TaxTMI 
TaxTMI 
1976 (10) TMI 121
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.... 1947 (hereinafter referred to as "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 it by the State. The sixth question, which was one of law only, was referred by the Division Bench to a Full Bench and, this was determined in favour of the State. There are, therefore, four appeals by the assessee against the Full Bench decision. 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 ....
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...., 1950. 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 (11) to section 2(g) of the Act which as amended by the C.P. and Berar Sales Tax (Amendment) Act No. 16 of 1949, came into force on 11th April, 1949. Hence, the law, as found after 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 could 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 transfer of property in goods made in course of the execution of a contract, but does not include a mortgage, hypothecation, cha....
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....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 enactment of the fresh provision meant to replace it. 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 contrary 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 assum....
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....this observation must be deemed to have been overruled by the subsequent pronouncements of this Court. The passage cited above by us occurs in answering the fifth question considered by this Court 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 place outside the Province, is 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 by this Court, 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 question which necessarily arose for determination before the court on that occasion. We think that the view that the unamended law was in operation was not a mere obiter dictum. It was necessary for this Court to decide that question before other questions could be determined. The following passage was also cited from Koteswar Vittal Kamath v. K. Rangappa Baliga & Co. [1969] 3 S.C.R. 4....
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....one Prohibition Order by a subsequent Order, which was found to be invalid. It recorded its conclusion as follows: "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 of 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 case[1969] 3 S.C.R. 40 at 47; A.I.R. 1969 S.C. 504 at 509., where a distinction was drawn between a "substitution" and "supersession". It is true that, as the term substituted was not used there, the old rule was not held to have been repealed. Nevertheless, the real basis of that decision was th....
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..... Looking at the actual procedure which was gone through, we find that, even if the Governor had assented to the substitution, yet, the amendment 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 [1965] 2 S.C.R. 421., and the case of Firm A.T.B. Mehtab Majid & Co. v. State of Madras [1963] 14 S.T.C. 355 (S.C.); [1963] Supp. 2 S.C.R. 435. Tewari's case [1965] 2 S.C.R. 421., 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 ....
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....ment 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 the 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 lead to another inference. It means, ordinarily, that unless the substituted 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 simu....
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....he 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. Husenali Adamji & Co.[1959] 10 S.T.C. 297 (S.C.)., there was no evidence that at the date when the agreement for sale was made, the particular logs delivered thereunder were in the Central Provinces in the shape of logs at all, and a standing tree which was in existence at the date of the agreement of sale 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 head office of the applicant- company." After giving the findin....
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....o a process of manufacturing when 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 product was a commercially distinct commodity. Several cases of manure mixtures are referred to in the case. Now, in the case of manure mixtures, made out of different ingredients, at a "mixing 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 name "oriental mixture" only if the term "manufacture" can be employed at all to anything done by the assessee. What is to be determined is whether there 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 sel....
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....chanical or chemical process of manufacture, could not, we think, result in a new commodity. We, therefore, answer the following six questions before the High Court as follows: Q. 1: Was the Tribunal right in holding that, although the assessment order was made after the Constitution of India came into force, article 286 was thereby not contravened, because such order related to a period prior to January 26, 1950. Ans.: Yes. The provisions of article 286 were not contravened. Q. 2: Was the Tribunal right in holding that explanation (II) to section 2(g), as was originally embodied in the Sales Tax Act, 1947, got restored on the statute book because of the unconstitutionality of the substituted explanation enacted in the Sales Tax (Amendment) Act, 1949. Ans.: There is no question of restoration of unamended explanation (11) to section 2(g) as the purported amendment itself did not take effect. Hence, the unamended provision stood as it was before the attempted amendment. The question framed rests on a misconception that there was something to be restored. As nothing was taken away, nothing was there to be restored. And, there was nothing added or substituted. Q. ....