STATE OF JAMMU & KASHMIR AND OTHERS versus CALTEX INDIA (LTD.)

Citation: [1966] 3 S.C.R. 149 · Decided: 17-12-1965 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Case Partly allowed

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Judgment (excerpt)

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A 
STATE OF JAMMU & KASHMIR AND OTHERS: 
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v. 
CAI,TEX INDIA (LTD.) 
December 17, 1965 
[P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, 
M. HIDAYATULLAH, V. RAMASWAMI, AND 
P. SATYANARAYANA RAJU, JJ.] 
Sales Tax-Petrol sent under 
contract from 
Punjab to Jammu & 
Kashmir-Sa/es whether inter-State in 
character-Chargeability 
under 
Jammu & Kashmir Motor Spirit (Taxation of Sales) Act 2005, '· 3-
Sales Tax Laws Validation Act, 1956, effect of-Constitution of India 
Art. 286(2). 
Petrol and allied products were supplied by the respondent company 
from its depot in Punjab to the State Mechamzed 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 challeng-
ed 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 impooed by Art. 
286 ( 2) as interpreted by this Court in the Bengal Immunity c..,e, as also 
the provisions of the Central Sales Tax Act. 1956 passed by Parliament 
after the amendment of Art. 286 by the Constituticn 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 -:ase 
for a sale to be 
an· 
inter-State sale that ( 1) there should be a sale of goods and (2) 
the 
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goods must be transported under the contract oi 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] 
H 
Bengal Immunity Co. Ltd. v. State of Bihar, [1955] 2 S.C.R. 603, re-
ferred to. 
(ii) The last mentioned Act however validated the State Jaws 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 Fl 
150 
SUPREME COURT 
REPORTS 
[1966) 3 S.C.R. 
. 
(iii) The f_act th.at the respondent had no place of business or stora~c 
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in Ja.mmu & Ka()hm1r \\';i."' not material hecausc it \l.'as not a condition for 
taxation under the Jammu & Kashmir ti.fotor Spirit 
(Taxation of S<ile::.) 
Act that there ~hould he such a place of bu..;incss or . ..ioragc. 
Scc1ion 3 
~f the Act purports 10. tax. all •·retail ~ales". Nor 
i'i the holJing of a 
' 
hccnce under ~. 6 \\·hich 1s a m3ch:ncry 
section only, a condition of 
liabilliy lo pa~ "i,dcs-1.t\ u11dcr '.he ;\ct 
f J 'iS C'-DJ 
(iv) ThL~ Division Bench \\'JS ,,,.rl1ng \\'hen it held 1h:it becaut;.c there 
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was one a'>sc..;sment order for the \\·hole 
period from Janu;1n.· 19.<i) 10 
May 1959. the \i.•holc of :1 \Vas vitiated. 
Salc:-1-tax is in ullimaie analysis 
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impo .• cd on receipt~ fron1 inJi\"idu;ll 
sale~ or purchase~ of goodc:. and it 
v.·as possihlc to separate 1hc assessment of rcccipls derived from the ~ales 
for rhc period up 10 Seprcmber 6. 1955 and 10 allow the !axing aulh<>-
rities to enforce the statuh: \\'ith respect to 1he sales taking plac·~ during 
this period and also prevent them by grant of a \vrit from in1po..;ing the 
lax \\'i!h reg:1trd to 
:o.1tle~ for th-.. • excn1ptcd pi.:rlo<l. [159 G-160 EJ 
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State of Bo111hay '" t'niu'd Afotor.,· lndia Ltd. r1953l S.C.R. 
1069, 
relied on. 
8tnne11 & JVliire (Calgary) Ltd. v. ,\f11nf(ipal Districr of S11gar Cit.\' 
No. 5. [ 1951] A.C. 786. disringuished. 
CIVIL APPELLATE JURISDICTIOS : Civil Appeal No. 864 of 
D 
1964. 
Appeal from the judgment and order, dated July 10, 1 %2 of 
Ihe Jammu & Kashmir High Court in L. P. Appeal No. 4 of 1962. 
S. V. G11ptc, Solicitor-Genera!, Raja Jaswanr Singh, Adrn-
cat

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