LexMESSRS ASHOK LEYLAND LTD. versus THE STATE OF MADRAS
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JI' • • .. 1 S.C.R. SUPREME COURT REPORTS 607 MESSRS ASHOK LEYLAND LTD. v. THE STATE OF MADRAS (S. K. DAS, J. L. KAPUR, M. HIDAYATULLAH, J. C. SHAH and T. L. VENKATARAMA AIYAR, JJ.) Sales Tax-Inter-State sales before the enactment of the Sales Tax Laws Validation Act-Such sales taxed on the footing of sales inside the State-Sales found to be inter-State sales-Validity of assessment after the passing of that Act-Madras General Sales Tax Act, I939 (Mad. 9 of I939), ss. 2 (h), 22-Sales Tax Laws Valida- tion Act, I956 (7 of I956), s. 2-Constitution of l ndia, Art. 286. The appellant firm had its factory in the State of Madras, where it manufactnred, assembled and sold motor vehicles, spare parts and accessories. For the assessment year 1952-53, the sales tax authority computed the appellant's taxable turnover of sales for that year excluding a sum which represented the value of vehicles etc., sold outside the State of Madras, but on revision, the taxable turnover was increased by including a sum which related to certain transactions with dealers outside the State of Madras on the ground that the sales covered thereby were made within the State of Madras and were therefore liable to tax under the Madras General Sales Tax Act, 1939. The appellant claimed that these sales were in the course of inter-State trade and commerce and not liable to sales tax by reason of the provi- sions of Art. 286(2) of the Constitution of India. The matter was taken up to the Supreme Court and in the meantime, the Sales Tax Laws Validation Act, 1956, had been passed by Parlia- ment. The question was whether the transactions in question, even if they were considered as having taken place in the course of inter-State trade, came within the protection of the Validation Act of 1956 and, therefore, the assessment in the present case was valid. The appellant contended (1) that the Validation Act was applicable only when the law of the State imposed, in express terms. a tax on the sale or purchase of any goods in the course of inter-State trade or commerce, and (2) that the new s. 22 inserted in the Madras General Sales Tax Act, 1939, by Madras Act r of 1957, which operated retrospectively from January 26, 1950, talked of sales in which the goods were deli- vered for consumption in the State of Madras, and, therefore, the Validation Act did not operate on sales of an inter-State character other than such sales. Held: (1) that the effect of the Sales Tax Laws Validation Act, 1956, was to liberate the State laws from the fetter placed on them by Art. 286(2) of the Constitution of India and enable such laws to operate on their own terms. Consequently, the transactions in question were liable to tax under the provisions March a8, Messrs Ashok Leyland Ltd. v. The State of Madras 608 SUPREME COURT REPORTS [1962) of the Madras General Sales Tax Act, 1939, and it was not necessary to provide in that Act in express terms that it was taxing sales in the course of the inter-State trade. M. P. V. Sundararamier & Co. v. The State of Andhra Pra- desh and Another, [1958] S.C.R. 1422, relied on. (2) that the transactions in question came within the defini- tion of sale in s. z(h) of the Madras General Sales Tax Act, 1939, and the power to tax conferred on the State by the charging section, s. 3, was not affected by s. 22 in view of sub-s. (2) therein. CrvIL APPELLATE JURISDICTION: Civil Appeal No. 446 of 1958. Appeal from the judgment and order dated April 18, 1956, of the High Court of Judicature at Madras in Tax Revision Case No. 93 of 1955. M. G. Setalvad, Attorney-General of India, S. Swami- nathan and K. L. Mehta, for the appellants. V. K. T. Chari, Advocate-General of Madras, M. M. Ismail and T. M. Sen, for the respondent. N. A. Palkhivala, J. B. Dadachanji, S. N. Andley, Rameshwar Nath and P. L. Vohra, for the Intervener (Tata Loco & Engineering Co. Ltd., Bombay). 1961. March 28. The Judgment of the Court was delivered by . " • s. K. Das J. S. K. DAS, J.-This is an appeal on a certificate granted by the High Court of Madras. The firm of Messrs. Ashok Leyland Ltd., Ennore, is the appellant before us. For brevity and convenience, we shall hereinafter refer to the firm as the assessee. The State of Madras through the Commercial Tax Officer, Saidapet, is the respondent before us. · The assessee is a firm with its factory at Ennore in the State of Madras, where it manufactu
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