State of Jammu & Kashmir & Ors
Vs. Caltex India (Ltd.) [1965] INSC 305 (17 December 1965)
17/12/1965 RAMASWAMI, V.
RAMASWAMI, V.
GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N.
HIDAYATULLAH, M.
SATYANARAYANARAJU, P.
CITATION: 1966 AIR 1350 1966 SCR (3) 149
CITATOR INFO:
R 1969 SC 343 (13) RF 1970 SC 306 (10) F 1975
SC 887 (6)
ACT:
Sales Tax-Petrol sent under contract from
Punjab to Jammu & Kashmir-Sales whether inter-State in
character-Chargeability under Jammu & Kashmir Motor Spirit (Taxation of
Sales) Act 2005, s. 3 Sales Tax Laws Validation Act, 1956, effect ofConstitution
of India Art. 286(2).
HEADNOTE:
Petrol and allied products were supplied by
the respondent company from its depot in Punjab to the State Mechanized Farm at
Nandpur in Jammu & Kashmir State under a contract with the Director-General
of Supplies, Delhi. The sales were taxed under the Jammu & Kashmir Motor
Spirit (Taxation of Sales) Act, 2005 for the period January 1955 to May 1959 by
a single assessment order. The assessment was challenged by the respondent by a
writ petition filed in the High Court, as being beyond the taxing power of the
State owing to the ban imposed by Art. 286(2) as interpreted by this Court in
the Bengal Immunity case, as also the provisions of the Central Sales Tax Act,
1956 passed by Parliament after the amendment of Art. 286 by the Constitution
Sixth Amendment Act, 1956. The respondent's plea was accepted by a single judge
of the High Court as regards the period after September 6, 1955; as regards the
period before and upto that date the learned Judge held that the sales were
taxable because the ban on taxation of inter-State sales in, Art.
286(2) was lifted in respect of that period
by the Sales Tax Laws Validation Act,, 1956. In Letters Patent Appeal the
Division Bench held that. the assessment order for the whole period from
January 1955 to, May 1959 was one composite whole and being bad in part was
infected throughout and must be treated as wholly invalid. The State appealed,
to this Court by special leave.
HELD : (i) The sales in question were
inter-State sales as both the conditions laid down in the Bengal immunity case
for a sale to be an inter-State sale that (1) there should be a sale of goods
and (2) the goods must be transported under the contract of sale from one State
to another, were fully satisfied in the present case. The sales could not
therefore be taxed for the period not covered by the Sales Tax Laws Validation
Act, 1956. [156 C-D] Bengal Immunity Co. Ltd. v. State of Bihar, [1955] 2
S.C.R. 603, referred to.
(ii) The last mentioned Act however validated
the St-ate laws which levied tax on inter-State sales for the period before
September 6. 1955. Hence the sales before that date could be validly taxed as
held by the single Judge. [159 F] 150 (iii) The fact that the respondent had no
place of business or storage in Jammu & Kashmir was not material because it
was not a condition for taxation under the Jammu
should be such a place of business or
storage. Section 3 of the Act purports to tax all "retail sales". Nor
is the holding of a licence under s. 6 which is a machinery section only, a
condition of liability to pay sales-tax under the Act. [158 C-D] (iv) The Division
Bench was wrong when it held that because there was one assessment order for
the whole period from January 1955 to May 1959, the whole of it was vitiated.
Sales-tax is in ultimate analysis imposed on
receipts from individual sales or purchases of goods and it was possible to
separate the assessment of receipts derived from the sales for the period up to
September 6, 1955 and to allow the taxing authorities to enforce the statute
with respect to the sales taking place during 'this period and also prevent
them by grant of a writ from imposing the tax with regard to sales for the
exempted period, [159 G-160 E] State of Bombay v. United Motors India Ltd.
[1953] S.C.R.
1069, relied on.
Bennett & White (Calgary) Ltd. v.
Municipal District of Sugar City No. 5, [1951] A.C. 786, distinguished.
& CIVIL APPELLATE JURISDICTION : Civil
Appeal No. 864 of 1964.
Appeal from the judgment and order, dated
July 10, 1962 of the Jammu & Kashmir High Court in L. P. Appeal No. 4 of
1962.
S. V. Gupte, Solicitor-General, Raja Jaswant
Singh, Advocate-General for the State of Jammu and Kashir, N. S. Bindra,R. H.
Dhebar, and R. N. Sachthey, for the appellants Nos. 1 and 2.
M. C. Setalvad, and D. N. Gupta, for the
respondent.
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought on a certificate against the judgment of
the Division Bench of the High Court of Jammu & Kashmir at Srinagar, dated
July 10, 1962 holding that the respondent is not liable to pay Sales tax for
the period from January, 1955 to May, 1959 under the Jammu & Kashmir Motor
Spirit (Taxation of Sales) Act, 2005 (1948 A.D.).
The Director-General of Supplies, Delhi
entered into a contract with General Manager, Caltex India (Ltd.) at Bombay
(hereinafter called the respondent) for the supply of petrol, HSD and Power
Kero to the State Mechanized Farm at Nandpur located in the State of Jammu
& Kashmir. In pursuance of this contract the respondent directed its depot
at Pathankot situated in the Punjab State to supply petrol to the Nandpur Farm.
151 The procedure adopted was as follows. The
Officer in charge of the Nandpur farm placed indents with the Pathankot depot
for supply of specified quantities of petrol to the farm and on receipt of the
indents, the Pathankot depot transported the petrol in its own tank-lorries to
Nandpur and delivered the petrol to the farm. The petrol was measured by means
of dipping rods and approved by the indenting officer at Nandpur farm and
thereafter the petrol was delivered to the Nandpur farm through pumps which belonged
to the respondent.
The price of petrol so supplied was paid to
the respondent at Delhi by the Director-General of Supplies. The Petrol
Taxation Officer at Srinagar considered that the sales of petrol to Nandpur
farm were liable to be taxed under the Jammu & Kashmir Motor Spirit
(Taxation of Sales) Act, 2005 and called upon the respondent to furnish returns
of sales between 1952 to 1959. The respondent, however, furnished returns only
for the period January, 1955 to May, 1959. On the basis of the returns the
Petrol Taxation Officer assessed the respondent to pay sales tax to the extent
of Rs. 39,619.75 in respect of sales of petrol from January, 1955 to May, 1959.
The respondent thereafter moved the High Court under s. 103 of the Constitution
of Jammu and Kashmir for grant of a writ to quash the assessment of sales tax
and to restrain the State of Jammu and Kashmir and the Petrol Taxation
authorities (hereinafter called the appellants) from levying the tax. It was
contended on behalf of the respondent that the sales tax could not be imposed
as the sales took place in the course of inter-State trade and commerce. Syed
Murtaza Fazl Ali, J. held that the respondent was liable to pay sales tax in
respect of the sales which took place during the period January, 1955 to
September, 1955. Regarding the rest of the period of assessment, the learned
Judge held that the appellants were not entitled to levy tax and accordingly
issued a writ restraining the appellants from levying the tax for the period
from October, 1955 to May, 1959. The appellants took the matter in Letters
Patent appeal and the respondent also filed Cross-objection with regard to the
liability to tax for the period from January,, 1955 to September, 1955. The
Division Bench dismissed the appeal in Letters Patent and allowed the
cross-objection of the respondent, holding that the appellants were not
entitled to levy sales tax for the entire period from January, 1955 to May,
1959 and accordingly quashed the assessment of sales tax, dated October 3, 1960.
It is necessary, at this stage, to indicate
the legislative development in the State of Jammu and Kashmir which provides
the setting for the questions to be investigated in this case.
152 Article 286 of the Constitution, as it
was originally enacted, read as follows :
"(1) No law of a State shall impose, or
authorise the imposition of, a tax on the sale or purchase of goods where such
sale or purchase takes place-(a) outside the State; or (b) in the course of the
import of the goods into, or export of the goods out of, the territory of
India.
Explanation.-For the purpose of sub-clause
(a), a sale or purchase shall be deemed to have taken place in the State in
which the goods have actually been delivered as a direct result of such sale or
purchase for the purpose of consumption in that State, notwithstanding the fact
that under the general,law relating to sale of goods the property in the goods
has by reason of such sale or purchase passed in another State.
(2) Except in so far as Parliament may by law
otherwise provide, no law of a State shall impose, or authorise the imposition
of, a tax on the sale or purchase of any goods where such sale or purchase
takes place in the course of inter-State trade or commerce :
Provided that the President may be order
direct that any tax on the sale or purchase of goods' which was being lawfully
levied by the Government of any State immediately before the commencement of
this Constitution shall, notwithstanding that the imposition of such tax is
contrary to the provisions of this clause, continue to be levied until the
thirty-first day of March, 1951.
(3) No law made by the Legislature of a State
imposing, or authorising the imposition of, a tax on the sale or purchase of
any such goods as have been declared by Parliament by law to be essential for
the life of the community shall have effect unless it has been reserved for the
consideration of the President and has received his assent." Article 286
therefore imposes four bans upon the legislative power of the States. Clause
(1) prohibited every State from imposing or authorising the imposition of, a
tax on outside sales and on sales in the course of import into or export
outside the territory 153 of India. By cl. (2) the State was prohibited from
imposing tax on the sale of goods where such sale took place in the course of
inter-State trade or commerce. But the ban could be removed by legislation made
by the Parliament. By cl. (3) the Legislature of a State was incompetent to
impose or authorise imposition of a tax on the sale of any goods declared by
the Parliament by law to be essential for the life of the community, unless the
legislation was reserved for the consideration of the President and had
received his assent. But Art. 286 of the Constitution did not apply to the
State of Jammu & Kashmir till May 14, 1954, because the Constitution
(Application to Jammu & Kashmir) Order 1950 made by the President of India
on January 26, 1950 excepted Art. 286 from its applicability to the State of
Jammu & Kashmir. Reference, in this connection, may be made to the Second
Schedule to the Constitution (Application to Jammu & Kashmir) Order 1950,
relevant excerpt from which is reproduced below :
"THE SECOND SCHEDULE (See paragraph 3)
Provisions of the Exceptions Modifications constitution applicable.
Part XII Articles 264 and 265 1.Articles 266
shall use (2) of Art. 267, apply only in so far Articles 268 to 281 as it
relates to the Clause (2) of Art. Consolidated Fund of 283, Articles 286 to
India and the public 291, 293, 295, 296 account of India.
and 297.
2. Articles 282 and 284 shall apply only in
so far as they relate to the Union or the public account of India.
3. Articles 298, 299 and 300 shall apply only
in so far as they relate to the Union or the Govt.
of India." But Art. 286 was applied to
the State of Jammu & Kashmir by the Constitution (Application to Jammu
& Kashmir) Order, 1954 which came into force on 14th day of May, 1954. In
The Bengal Immunity Company Ltd. v. State of Bihar(f) this Court held that the
operative provisions of the several parts of Art. 286, namely cl. (1) (a), cl.
(1) (b), cl. (2) and cl.
(3), were intended to deal with different
topics and one cannot be projected or read (1) [1955] 2 S.C.R. 603.
L9 Sup. CI/66-11 154 into another, and therefore
the Explanation in cl. (1) (a) cannot legitimately be extended to cl. (2)
either as an exception or as a proviso thereto or read as curtailing or
limiting the ambit of cl. (2). This Court further held that until the
Parliament by law, made in exercise of the powers vested in it by cl. (2) of
Art. 286, provides otherwise no State may impose or authorise the imposition of
any tax on sales or purchases of goods when such sales or purchases take place
in the course of inter-State trade or commerce, and therefore the State
Legislature could not charge inter State sales or purchases until the
Parliament had otherwise provided. The judgment of the Court in the Bengal
Immunity Company's case(1), was delivered on September 6, 1955. The President
issued the Sales Tax Laws Validation Ordinance, 1956, on January 30, 1956, the
provisions of which were later embodied in the Sales Tax Laws Validation Act,
1956.
By this Act 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 1st day of April, 1951 and the 6th day of September, 1955,
shall be deemed to be invalid merely by reason of the fact that such sale or
purchase took place in the course of inter-State trade or commerce; and all
such taxes levied or collected or purported to have been levied or collected
during the aforesaid period shall be deemed always to have been validly levied
or collected in accordance with law.
The Parliament thus removed the ban contained
in Art. 286(2) of the Constitution retrospectively but limited only to the
period between April 1, 1951 and September 6, 1955. All transactions of sale,
even though they were inter-State could for that period be lawfully charged to
tax. But Art.
286(2) remained operative after September 6,
1955 till the Constitution was amended by the Constitution (Sixth Amendment)
Act, i.e., September 11, 1956. By the amendment, the explanation to cl. (1) of
Art. 286 was deleted and for cls. (2) and (3) the following clauses were
substituted :
"(2) Parliament may by law formulate
principles for determining when a sale or purchase of goods takes place in any
of the ways mentioned in clause (1).
(3) Any law of a State shall, in so far as it
imposes, or authorises the imposition of, a tax on the sale or purchase of
goods, declared by Parliament by law to be (1) [1955] 2 S.C.R. 603.
155 of special importance in inter-state
trade or commerce be subject to such restrictions and conditions in regard to
the system of levy, rates and other incidents of the tax as Parliament may by
law specify." By cl. (2) of Art. 286 as amended, Parliament was authorised
to formulate principles for determining when a sale or purchase of goods takes
place in any of the ways mentioned in cl. (1), namely, outside the State or in
the course of the import into, or export out of the territory of India.
By the Constitution (Sixth Amendment) Act,
Parliament was entrusted with power under Art. 269(3) to formulate principles
for determining when a sale or purchase of goods takes place in the course of
inter-State trade or commerce;
and to effectuate the conferment of that
power, in the Seventh Schedule, Entry 92A was added in the First List and Entry
54 in the Second List was amended. The Parliament enacted, in exercise of that
power, the Central Sales Tax Act 74 of 1956 to formulate principles for
determining when a sale or purchase of goods takes place in the course of
inter-State trade or commerce or outside a State or in the course of import
into or export from India, and to provide for the levy, collection and
distribution of taxes on sales of goods in the course of inter-State trade or
commerce and to declare certain goods to be of special importance in
inter-State trade or commerce etc. Article 286, as amended by the Constitution
Sixth Amendment Act, 1956, was applied to the State of Jammu & Kashmir on
16th January 1958 by the Constitution (Application to Jammu & Kashmir)
Amendment Order 1958. The Central Sales Tax Act (Act 74 of 1956) was enacted by
Parliament on December 21, 1956 but it was applied to the State of Jammu &
Kashmir on March 23, 1958 by Act 5 of 1958.
The questions presented for determination in
this appeal are (1) whether sales tax could be imposed on the respondent for
the period from October, 1955 to May, 1959 in view of the prohibition contained
in Art. 286(2) of the Constitution as it stood before its amendment, (2)
whether sales tax could. be validly levied on sales taking place between
January 1, 1955 to September 6, 1955 in view of the provisions of Sales Tax
Validation Act, 1956 (Act 7 of 1956).
As regards the first question, it is admitted
by the parties that petrol was transported from Pathankot in the State of
Punjab to Nangpur in the State of Jammu & Kashmir under the contract of
sale. The petrol was kept in storage at a depot of the respondent 156 at
Pathankot and it was carried in the trucks of the respondent from Pathankot and
delivered to the Nandpur farm in the State of Jammu & Kashmir. The price of
the petrol supplied was paid to the respondent at Delhi by the Director-General
of Supplies. Upon these facts it is manifest that there was movement of goods
from the State of Punjab to the State of Jammu & Kashmir under the contract
of sale and there was completion of sale by the passing of property and the
delivery of the goods to the purchaser. As pointed out by Venkatarama Ayyar, J.
in the Bengal Immunity Company case(1) :
"A sale could be said to begin the
course of interState trade only if two conditions concur : (1) A sale of goods,
and (2) a transport of those goods from one State to another under the contract
of sale. Unless both these conditions are satisfied, there can be no sale in
the course of inter-State trade." In the present case, both these conditions
have been satisfied and the transactions of sale made between the parties were
unquestionably in the course of inter-State trade. Indeed, the
Solicitor-General on behalf of the appellants did not seriously challenge the
finding of the High Court on his point.
We proceed to consider the next question,
viz., whether the respondent was liable to pay sales tax for the period from
January 1, 1955 to September 6, 1955 in view of the lifting of the finding of
the High Court on this point.
On behalf of the respondent Mr. Setalvad put
forward the argument that the Sales Tax Validation Act by itself did not
empower any State to levy any tax on sales or purchases in the course of
inter-State trade but it merely liberated Sales Tax Acts of several States from
the fetter imposed by cl. (2) of Art. 286 of the Constitution and left the
State Act to operate in its own terms. It was submitted that if there was no
law in a State empowering the levy of a tax on sales or purchases in the course
of inter-State trade or commerce, the State could not derive any advantage from
the Sales Tax Validation Act. It was contended that the Explanation to Art. 286
(1) (a) of the Constitution did not confer any taxing power on any State
Legislature. On the contrary, it was intended to place a limitation on the
State taxing power and therefore the mere lifting of the ban under cl. (2) of
Art. 286 did not enable the State to impose the tax on sales in the course of
inter-State trade and such levy of tax could be made (1) [1955] 2 S.C.R. 603.
157 only when the taxing statute of the State
expressly provides for it. In our opinion, the argument of Mr. Setalvad is
well-founded. The question, therefore, arises whether the Jammu & Kashmir
Motor Spirit (Taxation of Sales) Act, 2005 (hereinafter called the Act) applies
to the sale of petrol made by the respondent between January 1, 1955 to
September 6, 1955 and whether the appellants can validly assess the respondent
to sales tax with regard to these transactions.
The preamble of the Act states that it is
expedient to provide for the levy of a tax on the retail sale of motor spirit.
Section 2 (g) of the Act defines "retail sale" to mean a sale by a
retail dealer of any motor spirit to a consumer or to any other person for any
purpose other than resale. Section 2(f) defines "retail dealer" to
mean any person who, on commission or otherwise, sells any motor spirit to a
consumer or to any other person for any purpose other than resale or keeps any
motor spirit for sale to consumers or to any other persons for purposes other
than resale. Under s. 2(h) of the Act the words "sale" and
"sell" include exchange barter and also the consumption of motor
spirit by the retail dealer himself. Section 3 deals with the imposition of tax
and reads as follows :
"3. There shall be levied and paid to
the Government on all retail sales of motor spirit a tax at the rate of four
annas for each imperial gallon of motor spirit or at such other rate as the
Government may prescribe from time to time." Section 6 of the Act deals
with the licensing of the retail dealers and states that after the expiry of a
period of two months from the commencement of the Act no person shall carry on
business as a retail dealer unless he is in possession of a valid license.
Section 7 relates to the procedure for grant of licence.
Section 7 (4) states as follows :
"No license under this Act shall be
granted to any person who does not hold a license for the storage of dangerous
petroleum under the Petroleum Act, 1998, and if any such license granted under
that Act is cancelled, suspended or is not renewed any license granted under
this Act to the holder thereof shall be deemed to be cancelled, suspended or
not renewed, as the case may be." It was contended on behalf of the
respondent that no tax could be levied under the Act unless the assessee has
his place of business 158 or storage of motor spirit within the State of Jammu
& Kashmir. It was pointed out that no retail dealer was permitted to carry
on business as a retail dealer of motor spirit unless he holds a license for
storage of petroleum under the State Petroleum Act. It is admitted that the
respondent had no storage depot or place of business within the State of Jammu
& Kashmir at the material time. It is also conceded that the respondent did
not hold any licence for storage of petrol within the State. Mr. Setalvad
therefore contended that the appellants were not authorised to levy sales-tax
under the provisions of the Act. We are unable to accept this contention as
correct. The charging section s. 3 authorises the Government to levy tax on
"all retail sales of motor spirit" at the rate of four annas for each
imperial gallon of motor spirit or at such other rate as the Government may
prescribe from time to time. The charging section does not require that for the
purpose of assessment of tax the assessee should have his place of business or
his storage depot within the State of Jammu & Kashmir. Nor is it a
requirement of the section that the assessee should hold a licence of a retail
dealer under the Act. The provisions in regard to licence contained in ss. 6
and 7 deal with the machinery of collection and it is not permissible, in our
opinion. to construe the language of s. 3 of the Act with reference to ss. 6
and 7 or to place any restriction on the scope and effect of the charge of tax
in the context of these sections. We may, in this context, refer to the
provisions of S. 10 of the Act which states "10.whoever contravene the providers
of section 6 shall be, punishable with fine which may extend to one thousand
rupees or to a sum double the amount of tax due in respect of the sale of any
motor spirit conducted by or on behalf of such person, whichever is greater."
It is evident from the section that a person who trades in petrol without
taking out a licence under s. 6 of the Act is liable to pay double the amount
of tax due from him. In other words. the requirement of s. 6 is only a matter
of machinery and does not affect the liability of the person who trades in
petrol to pay tax in accordance with the charging section. It follows therefore
that the respondent will be liable to pay sales-tax if it is shown that it has
made retail sales of motor spirit within the meaning of s. 3 of the Act. This
takes us to the question whether the transactions of sale between January 1,
1955 to September 6, 1955 were "retail sales of motor spirit" within
the meaning of S. 3 of the Act. As observed earlier, the procedure for supply
of petrol was that the officer in-charge of the Nandpur 159 farm placed indents
on the Pathankot depot of the respondent for supplies of specified quantities
of petrol to the farm.
On receipt of the indent the Pathankot depot
transported the petrol in its own tank-lorries to Nandpur within the State of
Jammu and Kashmir and decanted the petrol in its own underground tanks where it
was measured by means of dipping rods and approved by the indenting officer and
was then delivered to Nandpur farm. In this state of facts it was contended by
the Solicitor-General that the property in the petrol passed to Nandpur farm
inside the State of Jammu & Kashmir. It was submitted that the sales were,
therefore, liable to be taxed under s. 3 of the Act for the period from January
1, 1955 to September 6, 1955 when the ban was removed. On behalf of the respondent
Mr. Setalvad said that there was appropriation of the goods to the contract at
the bulk depot of the, respondent at Pathankot and therefore the property of
the goods passed to the Nandpur farm at Pathankot outside the State of Jammu
& Kashmir. No such argument appears to have been advanced on behalf of the
respondent before the High Court which decided the case on the assumption that
there was appropriation of the goods to the contract at Srinagar when the
petrol was transferred from the tank-lorries of the respondent for delivery to
Nandpur farm and measured by means of dipping rods and approved by the
indenting officer. The question as to passing of title of goods is essentially
a question of fact and we must deal with the present case on the same basis as
the High Court has done, viz., that there was passing of title inside the State
of Jammu & Kashmir. We accordingly hold that s. 3 of the Act applies to
transactions of sale of petrol made by the respondent for the period from
January 1, 1955 to September 6, 1955 and assessment of sales-tax made by the
taxing authorities for this period is legally valid.
It was lastly contended by the
Solicitor-General that the High Court was in error in taking the view that the
taxing authorities were not entitled to levy sales-tax for the period from
January 1, 1955 to September 6, 1955, because the assessment was one composite
whole relating to the entire period from January 1, 1955 to May, 1959, and the
assessment which was bad in part was infected throughout and must be treated as
invalid. In our opinion, the criticism of the Solicitor-General on this point
is well-founded and must be accepted as correct. It is true that there was one
order of assessment for the period from January 1, 1955 to May, 1959 but the assessment
can be easily split up and dissected and the items of sale can be separated and
taxed for different periods. In reading the conclusion that the entire
assessment was invalid the High Court has relied on the decision of the
Judicial Committee in Bennett & White (Calgary) Ltd. v. Municipal District
of Sugar City No. 5(1) in which Lord Reid observed as follows at page 816 of
the Report :
"When an assessment is not for an entire
sum, but for separate sums, dissected and earmarked each of them to a separate
assessable item, a court can sever the items and cut out one or more along with
the sum attributed to it, while affirming the residue. But where the assessment
consists of a single undivided sum in respect of the totality of property
treated as assessable, and when one component (not dismissible as "de
minimis") is on any view not assessable and wrongly included, it would
seem clear that such a procedure is barred, and the assessment is bad
wholly." But the principle has no application in the present case because
the sales-tax is imposed, in ultimate analysis, on receipts from individuals
sales or purchases of goods effected during the entire period and it is
possible to separate the assessment of the receipts derived from the sales for
the period from January 1, 1955 to September 6, 1955 and to allow the taxing
authorities to enforce the statute with respect to the sales taking place in
this period and also prevent them by grant of a writ from imposing the tax with
regard to sales for the exempted period. In other words, the assessment for the
period from January 1, 1955 to September 6, 1955 can be separated and dissected
from the assessment of the rest of the period and the High Court was in error
in holding that the assessment for the entire period was invalid in to. The
view that we have expressed is borne out by the decision of this Court in The
State of Bombay v. The United Motors (India) Ltd. (2).
For these reasons we allow this appeal in
part and order that the respondent should be granted a writ in the nature of
mandamus directing the appellants not to realise sales tax with regard to
transactions of sale between the period from September 7, 19 55 to May, 1959
but the respondent will not be entitled to any writ with regard to transactions
of sale between January 1, 1955 to September 6, 1955. The appeal is accordingly
allowed to this extent but the parties will bear their own costs.
Appeal allowed in part.
(1) [1951] A.C. 786.
(2) [1953] S.C.R. 1069 at p. 1097.
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