ivil Appeal Nos
446 449 of 1976
Appeals by Special Leave from the judgment and Orders dated
14 1338SCI76 1004 7 4 1969 and 25 1 1972 of the Bombay High Court Nagpur Bench In STR Nos
17 to 20 of 1964 and CIVIL APPEAL NOS
450453 OF 1976
V p Raman Addl
General for India SB Wad and M N Shroff for Appellants in CAs
450 to 45376
GL Sanghi A section Bobde ML Vaidya VA Bobde A G Meneses JB Dadachanji KJ John OC Mathur and Ravind er Narain for the Respondents in CAs
446 44976 and Appel lants in 2
450 45376 The Judgment of the Court was delivered by BEG J
The eight appeals before us by special leave arise out of four Sale Tax References under Section 231 of the Central Provinces and Berar Sales Tax Act 1947 hereinafter referred to as the Act 
Five of these were decided by a Division Bench of the Bombay High Court
As it answered the main question determining liabili ty to pay the sales tax under the Act against the State there are four appeals against it by the State
The sixth question which was one of law only was referred by the Division Bench to a Full Bench and this was determined in favour of the State
There are therefore four appeals by the assessee against the Full Bench decision
Ms Central Provinces Manganese Ore Co Ltd the assessee has its Head Office in London
It carries on business on an extensive scale
It owns 22 manganese ore mines in Madhya Pradesh from where manganese ore after being excavated is sent mostly abroad through different ports
The Company is a registered dealer under the Act
It used to enter into contracts at places outside Madhya Pradesh for the despatch of what came to be known in the special parlance of this company s business as Oriental Mixture But the contracts contain specifications only of strengths of manganese ore to be supplied with permissible percentages of other ingredients as admixtures
The term Oriental Mixture was evidently employed by the Company itself to describe a particular type of conglomerate which the unloading at one place of Various types of manganese ore produced
The required average consistency or strength of manganese ore specified in the contracts which did not contain a reference to any Oriental Mixture was said to be obtained in the course of this mechanical process of transportation when various grades of manganese ore were heaped together
These grades of manganese ore were trans ported in railway wagons from one or more mines and it appears that the order in which trucks wereloaded in goods trains and unloaded was also soarranged that the mixture came into existence as described above in the mere process of unloading at the port
1005 But this procedure did not seem to involve a process of Manufacture as that term is ordinarily understood to which the assessee could be said to have subjected its manganese ore
The case of the assessee company was that the Oriental Mixture as a taxable commodity came into existence only after the ores got mixed up in the process of unloading and not before so that it could not be taxed as goods in exist ence in Madhya Pradesh at the time when contracts relating to these goods were made
Other questions appear to be subsidiary
Nevertheless we have to consider them before coming to the crucial question which is Is the process described above one of manufacture so that a new kind of goods known as Oriental Mixture came into existence at the port where manganese ore trucks were unloaded As the High Court pointed out the periods involved in the four references before it were not governed by the provisions of the Constitution
Reference No 17 of 1964 for the period 1st January 1947 30th September 1947
Reference No 18 of 1964 for the period 1st October 1947 to 31st December 1948
Reference No 19 of 1964 for the period 1st January 1949 to 31st December 1949
Reference No 20 of 1964 for the period 1st January 1950 to 25th January 1950
We therefore agree with the High Court s view that Article 286 of the Constitution which is not retrospective in operation could not help the assessee merely because it was there at the time of assessment
The next question to be considered which was referred to the Full Bench flows from Explanation II to Section 2g of the Act which was amended by the CP  Berar Sale Tax Amendment Act No XVI of 1949 came into force on 11th April 1949
Hence the law as found after the amending Act could apply if valid only to the last two refer ences
But the question which arose on the assumption that the amendment was ineffective was whether the unamended law could be applied at all after the purported amendment
Section 2g of the Act with its two explanations before it was amended may be reproduced here in toto
It reads as follows 2g sale  with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or other valuable considera tion including a transfer of property in goods made in course of the execution of a contract but does notinclude a mortgage hypothecation charge or pledge Explanation I A transfer of goods on hire purchase or other installment system of pay ment  shall notwithstanding 1006 that the seller retains a title to any goods as security for payment of the price be deemed to be a sale Explanation 11 Notwithstanding anything to the contrary in the Indian  the sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as define in that Act in respect thereof is made shall wherever the said contract of sale is made be deemed for the purpose of this Act to have taken place in the Central Provinces and Berar
Section 2 of the Amending Act of 1949 provid ed 2
In section 2 of the Central Provinces and Berar Sales Tax Act 1947 hereinafter referred to as the said Act a in clause g for Explanation I1 the following shall be substituted  Explanation I1  Notwithstanding anything to the contrary in the Indian  the sale or purchase of any goods shall be deemed for the purposes of this Act to have taken place in this province wherever the contract of sale or purchase might have been made a if the goods were actually in this province at the time when the contract of sale or purchase in respect thereof was made or b in case the contract was for the sale or purchase of future goods by descrip tion then if the goods are actually produced or found in this Province at any time after the contract of sale or purchase in respect thereof was made
The submission made on behalf of the assessee which was accepted by the High Court was that as the amendment did not receive the assent of the Governor General under Section 107 of the Govt
of India Act it was void
It was howev er also urged on behalf of the assessee that a repeal of the previously existing section did not require the assent of the Governor General at all
The argument was that the original provision was validly repealed but as no substi tution of the new provision could take place because the assent of the Governor General was not obtained only the repeal survived
The result of accepting such a submission would be that the substitution will have to be split up into two distinct enactments firstly a repeal of the original section 2g of the Act and secondly the substitution of the new provision for the repealed one
The assessee s argument was that two processes one of repeal and another of substitution are necessarily implied in such an amend ment as the one before us
It was urged that both had received the assent of the Governor but since the substi tuted provision alone required the assent of the Governor General which was not obtained a repeal which was assent ed to by the Governor stood on its own separate footing
Thus the result was said to be a repeal simpliciter without the enactment of the fresh provision meant to replace it
1007 It was submitted that the High Court after finding the substituted provisions of section 2g of the Act to be invalid had erred in holding that the repeal was also ineffective
It was contended that such a view resulted in attributing to the legislature an intention contrary to that which it had unmistakably expressed by repealing the una mended provision
It was urged that the repeal which was clearly intended must be held to be valid
assessment periods
Of course this argument assumes that the repeal and the new  enactment are separate
In Shriram Gulabdas vs Board of Revenue Madhya Pradesh  Ant
the province is not ultra vires the Provision Legislature
We must make it clear that our answer to this question is in the affirmative free from considerations arising under Article 286
We have shown that the necessary power to make the unamended Explanation did exist in the State Legisla ture but we have also made it clear that by virtue  of Article 286 the Explanation can no longer be enforced because under the present Constitution the sales tax can only be col lected at the market and where the goods are delivered for consumption
We may also state that the amended Explanation II is not validly enacted because it makes drastic changes in the rules as found in the without obtaining the  assent of the Governor General
The effect of the amended Explanation going out would be to rehabilitate the old Explanation as it existed because the amendment being unconstitutional will fail to work any change in the law See the opinion given by one of us Hidayatullah J in Laxmibai vs The State ILR  608 610 FB
No question relating to the enforcement of the Sales tax by any collection to be made after the Constitution came into force was raised the cases before us
This was held to be the correct position in the case of Shriram Gulabdas Supra
It was also clearly held there that the result of the invalidity of the amended explana tion was to leave the law unaltered as it stood before the amendment
We approve of this pronouncement made long ago on this very question
It was urged on behalf of the assessee that the case of Shriram Gulabdas supra contained what was merely an obser vation with regard the rehabilitation of the preexisting law as that question was no directly under consideration there
It was also submitted that this observation must be deemed to have been over ruled by subsequent pronouncements of this Court
1 1952 3 STC 343
1008 The passage cited above by us occurs in answering the fifth question considered there which was framed as follows v Whether Explanation II to clause g of Section 2 which makes an agreement of sale taxable even though the sale may have taken placed outside the Province ultra vires of the Provincial Legislature  Other questions framed indicate that it was not only the validity of the provision both before and after its amend ment which was directly considered and pronounced upon but the application of the concept of sale under the unamended law and its effects were also under consideration
We think that the view that the unamended law was in operation was not a mere obiter dictum
It was necessary to decide that question before other questions could be determined
We give out own reasons below for accepting the correctness of the view taken then
The following passage was also cited from Koteswar Vittal Kamath VK Rangappa Baliga  Co at p 509 Learned counsel for the respondent however urged that the Prohibition Order of 1119 cannot in any case be held to have continued after 8th March 1950 if the prin ciple laid down by this Court in Firm ATB Mehtab Majid  Co vs State of Madras 1963 Supp
2 SCR 435 AIR 1963 SC 928 is applied
In that case rule 16 of the Madras General Sales Tax Turnover and Assessment Rules 1939 was impugned
The Court held that the  new Rule 162 was invalid because the provisions of that
rule contra vened the provisions of Article 304a of the Constitution
Thereupon it was urged before the Court that if the impugned rule be held to be invalid the old Rule 16 gets revived so that the tax assessed on the basis of that rule will  be good
The Court rejected this submission by holding that  Once the old rule has been substituted by the new rule it ceases to exist and it does not automatically get revived when the new rule is held to be invalid 
On that analogy it was argued that if we hold that the Prohibition Order of 1950 was invalid the previous Prohibition Order of 1119 cannot be held to be revived
This argument ignores the distinction between supersession of a rule and substitution of a rule
In the case of 1963 Supp 2 SCR 435 AIR supra the new Rule 16 was substituted for the old Rule 16
The process of substitution consists of two steps
First the old rule is made to cease to exist and next the new rule is brought into existence in its place
Even if the new rule be in valid the first step of the 1  509  471009 old rule ceasing to exist comes into effect and it was for this reason that the Court held that on declaration of the new rule as in valid the old rule could not be held to be revived
In the above mentioned passage this Court merely explained the argument which was ac cepted in the case of firm ATB Mehtab Majid  Co vs State of Madras1
After doing so it distinguished the facts in Koteswar s case supra relating to an alleged substitution of one Prohibition Order by a subsequent order which was found to be invalid
It recorded its conclusion as follows at p 509 In the case before us there was no substitution of the Prohibition Order of 1950 for the Prohibition Order of 1119
The Prohibition Order of 1950 was promulgated independ ently of the Prohibition Order of 1119 and because the provisions of law it would have had the effect of making the Prohibition Order of 1119 inoperative if it had been a valid order
If the Prohibition Order of 1950 is found to be void ab initio it could never make the Prohibition Order of 1119 inopera tive
The argument before us is that since the word substi tuted is used in the amending Act of 1949 it necessarily follows that the process embraces two steps
One of repeal and another of the new enactment
But this argument is basically different from the argument which prevailed in Koteswar s case supra where a distinction was drawn be tween a substitution and supersession
It is true that as the term substitution was not used there the old rule was not held to have been repealed
Nevertheless the real basis of that decision was that what was called supersession was void ab initio so that the law remained what it would have been if no such legislative process had taken place at all
It was held that the void and inoperative legislative process did not affect the validity of the pre existing rule
And this is precisely what is contended or by the State before us
In the case before us although the word substitution is used in the amending Act yet the whole legislative process termed substitution was itself abortive
of India Act was lacking
Such ineffectiveness was the very reason why in the case of Sriram Gulabdas supra it was held that the previous law stood unaffected by the attempted legislation called substitution
Moreover the case of Shriram Gulabdas supra is a direct authority on the very provisions now before us
Other cases cited are on very different legislative provisions
We do not think that the word substitution necessarily or always connotes two severable steps that is to say one of repeal and another of a fresh enactment even if it implies two steps
Indeed the natural meaning of the word substitution is to indicate that the process cannot be split up into two pieces like this
If the process de scribed as substitution fails it is totally ineffective so as to leave intact what was sought 1 1963 Suppl
2 SCR 435 1010 to be displaced
That seems to us to be the ordinary and natural meaning of the words shall be substituted
This part could not become effective without the assent of the Governor General
The State Governor s assent was insuffi cient
It could not be inferred that what was intended was that in case the substitution failed or proved ineffective some repeal not mentioned at all was brought about and remained effective so as to create what may be described as a vacuum in the statutory law on the subject matter
Pri marily the question is one of gathering the intent from the use of words in the enacting provision seen in the light of the procedure gone through
Here no intention to reveal without a substitution is deducible
In other words there  could be no repeal if substitution failed
The two were a part and parcel of a single indivisible process and not bits of a disjointed operation
It could not be said that what the Legislature intended
or what the Governor had assented to consisted of a separate repeal and a fresh enactment
The two results were to follow from one and the same effective Legislative process
The process had therefore to be so viewed and interpreted
Some help was sought to be derived by the citation of BN Tewari vs Union of India  Ors1 and the case of Firm ATB Mehtab Majid  Co vs State of Madras supra
Tewari s case supra related to the substitution of what was described as the carry forward rule contained in the departmental instruction which was sought to be substituted by a modified instruction declared invalid by the Court
It was held that when the rule contained in the modified in struction of 1955 was struck down the rule contained in a displaced instruction did not survive
Indeed one of the arguments there was that the original carry forward rule of 1952 was itself void for the very reason for which the carry forward rule contained in the modified instructions of 1955 had been struck down
Such a doctrine applies in a case where a judgment of a Subordinate Court merges in the judgment of the Appellate Court or an order reviewed merges in the order by which the review is granted
Its application to a legislative process may be possible only in cases of valid substitution
The legislative intent and its effect is gathered inter alia from the nature of the action of the authority which func tions
It is easier to impute an intention to an executive rule making authority to repeal altogether in any event what is sought to be displaced by another rule
The cases cited were of executive instructions
The procedure for enactment is far more elaborate and formal
A repeal and a displacement of a Legislative provision by a fresh enactment can only take place after that elaborate procedure has been followed in toto
In the case of any rule contained in an executive instruction
1  1011 on the other hand the repeal as well as displacement are capable of being achieved and inferred from a bare issue of fresh instructions on the same subject
In Mehtab Majid  Co s case supra a statutory role was held not to have revived after it was sought to be substi tuted by another held to be invalid
This was also a case in which no elaborate legislative procedure was prescribed for a repeal as it is in the case of statutory enactment of statutes by legislatures
In every case it is a question of intention to be gathered from the language as well as the acts of the rulemaking or legislating authority inthe context in which these occur
A principle of construction contained now in a statutory provision made in England since 1850 has been Where an Act passed after 1850 repeals wholly or partially any former enactment and substitutes provision for the enactment repealed the repealed enactment remains in force until the substituted provisions come into operation
See Halsbury s Laws of England Third Edn
 Craies on Statute Law 6th Edn p386
Although there is no corresponding provision in our General Clauses Acts yet it shows that the mere use of words denoting a substitution does not ipso facto or automatically repeal a provision until the provision which is to take its place becomes legally effective
We have as explained above reached the same conclusion by considering the ordi nary and natural meaning of the term substitution when it occurs
without anything else in the language used or in the context of it or in the surrounding facts and circumstances to lead to another inference
It means ordinarily that unless the substituted provision is there to take its place in law and in effect the pre existing provision continues
There is no question of a revival
This question of interpretation was referred separately to the Full Bench of the Bombay High Court which drew a distinction between the two meanings of the word substitut ed firstly where it involved a direction as to what would have to be removed or repealed simultaneously with another as to what was to be substituted so as to involve two directions and secondly where the substitution merely carried one direction to modify 
It is difficult to see how a single direction to one direction to modify
It is difficult to see how a single direction to substitute would be effective without implying in it another to remove what was to be displaced
Perhaps more simply and correct ly stated the difference between two meanings of the word substituted is one where it stands for two separable legislative process and another where it stands for one total or completed legislative procedure including the assent of the Governor General which would be covered by the words shall be substituted
The Full Bench came to the conclusion that in the context in which the words directing substitution occur they do not imply that in the event of the failure of the amendment taken as a whole a repeal would survive
To be able to Survive a repeal 1012 had first to come into existence
In the situation before us no repeal came into legal existence
The real question for determination is always one of the meaning of words used in a purported enactment in a particu lar context
We think that the Full Bench of the High Court correctly held that there was no repeal of the existing provision when substitution by means of an amendment failed to be effective
It had also rightly distinguished some of the cases cited before it on the ground that in those cases the process for substitution was interpreted to necessarily imply both a repeal and re enactment out of which only the repeal which took place had survived when the re enactment proved abortive
On the question whether the particular goods existed in Madhya Pradesh at all at the time of the contracts so that the contract could be said to be referable to them the High Court had observed   the question was whether Oriental Mixture was present in the former State of Madhya Pradesh when the contracts of sale in respect of Oriental Mixture were made by the applicant company
On this point which was purely a question of fact the decision of the second appellate authority was final and that decision was that Oriental Mixture in the form in which the contracts to sell that commodity were made was present in the State of Madhya Pradesh at the time when those contracts were made
Therefore that point was not open for decision before the Tribunal and it is not necessary to dilate on the facts relating to that question
It also said In Commissioner of Sales Tax Eastern Division Nagpur vs Hesenali Adamji  Co 1959 10 STC 297 there was no evidence that at the date when the agreement for sale was made the particular logs delivered there under were in Central Provinces in the shape of logs at all and a standing tree which was in existence at the date of the agreement of sale and out of which the logs were later on prepared cannot be said to be the form of the commodity in respect of which the agree ment of sale was made
The Tribunal relied on the observations in the Judgment of the Su preme Court at page 310 which are to the effect that the goods must at the date of the contract be there in the taxing State in the form in which they are agreed to be sold
In that case the agreement of sale can be said to be in respect of those goods
Here as found by the second appellate authority ore in the form of Oriental Mixture was present in the taxing State when contracts of sale in re spect of Oriental Mixture were made by the Head Office of the applicant company
After giving the findings set out above on the question whether the goods existed in the State of Madhya Pradesh when they were sold and whether the contracts were refera ble to these goods the High Court 1013 proceeded to consider the question whether Oriental Mix ture itself had come into existence in Madhya Pradesh or at the port where the goods forming the Oriental Mixture became mixed up in the process of unloading and transporta tion
Apparently what the High Court had meant by its earlier findings was not that the Oriental Mixture was in existence in Madhya Pradesh but that the ingredients which went into its composition existed in Madhya Pradesh at the time when the contracts were made
It had finally reached the conclusion that the Mixture itself was formed at the port where the ingredients were unloaded
We are unable to accept the High Court s reasoning that while the goods which went into the composition of the Oriental Mixture existed in Madhya Pradesh when the contracts were made yet they were not taxable in Madhya Pradesh because  the Oriental Mixture came into existence at the port
In other words it held that a mere mixture of goods even if it occurs in the process of unloading converts the goods which existed in Madhya Pradesh and were transported to the port into separately identifiable commercial commodity Known as Oriental Mixture
As already mentioned above this term is not used in the contracts but is a term employed by the firm itself to indicate the specifications contained in the contracts of goods ordered
It is difficult to see what process of manufacture is gone through so as to bring a new category or genus of commercial goods into existence at the port
The High Court had relied on cases where raw tobacco subjected to various processes such as sprinkling of jag gery juice or water on it and allowing it to ferment for some time before cutting it up and packing it was held to become a new commodity
These cases were The State of Madras vs Bell Mark Tobacco Co C The State of Madras vs Swasthik Tobacco Factory2 Anwarkhan Mehboob Co vs The State of Bombay Now Maharashtra  Ors
Reliance was also placed on behalf of the assessee on Shaw Wallace  Co Ltd vs The State of Tamil Nadu4 where it was held that goods were actually subjected to a process of manufacturing when chemical fertilisers and fillers like China clay gypsum and other ingredients were mixed at a mixing works of a company by means of shovels so as to conform to a particular formula
It was held there by this Court that the resulting product was a commercially distinct commodity
Several cases of manure mixtures are referred to in the case
Now  in the case of manure mixtures made out of different ingredients at a mixing works it can per haps be said that a chemical process is gone through
In any case the product which came into existence was known and sold as a separate commercial commodity in the mar ket
It required a process to be gone through at what were known as mixing works of the company to convert it into that commodity
On the other hand in the case before us it seems to us that what has been manufactured by the asses see is the same Oriental Mixture 1 1967 19 STC 129
2 1966 17 STC 316
3 1960 11 STC 698
4 1976 3 STC 522
1014 only if the term manufacture can be employed at all to anything done by the assessee
What is to be determined is whether there has been the manufacture of a new product which has a separate commercially current name in the mar ket
The mere giving of a new name by the seller to what is really the same product is not the manufacture of a new product
There is it appears to us no new process of the manufacture of goods at all by the assessee before us
Again cases in which logs of wood were cut in order to convert them into planks eg
Shaw Bros  Co vs The State of West Bengal1 could be of no assistance in the case before us
That too could be a process of manufacture
The High Court had also made a passing reference to Nil giri Ceylon Tea Supplying Co vs The State of Bombay2 a case decided by the Bombay High Court where different brands of tea purchased in bulk and without application of any mechanical or chemical process were mixed so as to conform to a particular mixing formula but this mixture was held not to constitute a fresh commodity as neither process ing nor alteration of the ingredients of the tea in any manner had taken place
We think that the similarity of the process to which goods sold were subjected in this case seems to make the reasoning adopted in this case more prop erly applicable to the cases before us than any other found in other cases mentioned above
The ingredients were not even shown to have got so mixed up as to become inseparable
As already mentioned above this is a case in which the term Oriental Mixture was nothing more than a name given by the appellant company itself to the goods which were in the State of Madhya Pradesh at the relevant time and sent from there specially in order to satisfy the specifications given in the contracts
The goods get mixed up in the process of unloading
The mere fact that the specifications in the contracts are satisfied when they get mixed up is not a good enough ground for holding that a new product has been manufactured
They could no more constitute a new commodity than parts of some machinery sent by its manufacturer to a purchaser outside a State so that the buyer has to just fit in the various parts together becomes a new commodity when the parts are fitted in
The mere fitting up of parts or a mixture of goods without employing any mechanical or chemical process of manufacture could not we think result in a new commod ity
We therefore answer the following six questions before the High Court as follows Q 1
Was the Tribunal right in holding that although the assessment order was made after the Constitution of India came into force Article 286 was thereby not contravened because such order related to a period prior to 2611950 1 1963 14 STC 878
2 1959 10 STC 500 1015 Ans
Yes The provisions of Article 286 were not contravened
Was the Tribunal right in holding that Explanation II to Section 2g as was origi nally embodied in the Sales Tax Act 1947 got restored on the Statute book because of the unconstitutionality of the substituted Expla nation enacted in the Sales Tax Amendment Act 1949  Ans
There is no question of restoration of unamended explanation II to Section 2g as the purported amendment itself did not take effect
Hence the unamended provision stood as it was before the attempted amendment
The question framed rests on a misconception that there was something to be restored
As nothing was taken away nothing was there to be restored
And there was nothing added or substituted
Does the Tribunal s decision not contra dict the true meaning of the language sale of any goods which are actually in the Central Provinces and Berar at the time when the contract of sale as defined in that Act in respect thereof is made as occuring in Explanation II to section 2g of the Sales Tax Act with reference to in respect thereof is reference to specified or ear marked goods which are actually present in the taxing State when the contracts are made  Ans
This is a question of fact as to what contracts specify and whether those goods were taxed on which the finding already recorded are enough to dispose it off against the assessee
In any case was the Tribunal right in its interpretation application and use of the provisions of original Explanation II to section 2g of the Sales Tax Act even as they were  Ans
Was the Tribunal right in assuming the law to be that the existence of ingredients of ores in the taxing State in question which were sufficient if and when mixed in the due proportion for yielding different varieties of standard mixtures contracted for by the over seas buyers was in law enough to attract the tax  Ans
There is no question of assuming any thing
It was only manganese ore of different grades which was unloaded at the port and gives the name of Oriental Mixture because the ingredients got mixed up automati cally in transportation and satisfied certain specifications
No new commodity was produced in this process
Was the Tribunal right in holding that the Sales Tax Authorities had found as a fact that the goods consisting of oriental mixture 1016 were in the Madhya Pradesh State when the contracts in respect of these goods were made  Ans
Before we part with the case we may observe that the questions could have been much more lucidly and simply and less culmsily stated
The appeals of the assessee company against the decisions of the Full Bench are dismissed
The appeals of the State of Maharashtra against the judgment of the Division Bench are allowed
Parties will hear their own costs
VPS Appeals dismissed


Summary:
Section 2g of the Central Provinces and Berar Sales Tax Act 1947 defines sale  and Explanation II to the sub section provides that notwithstanding anything to the contrary in the Indian  the sale of any goods which are actually in the State at the time when the contract of sale as defined in that Act in respect thereof is made shall wherever the contract of sale is made be deemed for the purpose of this Act to have taken place in the State
The Amending Act of 1949 substituted for this Explanation another Explanation but as the amend ment did not receive the assent of the Governor General under section 107 of the Government of India Act 1935 it was void
The assessee owned manganese ore mines in the State and was entering into contracts at places outside the State for the despatch abroad of manganese ore through different ports
The contracts contained specifications of strengths of manganese ore to be supplied with permissible percentages of other ingredients an admixtures
The assessee arranged for the transport of various grades of menganese ore in railway wagons from one or more of the mines and the order in which trucks were loaded and unloaded was so arranged that the required average consistency or strength of manganese ore specified in the contracts was obtained in the course of such unloading
The assessee described the par ticular type of conglomerate as Oriental mixture  The assessee contended 1 that the original Explanation II was validly repealed by the Amending Act and since no sub stitution of the new provision had taken place only the repeal survived and that therefore neither the old una mended provision nor its replacement were in operation with the result that the Sales after the date of amendment were
not subject to sales tax and 2 even assuming that the unamended provision was in force Oriental Mixture  as a taxable commodity came into existence only after the ores got mixed up in the process of unloading and not before so that its sale could not be taxed as goods which are actu ally in the State  at the time when contracts were entered into
The High Court on a reference held the first contention against the assessee and the second in favour of the asses see
Both sides appealed to this Court
Dismissing the appeals of the assessee and allowing the appeals of the State
HELD 1 As the period involved is preconstitution period article 286 of Constitution which is not retrospective in operation would not help the assessee even though the as sessment was after the Constitution came into force
1007 F 2 There was no repeal of the existing Explanation when substitution  by means of the amending Act failed to be effective and so the sale could be taxed under it
1012 A B a The question is one of gathering the intent from the use of words in the enacting provisions seen in the light of the procedure gone through and from the nature of the action of the authority which functions 1010 B 1003 b The word substitution  does not necessarily or always connote two severable steps one of repeal and another of a fresh enactment even if it implies two steps
The natural meaning of the word substitution  is to indicate that the process cannot be so split up
If the process described as substitution fails it is totally ineffective so as to leave in tact what was sought to be displaced
It could not be inferred that what was intended was that in case the substitution failed or proved ineffec tive some repeal not mentioned at all was brought about and remained effective so as to create what may be described as a vacuum in the statutory law on the subject matter
The term substitution  when it occurs without anything else in the language used or in the context of it or in the sur rounding facts and circumstances means ordinarily that unless the substituted provision is there to take its place in law and in effect the preexisting provision continues
1009 H 1010 A G c In the present case the whole legislative process termed substitution was abortive
because it did not take effect for want of the assent of the GovernorGeneral
Considering the actual procedure even if the Governor had assented the substitution yet the amendment would have been effective as a piece of valid legislation only when the assent of the Governor General had also been accorded to it
It could not be said that what the Legislature intended or what the Government had assented to consisted of a separate repeal and a fresh enactment
The two results were to follow from one and the same effective legislative process
1010 CD d It is easier to impute an intention to an executive rule making authority to repeal altogether in any event what is sought to be displaced by another rule because the repeal as we11 as replacement are capable of being achieved and inferred from a bare issue of fresh instructions on the same subject
In the case of a legislative provision sought to be amended by a fresh enactment the procedure for enact ment is far more elaborate and formal
A repeal and a replacement of a legislative provision by a fresh enactment can only take place after such elaborate procedure has been followed in toto
Even the analogy of a merger of an order into another which was meant to be its substitute could only where there is a valid substitute
1011 C F 1012 A B Koteswar Vittal Kamath vs
K Rangappa Balica  Co AIR 1969 SC  509   47 Firm ATB
Mehtab Majid  Co vs State Madras 1963 Suppl
2 SCR 435 and BN Tewari vs Union of India  Ors  explained
Shriram Gulabdas vs Board of Revenue Madhya Pradesh  Anr
1952 3 STC 343  367 approved
The present case is not one of mixing various ingre dients at a mixing works  and the product which comes into existence being sold as a separate commercial commodity in the market
The goods got mixed up in the process of un loading without employing any mechanical or chemical process of manufacture
The mere fact that the specifications in the conrtacts were satisfied when they got so mixed up is not a good enough ground for holding that a new product has been manufactured
The mere giving of the new name Orien tal mixture by the assessee to
what is really the same product is not the manufacture of a new product
1013 A D G H 1014 A B The Stale of Madras vs Bell Mark Tobacco Co 1967 19 STC 129 The State of Madras vs Swasthik Tobacco Factory 1966 17 STC 316 and Anwarkhan Mchboob Co vs The State of Bombay Now Maharashtra  Ors
1960 11 STC 698 and Shaw Bros  Co vs The State of West Bengal 1963 14 STC 878 referred to
Shaw Wallace  Co Ltd vs The State of Tamil Nadu 1976 37 STC 522 explained
Nilciri Ceylon Tea Supplying Co vs The State of Bombay 1959 10 STC 500 approved