TaxTMI 
TaxTMI 
1956 (1) TMI 35
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....ce. Wherever any particular case needs special treatment in view of some special point involved therein it will be dealt with separately while dealing with that case. 2. As regards the two writ-petitions they are petitions under Article 226 of the Constitution of India for the issue of a writ of mandamus or any other kind of writ or direction submitted by the Firm of M/s Mohammad Siddiq Gautamlal and M/s Nemichand Fulchand against the State of Madhya Bharat and the Sales Tax Officer, Indore. 3. The Petitioners firms carry on business of sale and purchase of pugrees, Their shops are situated in M.T. Cloth Market, Indore. It is alleged by the Petitioners that the pugrees in which they deal are manufactured mainly in Uttar Pradesh and Rajasthan as also elsewhere. They are made of cotton yarn. The process employed for their manufacture is one of hand-looms. The pugrees bear 'pallas' of jari yarn breadth of which varies from 1/8" to 4". It is said that cost of jari yarn employed for the purpose of these pugrees does not exceed 5 per cent of the total cost of the commodity. Under Section 4(3), Madhya Bharat Sales Tax Act (30 of 1950) the Government of Madhya Bharat issue....
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....ness of count of cotton yarn used therein as well as the quantity of gold or silver threads of the jari borders. The price charged is a composite price and the value of the borders of 'pallas' is not negligible. The pugrees in question therefore do not fall in the category of cotton cloth woven on handlooms and as such are not exempt from taxation under the Act. It is denied that the levy of Sales Tax amounts to unreasonable restriction of the fundamental right of the Petitioner to carry on trade and that the requirement under the Act to obtain licence violates any provision of the Constitution. 10. It is further asserted that inasmuch as vires of the Act is not challenged by the Petitioner he could not invoke this remedy under Article226 of the Constitution of India. His only remedy lies under the Sales Tax Act itself. 11. The return further asserts that Article 286(3) of the Constitution of India and Act 52 of 1952 affect only such legislation as would be made after that Act came into force on 9-8-1952. It cannot affect a legislation which was already in force since prior to coming into force of Act 52 of 1952. It is denied that Act 30 of 1950 is rendered ultra v....
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....nt. Article 286(3) of the Constitution of India was invoked by the learned Counsel in support of his contention. Reference was made in this connection by him to the cases reported in - 'lshwar Das Kupoor v. Member, Board of Revenue', ILR (1946) 2 Cal 395(A); - 'Soma Singh v. The State of Pepsu', AIR 1954 SC 311 (v 41)(B) and - 'Firm of Soma Rajaiah v. Sales Tax Officer, Secunderabad', AIR 1954 AP 50( v 41)(C). 16. Lastly he rested his third ground of attack on Articles 303 and 304 of the Constitution of India. He contended that cloth manufactured on handlooms at four places in Madhya Bharat viz. Shajapur, Sarangpur, Chanderi and Maheshwar, is exempt from sales tax by reason of specific notification issued under the Act, This has the effect, according to him, of creating discrimination between goods imported from outside the State and those produced at these principal places of manufacture of that kind of goods. The power of the State to tax the imported goods under the circumstances is lost during part of the material period viz., 1952-53. This he tried to support on the strength of an affidavit filed practically at the close of the argument. 17. ....
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....islature of a State' and 'as have been declared by Parliament by law' in Article 286(3) it is clear the State legislation contemplated is a post-constitutional legislation. For if that had not been the intention the Article would not have used the words Legislature of a State and Parliament. This is also clear from the decision of their Lordships of the Supreme Court reported in AIR 1954 SC 311 ( V. 41)(B). There it is stated at page 312: The Petitioners are dealers in coarse cloth and medium cloth and their contention is that these commodities having been declared as essential for the life of the community they are not liable to pay sales tax on them. In the petition an allegation has been made that Section 3 of Act 52 of 1952 is in direct contravention of Article 286(3) of the Constitution. There does not appear to be any substance in this contention. Section 3 is in line with Article 286(3) and there is no inconsistency between that section and the relevant provision of the Constitution. The Petitioner are sought to be taxed under Ordinance 33 of 2006 which, as an existing law, has been continued by Article 372. The question is whether that Ordinanc....
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....ation must precede the impugned State legislation. It therefore follows that the said Act 52 of 1952 will not affect a State legislation made prior to the coming into force of that Act. Moreover the declaration has to be made by Parliament. It therefore follows that, even if there be in force Essential Supplies (Temporary Powers) Act of 1946, having been continued as the existing law by Article 372 of the Constitution of India, still 7 declaration made thereby of certain commodities as essential cannot be construed to be a declaration by Parliament regarding goods as being essential to the life of the community under Act 52 of 1952. 26. This view, which I have taken, can find its support in the case reported in As we are concerned in this application with a pre-Constitution laMohammad Siddiq Gautamlal and Ors. vs. The State of Madhya Bharat and Ors. (17.01.1956 - MPHC) : AIR 1954 AP 50( V 41)(C). In that case it was also held that the Hyderabad General Sales Tax Act 1950 was properly passed after it received the assent of the Rajpramukh, as it was a competent legislation then. There was no question of reservation of the Act for assent of the President when it was made into la....
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....t goods, manufactured outside the State of Madhya Bharat. It is clear that whereas handloom cloth manufactured at say Maheshwar was not subjected to a tax handloom cloth imported from say Uttar Pradesh or Rajasthan was subjected to a sales tax. 32. This worked discrimination and placed goods from outside at a disadvantage. The fact that there were places within the State itself which were placed under similar disadvantage was in my opinion immaterial. The material question is whether the imposition of tax on sale of goods coming from Uttar Pradesh or Rajasthan was sought to be discriminated or not and whether similar goods produced at least at some places in Madhya Bharat were free from such taxation. It is clear from the above mentioned notification that there was discriminatory taxation of goods coming from other States. 33. Similar notifications have been issued by Madhya Bharat Government in respect of four places viz. Chanderi, Maheshwar, Sarangpur and Shajapur for subsequent years upto 31-3-1955. But in this petition we are concerned only with the year ending on 31-3-1953. 34. I am, therefore, of the opinion that as all varities of goods manufactured on handlooms in ....
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....possible therefore to require the dealer to render an account of sale of the exempted goods for the purpose of enabling the Sales Tax Officer to determine the amount of tax. 40. For all these reasons I am of the opinion that taxation of the handloom cloth of whatever variety, imported into Madhya Bharat for consumption into Madhya Bharat from any other State is invalid for the period from 1-4-1952 to 31-3-1953. 41. As we are not concerned in this petition for any other period it is unnecessary to say anything in respect of it. But it may be stated that similar line of reasoning will apply to the subsequent period as well. 42. The last question to be considered is whether the goods in question fall within the category of cotton cloth made on handloom. 43. Section 4(2), M.B. Sales Tax Act is as follows: No tax shall be payable under this Act on the sale of goods specified in the second column of Schedule 1 on conditions mentioned in column three of this schedule. 44. Schedule 1 contains the following as the second item exempted from sales tax: Cotton cloth manufactured on handlooms. 45. It is clear from this provision that all cotton cloth manufact....
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.... exempted goods no exemption can be claimed. He therefore argued that what is exempted is cotton cloth so that, even if there be slight or negligible quantity of fibres of other material the exemption cannot be claimed. The learned Counsel, however, expressed that he could not lay his hand on any authority dealing with the question regarding substantial character of particular variety of goods in the matter of taxation except the aforesaid Calcutta case. In that case apparently stricter interpretation was put but it appears from the facts in that case that the additional work done after the cloth was removed from the looms considerably increased its value. 51. Another case to which a reference was made in his argument by the learned Advocate-General was one reported in - 'Varasuki and Co. v. The Province of Madras', AIR 1951 Mad 254 ( V 38)(F). 52. In that case the question was whether where the exempted commodity was salt, gunny bags used for carrying salt could be exempted. It was held that they were not exempt. We cannot derive much assistance from this case as the commodity in respect of which exemption was claimed was altogether a different commodity. 53. I....
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....ooms of value at a specified rate the difficulty would have been over. In that case Pugrees and cloth containing negligible quantity of embellishment would have been free and these containing substantial quantity of embellishment would not have been so. 56. There is one more argument which may justify, the view I have taken. If a cotton cloth contains coloured fibres it will be exempt. The reason apparently, is that the colour forms a negligible part. I see no reason why the analogy cannot be extended. 57. On the third question therefore I hold that it is in each case a question of fact as to whether Pugrees with Jari border or Pallas are entitled to exemption or not depending upon the question whether the quantity of Jari is substantial or small and negligible. 58. The result is that Civ. Misc. Applns. Nos. 20 and 21 of 1953 are partly accepted and it is held that for the period from 1-4-1952 to 1-5-1953 the Petitioners are not liable, to be taxed. As regards the rest of the period included in the claim whether they will be liable to tax or not will depend upon the nature of the goods as indicated above. 59. I therefore hereby order that the Sales Tax Officer shall not....
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....e entitled to exemption under Item No. 2 of Schedule 1 made in exercise of powers under Section 4(2), Madhya Bharat Sales Tax Act, and if it is substantial so as to increase its value materially it will not be exempt. I held that it will in each case be a question of fact as to whether the exemption can legitimately be claimed. What applies to jari will equally apply to silk or artificial silk. I therefore answer questions Nos. (1)(a) and (b) accordingly. 64. Question No. 2: The answer to this is involved in the answer given earlier on question No. (1). 65. Question No. 3: This too will be answered by my answer regarding question No. (1). 66. It was pointed out by the learned Advocate General that Item No. 19 in the charging Schedule mentions; हर प्रकार का सूती कपड़ा, रेशमी, उनी व कृत्रीम रेशमी व अन्य रेशेदार पदार्थ ....
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....se Duty would be treated as handloom cloth and has got to be accepted as such by the State Legislature. 4. Whether cloth manufactured on handlooms and containing cotton yarn, silk or artificial silk yarn or Jari Fibres falls under Item No. 2 of Schedule 1 issued under Section 4(2) of the Act, vide Madhya Bharat Gazette dated 30-4-1950. 5. Whether under Item No. 19 of the Rate Schedule issued under Section 5 of the Act and published in the Madhya Bharat Gazette, Extraordinary dated 22-5-1950 the proportionate price of silk, artificial silk yarn or Jari fibre is liable to sales tax or the whole price of the cloth containing such yarns is taxable. 73. Question No. (1): The answer to this question will be found in this decision given by me while dealing with Civ. Misc. Applns. Nos. 20 and 21 of 1953. I have held therein that the Madhya Bharat Sales Tax Act is not ultra vires the State legislature and is a valid piece of legislation even after passing of the Central Act 52 of 1952. Argument of Mr. Waghmare was based on the contention that after the passing of the Central Act 52 of 1952 declaring handloom cloth as goods essential to the life of the community provi....