TaxTMI 
TaxTMI 
1960 (10) TMI 79
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the levy of sales tax under the Bihar Sales Tax Act (hereafter referred to as the Act) on the appellants in respect of sales effected during the financial years 1949-50 and 1950-51. The point urged in these appeals is a very narrow one and relates to the proper construction to be placed on certain orders of the Board of Revenue passed in regard to the tax properly leviable for these two years. The facts relevant to this point are briefly these: The assessment of the appellants for both the years was completed by the Superintendent of Sales Tax, Monghyr, on May 7, 1952, and the total tax liability was determined in the sum of Rs. 6,44,940-2-6 and Rs. 7,46,876-1-3 for the two assessment years 1950-51 and 1951-52 respectively. Before the assessing officer, the appellants contended that all sales effected by them as a direct result of which the goods were delivered outside the State of Bihar were exempted from tax liability under Article 286(1)(a) of the Constitution. This objection was overruled, the reason assigned being, that the sales were completed in Bihar, and that the entire turnover of the appellants was therefore subjected to tax under the Act. In taking this view the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... when the Constitution came into force, the learned lower Court has been guided by the decision of the Board in the Bengal Timber case (Case No. 61 of 1952). But this ruling of the Board stands superseded by the subsequent decision of the Supreme Court in the United Motors case [1953] S.C.R. 1069; 4 S.T.C. 133. According to the decision of the Supreme Court, no tax can be levied on despatches to the places outside the State after the 26th January, 1950, and on this point the petitions are allowed, and the Sales Tax Officer directed to recalculate the amount of tax payable by the assessee." Apparently the appellants understood this order as meaning that all sales, whereunder goods were delivered outside the State, whether or not for consumption in the State of first delivery [i.e., both types (a) and (b)] were exempted from the tax levy. The Sales Tax Authorities, however, took the order to mean that only those sales in which deliveries were made outside the State for consumption in the State of first destination, i.e., those of type (a), were intended to be exempted, and these rival interpretations were put forward in the correspondence that passed between the appellants ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Court of Patna under Article 226 of the Constitution for the issue of writs of mandamus to compel the refund of the tax on the principal ground that a duty to do so had been imposed by the orders of the Board of Revenue, though the petition made an incidental reference to the appellants being entitled to such refund on a proper construction of Article 286(1) and (2) of the Constitution, even apart from the order of the Board of Revenue. The learned Judges of the High Court however in the main considered the question whether on a proper interpretation of the relevant Articles of the Constitution, sales under which goods were delivered outside Bihar but for consumption not in the State of first delivery, were exempt from tax under the Bihar Sales Tax Act and decided the point against the appellants. They next dealt with the central point urged in the petitions, viz., that the Board of Revenue by its order dated August 28, 1953, had allowed the appellant's revision in regard to "the second point" which included sales of all categories whether or not for the purpose of consumption in the State of first destination outside Bihar, and directed the Sales Tax Officer to recompute the t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s became final, it bound all parties to it and its correct- ness could not be challenged collaterally in proceedings for enforcing that order. The attempt of learned counsel for the appellants was to bring this case within the scope of the above ruling. The ratio of this decision is to be found in this passage: "By that order the respondent virtually refused to carry out the directions which a superior tribunal had given to him in exercise of its appellate powers in respect of an order of assessment made by him. Such refusal is in effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hirearchy of courts. If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior tribunal, yet held that no manifest injustice resulted from suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which the appellants were entitled on that officer's interpretation of the judgment of this Court. It may be that this was not a satisfactory method of disposing of the revision petition-leaving the point which arose for decision by the Member of the Board of Revenue, to be decided by the Sales Tax Officer, but we are now only concerned with the simple question whether Mr. Bakshi had or had not deter- mined the true scope and effect of the judgment of this Court and decided it as meaning that all sales as a result of which goods were delivered outside the State of Bihar were within the Explanation and so were exempt from the tax liability. Notwithstanding the cryptic language used by the Member of the Board, we are clearly of the opinion that he did not intend to decide this point in favour of the appellants in the manner contended for by them. It is now common ground that when the Board of Revenue was approached by the State Government to review or clarify this order, Mr. Bakshi, by his order dated April 25, 1955, expressed himself as having decided earlier that he had directed the Sales Tax Officer to give effect to the judgment of this Court in the United Motors case [1953] ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....R. 1069; 4 S.T.C. 133, the exclusion of type (b) sales from those exempted under Article 286(1) was erroneous. Mr. Chatterjee, learned counsel for the appellants sought to establish that this Court had decided in the United Motors case [1953] S.C.R. 1069; 4 S.T.C. 133, three points: (1) that sales as a result of which goods were delivered in a State for consumption in such State i.e., the sales falling within the Explanation to Article 286(1) were fictionally inside that State for all purposes and so within the taxing power of the State in which such delivery took place, (2) that sales which by the fiction created by the Explanation were inside a particular State, were "outside" all other States, and so exempt from tax levy by all such other States, (3) that further and beyond this, all sales which did not satisfy the terms of the Explanation but in which goods were delivered outside the State in which title passed were "outside sales" over which no State would have power to levy a tax. In other words, the argument was that this Court had laid down that every sale which was not an "Explanation sale" and there- fore not an "inside sale" within a particular Sta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n, this passage explains the scope of the Explanation and deals with what might be termed "Explanation sales". If there is a sale falling within the terms of the Explanation, it is "inside" the State of delivery-cum-consumption and that State alone can levy the tax. Such a sale is outside all other States, which are prohibited from taxing such a sale by reason of any territorial nexus however close or cogent. The passage extracted, however, does not deal with cases where the sale in question does not satisfy the requirements of the Explanation leading to the fixation of the fictional situs of the sale determining the State by which the tax might be levied. Whether any and, if so, which is the State which can levy a tax on a sale not covered by the Explanation, is not dealt with by this decision at all. From this it would follow that sales of type (a) would be exempt from the levy of tax under the Bihar Sales Tax Act by reason of their being "inside" sales within the State of delivery-cum-consumption and therefore being "outside" sales quoad the State of Bihar. Sales of type (b), however, not having been dealt by the decision in the United Motors case(1), it would follow that on ....