the
Constitution, is ~irected agaimt an appellate judgment of a Division Bench of the High Court of
Madras, passed in Criminal Appeal No. 129 of 1952,
by which the learned Judges affirmed an order of the
Seventh Presidency Magistrate, Madras, dated February 25, 1952, convicting the appellant of an offence
punishable under section 15 of the Madras General
Sales 'fax Act and sentencing him to pay a fine of
Rs. 1,000; in default to snfler imprisonment for a
period of 3 months.
The appellant is a partner of a firm of merchants
called "Indo-Malayan Trading Company" which has
its head office in the city of Madras and carries on
the business of selling and purchasing groundnut oil,
sago and kirana articles.
For the period-April 1,
1947, to December31, 1947-the company was assessed to sales tax under the Madras Act IX of 1939 for
an amount of Hs. 37,771 annas odd on a total turnover of Rs. 37,75,257 and for failure to pay the same
proceedings were instituted against him under the
provision of section 15 of the Act which resulted in
his conviction as mentioned above.
The course of
business, which is usually followed by the company
Madras.
6so
SUPREME COURT REPOHTS
[1953)
1968
and which was actually followed during the period for
P
--;; Shh which assessment is made, .is as follows:
'I'he com·
appat.~
" pany receives orders in its Madras office from Cal·
Th• State of cutta merchants for supply of certain articles. 'l'hese
Madras.
articles are purchased in the local markets and they
are despatched to Calcutta by rail or steamer. 'fhe
Mukherjea J. railway receipts and bills of lading are taken in the
name of the vendor company- and so also a,re the
insurance policies, and they are sent to the company's
bankers in Calcutta who deliver the same to the consignees on payment of prices and other charges. The
sole point that requires consideration is, whether in
bhese circumstances the sale transactions were liable
to be taxed under the General Sales Tax Act of
Madras?
Before the High Court both the 'partie~ seem to
have accepted the position that if on the faQts stated
above, which were not disputed by either side, the
sales could be held to have taken place within tbe
Province of Madras, the tax could legitimately be
levied on them but not otherwise. The parties differ·
ed, however, as regards the test to be applied, in
determining whether the sales did take place within
the Province of Madras or not.
On behalf of the
appellant the contention raised was that the place of
sale in regard to all the transactions was Cal·
cutta, as the property in the goods sold admittedly passed to the purchasers in that city. 'l1he contention of the respondent State on the other hand
was that the true test for determining the locality of the sale was not where the property in the
goods sold passed, but where the actual transaction
was put through.
As the company had its head
office in the city of Madras, its accounts were maintained there and the goods were delivered to the common carrier in that city, the sale, according to the
respondent, must be deemed to have taken place in
Madras even though the property in the goods sold
passed outside the province.
The High Court accepted this contention of the
respondent State.
In the opinion of the learned
s.c.:R.
SUPREME COURT REPOi·rrs
6Si
Judges, the word "sale" has both a legal and 11 popu1958
Jar meaning. In the legal sense, it imports passing of
- 1- 1 Sh h
t .
h
d
d ,
. ,
h'
h
h
Poppat a
a
proper y m t e goo s an it is m t is sense t at t e
v
word is used in the Sale of Goods Act.
In the popuTh• s:ate of
Jar sense, however, it signifies the transaction itself
Madras.
which results in the passing of property.
As the
object of the Legislature in the Sales Tax Act is to Mukherj.a J.
impose a tax on the occasion of the sale, it is immaterial that the sale has been completed outside the
proYince.
'l'he place where the property passes is, it
is said, a matter of no concern to the taxing authority and iu such context the popular meaning of the
word is more appropriate and should be adopted. The
further contention raised on behalf of the appellant,
that if this view was accepted, the sales tax would
have to be regarded as being extra-territorial in its
operation and as such ultra vires the Provincial Legislature. was repelled by the High Court on the authority of the well known
decision of the Judicial
Committee in Wallace Brothers etc., cf: Company v.
Commissioner of Income-tax, Bombay(1).
It is the propriety of this decisiun that has been
challenged before us and the contentious raised by
Mr. Somayya, who appeared in support of the appeal,
are of a two-fold character: 'l'he learned counsel has
argued in the firnt place that the Provincial Legislature functioning under the Government of India Act,
1935, was constitutionally incompetent to enact a
legislation of this character which according to the
interpretation put upon it by the High Court is
capable of operating on sale transactions concluded
outside the province.
The other contention is that
on a proper construction of the relevant provisions of
the Madras Sales Tax Act the High Court ought to
have held that they do not authorise the imposition
of sale tax in respect of a transaction of sale where
prop_erty in the
goods sold passes outside the
provmce.
'l'he first contention appears to us to be unsustainable.
Section 100 (3) ·of the Government of India
(I) [1948] F.C.R. I (P.C.).
..
682
SUPREME COURT REPORTS
(1953}
1963
Act, 1935, upon which
Mr. Somayya relied and
-tl 1 Sh 1 which corresponds to article 246(3) of the ConstituPoppa a
a i
.
v.
t10n runs as follows :
The State of
!iladras.
-·-
Mukherje1. J.
"Subject to the two preceding sub-sections, the
Provincial Legislature has and the Federal Legislature has not, power to make laws for a province or
any part thereof with respect to any of the matters
enumerated in List II in the Second Schedule.''
The entry in the Provincial List that is relevant
for our purpose is Entry No. 48 and that speaks of
"taxes on the sale of goods and on advertisements."
The entry does not suggest that a legislation imposing tax on sale of goods can be made only in respect
of sales taking place within the boundaries of the
province; and all tbat section 100(3) provides is that
a law could be passed by a Provincial Legi'Slature
for purposes of the province itself. It admits of no
dispute that a Proviucial Legislature could not pass
a taxation statute which would be binding on any
other part of India outside the limits of the province,
but it would be quite competent to enact a legislation
imposing taxes on transactions concluded outside the
province, provided th&t there was sufficient and a real
territorial nexus between such transactions and the
taxing prnvince. '!'his principle. which i,; based upon
the decision of the Judicial Committee in Wallace
Brothers etc. J: Company v. Commissioner of Incometax, Bombay(') has been held by this court to be
applicable to sale tax legislation, in its recent decision in the Bombay Sales Tax Act case (2) and its propriety is ueyond question. As a matter of fact, the
legislative practice in regard to sale tax laws adopted
by the Provincial Legislatures prior to the coming
into force of the Conatitution has been to authorise
imposition of taxes on sales and purchases which
were related in some manner with the taxing province
by reason of some of the ingredients of the transaction having taken phce within the province or by
(1) [1948] F.C.R. 1 (P.G.).
(z) The State of Bombay & Another v. United lrlotors (India) Ltd, cC
Othet's-Civil Appeal No. 20• o:f 195i.
S.C.R.
SUPREME COUR'I.
1 REPORTS
683
reason of the production or location of goods within
1958
it at the time when the transaction took place. If in
-
·
the Madras Sales 'fax Act the basis adopted for taxa- Popp,tlal Shah
tion is the location of the place of business or of the
Th• ;;,t, of
goods sold, within the Proviuce·of Madras, undoubtMadras.
edly it would be a valid piece of legislation to which
no objection on constitutiona1 grounds could be taken.
Mukherjea J.
The controversy, therefore, narrows down to the short
point as to what exactly has been adopted as the
basis of the levy of sale tax by the Madras Legislature.
This leads us to the question of interpretation of the
statute which is involved in the second point raised
by Mr. Somayya.
It is a settled rale of construction that to ascertain
the legislative intent, all the constituent parts of a
statute are to be taken together and each word,
phrase or sentence is to be considered in the light of
the general purpo,se and object of the Act itself. The
title of the Madras Sales Tax Act describes it to be
an Act, the object of which is to provide for the levy
of a general tax on the sale of goods in the Province
of Madra~ and the very same words are repeated in
the preamble which follows.
The title and preamble,
what-ever their value might be as aids to the construe·
tion of a statute, undoubtedly throw light on the
intent and design of the Legislature and indicate the
scope and purpose of the legislation itself.
The title
and preamble of the Madras Sales Tax Act clearly
show that its object is to impose taxes on sales that
take place within the province, though these words
do not necessarily mean that the property in the goods
sold must pass within the province., The expression
"sale of goods" is a composite expression consisting
of various ingredients or elements.
Thus, there are
the elements of a bargain or contract of sale, the payment or promise of payment of price, the delivery of
goods and the actual passing of title, and each one of
them is essential to a transaction of sale though the
sale is not completed or concluded unless the purchaser becomes the owner of the property. 'rhe question is what element or elements have been accepted
684
SUPREME COURT REPOR'fS
[1953]
1958
by the Madras Legislature as constituting a sale in
Po
~-;Sh 1 the province upon which it is the object of the statute
ppa:.
"'to levy tax. Section 2(h) gives the definition of "sale"
The State of and it is defined as meaning, "every transfer of the
Madras.
property in goods by one person to another in the
course of trade or business for cash or for deferred
Mukhorjea J. payment or other valuab'le consideration, but does not
include a
mortgage,
hypothecation, . charge or
pledge."
Unmistakably the stress is laid in this definition on
the element of transfer of property in a sale and no
other.
The language gives no indication of the
popular meaning of sale in which according to the
High Court, the word was used.
It is to be noticed
that there was no provision by way of explanation of
this definition, in operation, at the material time to
indicate in what cases a sale would be regarded as
taking place within the Province of.Madras, although
the property in the goods sold did pass outside the
boundaries of the province.
Such explanations
were added by the Madras Act XXV of 1947 and one
of these explanations, namely explanation 2, provides
as follows:
"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 pnrchase of future goods by description, then, if the
goods are actually produced in this Province at any
time after the contract of sale or pmchase in respect
thereof was made."
It would be clear from this that these trnnsacti0ns
were not considered by the Legislature to constitute
sales within the Province of Madras under the defini.-
tion itself, but by resort to a legal fiction they were
S.C.R.
SUPREME COUR'l' REPORTS
685
declared to be so, notwithstanding any provision in
1958
the Sale of Goods Act to the contrary which, it was P
~Sh h
assumed, would otherwise be applicable.
The explaoppat:
a
nation further shows that in defining "sale" in secThe st:,, of
tion '2(h), the Legislature had in mind a sale in the
Madras.
Province of Madras and as these words occur in the
title and preamble of the Act it was not deemed ueceeMu/,herjea J.
sary to repeat them in the definition or the charging
sections. Section 3 is the charging section in the Act
and it provides for the levy of a tax on the total
•
turnover of a dealer for a particular year. A "turnover" is defined to be the aggregate amount for which
goods are either bought or sold. The charging section
purports .to levy a tax on the sale of goods and the
tax is on the sale of goods in the Province of Madras
as defined in section 2(h) of the Act read in the light
of its title and prea.mble.
In our opinion, the mere fact that the contract for
sale was entered into within the Province of Madras
does not make the transaction, which was completed
admittedly within another province, where the property in the goods passed, a sale within the Province
of Madras according to the provisions of the Madras
Sales Tali: Act and no tax could be levied upon such
a transaction under the provisions of the Act.
A
contract of sale becomes a sale under the Sale of
Goods Act only when the property in the goods is
transferred to the buyer under the terms of the
contract itself. The presence of the goods within the
province at the time of the contract would undoubtedly make the s:i.le, if subsequently completed, a sale
within the province by reason of the exp \anation
added by Act XXV of 1947; but as this explanation
was not in operation during the relevant period with
which we are concerned, the assessment of sale tax,
in our opinion, on the transactions during this period
is illegal and not warranted by the provisions of the
Act. It is worthwhile to mention in this connection
that except for the period in question no tax was
. attempted to be levied on similar transactions of the
a.ppellant by the taxing authorities in' any of the
89
686
SUPREME COURT REPORTS
[1953]
1953
previous years, though the Act came iuto operation
Poppatlal Shah as early as the ye11r 1939. It is not disputed also that
v.
the company is pa.ying sale tax on its transactions
The State of with the Calcutta merchants sirice the explanation
Madras.
added by Act XXV of 1947 came into force.
In our
opinion, the appeal should be allowed and the conMiikhe1·j ea J.
b 1
viction and sentence passed by the courts
e ow
should be set aside. The fine and sale tax, if actually
paid, should be refunded to the appellant.
Appeal allowed.
Agent for the a,ppellant: M. S. K. Aiyangar.
Agent for the respondent (the State of Madras),
the L' nion of India, and the States ~f Punjab,
Mysore,
Madhya Pradesh
and TravancoreCochin (Interveners): G. H. Rajadhyaksha.
Agent for the State of Bihar : R. 0. Prasad.
Agent for the State of TJ. P. : 0. P. Lal.
Agent for Intervener No. 8: Rajinder Narain.
PUNJAB NATIONAL BANK LTD.
v.
EMPLOYEES OF THE BANK.
[PATANJALI 8ASTRI 0. J.,
MUKHERJEA, S. R. DAS,
GHULAM HASAN and BHAGWATI JJ.]
Industrial Disp11t'8 Act, 1947, s. 33-lnili;strial dispute-Reference to Tribunal-Strike on fresh grounds-Dismissal of strikers
d·uring pendency of proceedings before Tribunal-Legality-Scope of
s. 33.
During the pendency of proceedings before an Industrial
Tribunal relating to certain disputes between a bank and its workmen represented by the ur.ion of its employees, the respondents
along with other workmen numbering over a thousand commenced
a gerieral strike in connection with a fresh dispute.
The strikers
were dismissed and on a reference to another Tribunal, it was
held by that Tribunal that, the strike was illegal and the dismissal was legal.
The Labom Appellate Tribunal held on appeal that
though the strike was illegal the bank had condoned it and the
dismissal was therefore illegal ancj ordered reinstatelllent, Oq
f1nther appeal ; ·
•