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Report No. 30

25. 1956 Act linked up with the two Travancore cases (Tata Iron Case).-It may be noted, that when the Central Sales Tax Act came to be enacted, the legislature had before it the Report of the Law Commission, and it eventually adopted in section 5 the same language in which the Law Commission had expressed its recommendation.

Thus the history of this legislative process which preceded the enactment of the Central Sales Tax Act also leaves us in no doubt that the principles laid down in the earlier decisions of the Supreme Court were themselves enacted as the principles for determining when a sale or purchase of goods takes place in the course of the import of the goods into, or export of the goods out of, the territory of India.

Indeed, I may be permitted to say that sections 3 and 5 of the Central Sales Tax Act, as we see them today, are in one sense so inextricably linked up with the previous and authoritative decisions of the Supreme Court, particularly on the subjects dealt with in those sections, that it would be difficult correctly to construe them without knowing and following the guiding principles already enunciated in those decisions. I am aware that in Tata Iron and Steel Co. Ltd. v. S. R. Sarkar, [AIR 1961 SC 65: (1961) 1 SCR 379], the Supreme Court made the following observations (para. 17 SIR):-

'Cases of this Court viz. State of Travancore-Cochin v. Bombay Co. Ltd., Alleppy, (1953) 3 SCR 1112: AIR 1952 SC 366 and State of Travancore-Cochin v. Shanmugha Vilas Cashew Nut Factory, 1954 SCR 53: AIR 1953 SC 333 have no bearing on the interpretation of section 3(a) and (b). In those cases the meaning of the expressions "in the course of import and export" and "in the course of inter-State trade or commerce" used in Article 286 fell to be determined. The Constitution does not define these expressions.

The Parliament has in the Central Sales Tax Act, 1956 sought to define by section 3 when a sale or purchase of goods is said to take place in the inter-State trade or commerce and by section 5 when a sale or purchase is said to take place in the course of import or export. In interpreting these definition clauses, it would be inappropriate to requisition in aid the observation made in ascertaining the true nature and incidents without the assistance of any definition clause of."sales in the course of imports" and ''sales in the course of inter-State trade or commerce" used in Article 286.'.

26. I have already stated1 Paras. 21 and 23 that a different view was expressed by the Supreme Court in its later decisions on the relevancy of the earlier decisions in interpreting sections 3 and 5 of the Central Sales Tax Act, 1956. Besides, in the case of Tata Iron and Steel Co. Ltd. v. S.R. Sarkar the Supreme Court even without the aid of the earlier decisions came to construe the provisions of section 3 in the same way in which the expression "where such sale or purchase takes place in the course of inter-State trade or commerce" occurring in Article 286 (as it stood before the amendment) had been construed in the earlier decisions.

That a fresh mind was brought to bear on the interpretation of section 3 without any reference to earlier decisions on the subject and yet the same conclusion was arrived at, only reinforces the correctness and the universality of the propositions laid down in the previous decisions.

Certain expressions were used (e.g., "sales and purchases which themselves occasion the export or import of the goods, as the case may be") in the previous decisions for elucidating when a sale or purchase took place in the course of export or import or in the course of inter-State trade or commerce, and if the same expressions have now been used in sections 3 and 5 of the Central Sales Tax Act, it seems to me that in interpreting these sections, we have necessarily to go to the earlier decisions and see how the expressions now codified into the sections were used and explained in those decisions.

In fact, even assuming that there were no such observations as we find in the cases of Cement Marketing Co. v. State of Mysore (AIR 1963 SC 980) and Ben Gorm Nilgiri Plantations v. Sales Tax Officer (AIR 1964 SC 1752) on the relevancy of the earlier decisions, the Supreme Court could not but have referred to, and approved of and followed the earlier decisions in interpreting sections 3 and 5 if only because the expressions used in the sections were the identical expressions used and explained in the earlier decisions.

If the Parliament in the exercise of its power conferred on it by the Constitution formulated principles for determining when a sale or purchase of goods took place in the course of import or export or in the course of inter-State trade or commerce, it seems to me that the key to interpret the principles so formulated is afforded by the principles already laid down by the Supreme Court almost in the same language.

1. Paras. 21 and 23.



Section 5 of the Central Sales Tax Act, 1956 - Taxation by the States of Sales in the Course of Import Back




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