Report No. 30
117. Amendment only remedy.-If, however, it is considered that the wording of the section as it stands today was very much present in the minds of the learned Judges and necessarily formed the basis of their judgment in Khosla's case, then there would be no need to approach the Supreme Court for such reconsideration. The only remedy would, then be to effect an amendment of the section in the manner indicated above.
Note of Dissent by Shri Rama Prasad Mookerjee
After anxious and mature consideration I have arrived at the conclusion that the decision in Khosla's case does not, strictly speaking, either follow or is consistent with the principles laid down by the Supreme Court in the two Travancore cases, [1952 SCR 1112 and (1954) SCR 53.-principles which had been accepted by all concerned and were intended to be incorporated in the Central Sales Tax Act.
I cannot, therefore, agree with the majority view on the principal question as to whether Khosla's case goes beyond and is inconsistent with the two Travancore cases.
It will, however, not be necessary for me to enter into a detailed discussion as I am in general agreement with the reason assigned by Shri K. G. Datar in his exhaustive Note of Dissent.
The Taxation Enquiry Commission had recommended that Parliament should have power to tax inter-State transactions and that it should be empowered by law to determine the principles when a sale or purchase of goods took place in the course of inter-State trade or commerce and also when a sale or purchase took place in the course of import into or export out of the territory of India or outside a particular State.
In pursuance thereof the Constitution (Tenth Amendment) Bill was introduced in Parliament. When that Bill was pending the Law Commission had been invited to offer its suggestions for formulating principles as aforesaid.
For the formulation of the principles to determine when a sale or purchase takes place in the course of import or export, the Law Commission felt no difficulty.
The Supreme Court had before this considered in the two Travancore cases, [1952 SCR 1112 and (1954) SCR 53]-Article 286(1)(b) of the Constitution as it then stood. The Taxation Enquiry Commission had observed that the interpretation so given by the Supreme Court was "perfectly satisfactory so far as foreign trade is concerned". The Law Commission also accepted the principles so laid down by the Supreme Court.
The Law Commission also considered how far such principles should be applicable in the case of inter-State Sales or Purchases and of Sales or Purchases outside a State.
The Law Commission, thereafter, enunciated the principles based on the Supreme Court decisions in the two Travancore cases.
It should be here noticed that the draft of the proposed Parliamentary Legislation had neither been placed before nor considered by the Law Commission1. Further, the Law Commission made it clear in the Report that "the principles enunciated by us in the foregoing paragraphs do not purport to be a draft of the sections of the proposed Bill
1. 1. Certain points relating to the Bill were forwarded to the Law Commission on 8th October, 1956 and were considered by the Commission on 20th October, 1956. But they did not concern import sales.-P.M.B.".
In spite of such observations the language used in the Commission's Report was copied verbatim in the subsequent Bill.
The Legislature while enacting section 5 of the Central Sales Tax Act purports to accept, as recommended by the Law Commission, the principles of law as enunciated by the Supreme Court in the said two Travancore cases. The language of section 5 of the Central Sales Tax Act should not be, as observed by Sri Datar, what it is.
In order to put the intention beyond doubt the section should be amended. As observed by Sri Data.-
"The section should not be what it is today. At present the section reads if the sale or purchase occasions such export and "if the sale or purchase occasions such import.". If only the Travancore cases were to be followed and accepted, it would be only the sale occasioning the export and only the purchase occasioning the import".
My view is that immediate steps should be taken to introduce the amendment. It is not necessary for "the Government to approach the Supreme Court and persuade it to reconsider the present decision in some other matter where the same questions may again come up before it for decision".
Rama Prasad Mookerjee.