TIKA RAM & SONS LTD. ETC. versus THE COMMISSIONER OF SALES TAX U.P., LUCKNOW

Citation: [1968] 3 S.C.R. 512 · Decided: 22-03-1968 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Judgment (excerpt)

TIKA RAM & SONS LTD •. ETC. 
v. 
11IE COMMISSIONER OF SALES TAX U.P., LUCKNOW 
March 22, 1968 
[I. C. SHAH, V. RAMASWAMI AND G. K. MITTER, JI.) 
U.P. Stiles Tax Act (15 of 1948) ar amended by Act 8 of 1954, ss 
2(h), Explanc·tion II (ii) and II-Scope of Explanation-If ultra."'-
When Commiss/Qner has right to ask for reference to High Co11rt-Jwil-
diction of Revisin11 Authorit,v to refer and of High Court to ~ec/de conlti-
tutional validity of provisions of Act. 
For the period !st April 1948 to 25th January 1950, goods (oil) were 
manufactured o'r produced in the Stat<> of Uttar Pradesh by the appelllllla 
who were carrying on business in the . State in those goods. 
Part of the 
good< were sent to their· depols outside the State before any contract of. 
sale in respect of them was made, and thereafter, sold to various parti ... 
'Those outside sales were also assessed to sales tax under the U.P. s.leo 
'tax Act, 1948. The matter was taken to the Appellate Authority ud 
thereafter to the Revising Authority constituted UDder the Act. Though 
the revision was filed before !st April 1954 when the Amending Act of 
1954 came into force, it was disposed of in 1957, in favour of the appel-
lants. On the application of the Commissioner of Sales Tax two questiODS 
of law were referred to the High Court one of which related to the oon-
stitutional validity of Explanation II (ii) to s, 2(h) of the Act, according 
to which, the sale of any goods 'which are produced or manufactured in 
U.P. by the producer or manufacture thereof, shall, wherever the c!eli...Y 
or contract of sale is made, be deemed for the pul'poses of this Act to 
liave taken place in U.P.' The High Court decided both questions in 
favour of the Commissioner. 
In appeal to this Court it was contended that : (I) For attractin& tu 
liability the Explanation requires that the goods should have been mann-
factured or produced in U.P. after the contract of sale was entered inlD; 
(2) the Explanation was ultra vires as being outside legislative compe-
tence, because, sales tax legislation was concerned with tax on the trans-
action of a completed sale, and a Stare could not impoae sales tax on tbe 
baois that one of the component parts of sale constitutes sufficient nexJU 
between the taxing stale and the sale; (3) the Revising Authority could 
not rdfer to the High Court and the High Court could not decide on such 
ref«ence, any question regarding the constitutional validity of the Expla-
nation; and ( 4) the Revising Authority could not make a reference to 
tho High Court under s. 11, at the instance of the Commissioner, as the 
Commissioner had no power to apply when the revision was filed before 
the Revising Authority but was empowered to do so only by the amending 
ACt of 1954 which had no retrospective operation. 
HELD : (I) For the application of the Explanation and attracting tax 
liability, it is only necessary that the goods must have been sold by the 
person who produced or manufactured them, but there is no requirement 
that he must have manufactured or produced them after the contract of 
sale and not before. (518 CJ 
· 
(2) To ccinfer jurisdiction upon the State Legislature to impose sales 
tax, it is sufficient if there is a proper territorial nexus or connection 
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TIKA RAM & SONS v. C.S.T, (Ramaswami, I.) 
513 
between the taxing authority and the transaction sought to be taxed. and, 
the fact that goods were manufactured in the State constitutes a real and 
pertinent nexus. [519 CJ 
The Tata Iron and Steel Co. Ltd. v. State of Bi/Jar, [1958] S.C.R. 1355 
and Bharat Sugar Mill.< v. The Staie of Bi/Jar, 11 S.T.C, 793, followed. 
(3) The appellants did not challenge the jurisdiction of the High 
Court to examine the constitutional validity of the Explanation; nor was 
any such challenge made in the special leave petition to this Coun OI' in 
the statement of case. On the contrary, the appellants contended in the 
revision before the Revising Authority that the Explanation was 
ultra 
vires. Therefore. having voluntarily submitted to the jurisdiction of the 
Revising Authority it is not open to the appellants to challenge the juris-
diction of the Revising Authority to refer the question of the constitu-
tional validity of the Explanation to the High Coun, or of the High 
Court to decide it [522 E-0] 
( 4) The Commissioner had the power to apply for a referenoe on the 
date he applied for a reference, a

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