ivil Appeal No 619 NT of 1975
From the Judgment and Order dated 1171973 of the High Court of Madras in Tax Case No 2 of 1970
R Mohan for the Appellant
K Rajendra Choudhary for the Respondent
The Judgment of the Court was delivered by KANIA J
This is an appeal against the common judgment of a Division Bench of the High Court of Judicature at Madras in Tax Cases Nos 2  3 of 1970
The appeal has been preferred pursuant to special leave granted by this Court under Article 136 of the Constitution of India
The facts giving rise to the appeal are as follows The Dharangadhara Chemical Works Ltd is a manufacturer of Caustic Soda and certain other chemicals
Dharangadhara Chemicals Works Ltd referred to hereinafter as the Chemical Company entered into an agreement dated 9th August 1957 under which it agreed to sell all its products to Dharangadhara Trading Co Pvt Ltd referred hereinafter as the Trading Company
Under clause 1 of the said agreement the Chemical Company agreed to confine the sale of all the products manufactured by it at all its works to the Trading Co for a period of 5 years from the 1st day of March 1958
Clause 2 of the agreement provided the Chemical Co would make the sales directly to the Trading Co on a principal to principal basis against offers or indents
Clause 3 provided that the selling price would be determined by the Board of Directors of the Chemical Co on the basis of ex factory or FOR at booking or FOR destination stations as decided upon by the Directors
The delivery of the goods would however be given FOR at booking stations
The Trading Co would make payments to the Chemical Co within one month from the date of supply or sale of goods by the Chemical Co Pursuant to this agreement sales were effected by the Chemical Co to the Trading Co
Although the aforesaid agreement contained the general terms as set out earlier neither the booking stations nor the destination stations nor the sale price were given in the said agree 808 ment
The Trading Co used to given directions to the Chemical Co for despatching specified quantities of goods to the stations named by the Trading Co and as per these directions the Chemical Co booked the goods at the booking station which was invariably Arunuganeri Railway Station in the State of Tamil Nadu showing themselves as the consignors and the Trading Co as the consignees of the goods specified in that contract of sale
After booking the goods the invoices were handed over to the Trading Co by the Chemical Co
It may be mentioned that the actual quantities sold the sale price the booking station and the destination stations were not determined under the aforesaid agreement of 9th August 1957 but in the actual contracts of sale in respect of definite or specified quantities
The mode in which sales were made was that the Trading Co obtained orders from out of State buyers and entered into agreement of purchase with the Chemical Co for these specified quanities
All the goods sold under these contracts of sale were booked at the aforesaid railway station in Tamil Nadu to the various places outside the State of Tamil Nadu where buyers from the Trading Co required the goods and after the goods were booked as aforesaid on the railway the railway receipts and the invoices concerned were endorsed and handed over to the Trading Co
Admittedly as pointed out by the Tribunal there were two sets of sales one by the Chemical Co to the Trading Co and the second by the Trading Co to the various out of State buyers
In the original assessment order for the assessment year 1961 62 made by the Sales Tax Officer both the sales by the Chemical Co to the Trading Co and the sales by the Trading Co to the out State buyers were treated as inter State sales
Consequently Central Sales tax was levied on the first sale but not on the second sale
This assessment order was revised and under the revised assessment order the assessing authority treated the sales effected by the Chemical Co to the Trading Co as intra State sales and the sales effected by the Trading Co to the out of State buyers as inter state sales falling under Section 3 of the 
The assessees namely the Chemical Co as well as the Trading Co filed appeals before the Appellate Assistant Commissioner contending that both the said sales were inter state sales
It was contended by the assessee that the sales by the Trading Co to the out of State purchasers were admittedly inter state sales and as far as sales by the Chemical Co to the Trading Co were concerned these were also inter state sales as the sales were completed by the delivery 809 of railway receipts and invoices only after the inter state journey of the goods had commenced
These contentions were rejected by the Appellate Assistant Commissioner who dismissed the appeals
Both the assessees filed appeals against the decisions of the Appellate Assistant Commissioner to the Tribunal
The Tribunal allowed both the appeals
The Tribunal pointed out that there were two sets of sales the second set of sales by the Trading Co to out of State buyers was admittedly inter state in character
The Trading Co had filed necessary E 1  forms and C  forms in these cases and the transactions therefore fell within the scope of Section 62B of the and were exempt from tax under local Sales Tax Act as well as the 
As far as first set of sales namely by the Chemical Co to Trading Co were concerned it was pointed out that although under the agreement dated 9th August 1957 the sales were agreed to be FOR Booking Stations  and the booking station was in Tamil Nadu the delivery of goods could be either by physical delivery or by handing over documents of title
The delivery contemplated in the agreement was not actual physical delivery as the place of delivery was neither seller s place of business nor the buyers  place of business
Considering the manner in which the sales were effected and despatches made by the Chemical Co and after examining some specimen orders placed by the Trading Co with the Chemical Co the Tribunal came to conclusion that the delivery was effected by the Chemical Co to the Trading Co by delivery of documents of title namely the respective invoices and the railway receipts
The nature of sales by the Chemical Co to the Trading Co and the question whether they were inter state sales had to be decided after further taking into account the further instructions given by the buyers
The actual terms of the sales have to be determined not merely under the agreement dated 9th August 1957 as that agreement was a general agreement which did not specify the quantities to be sold the sale price booking stations the destination stations and so on but these actual terms could be determined only by taking into account the terms on which and the manner in which the actual sales were made by the Chemical Co to the Trading Co
For ascertaining these terms the Tribunal examined some of the subsequent orders placed by that Trading Co on the Chemical Co Taking into account all these the Tribunal found that as the orders were placed for booking specified goods to out of station buyers and the Chemical Co never give physical delivery of the goods to the Trading Co but booked the goods to the destinations as required by the out of state buyers and merely handed over documents of title to the Trading Co
It was clear that the movement of the goods 810 from the State of Tamil Nadu to the outside States was occasioned by the terms of the contract themselves and the sales were inter state sales falling within Section 3 Sub section a of the 
Alternatively if a view were taken that the sales did not fall under Sub section a of Section 3 the deliveries of goods sold were effected by the transfer of documents after the movement of the goods from Tamil Nadu to the other States had commenced and the sales could be regarded as covered under Sub section b of Section 3 of the 
From this decision of the Tribunal Revision Petitions under Section 38 of the Tamil Nadu General Sales Tax Act were preferred by the State of Tamil Nadu to the Madras High Court
The High Court upheld the views of the Tribunal and dismissed both the Revision Petitions which were numbered as Tax Cases Nos 2 and 3 respectively
An appeal was preferred by the State in the case of the Trading Co namely the case pertaining to the assessment of the sales from Chemical Co to the Trading Co The only submission advanced by Mr Mohan learned counsel for the appellant was that there were two sets of sales namely by the Chemical Co to the Trading Co and by the Trading Co to the out of State buyers
It was submitted by him that the first set of sales namely by the Chemical Co to the Trading Co were local or intrastate sales because under the agreement dated 9th August 1957 the delivery was to be effected at the booking station
In our view as the Tribunal has rightly pointed out the agreement dated 9th August 1957 is merely a general agreement and the actual terms of the contracts of sales as well as the instructions of the out of state buyers have to be taken into account in determining the nature of the sales in question
In view of this the conclusions arrived at by the Tribunal as well as the High Court that the sales by the Chemical Co to the Trading Co were inter state sales cannot be faulted and the learned counsel for the appellant has not advanced a single reason showing how that conclusion is incorrect
In fact this conclusion finds some support from the observations of this Court in Union of India  Anr
vs K G Khosla  Co P Ltd  Ors 1979 3 SCR 453 at p 460
In the result we find that there is no merit in the appeal and it must fail
The appeal is dismissed with costs
NPV Appeal dismissed


Summary:
By this writ petition Personal Assistants and Stenographers Grade I in the pay scale of Rs 550 900 attached with officers in the pay scale of Rs2500 2750 Level I ie heads of the departments in the Customs and Central Excise Departments of the Finance Ministry sought parity with the pay scale of the stenographers attached to the Joint Secretaries and the officers above
The petitioners asserted that they had been and were discriminated vis a vis the personal assistants and stenographers attached to the Joint Secretaries and the officers above in the Ministry and claimed that they should be placed in the pay scale of Rs650 1040 with effect from 1st January 1973
They contended that the basic qualifications method manner and source of recruitment and grades of promotion were the same as of their counterparts attached to the Joint SecretariesSecretaries and other officers in the Secretariat
According to them even on the criteria adopted by the Third Pay Commission there was no basis for any differentiation between the petitioners and their counterparts
While the petitioners got a grade of Rs550 900 their counterparts were in the pay scale of Rs650 1040
The petitioners asserted that this differentiation without any rational basis was discrimination violative of Articles 14 and 161 of the Constitution of India
They contended for equal pay for equal work and alleged discrimination in the adoption of the recommendation of the Third Pay Commission
The respondents denied that there was any discrimination differentiation without basis and referred to the Report of the Third Pay Commission recommending different and low scales of pay for the 999 stenographers of the non participating attached and subordinate offices in comparison with those in the Central Secretariat
It was emphasised that the difference in the functional requirements of the work done was a point
In devising any scales of various postscategories inter alia the degree of skill experience involved training required responsibility taken strain fatigue risk and confidentiality undertaken mental and physical requirements were the factors to be borne in mind
Dismissing the petition with an observation the Court  HELD The petition had to be disposed of on the basis of the position prevailing prior to the report of the Fourth Pay Commission and its acceptanceimplementation
1007B Equal pay for equal work is a fundamental right
But equal pay must depend upon the nature of the work done
It cannot be judged by the mere volume of work there may be qualitative difference as regards reliability and responsibility
Functions may be the same but the responsibilities make a difference
Often the difference is a matter of degree and there is an element of value judgment by those who are charged with the administration in fixing the scales of pay and other conditions of service
So long as such value judgment is made bonafide reasonably on an intelligible criteria having a rational nexus with the object of differentiation such differentiation will not amount to discrimination
Equal pay for equal work is a concomitant of Article 14 of the Constitution
But it follows that equal pay for unequal work will be a negation of that right
1009A C Differentiation in implementing the award or the recommendations of Pay Commission without rational basis may amount to discrimination
However in this case there is an element of faith reliability and responsibility and the functional responsibilities and the requirements of persons doing the same amount of physical work may be different in some cases depending upon the officers with whom the stenographers and personal assistants are attached
The basic principles on which differentiation would not amount to discrimination violative of Article 14 or Article 161 of the Constitution are well settled
Article 14 strikes at the arbitrariness in State action and ensures fairness and equality of treatment
It is attracted where equals are treated differently without any reasonable basis
Equal laws must be applied equally and there should be no discrimination between one person and another if as regards the subject matter of either administrative action or legislation their position is substantially the same
Article 14 forbids 1000 class legislation but permits reasonable classification for the purpose of legislation or administrative mandate
The classification must however be founded on an intelligible basis which distinguishes persons or things grouped together from those left out of the group and that differentia must have a rational nexus with the object to be achieved by the differentiation made in the statute or order in question
There ought to be causal connection between the basis of classification and the object of classification
The observations of the Constitution Bench of this Court in DS Nakara  Ors
vs Union of India  may be seen in this connection
1011B G In this case differentiation had been sought to be justified in view of the nature and the types of the work done that is on intelligible basis
The same amount of physical work may entail different quality of work some more sensitive some requiring more tact some less it varies with nature and culture of employment
The problem about equal pay cannot always be translated into a mathematical formula
If it has a rational nexus with the object to be sought for a certain amount of value judgment of the administrative authorities charged with fixing the pay scale has to be left with them and it cannot be interfered with by the Court unless it is demonstrated that either it is irrational or based on no basis or arrived at mala fide either in law or fact
In the light of the averments made and in the facts of this case it was not possible to say that the differentiation was based on no rational nexus with the object sought to be achieved
This application must fail and was dismissed
This however would not in any way prevent or prejudice the Government from reviewing the situation in the light of the report of the Fourth Pay Commission or any other appropriate body if any with such modification as the Government and the authorities concerned considered fit and proper
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