TaxTMI 
TaxTMI 
TaxTMI 
1961 (3) TMI 72
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....assessee is a firm with its factory at Ennore in the State of Madras, where it manufactures, assembles and sells motor vehicles and spare parts and accessories thereof, through an elaborate organisation spread over several States. It is, perhaps, necessary to indicate briefly the organisational set up in order to appreciate the point on which the case was heard in the High Court and argued before us. The system of distribution of its motor vehicles, spare parts and accessories at one uniform price to consumers in the various States which the assessee adopted, consisted of the appointment of a distributor (called a dealer) with a definite territorial jurisdiction, both inside and outside the State of Madras. To every such dealer it granted the sole right of selling the products of the firm within the territory allotted to him. If the territory of the dealer was outside the State of Madras, the agreement entered into by the dealer provided for the delivery of the products of the firm by consignment, by rail or steamer or road transport. The agreement specifically stipulated that the dealer must not canvass or sell the products outside the territory allotted to him, and in the event o....
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....ax Appellate, Tribunal, Madras, and the assessee contended in that appeal that the revision of the assessment by the Commercial Tax Officer was without jurisdiction and that the inclusion of Rs. 42 lacs odd in the taxable turnover was contrary to the provisions of Article 286 of the Constitution. The Tribunal rejected the plea of absence of jurisdiction, but held on merits that the sum of Rs. 12,48,403 odd representing the value of vehicles driven away on their own motive power through the assessee's own drivers to the places of business of the non-resident dealers was not liable to sales tax. The assessee then preferred a revision to the High Court of Madras under section 12B(1) of the Act and repeated the contention that the sales in question were in the course of inter-State trade and commerce and not liable to sales tax by reason of the provisions of Article 286(2) of the Constitution. In the High Court the liability to tax was challenged by the assessee in respect of the following four items only: (1) A sum of Rs. 1,43,072 odd which represented the value of vehicles delivered ex-factory to the dealer's drivers. The vehicles were driven away by those drivers aft....
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....e, on merits, whether the transactions under consideration here come within the ban of Article 286(2) of the Constitution, on the ground that such decision will be of assistance in a pending case to which the intervener is party. We do not think that we can do so for the benefit of the intervener. The intervener has no right to ask us to decide a question which does not fall for decision if the Validation Act applies; for it is conceded that if the Validation Act applies, that will be decisive of the whole appeal. We must, therefore, reject the plea of the intervener. We proceed now to consider the main point argued in this appeal, namely, whether the Validation Act applies to the transactions in question. It is convenient to read here section 2, which is the relevant section, of the Validation Act: "Section 2. Notwithstanding any judgment, decree or order of any Court, no law of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter-State trade or commerce during the period between the Ist day of April, 1951, and the 6th day of September, 1955, shall be dee....
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....er & Co. v. The State of Andhra Pradesh and Another [1958] S.C.R. 1422; 9 S.T.C. 298. We shall consider these two arguments one after the other. It appears to us that the first argument does not correctly reflect the true scope and effect of section 2 of the Validation Act. It is necessary, perhaps, to advert to the circumstances which led to the enactment of the Validation Act. The true meaning and scope of the Expla- nation to Article 286(1) of the Constitution came up for consideration before this Court in The State of Bombay and Another v. The United Motors (India) Ltd. and Others [1953] S.C.R. 1069; 4 S.T.C. 133. It was therein held by the majority that though the sales falling within the Explanation would, in fact, be in the course of inter-State trade, they became intra-State sales by the fiction introduced by the Explanation and were liable to be taxed by the State within which the goods were delivered for consumption. Then came the decision in The Bengal Immunity Company Limited v. The State of Bihar and Others [1955] 2 S.C.R. 603; 6 S.T.C. 446., where this Court held, again by a majority, that the sales falling within the Explanation being inter-State in cha....
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....of inter-State trade. What we have to see is that the fetter under Article 286(2) having been removed, does the Act operating on its own terms affect the transactions in question even though they be in the course of inter-State trade? If it does, the assessment is no longer liable to challenge on the ground of the ban imposed by Article 286(2). This brings us to the second argument of the learned Attorney- General. One has merely to see the definitions of "sale" and "turnover" and section 3, the charging section, to come to the conclusion that the Act operating on its own terms makes the transactions under consideration in this appeal liable to sales tax. Explanation 2 to the definition of "sale" says: "The sale or purchase of any goods shall be deemed, for the purposes of this Act, to have taken place in this State, wherever the contract of sale or purchase might have been made- (a) if the goods were actually in this State at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced in this State at any ....