LexSTATE TRADING CORPORATION OF INDIA LTD. versus STATE OF MYSORE
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1962
792
SDPREME COURT REPORTS (1963)
STATE TRADING CORPORATI0:-1
OF INDIA LTD.
v.
STATE OF MYSORE
( S. K. Das, J. L. KAPUR, A. IC 8.ARKAR, M.
II:cDAY.ATULLAH and RAGHUBAR DAYAL, JJ.)
Sales Tax-Supply matie to purchasers within the State
}rom factories outside the State-If inter-State aale-Oentral
Sales Tax Act, 1956(74 of 1956), s.3-0onstitution of Intiia,
aa amentkti by the Oonslitution (Sixth Amendment) Act, 195~
Arta.286(2;, 269(1)(g), Entrg 92A of List I, 19(1)(/), 31.
Clause (I} of Art. 269 of the Constitution as amended by
the Constitution (Sixth Amendment) Act, 1956, which came
into force
on September II, 1956, provided that "The
following. • . . . taxes shall be levied and collected by the
Government of India ...•.. (g} taxes on the sale ...... of
goods other than newspapers, where such sale .... takes
place in the course of inter-State trade ...... "
Clause ( 3)
of that article provided that "Parliament may by law formu-
late principles for determining whon a .•ale ...... takes place
in the course of inter-State trade .... "
Bys. 3 of the Central
Sales Tax Act, passed by Parliament on December 21, 1956,
it was provided that "A sale ..•... shall be deemed to take
plare in the course of inter-State trade ...... if the sale ..... .
(a} occasions the movement of goods from one State to
another."
In 1957-58 the C. Company made various sales of cement
which were supplied from factories outside the State of Mysore
to purchasers within that State. The State of Mysore levied
tax on these sales under two Sales Tax Acts passed by the
Mysore legislature. The C. Company applied under Art.32
of the Constitution to quash the assessment orders on the
ground that Mysore State had no power to tax the sales as
they had taken place in the course of inter-State trade.
Held, that a sale occasions the movement of goods from
one State to another within s.3(a} of the Central Sales Tax
Act when the movement is the result of a covenant or incident
of the contract of sale.
Tata Iron and Stm Co. Ltd. v. S. R. Sarkar, [1961],
l S.C.R •. 379, followed,
3S.C.R.
SUPREME COURT REPORTS
793
~- ,
As the sales were made under permits issued by the
Government a11d on the terms contained in them, and as the
permits provided that the supply had to be made from
factories outside State of Mysore the contracts of sale must
be deemed to have contained a covenant that the goods would
be supplied in Mysore from a place situate outside its borders.
The Sales were, therefore, inter-State sales within s.3( a) of
the Central Sales Tax Act which a State could not tax in view
» , of Art. 2-69 of the Constitution.
>•
-The taxing officer had no jurisdiction t'l tax inter-State
~ales in view of the Constitutional prohibition and he could
not give himself jurisdiction to do so by deciding a collateral
fact wrongly. The petitions are, therefore, not incompetent
under the principle laid down in Ujjam Bai,'s case.
Ujjam Bai v. The State of Uttar Pradesh [1963]1S.C.R.778
held inapplicable.
ORIGIN.AL Ju&ISDIOTION: Petitions Nos. 65
and 66 of 1960.
(Under Article 32 of the Constitution of India
for enforcement of Fundamental Rights.)
R. J. Kolah, J. B. Dadachanji, 0. 0. Mathur
and Ravinder Narain for the Petitioners.
0. K. Daphtary, Solicitor General of India,
R. Gopalakrishnan and P. D. Memon
for the
respondents.
1962. August 28. The Judgement of the court
was delivered by
SaRK.AR, J.-These are two
petitions under
Art. 32 of the Constitution asking for writs to quash
certain assessment orders impossing sales tax and far
c?n11eqential reliefs preventing the levy and 001lec-
t10n of that tax. The petitioners allege that the
assessment orders are wholly void and therefore
1r' affect their fundamental rights under Art. 19 (I) (f)
and Art. 31.
Slate Trading
Co-porali°" of
lnd•a L.1d.
v.
S101, of M;fio•e
1961
Slal1 Trud1ng
Co1po1 otion of
India Ltd.
v.
State of Mysore
Sar~ar J,
794
SUPREME COURT REPORTS [1963)
There are two petitioners in eaoh oasA, the first
.. ,,.\
being the State Trading Corporation of India Ltd.
and the second, the {foment Marketing Company of
India Ltd. There are also two respondents in each
petition, the first of whom is the State of Mysore
which
through one of its officers, the second
respondent, passed the assessment orders imposing
the tax.
·'"
The impughed assessment orders were made on
the Marketing Company in reapect of certain sales
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