THE SALES TAX OFFICER, PILIBHIT versus MESSRS. BUDH PRAKASH JAI PRAKASH.

Citation: [1955] 1 S.C.R. 243 · Decided: 03-05-1954 · Supreme Court of India · Bench: MEHR CHAND MAHAJAN · Disposal: Dismissed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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$.C.R. 
SUPREME COURT REPORTS 
THE SALES TAX OFFIC_ER, PILIBHIT 
v. 
243 
MESSRS. BUDH PRAKASH JAI PRAKASH. 
[MEHR 
CHAND 
MAHAJAN C.J., MuKHERJEA, 
VIVIAN 
> 
BosE, BHAGWATI and VENKATARAMA AYYAR, JJ] 
Government 
of India Act, 1935, Schedule VII, List II, entry 
'f 
No. 48-Sale of goods-Meaning of-U. P. Sales Tax Act (XV of 
i. 
1948), s. 2(h )-Explanation III to s. 2(h) and s. 3B-Ultra vires 
Provincial Legislature. 
Held, that there is a well-defined and well-established 
distinc-
tion between a .sale and an agreement to sell. 
The words "Taxes on the sale of goods" in entry No. 48, List 
Ii, Schedule VII of the Government of 
India 
Act, 1935, confer 
pbwer 
on 
the Provincial Legislature to impose a tax only when 
there has been 
a completed sale and 
not when there is only an 
J 
agreement to sell. 
\ 
Accordingly section 2(h) of the Uttar Pradesh Sales Tax Act, 
XV of 1948, enlarging the definition of "sale" so as to include for-
ward contracts must, to that extent, be declared ultra vires. 
_ For the same reason Explanation III to 
section 2 ( h) 
which 
provides that forward 
contracts 
"shall be 
deemed 
to have been 
completed on the date 
originally 
agreed 
upon for delivery" and 
section 3B of the Act must also be held to be ultra vires. 
Colley v. Overseas Exporters ((1921] 3 K. B. 302 at 309, 310 
.....;.. 
referred to. 
CrvrL 
APPELLATE 
JuRrsmcTION : 
Civil 
Appeal 
No. 23 of 1954. 
Appeal under article 133(1) of the Constitution of 
India from the Judgment and Decree dated the 
28th 
February, 1952, of the High Court of Judicature at 
Allahabad in Writ Application No. 7297 of 1951. 
C. P. Lal for the appellant. 
N. C. Chatterjee (Radhey Lal Aggarwal., with him) 
for the respondent. 
1954. May 3. The Judgment of the Court was 
<lelivered by 
~: 
VENKATARAMA AYYAR J.-This is 
an appeal by the 
Sales Tax Officer, Pilibhit, against the judgment of 
the High Court of Allahabad granting firstly, a writ of 
certiorari 
q,uashing 
certain 
assessment 
orders 
made 
;igainst the respondent, and secondly, a writ of pro:-
hibition in respect 
of 
certain · other - proceedings 
for 
r954 
May3: 
1954 
Tht Salu Ta." 
Offictr, Pllibhit 
v. 
Missrs. Budh 
Prakash 
Jai Pralcruh. 
V enlcatm-ama 
Ayyar J. 
244 
SUPREME COURT REPORTS 
(19551 
assessment of tax under the provisions of the Uttar 
Pradesh Sales Tax Act (Act XV of 1948)~ The res-
pondent is a firm doing business in forward contracts. 
and was 
assessed in respect of such contracts to a tax 
of Rs. 
1,082-8-0 for 
the year 1948-49 by an order 
dated 27th February, 1950, 
Exhibit A, and 
to a tax 
of Rs. 7,369 for the year 1949-1950 by an order dated 
23rd May, 1950, Exhibit B. For the period, 1st April. 
1950, . to 31st January, 
1951, 
the respondent paid a 
sum of Rs. 845-4-0 as tax. Assessment proceedings 
were also started by the appellant in respect of certain 
forward contracts relating to gur and peas. The res-
pondent challenged the legality of these proceedings 
and of the assessment orders on the ground that the: 
Act in so far as it imposed a tax on forward contracts 
was ultra vires the powers of the Provincial Legislature •. 
The learned Judges agreed with this contention, and 
7 
issued a writ of certiorari quashing the orders of assess-
ment, Exhibits A and B, and a writ of prohibition in 
respect of the proceedings for assessment of tax on· 
forward contracts in gur and peas. The matter now 
comes before us in appeal under a certificate 
of the 
High Court under article 133(1) of the Constitution. 
Under the Government of India Act, 1935, the Pro-
vincial Legislature derived its power to impose a tax 
on the sale of goods under entry 48 in List II of the 
Seventh 
Schedule, 
and the Uttar Pradesh Sales 
Tax 
Act, XV of 1948, was enacted in exercise of this power. 
Section Z(h) of the Act defines "sale" as follows : 
"Sale" 
means 
within its 
grammatical 
vanat1ons 
\. 
and cognate expressions, any 
transfer 
of property 
in 
goods for cash or deferred payment or other valuable 
consideration and includes forward contracts but does not 
include a mortgage, hypothecation, charge or pledge." 
-~. 
It is the extended definition of sale as including 
forward contracts in this section that is relied on as 
conferring authority on the appellant to make the 
orders in Exhibits A and B. The point for decision in A
this appeal is whether the power to impose a tax on 
the sale of goods under entry 48 includes a power ta · 
impose a tax on forwa

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