MOHANLAL HARGOVINDDAS versus STATE OF MADHYA PRADESH & ORS.

Citation: [1967] 2 S.C.R. 88 · Decided: 15-11-1966 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

MOHANLAL HARGOVINDDAS 
'· 
STATE OF MADHYA PRADESH & ORS. 
November 15, 1966 
TK. SuBBA RAo, C.J., J.C. SHAH, S.M. S1KRI, V. RAMASWAMJ AND 
C.A. VAJDIALII>GAM, JJ.] 
Central Provinces and Berar Sales Tax Act (21 of 1947) as amended 
by Madhya Pradesh Sales Tux Act (20 of 1953), ss. 27A and 4(6)-Goods 
declared and mentioned in registration certificatt as meant for use as raw 
material for manufac;•re of goods for sale, delivery and consumption in 
Madhya Pradtsh actually used for export out oj Sta1--Whether liabl1 to 
purchase tax-EOect of Salts Tax Laws Validalion Act. 1956. 
The appellant was a firm i'I Madhya Pradesh and wa.s 1egistered u. a 
'dealer' under the Central Provinces and Berar Sales Tax Act, 1947 u 
J1IDenJed by the Madhya Piadesil Sales Tax (Amendment) 
Act, 1953. 
Durir.g 1951 and 1955 the firm imported tobacco from the State of 
Bombay on the declaration that it would be used a.s raw material in the 
manufac1'1rc of goods for sale by actual delivery in Madhya 
Pradesh 
for consumption in that State. Tobacco was mentioned as one of the raw 
materials in the firm's registration certificate issued under s. 8 of the Act. 
However the goods manufactured by the firm were utilised for a dilferent 
purposes i.e. for expon outside the State. 
Under s. 4(6) of the Act when 
goods were used for a different purpose other than the one declared and 
mentioned in the registration certificate the price paid by the dealer for 
such goeds would be included in his taxable turnover. However in a 
writ petition before the High Court the appellant finn contended 
that 
the goods exempt as inter..Siate sales were exempted from levy of sales 
tax under s. 27A of the Act which incorporated the bans in Art. 286 of 
the Constitution. The writ petition 
wa.s allowed 
in September 1955. 
However in 1956 the Sales Tax Validation Ordinance and thereafter the 
Sales Tax Laws Validation Act were passed. Accordingly the Sales Tax 
Authorities issued notices to the appellant firm proposing to levy purebaae 
tax on the tobacco purchased by it from non-resident dealers dilring the 
period November 7, 1953 to September 5; 1955. The appellant there-
upon filed another writ petition before the High Court challenging 
the 
levy but it was dismissed. 
With certificate 
tlie appellant came to this 
Court. 
It was urged on behalf of the appellant that (I) before advantage could 
be taken of the Sales Tax Laws Validation Act. 1956 there had to be in 
-existence a State Act imposing tax on inter.State sales and 1. 27 A of the 
Act imposed no such tax, (ii) 1. 4(6) bad no applicatJon because tobacco 
wa.s not spccitled in the certificate of registration granted to tho appellant 
"as Intended for USc by it as raw material in the manufacture of any goods 
for aale by actual delivery in Madhya Pradesh for the purpose of consump-
tion in that State. tt 
HEW : (i) Read with the third explanatlon to s. '2(g) of the Act 
s. 27-A had a positive and not mettly a negative conlenL 
It gave power to 
the State of Madhya Pradesh to impose a tax OD a transaction falling 
within its purview. It was therefore a pre.aisting law validated by the 
Sales Tax Laws Validation Act, 
1956 and the appellant could be taxed 
UDcler it in ~ 
of inter-Sim sales only duriD8 the relevant period. 
t95 H; 96 0-H] 
A 
B 
c 
D 
E 
F 
G 
R 
A 
B 
c 
MOHANLAL v. M. P. STATE (Ramaswami, 1.) 
89 
M.P.V. Sundararamier & Co. v. The State of Andhra Pradesh, (19581 
S.C.R. 1422, relied on. 
(ii) The declaration made by the appellant to the Bombay dealers was 
for the purpose of obtaining exemption from purchase tax. The same 
was the purpose of the mention of tobacco in the registration certificate 
under s. 8. If the language of the cenificate were construed in the coniext 
of the s. 8. of the Act (as amended) and along with the declaration of 
the appellant, it was manifest that the appellant was liable to JJay tax on 
tobacco imponed from Bombay dealers an.d that the requirements cf 
1. 4(6) were satisfied. The technical omission of the Sales Tax Officer to 
make a specific entry in the cenificate would not confer any benefit on the 
appellant when there was other incontrovertible evidence to show that the 
appellant did purchase the goods specified 
in. the certificate 
rui 
raw 
materials in the manufacture of any goods for the purpose of sale by 
actual delivery ;~ Madhya Pradesh for the purpose of consumption in that 
State. E98 F-H; 99 A] 
Modi Spinning & Weaving Mills Co. Ltd. v

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