Chagla, C.J.
1. This is a petition challenging the validity of the Bombay Sales Tax Act, being Act XXIV of 1952. The Act is broadly challenged on three grounds. The first ground is that the Legislature was not competent to enact this piece of legislation. The second ground is that it contravenes Article 14 of the Constitution; and the third ground is that it contravenes Article 19(1)(g) of the Constitution. The petitioners before us carry on business of buying and selling motor cars on a large and extensive scale and they allege in the petition that the sales and purchases effected by them in the course of their business take place inter alia in and outside the State of Bombay, in the course of import of he goods into or export of the goods out of the territory of India and in the course of inter-State trade or commerce. They further allege that in a number of sales and purchases effected by them goods are actually delivered outside the State of Bombay as a direct result of such sales or purchases for the purposes of consumption outside the State of Bombay. The Advocate-General has raised various preliminary objections to the maintainability of this petition, and perhaps it would be best, before we consider the merits of this petition, to consider these objections.
2. The first objection is that the petitioners have an efficacious alternative remedy and therefore it would not be proper for the Court to issue a writ in such a case. It is pointed out that the substantial relief which the petitioners seek in the petition is the avoidance of assessment under the Sales Tax Act, and the Advocate-General's contention is that it is open to the petitioners to pay the tax under protest and then file a suit for the recovery of that tax on the ground that the tax was illegally recovered. For this purpose reliance is placed on a decision of this Court in Civil Application No. 735 of 1952, Walchandnagar Industries Ltd. v. The State of Bombay. In that case the petitioner company challenged the validity of the Bombay Sugarcane Cess Act of 1948 and we pointed out in that case that Article 226 was not intended to supplant the ordinary processes under the law and that it was not left to the option of the petitioner to file a suit or to approach this Court on a petition. We pointed out that the petitioner had been paying tax for several years, that he had an opportunity to challenge the validity of the Act, he had not done so, and there was no reason why any exception should be made in the case of the petitioner, and on that preliminary ground we dismissed the petition. It should be borne in mind that in this particular case the petitioners are not merely challenging the validity of the Act to the extent that it may impose upon them an illegal tax, but they are also challenging the Act on the ground that it contravenes their fundamental rights. The principle enunciated by the Advocate-General that a Court will not issue a prerogative writ when an equally adequate alternative remedy is available, has always been applied when the Court is called upon to issue writs like writs of certiorari and mandamus, but the interesting question that arises is whether the same principle would apply when a party comes to the Court with the allegation that his fundamental rights have been contravened and he wants relief from the High Court under Article 226. It is important to note that the High Courts have been entrusted with the important and responsible duty of enforcing the fundamental rights embodied in Part III of the Constitution when those rights have been contravened. It is the greatest safety that a citizen has in this country that he can approach the High Court if any of his fundamental rights have been trespassed upon, and it seems very doubtful that the High Court can ordinarily tell a citizen or even a non-citizen in certain cases not to approach it under Article 226, but to file a suit or to avail himself of some other similar remedy. The Supreme Court itself in construing Article 32 in Romesh Thappar v. State of Madras : 1950CriLJ1514 has taken the view that the Supreme Court was constituted the protector and guarantor of fundamental rights and it could not, consistently with the responsibilities so laid upon it, refuse to entertain applications seeking protection against infringement of such rights, and the view of the Supreme Court was that no limitation could be put upon the right of a person to approach the Supreme Court under Article 32. What was contended before the Supreme Court in that case was that the petitioner should in the first instance approach a High Court under Article 226 and then approach the Supreme Court under Article 32 and the Supreme Court negatived this contention. In our opinion, if the Supreme Court is constituted the protector and guarantor of fundamental rights, equally so is the High Court constituted the protector and guarantor of fundamental rights under Article 226. It would lead to a very curious result if a petitioner could approach the Supreme Court under Article 32 on the allegation that his fundamental rights were contravened and he could not do so as far as the High Court was concerned on an identical allegation under Article 226. The powers of the Supreme Court under Article 32 and of the High Court under Article 226 are concurrent and if the Supreme Court has held that it cannot refuse the application of any petitioner who comes before it complaining of contravention of fundamental rights, equally so the High Court cannot refuse to entertain the application of a person who comes before it under Article 226 on the ground that his fundamental rights should be protected.
3. The second preliminary point urged by the Advocate-General is that this is a petition by seven petitioners and according to him a petition can only be entertained by one petitioner when he complains of either a breach of statutory duty on the part of an officer of Government or a contravention of fundamental rights and a relief can only be given to one petitioner in a petition. According to the Advocate-General, the seven petitioners require seven different reliefs in this petition, each one complaining of a violation of his own right, and the seven petitioners cannot combine in presenting one petition. For this purpose reliance is placed on a statement of the law in Halsbury, Vol. 9, p. 783, paragraph 1325 : 'Two or more persons cannot join in a single application for a writ of mandamus to enforce separate claims. There must be separate applications for separate writs, and this although the several applicants are successors in the office in respect of the claims arise.' In support of this statement of the law reliance is placed on an old English decision reported in The King against the City of Chester 87 ER 487 corresponding to 5 Modern p. 10. In that case several councilmen were removed from their offices and they came to Court for a writ for being reinstated, and what the Court held was that they could not all be reinstated by one writ. The position in this petition is entirely different. The claim made by all the petitioners is the same, viz., that the Sales Tax Act is invalid and it should not be enforced against them. Here there are not several claims made by several petitioners. Even assuming that the Advocate-General was right, at the highest the joining of more than one petitioner would be a surplusage and that surplusage could be cured by six of the petitioners being struck off the record. The petition could easily be maintained by one out of the seven petitioners.
4. The third contention urged by the Advocate-General is that the petition is premature and does not disclose a cause of action. The Advocate-General says that no assessment has been made upon the petitioners, that no injury has been caused to them, that no occasion arises for the exercise of the Court's prerogative, and therefore at this stage the petition is not maintainable. The petitioners' complaint is not merely concerned with the question of payment of tax. They have also complained that under the provisions of the Act they are required to obtain registration and to obtain a licence and in view of the fact that the provisions of Act require them to do these acts, the Act contravenes the provisions of Article 19(1)(g) of the Constitution. In other words, the petitioners' contention is that their right to carry on business guaranteed to them under Article 19(1)(g) has been unreasonably restricted by the provisions of the law. Even assuming that the petitioners' grievance was confined to the imposition of an illegal impost, we are not at all sure that a party is not entitled to come to Court and to say, 'I am likely to be assessed in respect of an illegal tax, prevent the assessment'. The initiation of assessment ultimately results in a levy of tax and it has been laid down by the Supreme Court in The State of Tripura v. The Province of East Bengal : [1951]19ITR132(SC) , that the initiation of assessment constitutes an actionable wrong which a party is entitled to prevent by an order issued by the Court. The order of the Court would be to the effect that the officer concerned who has initiated the assessment should not complete an illegal and unauthorised act.
5. It is further contended by the Advocate-General that the Sale Tax Act itself provides a complete machinery for challenging the Act and the petitioners should be referred to that machinery rather than this Court taking upon itself to determine the validity of the Act. It is pointed out that the Act provides for the Collector determining disputes arising out of the Act under Section 27, it provides for an appeal under Section 30, it provides for a revision under Section 31, it provides for a statement of case to the High Court under Section 34 and it is further pointed out that Section 29 provides that any assessment made and any order passed under the Act shall not be called into question in any Civil Court; and for this purpose reliance has been placed on a decision of the Privy Council in Raleigh Investment Co. Ltd. v. Governor-General in Council [1947] 15 I.T.R. 332; 74 Ind.Ap. 50) In that case a suit was filed for a declaration that certain provisions of the Income-tax Act were invalid and the Privy Council held that the suit was not maintainable in view of Section 67 of the Income-tax Act, and what the Privy Council pointed out was that inasmuch as the appellant was objecting to an assessment, even though the objection was on the ground that the provision of law under which the assessment was made was bad, the assessment could only be challenged in the manner laid down in the Income-tax Act itself. That decision would have applied if the petitioners had come before us to challenge an assessment made under the Sales Tax Act. But no assessment has yet been made. The petitioners are not challenging any assessment. They have come before us before any assessment could be made, contending that the authorities under the Act have no right to assess them because the Act is ultra vires of the Legislature. Therefore the petitioners are challenging they very authorities who are supposed to decide the assessment made against them, and it is difficult to understand how under the machinery provided under the Act it would be open to the various authorities to decide whether the very statute of which they are creatures is a valid statute or not. Further, as already pointed out, there are two other issues involved in this petition, viz., the contravention of fundamental rights under Article 14 and Article 19 which in no view of the case could be decided by the authorities set up under the Sales Tax Act. The jurisdiction of those authorities is limited to decide questions regarding the validity of the assessment, but no jurisdiction has been conferred upon them to adjudicate upon the validity of the Act on the ground that it affects the fundamental rights of the petitioners.
6. The further contention of the Advocate-General is that in effect the petitioners are seeking a mandamus in order to compel the respondents to forbear and desist from enforcing against them any of the provisions of Act XXIV of 1952, and the Advocate-General argues that a mandamus can only issue on the basis that the Act which confers statutory obligations and duties upon an officer is a valid Act. The Advocate-General says that the very basis of mandamus is that an officer has got to carry out statutory duties or obligations and it is not open to the petitioner to challenge the statute if he wants the officer concerned to carry out any duties imposed upon him by that statute. For this purpose reliance is placed on Lady Dinbai's case : AIR1946Bom407 decided by this Court. The principle put forward by the Advocate-General is unexceptional, but what the Advocate-General overlooks is the fact that in this petition we are not dealing with a question of enforcing a statutory obligation; we are dealing with a case where the petitioners want us to enforce a fundamental right guaranteed to them by the Constitution. Whatever principles may apply when a mandamus is sought, entirely different considerations would apply when the question is of enforcing fundamental rights, and there is no doubt and there can be no doubt that the High Court has been given the widest powers of issuing any order, any direction or any writ under Article 226 appropriate to the occasion and the situation which would safeguard the fundamental rights of a citizen or any person affected by the violation of contravention of fundamental rights. As pointed out by the Supreme Court in Chiranjitlal Chowdhuri v. The Union of India and Others : [1950]1SCR869 by Mr. Justice Mukherjea : 'Under Article 32 the Supreme Court has a very wide discretion in the matter of framing writs to suit the exigencies of particular cases and an application under the Article cannot be thrown out simply on the ground that the proper writ or direction has not been prayed for.'
7. Now, coming to the merits, it would be desirable in the first instance to look at the Act and the scheme embodied in the Act. This Act has taken the place of an earlier Sales Tax Act of 1946. Section 2 deals with various definitions, and the most important of these definitions is the definition of 'sale', the subject-matter itself of the Act, and 'sale' is defined as : 'With all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable consideration and includes any supply by a society, a club, or an association to its members on payment of price or on fees or subscription but does not include a mortgage, hypothecation, charge or pledge.' Then there are two explanations to this definition. One, with which we are not concerned, is with regard to an agreement for hire purchase and under certain circumstances such an agreement is deemed to be a sale. Then we have explanation (2) which is : 'The sale of any goods which have actually been delivered in the State of Bombay as a directed result of such sale for the purpose of consumption in the said State, shall be deemed, for the purposes of this Act, to have taken place in the said State, irrespective of the fact that the property in the goods has, by reason of such sale, passed in another State.' Therefore this definition brings within its ambit all sales without exception where there is a transfer of property in goods for a valuable consideration. It also brings within the ambit of the statute sales where, although property may have passed outside the State of Bombay, the goods are delivered for consumption as a result of the sale in the State of Bombay. Therefore, according to this explanation, even though the seller may be, say, in Madras and the property in the goods may have passed in Madras, if the goods have been delivered for consumption in the State of Bombay, it would come within the definition of 'sale' given in the statute. Chapter II deals with Sales Tax Authorities and Tribunal, and Chapter III deals with General Tax. The charging section is Section 5 and the scheme of the section is that if a person has a turnover is respect of all sales made within the State of Bombay during any of the three consecutive years immediately preceding the first day of April, 1952, exceeding Rs. 30,000, or if his turnover in respect of such sales exceeds that limit during the year commencing on the first day of April, 1952, he shall with effect from the appointed day be liable to pay the general tax at the rate specified in sub-section (1) of Section 6 on his turnover in respect of sales of goods made on or after the appointed day. The 'appointed day' is defined as the day which the State Government may by notification in the Official Gazette specify as the appointed day for the purposes of Sections 5, 9, 10 and 47, and we have been informed that the Government has appointed the first of November, 1952, as the appointed day. It is significant to note that the turnover for the purposes of Section 5 consists of all sales and not any specific sale subject to any exceptions or limitations. Whatever the nature of the sale, if there is a transfer as defined by Section 2(14), then that sale would be considered in deciding whether the turnover exceeds Rs. 30,000 or not, and if the turnover so determined exceeds Rs. 30,000 then there would be a liability to pay the general tax. Sections 6 and 7 deal with levy and rate of general tax and deductions to be made from the sales which constituted the turnover for the purpose of Section 5. Section 6(1) provides that the general tax payable by a dealer shall be levied at the rate of three pies in the rupee on his taxable turnover in respect of sales of goods. Therefore Section 6 refers to a taxable turnover in contradistinction to a turnover referred to in Section 5 and the rate of tax in three pies in the rupee on this taxable turnover. The Legislature has provided for a taxable turnover merely in order to determine on what part of the turnover the tax should be levied. Section 7 lays down the mode of determining the taxable turnover, and clause (i) provides that from the turnover of the dealer in respect of all his sales of goods during any period of his liability to pay the general tax, there shall first be deducted this turnover during that period in respect of - (a) sales of any goods declared from time to time as tax free under Section 8, and (b) such other sales as may be prescribed; and clause (ii) provides that from that part of the balance remaining after making deductions under clause (i) which is in respect of sales of goods other than bullion and specie, there shall be deducted one-sixty-fifth part of such balance, and the balance remaining after making deductions under clauses (i) and (ii) of the section shall be the taxable turnover for the purposes of sub-section (1) of Section 6. Therefore the scheme of Section 7 is clear. Those goods which are declared tax free under Section 8 have got to go out of the turnover referred to in Section 5. Then such other sales have to go out as may be prescribed by the rule-making authority to which reference will be made a little later. It is pertinent to note that the Legislature has given no indication whatever as to what are the sales which may be prescribed and what are the sales which may be deducted or should be deducted from the turnover referred to in Section 5. Then Section 8 deals with goods which are exempted from payment of general tax. Section 9 deals with registration of dealers, and again it is important to note that every dealer who is liable to pay the general tax under Section 5 has to apply for registration if his turnover in respect of all sales exceeds Rs. 30,000, and for the purpose of this section the deductions to be made under Section 7 have not to be taken into consideration at all. Therefore, again, whatever the nature of the sales, if they exceed Rs. 30,000 the liability is cast upon the dealer to register himself under the Act.
8. Then Chapter IV deals with special tax and the scheme mutatis mutandis is the same as the scheme under Chapter III with regard to general tax. We start with a turnover in respect of sales of special goods which are enumerated in the Act and in this case the limit is Rs. 5,000 as against Rs. 30,000 in respect of general tax. Section II corresponds to Section 7 and it also provides for deduction form the turnover for the purpose of Section 10 such sales as may be prescribed, and under Section 12 there is a liability upon the dealer to apply for a licence if he is liable to pay the special tax and here again the liability arises if his turnover exceeds Rs. 5,000, whatever the nature of the sales may be and without deducting the sales which are deductable in order to ascertain the taxable turnover under Section 11. Chapter V deals with returns, assessment, payment, recovery and refund of the tax and levy of the tax on purchases. Under Section 13 there is an obligation upon every registered dealer and every licensed dealer to furnish returns. Section 14 deals with assessment of taxes. Section 15 corresponds to a similar provision of the Income-tax Act about turnover escaping assessment. Section 16 provides for payment and recovery of tax. Section 17 provides for special mode of recovery of tax. Section 18 deals with purchase tax and it provides for the tax being paid by a buyer who has bought goods from any place in India outside the State of Bombay and which goods are actually delivered as a direct result of a sale in the State of Bombay. Section 19 deals with refunds, Section 20 with remission of taxes, and Section 21 with prohibition against collection of tax in certain cases. Then Chapter VI deals with liability to produce accounts, to supply information and to pay the tax in the case of transfer of business and cancellation of certificate of registration or licence. Section 22 casts an obligation upon every registered dealer and every licensed dealer or any person liable to pay the tax under the Act to keep accounts. Section 23 gives the power to the Collector to call upon a dealer to produce accounts before him or to furnish any information. It is not material to consider sections 24, 25 and 26 for the purpose of this petition. Then Chapter VII deals with proceedings and various authorities set up under the Act for the purpose of assessment, appeals, references and revisions. Chapter VIII deals with offences and penalties, and severe penalties are prescribed for dealers who carry on business without applying for registration or grant of renewal of licence in contravention of Sections 9, 12 or 26, also for failure to furnish any return or statement, failure to keep accounts, neglect to furnish any information, and the penalty includes simple imprisonment which may extend to six months. Chapter IX deals with miscellaneous matters, but the important section in this chapter is Section 45 which constitutes the State Government the rule-making authority and it provides : 'The State Government may, subject to the condition of previous publication, make rules for carrying out the purposes of this Act,' and then, without prejudice to the generality of the power conferred upon the Government, particular instances are given for which the State Government may prescribe rules, and sub-clause (e) provides for rules in respect of other sales, turnover in respect of which may be deducted from a dealer's turnover in computing his taxable turnover as defined in Section 7 and in Section 11. Section 47 repeals the Sales Tax Act of 1946 and brings the new Act into force with effect from the appointed day.
9. Now, the first question that we have to consider is whether the Legislature had the competence and the power to enact this legislation and for that purpose we must turn to the Constitution in order to ascertain what the powers of the State Legislature are. Part XI deals with legislative powers and Article 245 provides : 'Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State'. Article 246(3) provides : 'Subject to clauses (1) and (2), the Legislature of any State specified in Part A or Part B of the First Schedule has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule.' When we turn to the Seventh Schedule we find that entry 54 deals with taxes on the sale or purchase of goods other tan newspapers. Therefore, it is clear that unless there are some provisions of the Constitution which limit the legislative power of the State Legislature, the Legislature has plenary and exclusive power to levy tax on the sale or purchase of goods. It is now well-established canon of construction with regard to entries in the various Lists that the most liberal construction must be placed upon the expressions used in these entries and they must be interpreted in their widest significance. There is one further provision in the Constitution which deals with taxes on sale or purchase of goods and that is Article 286, and the marginal note which ordinarily indicates the drifts of a section of a Statute or an article of the Constitution is, 'restrictions as to imposition of tax on the sale or purchase of goods,' and these restriction which are covered by Article 286 fall into three categories. The first restriction is that a Legislature of a State is prohibited from taxing a sale or purchase which takes place outside the State. The second restriction is that a Legislature of a State is prohibited from taxing a sale or purchase which takes place in the course of the import of the goods into, or export of the goods out of, the territory of India. The third restriction is that the Legislature of a State is prohibited from taxing a sale or purchase where such sale or purchase takes place in the course of inter-State trade or commerce. There is also a further restriction contained in clause (3) with which we are not concerned, and that is with regard to taxing a sale or purchase of goods declared by Parliament to be essential for the life of the community. The Constitution has supplied and explanation to the first restriction imposed upon the State Legislature, viz., a restriction with regard to a sale or purchase which takes place outside the State, and the explanation is to following effect :-
'For the purposes of sub-clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.'
10. The main part of the argument both of the Advocate-General and Mr. Seervai, from both of whom we have received considerable assistance and help, has been directed to construing and interpreting this explanation. Although the Article is short and the explanation is shorter, the language used is by no means, with respect to out Constitution-makers, clear and various possible constructions have been suggested and we have to accept a constructions which reconciles the various parts of Article 286 and which permits the explanation to play its proper role and discharge its proper function.
11. Now, as a matter of legislative history, it is rather important to not - and that is a fact on which the Advocate-General himself has relied - that before out Constitution was enacted, under the Government of India Act the Provincial Legislature under entry 48 in List II of the Seventh Schedule had also the power to impose taxes on the sale of goods. The Government of India Act did not contain any limitation upon the power of the Legislature similar to Article 286 and its seems that the Provincial Legislatures functioning under the Government of India Act did tax goods assuming to themselves the power to tax them provided some ingredient of the transaction of sale took place within the State imposing the tax. Now, the word 'sale' may have one or other meaning. It may mean sale as understood in the Sale of Goods Act which emphasises the distinction between an agreement to sell and a sale and refers to the passing of property as the moment of time when sale is constituted. On the other hand, 'sale' may be construed in a more popular sense as the transactions of sale irrespective of the passing of property, and most of the Legislatures prior to the Constitution assumed to themselves the power on the assumption that 'sale' as used in entry 48 must be given its popular meaning and it seems that they were not wrong because, as just pointed out, 'sale' in entry 48 must be given the widest possible meaning and there seems to be no reason whatever why the expression 'sale' in entry 48 should be restricted to its rather technical legal meaning found in the Sale of Goods Act. It was because of this that the Provincial Legislatures often taxed sales if the goods covered by the sale were located within the State, because they considered that the location of the goods was more important than the question of passing of property which to a large extent depends upon the intention of parties; and there seems to be no reason why in construing entry 54 in List II of the Seventh Schedule in the Constitution we should give to the expression 'sale' only its legal technical meaning and not the wide meaning which was accepted and acted upon under the Government of India Act. Therefore, if the Constitution had merely provided for Articles 245 and 246(3) and entry 54 in List II of the Seventh Schedule, the power of the State Legislature would have been identical with the power of the Provincial Legislature under the Government of India Act. But the Constitution did not want the State Legislature to have the same power with regard to taxes on sales and purchases of goods as the Provincial Legislatures had under the Government of India Act and that is why Article 286 was enacted and restrictions were placed upon the powers of the State Legislature, and the real and substantial question for our determination is, what is the extent and the nature of the restriction placed upon the powers of the State Legislature under Article 286
12. Turning to the most important restriction with which we are concerned, viz., that a State Legislature has no power to impose or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place outside the State, it may seem that it was unnecessary to enact this provision because this restriction was implicit in Article 245(1) itself. Whereas our Constitution permits Parliament to enact laws which may have extra-territorial operation, our Constitution does not permit a State Legislature to make laws which have an operation beyond the boundaries of the State itself, and therefore if there is a prohibition against imposing a tax on a sale which take place outside the State that prohibition is in conformity with what is contained in Article 245(1) itself. It has been argued by the Advocate-General that what is emphasised in sub-clause (a) of Article 286(1) is a sale or purchase taking place outside the State, and the Advocate-General says that whereas under entry 54 the State Legislature can impose a tax on the sale or purchase of goods, if the sale takes place outside the State then the State Legislature has no power, and what is emphasised in this connection is the expression 'taking place' and the Advocate-General further contends that 'taking place' in this context means where property has passed outside the State. According to the Advocate-General a purchase takes place when property passes and the Advocate-General is at pains to emphasise this aspect of Article 286(1) because he contends that if the property passes within the State itself the sale or purchase always takes place inside the State and that power the Legislature has under entry 54. We have looked in vain for any authority which gives any indication of what the situs of a sale is. Neither our Sale of Goods Act nor so well-known a Treatise as Benjamin on the Sale of Personal Property gives us any help, and it is difficult to accept the Advocate-General's contention that a sale takes place where the property in the goods passes. 'Sale', it seems to us, has been used in Article 286(1) in the sense of transaction of sale and what in emphasised by Article 286(1) is not the aspect of passing of property but the aspect of the transaction of sale which consists of various ingredients, and having given the power to the Legislature under entry 54 to tax a sale which takes places within the State, the Constitution emphasises the disability from which the Leigislature suffers and the disability is that is cannot tax a sale or a transaction of sale which takes place outside the State.
13. Now, when we come to the explanation, before we construe it, it is necessary to bear in mind what the object and function of an explanation in a section or an article of a statute or Constitution is. An explanation is not a proviso. It does not carve out of the section something which the section has provided and deal with that part which is carved out. It is not the function or purpose of an explanation to extend the scope of the section itself or to restrict its operation. An explanation ordinarily is intended to apply to the whole ambit of the section and to throw light on the construction of the words used by the Legislature. An explanation very often introduces a legal fiction and treats the legal fiction as a reality contained in the section itself; and when we turn to the explanation with which we are concerned in this case we find that it also creates a legal fiction or raises a statutory presumption with regard to the meaning and scope of the expression 'outside the State' used in Article 286(1). What it says is that if you find that goods have been actually delivered as a direct result of a sale or purchase for the purpose of consumption in a particular State, then the sale or purchase shall be deemed to have taken place in that State, and it further emphasises the statutory presumption or legal fiction by stating that this is so even though the property in the goods has passed by reason of such sale or purchase in another State. The contention of the Advocate-General is that explanation explains what is not outside the State; it does not explain what is inside the State. He says that the particular instance given in the explanation is taken out of the category of sales outside the State and has been brought into the category of sales inside the State, but the explanation throws no light whatever on what a sale inside the State is; and on this construction the Advocate-General bases his argument that if goods have been brought into Bombay as a direct result of a sale which may have taken place, say, in Madras and if these goods are delivered for the purpose of consumption in the State of Bombay, the explanation gives power to the State Legislature to tax those goods although the property in those goods might have passed in Madras. But, says the Advocate-General, even though the goods might have been delivered in Madras as a direct result of a sale and for the purpose of consumption in Madras, the power of the Bombay Legislature to tax these goods has not taken away by the explanation. If the property in those goods passed in Bombay, according to the Advocate-General, the original power which the Legislature had under entry 54 continues untramelled and unfettered. In other words, according to the Advocate-General, the explanation deals with only one aspect of the matter. It provides for a case where a sale takes place inside the State; it does not provide for the case of that very sale taking place outside the State under similar circumstances. It would become obvious that to accept the interpretation of the Advocate-General would result not in any restriction on the legislative power of the State Legislature, but on the contrary on its enlargement, because - and we hope we are being fair to the Advocate-General - according to him the sole object of the explanation was to confer an additional power upon the State Legislature which it did not enjoy under entry 54. According to the Advocate-General it might have been contended that as the property in the goods passed in another State, even though the goods were delivered in Bombay for the purpose of consumption, the Bombay Legislature would have had no authority to tax those goods. The explanation has removed that doubt and has conferred that power upon the State Legislature. In other words, according to the Advocate-General what would have been a sale outside the State by legal fiction has been made a sale inside the State. The Advocate-General is conscious of the fact that in asking us to put this construction upon the explanation he is making the explanation play a rather unusual role. He, therefore, suggested that really the explanation should have been described as a proviso should have appeared after Article 286(1)(a), but inasmuch as clause (b) was interposed the proviso was postponed to a lower position. But why the Constitution-makers should call a proviso an explanation is a mystery which the Advocate-General has not been able to solve. We take it that the Constitution-makers were familiar withe the distinction between a proviso and an explanation and when advisedly they have used the expression 'explanation' and not a proviso, we must before accepting the Advocate-General's argument try and explore all avenues in order to find out whether a construction is possible of Article 286(1)(a) which fits in with the explanation and which makes the explanation an explanation and not a proviso.
14. In construing the explanation to Article 286(1) what should be borne in mind is that it postulates two States, a State in which, under the general law relating to sale of goods, the property in the goods has passed, and a State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, and it should also be borne in mind that the explanation is to the expression used in Article 286(1)(a), viz., outside the State. Therefore, in our opinion, the explanation by stating what is inside the State by necessary implication states what is outside the State. If the sale takes place inside that State in which the goods have actually been delivered as a result of such sale for the purpose of consumption in that State, then it must follow as an inevitable corollary that it is a sale outside the State for the purposes of the State in which the property has passed. Further, the explanation refers to one particular transaction and that is the transaction of sale for consumption, and what the explanation is at pains to point out is that that transaction can only be taxed where goods are delivered. It is only in the State in which the goods are delivered that the sale is within the State. For all other States it is sale outside the State. The explanation, in our opinion, was enacted for a very definite and specific purpose and that purpose was to save the consumer from multifold or cumulative imposts. It is not too much to assume that our Constitution-makers were anxious to protect the interests of the consumer. They did not want a consumer to pay more that one sales tax, and the rational basis of taxing goods intended for consumption would be to tax them where they were delivered for consumption. Considerable support is lent to this view by the recent judgment of the Supreme Court in Civil Appeal No. 23 of 1952 dealing with the question of the Sales Tax Act passed by the Travancore Legislature (Since reported as the State of Travancore-Cochin and Others v. The Bombay Company Ltd., Alleppey, and Others [1952] 3 S.T.C. 434. The question that fell for consideration before the Supreme Court was not the very one which we are considering here today. What the Supreme Court was considering was the true meaning to be given to the expression 'in the course of import of the goods into, or export of the goods out of, the territory of India', but certain observations in the judgment throw considerable light on the principles which must be adopted in construing Article 286. The Supreme Court gave a very extended meaning to the expression 'in the course of' and held that a sale by export involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea. The learned Judges point out in their judgment that they have arrived at this conclusion in order to prevent the imposition of cumulative burden on the export-import trade of the country which is of great importance to the nation's economy, and they sound a note of warning against importing principles laid down by the American Supreme Court in construing Article 286. If the Supreme Court was anxious to prevent cumulative burden on the export-import trade of the country and leaned against a construction which would have thrown upon that trade multifold taxation, we should be equally anxious to lean against a construction of the explanation to Article 286(1) which would throw upon the consumer in India, hard pressed as he already is, a cumulative burden of taxation which may be beyond his capacity to bear. The Advocate-General concedes that the construction that the wants us to put upon the explanation may result in double taxation, but what he argues is that there is nothing in the Constitution which prevents an article being taxed twice under an identical tax. The Advocate-General is right when he says that there is no prohibition in the Constitution, but when a taxing provision comes up for construction before us and if that provision is capable of more than one interpretation, we must give to it that interpretation which will be in the interest of national economy and also if possible in the interest of the ordinary humble consumer in the country.
15. Therefore, the result of the interpretation we are putting upon the explanation is, to sum up, that Article 286 puts various restrictions upon the competence of the State Legislature to impose tax on the sale or purchase of goods. The first restriction is that it cannot tax a sale or purchase which takes place outside the State. It cannot tax a sale or purchase where goods are delivered for consumption outside the State. Further, it cannot tax sales or purchases, even though they may be inside the State, if the sales or purchases are in the course of the import of the goods into, or export of the goods out of, the territory of India. Finally, it cannot tax sales or purchases, even though they may have taken place inside the State, if the sales or purchases are in the course of inter-State trade or commerce. A very interesting argument was advanced before us as to the true meaning to be given to the expression 'inter-State commerce' under in Article 286(2). Whereas Mr. Seervai contended that 'commerce' must be given its widest connotation and would mean intercourse or transport as understood by the American Courts, the Advocate-General wanted us to give a meaning to it almost synonymous with the expression 'trade' used in that Article. According to the Advocate-General what distinguished commerce from trade was one of degree and not of principle. In our opinion it is unnecessary to pronounce upon this interesting question as it does not really directly arise for our consideration on this petition.
16. The Advocate-General has relied on two Madras judgments which we might briefly look at. The first is a judgment delivered in Criminal Appeal No. 129 of 1952, Poppatlal Shah v. State of Madras (Since reported at 3 S.T.C. 396). The contention there of the assessee who was assessed to sales tax was that as the title to the goods sold passed only in Calcutta and the goods were delivered to the purchaser on payment of the price at Calcutta, there was no sale within the Province of Madras and therefore there was no liability to pay the tax under the Act; and the Advocate-General relies on certain observations of Mr. Justice Venkatarama Ayyar who delivered the judgment of the Court. The learned Judge points out that the question as to whether there was a sale within the Province of Madras would have to be determined on a factual basis as to where the transaction took place and not on a consideration of questions as to where property passed in the goods. He further points out that the word 'sale' has both a legal and a popular sense and he emphasises the fact that in its popular sense 'sale' signifies the transaction which results in the passing of property, whereas in the legal sense it imports passing of property in the goods, and the learned Judge takes the view that the considerations which arise under the Sales Tax Act are altogether different from those which arise under the Sale of Goods Act, and considering various authorities he comes to the conclusion that there is goods reason for adopting the popular meaning of the expression 'sale' and not its legal meaning. With respect, we agree with these observations and as pointed out earlier in the judgment we have taken the same view that in construing the expression 'sale' in the entry 54 the widest meaning should be given to that expression and not a narrow legal technical meaning. It is rather interesting to note that the learned Judges says in his judgment that explanations are inserted for removing doubts and declaring the law; not as the Advocate-General suggests, for the purpose of serving as a proviso to the section enacted by the Legislature.
17. The second judgment on which the Advocate-General relies is a judgment delivered in Writ Petition No. 227 of 1952, Govindarajulu Naidu v. The State of Madras (Since reported at 3 S.T.C. 405), and what is relied upon is the interpretation put by the Madras High Court on the explanation to Article 286(1)(a), and the view given expression to by Mr. Justice Venkatarama Ayyar, who also delivered the judgment in this case, is that 'the effect of the explanation is to remove the limitation imposed on Article 245 and Article 286(1) on the power of a State to enact extra-territorial legislation and permit the State to levy sales tax on an extra-State sale, provided goods thereunder are delivered within the State. The Explanation should accordingly by construed as not taking away the positive powers of taxation conferred under Article 246 and Entry No. 54 but as enlarging those powers in cases falling within the Explanation.' With very great respect, the learned Judge seems to have overlooked what he himself stated in the earlier judgment, to which reference has already been made, as to the scope and purpose of an explanation. We cannot possibly accept the view, again with respect, that an explanation is intended to enlarge the power when the section to which it is an explanation was admittedly enacted for the purpose of restricting the powers of the Legislature. Further, again with respect, the learned Judge has faced with equanimity the possibility of double taxation. It must be said in fairness to the learned Judge that he had not the benefit of the Judgment of the Supreme Court which we have. It has also further to be remembered that this judgment was wholly coloured by the view taken by the Court as to the true meaning of the expression 'in the course of import and export' an the view that the Court took has now been found to be erroneous in view of the decision of the Supreme Court. Further, in construing the explanation the Madras High Court took into consideration that this explanation was not originally in the bill and it came to be inserted at the last stage out of deference to the representations made on behalf of certain States that the law as it stood would prevent them from taxing commodities which would be used in the State and that a power to tax such transactions should be conferred on them. Now, no extraneous aids are permissible for construing a provision of the Constitution and certainly the extraneous aid availed of by the Madras High Court is not a permissible aid. The Supreme Court has now clearly laid down that in construing the Constitution it is not open to the Court to consider the speeches made in the Constituent Assembly or the reasons which influenced the Assembly in enacting a particular provision in the Constitution. We must therefore arrive at out own conclusion unaided by any considerations which are outside the record. With respect, therefore, we are unable to agree with the Madras High Court in the view that the Court has taken of the true meaning of the explanation.
18. Having considered the legislative competence of the State Legislature in respect of taxes which can be imposed on sales and purchases of goods, the question we have to consider is whether out Legislature has taken to itself the power to tax sales which are prohibited under the Constitution. Turning first to the definition, as we have already pointed out, the definition of 'sale' is in the widest of term and it embraces any transfer of property in goods for valuable consideration. The draftsman of the Act was fully conscious of the provision in the Constitution because in the second explanation to the definition it includes in the definition of 'sale', the sale of any goods which have actually been delivered in the State of Bombay as a direct result of such sale for the purpose of consumption in the said State, although the property in the goods has by reason of such sale passed in another State. But the definition does not contain the other explanation dealing with the converse case where the property has passed in the State of Bombay and the goods have been delivered for consumption as a direct result of such sale outside the State of Bombay. Therefore, whereas the explanation makes clear what sales are within the State, it fails to exclude those sales which on our construction of Article 286(1) are outside the State of Bombay. The further significant feature of the definition is that it does not exempt any sales which fall under Article 286(1)(b) and Article 286(2). When we look at the whole Act it becomes abundantly clear that the definition pervades the whole Act and the whole scheme of the Act is bound up with this definition of 'sale'. Turning to the general tax, the scheme of levying general tax, as has already been explained, is comprised in Sections 5, 6 and 7 and the very basis of that tax is the turnover exceeding Rs. 30,000 and the turnover is in respect of sales made within the State of Bombay as understood by the definition given in section 2(14). The very liability to pay general tax under Section 5 arises in respect of those persons whose turnover exceeds Rs. 30,000, the turnover being made up, as pointed out, of all sales made within the State of Bombay. It is also a striking feature of this Act that even when the taxable turnover is determined under Section 7 and for the purposes of taxable turnover the sales of certain goods enumerated in Section 8 are to be excluded, the prohibited sales, if we may use the compendious expression, are not excluded under Section 7 at all. A general provision is made under sub-clause (b) of Section 7(i) that the turnover in respect of such other sales as may be prescribed may be deducted from his turnover. Therefore an authority is given to the rule-making power to deduct turnovers in respect of certain sales, but there is no compulsion upon the authority to exclude any particular sales and a complete discretion is given to the authority either to exclude or not to exclude any sales. In our opinion, reading these sections with regard to the general tax and the similar provisions in Chapter IV in regard to special tax, it is clear that the Legislature has proceeded to pass this law on the clear undoubted assumption that if had the power to tax those sales which are excluded by reason of Article 286.
19. Now, when one talks of the competence of a Legislature what one has to consider is the assumption of powers at the time the legislation is passed. A Legislature is competent or incompetent in respect of legislation which it puts on the statute book. It is the question of vires, the possession of the power or the lack or power, and in our opinion it is difficult to accept the position that in enacting this particular measure the Legislature did not exercise the power of legislating upon a field which was not within its competence. There are three answers given by the Advocate-General to this contention and coming from him it is our duty seriously to tally each one of these three answers. The first answer is that under the rules framed by the Government the prohibited sales are exempted. We have already pointed out that under Section 45 the State Government is authoraised to make rules for carrying out the purposes of the Act, and in sub-section (2) specific provision is made in regard to the rules to be framed for deduction of turnovers in respect of sales which may be prescribed under Section 7. The rule on which reliance is placed in rule 5 and that provides for deduction of certain sales in calculating taxable turnover under Section 7, and two of these sales are sales in the course of the import of the goods into, or export of the goods out of, the territory of India, and sales in the course of inter-State trade or commerce, and the Advocate-General says that when you look at the Act along with the rules framed under that very Act, it is clear that the Legislature has not imposed any unlawful tax on sales which are exempted from their competence under Article 286 of the Constitution. It is impossible for us to accept the contention that the competence of the Legislature must be judged not by the legislation itself, but by the rules framed under that legislation. If the Legislature has no competence at the date the law was passed, the rules subsequently framed cannot confer competence upon the Legislature. In this case there is not even a mandate from the Legislature to the State Government to frame rules deducting sales prohibited under the Constitution. There is no obligation whatever upon the State Government to deduct any sales by rules and it is clear that the power conferred upon the State Government to deduct certain sales assumes the power not to deduct. Therefore the very provision in Section 7 authorising the Government to deduct certain sales which may be prescribed proceeds on the necessary assumption that the State Legislature has the power to tax those sales and would have the power to tax those sales if they were not deducted by the rules framed by the State Government. Further, Section 45 makes it clear that the power of the State Government to frame rules is limited by the condition that it must be exercised for carrying out the purposes of the Act, and as we have already pointed out, the purposes of the Act is to tax sales irrespective of the consideration whether the sales are prohibited under the Constitution or not. Rule 5 on which the Advocate-General relies enumerates eight different kinds of sales which are to be deducted in calculating the taxable turnover under Section 7, and these two sales which are prohibited by the Constitution, viz., sales in the course of export and import and in the course of inter-State trade or commerce, take their humble place along with the other sales which the State Government has thought fit to deduct from the taxable turnover under Section 7. In rule 5, even when the rules are being framed, no distinction is made between sales which are prohibited under the Constitution and sales which for reasons of State, the State Government has deducted from the taxable turnover. Therefore it seems to us that there is a complete lack of understanding as to the true effect and meaning of the Constitutional restriction placed upon the powers of the Legislature. When we look a little more closely into the rules we find clear evidence that the State Government thought that they could regulate the conditions on which even sales in the course of import and export of goods and in the course of inter-State trade or commerce can be regulated. In sun-rule (2) of rule 5 it is provided that for the purpose of clause (i) of sub-rule (1) which deals with sales in the course of the import of the goods into, or export of goods out of, the territory of India, and in the course of inter-State trade or commerce, the goods shall be consigned from a place outside the State of Bombay to a place within the State, or consigned from a place within the State of Bombay to a place outside the State, as the case may be, through a railway, shipping or air-craft company, or country boat registered for carrying cargo, or public motor transport service, or by registered post. In other words, if the goods are not consigned as laid down in sub-rule (2) then the sale would not be exempted from tax. In other words, the rule-making authority has taken to itself the power to tax a sale although it may be in the course of import of export or in the course of inter-State trade or commerce, if it is not consigned in the manner laid down in sub-rule (2). It is difficult to understand where the State Government derives its power or authority to tax such sales. It is needless to repeat that if it is a sale which is a prohibited sale within the meaning of Article 286, no conditions whatever can entitle the State Legislature to tax those sales and by making rules the Government cannot convert a sale which is a prohibited sale under the Constitution into a sale in respect of which it could impose a tax. Then sub-clause (v) of sub-rule (2) of rule 5 raises a statutory presumption that where the goods have not been consigned to a place outside the State of Bombay within three months from the date of sale, it shall be presumed unless the contrary is proved to the satisfaction of the Collector that the sale has not taken place in the course of export of the goods out of the territory of India or in the course of inter-State trade or commerce, as the case may be. Again, an attempt at raising a statutory presumption with regard to prohibited sales is a clear indication that the State Government was of the opinion that it could tax such sales provided the conditions laid down by it were not satisfied. The explanation 2 to rule 5(2)(i) provides that the provisions of clause (i) shall not apply to motor vehicles despatched to a place in India outside the State of Bombay by road driven by their own power, provided a certificate is obtained from an authority mentioned in that explanation. Therefore a concession is given to motor vehicles driven by their own power, but that concession is hedged round with a certain condition. In other words, if a motor car is sold in the course of inter-State commerce and it leaves the State for another State by its own power and the certificate mentioned in explanation (2) is not obtained, the State has taken to itself the power to tax that sale although it is a prohibited sale. It is not necessary to go in detail to the various rules which have been framed, but we have given instances which go to emphasise the point made.
20. The second answer given by the Advocate-General is that we should read the definition of 'sale' as being subject to the provisions of Constitution. The Advocate-General relies on a well-established doctrine of construction that every Legislature must be presumed to know the limits of its competence and that to the extent that a Court can do so is must construe a stature as being within the limits of the competence of the Legislature rather than outside the competence, and for this purpose reliance is placed on the observation of this Court in State of Bombay v. Heman Alreja : AIR1952Bom16 . In that case we were dealing with the Bombay Land Requisition Act and we were considering the provision contained in that Act, viz., that Government had the power to requisition land for any purpose, and the question that came before us was, what was the construction we should put upon the expression 'any purpose' because if 'any purpose' included the purpose of the Union then the Act would be ultra vires of the Legislature, and we construed 'any purpose' as a purpose other than the purpose of the Union and held that the Act was intra vires of the Legislature and in coming to that conclusion we relied on the well-known case of In re the Hindu Women's Rights to Property Act [1941] 3 F.C.R. 12 and we referred to the observation of Sir Maurice Gwyer at page 26 : '..... but when a Legislature with limited and restricted powers makes use of a word of such wide and general import, the presumption must surely be that it is using it with reference to that kind of property with respect to which it is competent to legislate and to no other. The question is thus one of construction, and unless the Act is to be regarded as wholly meaningless, and ineffective, the Court is bound to construe the word 'property' as referring only to those forms of property with respect to which the Legislature which enacted the Act was competent to legislate; that is to say property other than agricultural land.' In that case before the Federal Court the contention was that the Hindu Women's Rights to Property Act was ultra vires because the Legislature had attempted to legislate with regard to agricultural land. In that case we also relied on the well-known case of Macleod v. Attorney-General for New South Wales [1891] A.C. 455 and we referred to the observation of Lord Halsbury at page 457 : '....... Their Lordships do not desire to attribute to the Colonial Legislature an effort to enlarge their jurisdiction to such an extent as would be inconsistent with the powers committed to a colony ........'
21. Now, it is perfectly correct that the expression 'sale' is a word of wide and general import and the Advocate-General would have been on very strong grounds if the Legislature had merely used the expression 'sale' in the Act in question. Then it would have been out duty to presume that the Legislature knew its own limitations and to construe the expression 'sale' as falling within the legislative powers of the Legislature rather than outside those powers. But unfortunately 'sale' has been defined by the Legislature. Neither in the case before Sir Maurice Gwyer nor in the case before us was the expression defined in the Act itself. 'Property' was not defined in the Hindu Women's Rights to Property Act, and 'premises' was not defined in the Land Requisition Act, but in the impugned Act before us 'sale' has been defined, and what the Advocate-General is really asking us to do is to rewrite that definition. He wants us to discard the definition which the Legislature itself has adopted and to substitute for it a definition more in accordance with the Constitutional limitations upon the powers of the Legislature. That is a function which the Court can never discharge. It has been often said that in construing an Act it is not the duty of a Court to amend the Act, it must take the Act as it finds it, as the Legislature has passed it, and it is only by means of construction that the Court helps to maintain the validity of an Act. But when we construe the definition of 'sale', it is clear that it is used in a manner which would contravene the provisions of the Constitution, and therefore it is no longer a question of construction; it is a question, as we just said, of altering the definition or amending the statute.
22. The third answer given by the Advocate-General, which is a very ingenious one, is that Article 286 is really not a restriction upon the legislative competence at all. In a sense this argument runs counter to the argument advanced earlier by the Advocate-General, but waiving that technicality we are prepared to consider it on its own merits. What the Advocate-General says is that looking to the language of Article 286 and the language, for instance, of Article 303, the distinction between the expressions used by the Constitution-makers in these tow Articles would become immediately apparent. Whereas Article 303 speaks of the Legislature not having the power to make a particular law, Article 286 merely speaks of 'no law of a State shall impose or authorise the imposition of a tax for the purposes mentioned in that Article,' and the Advocate-General says that Article 286 is not a limitation upon the competence or the power of the Legislature to legislate, but Article 286 provides that if a law is passed then if the Courts come to the conclusion that on a construction of that law it results in imposition of an illegal tax, then the Court will hold that law bad to that extent. Now, the powers conferred upon the Legislature under Article 245 are subject to the provisions of the Constitution. The powers are not unlimited and the Constitution itself provides various limitations upon those powers and in our opinion although the language of Article 286 is not identical with the language in Article 303, if the Constitution provides that not law of a State shall authorise the imposition of a tax, it does contain a restriction or a limitation upon the legislative power of the Legislature.
23. A similar question came for consideration before the Privy Council in a case reported in Punjab Province v. Daulat Singh and Others [1946] 8 F.C.R. 1 As is well-known, the scheme adopted in our Constitution with regard to the distribution of powers between the Union Legislature and the State Legislature is very similar to the scheme embodied in the Government of India Act, and the Privy Council was considering the Punjab Alienation of Land Act and what was contended before it was that certain provisions of that Act were ultra vires of the Legislature because it contravened Section 298 of the Government of India Act. Section 298 provided that no subject of His Majesty shall be subjected to disability of any sort by reason or race, religion, etc. and the Privy Council held that certain provisions to the extent that they were retrospective were ultra vires of the Legislature, and their Lordships of the Privy Council held that the provisions of the new Section 13A of that Act involved a contravention of sub-section (1) of Section 298 of the Government of India Act and were ultra vires of the Provincial Legislature. Further, they point out at the bottom of page 19 : 'It follows, in the opinion of their Lordships, that the impugned Act, so far as retrospective, was beyond the legislative powers of the Provincial Legislature and, if the retrospective elements were not severable from the rest of the provisions, it is established beyond controversy that the whole Act would have to be declared ultra vires and void.' In that particular case the retrospective element was severable and therefore, they severed that part and held the other part of the Act to be intra vires. The point of this decision is that Section 298 of the Government of India Act does not speak of the Legislature not having certain powers, but Section 298 was looked upon as a limitation of the power of the Legislature by reason of Section 99 of the Government of India Act which was in terms similar to Article 245 of our Constitution. Just as in Article 245, so also in Section 99 of the Government of India Act, the power of the Provincial Legislature to make laws for the Province was subject to the provisions of the Government of India Act, and the Privy Council held that that power was subject to Section 298 although Section 298 did not in terms impose a limitation upon the competence of the legislature. If that argument was good for Section 298 of the Government of India Act, it is equally goods for Article 286 of the Constitution.
24. The Advocate-General says that the law we are considering is the Sales Tax Act plus the rules and we must look not only at the Act but also at the rules in order to decide whether the law of the State imposes or authorises the imposition of the tax. In advancing this argument the Advocate-General is overlooking two important aspects of legislation. One aspect of legislation is that the legislature may not have the competence to legislate at all on a particular subject. The other aspect of legislation is that the legislature may have the competence to legislate with regard to a particular matter and having legislated with competence the law may be void by reason of some provision of the Constitution. If in this case the legislature had the competence to legislate with regard to tax on prohibited sales, then undoubtedly the question would arise whether the law passed was void under any of the provisions of the Constitution. But if the view we take is correct that the competence of the legislature is wanting in respect of prohibited sales, then no question of considering the validity of the law passed by the legislature car arise. Of course, there are two other points which must be also borne in mind. One is that if the Act itself it bad, the rules made under it cannot have any greater efficacy, and further, even this argument of the Advocate-General only applies to the extent that the rules provide for sales in the course of the import of the goods into or export of the goods out of the territory of India and sales in the course of inter-State trade or commerce. But, as pointed out, neither the Act nor the rules exempt sales which are outside the State within the meaning of Article 286(1)(a) read with explanation.
25. Therefore, in our opinion, the Sales Tax Act as passed by the State Legislature is ultra vires of our Legislature. We must declare the whole Act as ultra vires because in our opinion it is impossible to sever any specific provision of the Act so as to save the rest of the Act and the difficulty of severing certain provisions of the Act arises, as pointed out, from the fact that the definition permeates the whole Act and it is the definition itself which permits the tax being imposed on prohibited sales.
26. In view of the conclusion we have come to, it is perhaps not necessary to consider the further challenge that has been made to the Act under Articles 14 and 19. Without, therefore, deciding this point we would briefly indicate what the contentions are and leave the matter at that. It is urged by Mr. Seervai that in providing a limit of Rs. 30,000 in respect of the general tax and Rs. 5,000 in respect of the special tax, the Legislature has offended against Article 14 and the argument of Mr. Seervai is put in this way. He says that this is not an income-tax, it is a tax on sales, and the dealers who have to pay this tax are really collectors on behalf of the Government from the consumers who ultimately pay the tax. Therefore there is no rational basis of exempting dealers whose turnover is less than Rs. 30,000 or Rs. 5,000 as the case may be. According to Mr. Seervai this provision of the law results in unfair competition as between one dealer and another. He says that a dealer whose turnover is Rs. 25,000 is in a much better position than a dealer whose turnover is Rs. 30,000, because a dealer with a turnover of Rs. 25,000 can sell goods cheaper than a dealer with a turnover of Rs. 30,000. There is no reason for making this classification because even a dealer whose turnover is Rs. 5,000 is not paying the tax out of his own pocket but is collecting the tax on behalf of the Government and he can collect the tax as easily as a dealer whose turnover is Rs. 30,000 Reliance was placed by Mr. Seervai on a judgment of the Supreme Court in Stewart Dry Goods Co. v. Lewis 294 U.S. 550. That case laid down that a graduated sales tax offended against the equality clause in the American Constitution. The answer that the Advocate-General gives to this contention is that administrative reasons compel Government to draw the line somewhere; that it would be administratively impossible for Government to tax all dealers whether their turnover is Rs. 10 or Rs. 30,000. Therefore some arbitrary line has to be drawn and the line was drawn at Rs. 30,000 in the case of general tax an Rs. 5,000 in the case of special tax.
27. Mr. Seervai then complains against Section 5(3) and Section 10(4) of the Act. Section 5(3) provides that once a dealer has become liable to pay the general tax, he shall continue to be so liable until the expiry of three consecutive years although during these three years he does not reach the limit of the turnover laid down in Section 5(1), and he may continue to be liable for such further period after the expiry of the three year period as may be prescribed and he would continue to remain liable to pay the general tax. Mr. Seervai says that clearly this is a most arbitrary classification that because a man had a turnover of Rs. 30,000 in one year, although for the three subsequent years and for an indefinite period thereafter this turnover may fall to anything between Rs. 30,000 and Rs. 100, he would still be liable to pay tax, and Mr. Seervai says that no possible justification can be advanced for a provision like this. The answer given by the Advocate-General to this is that once a man has paid general tax it would be impossible to say what his turnover would be next year and Government must make him liable so that he can go on collecting the sales tax for Government. There is a similar provision with regard to special tax in Section 10(4) and the same contentions are raised with regard to this provision.
28. A third contention raised by Mr. Seervai under Article 14 is with regard to the provision is Section 46 of the Act. That section exempts the district of Amreli from paying general tax on certain commodities and Mr. Seervai says that it is very extraordinary that a particular part of the State of Bombay should have been picked out for this special treatment. The answer given by the Advocate-General is that Amreli formerly belonged to Baroda, that it was recently merged in out State and forms a sort of an enclave in the State of Saurashtra, and as it is surrounded on all sides by the State of Saurashtra it was felt that certain special provision should be made with regard to this district. We express no opinion on the points urged by counsel with regard to this Article.
29. Then the Act is also challenged on the ground that it violates Article 19(1)(g) of the Constitution. It is pointed out that that Article gives the right to a citizen to carry on his business and that right can only be controlled by a reasonable restriction under sub-clause (6), and it is pointed out by Mr. Seervai that we have provisions here which would compel even a dealer who only does import-export business to take out a licence, to get himself registered, to make a return, to keep accounts, and to be at the beck and call of the Collector if he wants any information or any document to be produced before him, and according to Mr. Seervai these are restrictions which are unreasonable in their nature. We also express no opinion as to the validity of this Article. The answer that the Advocate-General has given is that in order that the Government should know what the nature of the business of every dealer is and whether he sells or buys articles which are liable to tax, it is necessary that all dealers should keep proper accounts and make proper returns.
30. Mr. Seervai has also argued on the strength of Mohamad Yasin v. The Town Area Committee, Jalalabad, and Another : [1952]1SCR572 , that the licence fee he has to pay under the Act would be an illegal impost if the Act is ultra vires and that constitutes an unreasonable restriction upon the right of the petitioners to carry on their business.
31. There is only one final point which was not seriously pressed by the Advocate-General, but as it has been taken we might deal with it. The point is that the petitioners are not entitled to any relief under Article 19 of the Constitution because they are not citizens. It is pointed out that out of the seven petitioners six are corporations and that corporations cannot be citizens within the meaning of the Constitution. With regard to the seventh it is contended that it also is not a citizen because it is an association or a firm and a firm also cannot claim the benefit of Article 19. In our opinion, there is no substance whatever in this contention. Petitioner No. 7 is the firm of Metro Motors. It is well-known and well understood that a firm has no legal entity. It is merely a compendious name of the partners of whom it is constituted. Therefore we have on the record not a corporation or a legal entity consisting of Metro Motors, but what we have on record before us is the partners of that firm, and the petitioners on oath state that both the partners of that firm are citizens of India and that allegation has not been denied in the affidavit in reply by the Government. Therefore, if we were called upon to give relief under Article 19, we could certainly have given that relief at least to the seventh petitioner whose partners consist of citizens of our country.
32. The result therefore is that the petition succeeds and there will be an order issued against the respondents in terms of prayer (a) of the petition. Respondents must pay the costs of the petitioners.
33. Petition allowed.