VRAJLAL MANILAL AND CO. AND ANOTHER versus STATE OF MADHYA PRADESH AND ANOTHER

Citation: [1986] 2 S.C.R. 98 · Decided: 02-04-1986 · Supreme Court of India · Bench: A.P. SEN · Disposal: Dismissed

Cited by 1 judgment(s) · cites 6 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
98 
VRAJLAL MANII.AL AND 00. AND AliOTllER 
v. 
STATE OF MAiJ!IYA PRADESH AND AliOTllER 
APRIL 2, 1986 
[A.P. SEN AND D.P. MADON, JJ.] 
Madhya Pradesh General Sales Tax Act 1958/Madhya Pradesh .J<, 
General Sales Tax (Amendment) Act, 1968 
c 
Section 8(1) - Effect of Amending 
Act 
1968 
-
Tendu 
"I
leaves treated different from 'raw materials' - Increase in ) 
rate of tax - Whether within legislative competence of State - ~­
Whether violates Articles 14, 19(l)(g), 301 
and 
304 of 
Constitution. 
The Madhya Pradesh General Sales Tax Act, 1958 came into 
D 
force on April 1, 1959 repealing all the earlier sales tax 
laws in force in the State. With effect from that date tho! 
Central Government or a State Government or any of their 
departments or offices which buy, sell, supply or distributo! 
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goods, 
directly 
or 
otherwise, 
for 
cash 
or 
other 
considerations, is to be deemed to be a 'dealer' for th<! • 
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purposes of the Act irrespective of the fact whether such 
purchase, sale, supply or distribution of goods is in the 
course of business or not. 
F 
•
By the Madhya Pradesh General Sales Tax (Amendment) Act 
1968, which came into force from April 15, 1968 sub-s. (1) of ! 
s. 8 of the M.P. Sales Tax Act was substituted and tendu~ 
leaves ceased to be raw material for the purposes of s. 8 and 
. 
" 
consequently became exigible to tax at the rate of 7% under 
s.6 read with residuary Entry No.l in Part VI of Schedule II. 
By s. 10 of the Madhya Pradesh General Sales Tax 
G 
(Amendment 
and Validation) Act, 
1971 
certain amendments, 
including the amendments made by clause (i) of s.2, were 
deemed to have formed part of the M. P. Sales Tax Act from the 
I' 
date of its co11111encement. A new sub-cl. (i) was substituted " 
for the original sub-cl. (i) and a further Explanation II was 
inserted in cl. (d) of s.2 with retrospective effect from 
H 
April 1, 1959. By the 1971 Act sub-s. (1) of s.8 was again 
substituted and a new sub-s. (3) was inserted in s.8, and they 
VRAJLAL MANILAL v. STATE 
99 
-""""-. C8Jl8 into force on May 6, 1971. With effect froa that date the 
proVisions of s.8 ceased to a~ply to sales of any goods 111lde 
by the Forest Depart11ent of the State Government or any of the 
offices under that Department, but where goods were purchased 
by a registered dealer from the Forest Department or any of 
the of fices of that Department and used by him as a raw 
material for the manufacture of other goods for sale within 
~the State of Madhya Pradesh or in the course of inter-State 
trade or co.-erce or in course of export out of the territory 
of India such dealer became entitled to a set-off of an amount 
• 
equal to the difference between the tax payable at the full 
; rate on such goods as mentioned in Schedule II and the tax 
-,.J payable on raw material at the rate of 2%. Purchases of Tendu 
· leaves by the registered dealers f roa the Forest Department of 
.._the State Government or any of the offices under that 
' Department did not, however, qualify for the set-off. 
The appellant-firm carried on business as mallllf acturers 
of bidis and dealers in tendu leaves. It filed a petition 
under Art. 226 of the Constitution challenging the validity of 
amendaent 118de in sub-s. (1) of the Madhya Pradesh General 
es Tax Act 1958 by the Madhya Pradesh General Sales Tax 
endment) Act 1968 to the extent that the said aaend.Ent 
ated tendu leave differently from other raw materials. 
After the enactment of the Madhya Pradesh General Sales 
(Amendment and Validation) Act 1971, the writ petition was 
aded to challenge also the validity of the amendments. 
~ 
~1milar writ petitions were also filed by other bidi 
llllDUfacturers and dealers in tendu leaves. The High Court 
A 
B 
c 
D 
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dismissed all these petitions. 
F 
In the Appeal to this Court on behalf of the appellants 
it was contended : (i) that as sales and purchases of tendu 
leaves cease to be exigible to tax under s.8 by reason of the 
amendments ll&de therein and as tendu leaves were not mentioned 
in any of the entries in Schedule II to the M. P. Sales Tax 
G 
Act, sales and purchases of tendu leaves could not be made 
-y- exigible to tax under s.6 read with the residuary Entry No. 1 
in Part VI of Schedule II; (ii) that neither the State 
Government nor any of its departments including the Fores~ 
Department or its off ices was a dealer as defined in cl. (d) 
of s.2; (iii) that the impugned amendments to s.8 are 
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