Case: M/s. Goodyear India Ltd Vs. State of Haryana and Another

interpretation, as it should be, it would be clear that the Constitutional changes introduced by the 46th Amendment in Art.269 read with the Entry, the tax on consignment of goods now comes within the exclusive legislative field of Parliament. The true test to find out what is the pith and substance of the legislation is to ascertain the true intent of the Act which will determine the validity of the Act. If the Parliament in exercise of its plenary power under Entry 92B of List I imposes any tax on the despatch or consignment of goods, Parliament will be competent to do so. It is, therefore, not possible to accept the argument that the chargeable event was lying dormant and is activated only on the occurrence of the event of despatch. The argument on the construction of the enactment is misconceived. The charging event is the event the occurrence of which immediately attracts the charge. Taxable event cannot be postponed to the occurrence of the subsequent condition. In that event, it would be the subsequent condition the occurrence of which would attract the charge which will be taxable event. If that is so, then it is a duty on despatch. In that view of the matter, this charge cannot be sustained. 74. As mentioned hereinbefore, the section. has been challenged as being violative of Art.14 of the Constitution. This attack is based on the discrimination between the two types of taxes but in the way we have construed the section, in our opinion, this question does not survive. It was further submitted by Dr. Pal that S.13AA of the Act is violative of Art.301 of the Constitution. It makes a discrimination between the dealer/ manufacturer who despatches the goods outside the State and the other dealer/ manufacturer. Both the dealer/ manufacturers purchase the goods on payment of purchase tax and use them in the manufacture of taxable goods. The incidence of additional tax on the purchase of goods is attracted only when such manufactured goods are despatched outside the State. If a dealer/ manufacturer has to despatch the goods outside the State, he has to pay a higher rate of tax and thus he is discriminated as compared to the other dealer/ manufacturer who purchases the raw material on payment of 4% purchase tax, but despatches the raw material straight outside the State and uses them in the manufacture of goods outside the State. The High Court held that there was no violation of Art.301 of the Constitution. Reference was made to the decision of this Court in Atiabari Tea Co. Ltd. v. State of Assam, (1961) 1 SCR 809 : (AIR 1961 SC 232 ); Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, (1963) 1 SCR 491 : (AIR 1962 SC 1406 ); Andhra Sugars Ltd. v. State of Andhra Pradesh (AIR 1968 SC 599 ) (supra); State of Madras v. N. R. Natraja Mudaliar, (1968) 3 SCR 829 : (AIR 1969 SC 147 ) and State of Kerala v. A. B. Abdul Khadir, (1970) 1 SCR 700 : (AIR 1970 SC 1912 ). 75. One has to determine: does the impugned provision amount to restriction directly and immediately on the trade or commerce movement? As was observed by this Court in Kalyani Stores v. State of Orissa, (1966) 1 SCR 865 : (AIR 1966 SC 1686 ), imposition of a duty or tax in every case would not tantamount per se to any infringement of Art.301 of the Constitution. Only such restrictions or impediments which directly or immediately impede free flow of trade, commerce and intercourse fall within the prohibition imposed by Art.301. A tax in certain cases may directly and immediately restrict or hamper the flow of trade, but every imposition of tax does not do so. Every case must be judged on its own facts and its own setting of time and circumstances. Unless the Court first comes to the finding on the available material whether or not there is an infringement of the guarantee under Art.301 the further question as to whether the Statute is saved under Art.304(b) does not arise. The goods taxed do not leave the State in the shape of raw material, which change their form in the State itself and there is no question of any direct, immediate or substantial hindrance to a free flow of trade. On the evidence adduced, we are in agreement with the High Court that the challenge to the imposition in the background of Art.301 cannot be sustained and, therefore, no question whether such imposition is saved under Art. 304(b) of the Constitution arises. 76. In the aforesaid view of the matter and for the reasons mentioned hereinbefore, it must be held that so far as the appeals in respect of the Haryana Act are concerned, the High Court was right in the view it took in Goodyear India Ltd.s case (1983) 53 STC 163 (Punj and Har) as well as the views expressed by the High Court in Bata India Ltd. v. State of Haryana, (1984) 54 STC 226: (1984 Tax LR are correct and are affirmed. The views of the High Court expressed in Des Raj Pushap Kumar Gulatis case (1985 Tax LR 2882) (Punj and Har) (FB) (supra) are incorrect for the reasons mentioned hereinbefore. The last mentioned judgment and the judgment and orders following passed by the Punjab and Haryana High Court are, therefore, set aside. In the premises, civil appeals Nos. 1166-72/85 (M/s. Goodyear India Ltd. v. State of Haryana and Anr.), civil appeal No. 1173-77 (NT)/ 85 (Gedore (I) Pvt. Ltd. v. State of Haryana and Anr.), civil appeal No. 2674/ 86 (M/ s. Kelvinator of India Ltd. and Another v. State of Haryana and others), civil appeal No. 1633 (NT)/85 (The F.C.I. v. The State of Haryana and Anr.) and civil appeal No. 3033 (NT)/86 (The F.C.I., Karnal v. The State of Haryana and others) are allowed and the judgment and order of the High Court are set aside.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]12. In my opinion, the High Court correctly noted in the said decision that the provisions of constitutional change have to be construed, and such problems should not be viewed in narrow isolationism but on a much wider spectrum and the principles laid down in Heydons case (1984) 3 Co Rep 7a are instructive. Hence, in a situation of this nature, it was just and proper to see what was the position before the 46th Amendment of the Constitution, and find out what was the mischief that was sought to be remedied and then discover the true rationale for such a remedy. InBlack claws on International Ltd. v. Papierwerke waldhof-Aschaffenburg Ag. (1975) 1 All ER, Lord Reid observed as follows :"One must first read the words in the context of the Act as a whole, but one is entitled to go beyond that. The general rule in construing any document is that one should put oneself in the shoes of the maker or makers and take into account relevant facts known to them when the document was made. The same must apply to Acts of Parliament subject to one qualification. An Act is addressed to all the lieges and it would seem wrong to take into account anything that was not public knowledge at the time. That may be common knowledge at the time or it may be some published information which Parliament can be presumed to have had in mindIt has always been said to be important to consider the mischief which the Act was apparently intended to remedy. The word mischief traditional. I would expand it in this way. In addition to reading the Act you look at the facts presumed to be known to Parliament when the Bill which became the Act in question was before it, and you consider whether there is disclosed some unsatisfactory state of affairs which Parliament can properly be supposed to have intended to remedy by the Act ........"13. The state of affairs that the Parliament has sought to remedy by the 46th Amendment of the Constitution, was that prior to the promulgation each State attempted to subject the same transaction to tax on the nexus doctrine under its sales tax laws. Consequently, on the basis of one or the other element of the territorial nexus, the same transaction had to suffer tax in different States with the inevitable hardship to trade and consumers in the same or different States. The framers of the Constitution being fully aware of the problems sought to check the same by a somewhat complex constitutional scheme and by imposing restrictions on the States power with regard to levy tax on the sale or purchase of goods under Art.286. The High Court in the judgment referred to hereinbefore, mentioned these factors. It is in this background that Art.269 was amended and clause (3) was added to it. The effect, inter alia, is that the power to levy tax on the sale or purchase of goods is now referable to the legislative power vested in the States by virtue of Entry 54 in List II of the 7th Schedule. However, this legislative authority of the States is restricted by three limitations contained in Arts. 286(1)(a), 286(1)(b) and 286(3) of the Constitution. It may be mentioned that Parliament by the 6th Amendment to the Constitution, enactedthe Central Sales Tax Act,, with the object to formulate principles for determining when a sale or purchase of goods takes place in the course of inter State trade or commerce or outside a State or in the course of import into or export from India, to provide for the levy, collection and distribution of taxes on sales of goods in the course of inter State trade or commerce and to declare certain goods to be of, special. importance and specify the restrictions and conditions to which State laws imposing taxes on the sale of purchase of such goods shall be subject. In this connection, the High Court referred to the various propositions as mentioned by the Law Commission in its 61st Report rendered in May, 1974. It is not necessary to set out the same in detail. It was in the aforesaid historical background that the High Court construed the provisions in question and came to the conclusion that plain reading of these would leave little manner of doubt that the legislative power to tax consignment transfers of goods from one branch of an institution to another branch thereof outside the State and all matters incidental, ancillary or complementary thereto were then declared to be vested in the Union of India to the total exclusion of the States. The High Court referred to the observations of this Court in Khyerbari Tea Co Ltd. v. State of Assam, AIR 1964 SC 925 , Navinchandra Mafatlal v. Commer. of Income tax, Bombay City, 1955 SCR 829 : (AIR 1955 SC 58 ) and Waverly Jute Mills Co. Ltd. v. Raymon and Co. (1) Pvt. Ltd. (1963) 3 SCR 209 : (AIR 1963 SC 90 ), and concluded that Entry 92B enabled the Union of India not only to tax the consignment of goods in the strict sense but also embraced all ancillary and complementary areas as well to the exclusion of the State Legislature therefrom. In the aforesaid light the High Court construed S.9(1)(b) of the Haryana Act, 1983. Analysing the provisions in detail it observed that S.9 of the Act was a charging section for the levy of purchase tax. It imposed liability for payment of purchase tax, therefore, it should be distinguished from the machinery section. The High Court examined the real nature of the business outside the State and found that there was merely a change in the physical sites of the goods without any change in the basic incident of ownership and control. Therefore, in its true nature a mere despatch of goods outside the State to another branch of the original institution is not and never can be the equivalent of a sale either as a term of art in the existing sales tax legislation and not remotely so in common parlance, and construing S.9(1)(b) of the Act, the High Court was of the view that the real taxing event is the despatch of the manufactured goods to a place outside the State in any manner otherwise than by way of sale in the course of inter State trade or commerce26. To accept the submissions advanced by Mr. Tewatia, assumptions and presumptions are to be made. It is not permissible to do so in a fiscal provision. See in this connection the observations of this Court in C.S.T., U.P. v. The Modi Sugar Mills Ltd. (1961) 2 SCR 189 : (AIR 1961 SC 1047 ) and Baidyanath Ayurved Bhawan (P) Ltd., Jhansi v. Excise Commissioner, U.P. (1971) 2 SCR 590  at p. 592: (AIR 197 : SC 378 at p. 380). In that background it must be noted that S.9 of the Act nowhere makes a reference to S.24 or any declaration furnished by the purchasing dealer on the basis of which he was granted temporary exemption and thereby revival of the original purchase tax on the breach of declaration as such. S.9 of the Act opens with the expression "Where a dealer liable to pay tax under this Act" and not "Whether a dealer has paid tax or has not paid tax". The phrase liable to pay tax under the Act must relate to liability to pay sales tax on such purchases27. It is well settled that the main test for determining the taxable event is that on the happening of which the charge is affixed. The realisation often is postponed to further date The quantification of the levy and the recovery of tax are also postponed in some cases. It is well settled that there are three stages in the imposition of tax. There is the declaration of liability, that is the part of the Statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment, that ex hypothesis has already been fixed. But assessment particularises the exact sum which a person is liable to pay. Lastly comes the method of recovery if the person taxed does not voluntarily pay. Reference may be made to the observations of Lord Dunedin inWhitney v. Commissioner of Inland Revenue (1926) AC 37 at p. 52and of the Federal Court in Chatturam v. CIT, Bihar (1947) 15 ITR 302 at p. 308: (AIR 1947 FC 32 at p. 35)34. This ingredient was neither argued nor was considered, so the passing reference based on the phraseology of the section is not the dictum of Kandaswamis case (AIR 1975 SC 1871 ). Secondly, in S.9, in the instant case, the raw materials purchased or used in the manufacture of new goods and thereafter those new goods were despatched outside the State of Haryana whereupon the tax was levied. This important factor is Wholly missing in S.7A of the Tamil Nadu Act, which was considered in Kandaswarnis case (AIR 1975 SC 1871 ). In that decision, this Court approved the Kerala High Courts decision in Malabar Fruit Products (1972 Tax LR 2202) (supra), which was confined to the interpretation of the words goods, the sale or purchase under the Act. A decision on a question which has not been argued cannot be treated as a precedent. See the observations of this Court in Rajput Ruda Maha v. State of Gujarat (1980) 2 SCR 353  at p. 356 : (AIR 1980 SC 1707 at p. 1708). The decision of the Division Bench of the Kerala High Court in Yusuf Shabeer v. State of Kerala. (1973) 32 STC 359 : (1974 Tax LR 1730) is clearly distinguishable. In Ganesh Prasad Dixits case (AIR 1969 SC 1276 ) (supra) the question of constitutional validity was not argued. A reference was made by Mr. Tewatia to the decision of the High Court in theCoffee Board v. commr of Commercial Taxes. (1985) 60 STC 142 (Kant)and the decision of this Court in Coffee Board, Karnataka v. commr of Commercial Taxes, Karnataka (1988) 70 STC 162 : (AIR 1988 SC 1487 ). In these cases the question involved was the acquisition of coffee by the Coffee Board under compulsory acquisition or purchase or sale of goods. That question is entirely different from the question with which we are concerned in these appealsIn case of latter, the State Legislature will have no power to impose any tax on such consignment or despatch of goods outside the State. If it is the former, then it will be valid. The question is that under the true constructions of S.13AA of the Act, on which the imposition of tax is made, or in other words, what is the incidence of that taxation or taxable event?In both these appeals, namely, civil appeals No. 4162/ 88 and 4163 / 88, the appellants M/ s Wipro Products Ltd. and Hindustan Lever Ltd. are contending that the levy isbad.The issue involved in both the appeals is the constitutional validity and legality of the provisions of S.13AA of the Act, which was introduced into the Act by the Maharashtra Act XXVIII of1982. Theappellant had a factory at Amalner in Jalgaon district in the State of Maharashtra wherein it uses non essential oil purchased by it for the manufacture and transport. The finished products, namely, vanaspati manufactured by the appellant used to be despatched to their various marketing. depots in the State of Maharashtra, Madhya Pradesh, Karnataka, Andhra Pradesh, U.P., Tamil Nadu and Kerala etc. On July 1, 1981 the rate of purchase tax payable on VNE oils (falling under Schedule C, part 1 at Entry 35) purchased within the State of Maharashtra from non registered dealers increased from 3% to 4%, by the Maharashtra Act 32 of 198165. The power to tax the sale or purchase of goods is different from the right to impose taxes on use or consumption. According to Dr. Pal, such power to levy sales tax cannot be exercised at the earlier stage of import or manufacture/ production nor the said power can be exercised at the later stage of use or consumption but only at the stage of sale or purchase. In respect of sales tax, the right to levy duty would not at all come into being before the time of sale/purchase. Sales tax cannot be imposed unless the goods are actually sold and may not be leviable if there is a transfer in some other form. See in this connection the observations of the Federal Court in Mukunda Murari Chakravarti v. Pabitramoy Ghosh AIR 1945 FC 1 at p. 22. Therefore, in this case it is necessary to ascertain what is the taxable event under S.13AA of the Act which attracts duty. A taxing event is that event the occurrence of which immediately attracts the levy or the charge of tax.,71. It is well settled that reasonable construction should be followed and literal construction may be avoided if that defeats the manifest object and purpose of the Act. See Commr. of Wealth tax, Bihar and Orissa v. Kripashankar Dayashanker Worah (1971) 81 ITR 763  at p. 768 : (AIR 1971 SC 2463 at pp. 2466-67), and Income tax Commissioners for city of London v. Gibbs (1942) 10 ITR (Suppl) 121 at p. 132 (HL). Mr. Dholakia further submitted that the Statement of Objects and Reasons also helps this construction. In our opinion, he rightly submitted that because the accounts had to be maintained in a particular manner is no criterion or evidence for determining when the liability arises. The law is that the liability to tax would be determined with reference to the interpretation of the Statute which creates it. It cannot be determined by referring to another Statute. As contended by both the sides, it is well settled that the doctrine of pith and substance means that if an enactment substantially falls within the powers expressly conferred by the Constitution upon the Legislature which enacted it, it cannot be held to be invalid merely because it incidentally encroaches upon matters assigned to another Legislature. See Kerala State Electricity Board v. Indian Aluminium Co., (1976) 1 SCR 552 : (AIR 1976 SC 1031 ) and Praffulla Kumar Mukherjee v. Bank of Commerce Ltd., AIR 1947 PC 60 at p. 6572. Therefore, the proper question which one should address to oneself is, whether S.13AA is in pith and substance, not levying tax on purchase but one levying tax on consignment. Depending upon the answer to the question, the validity of the action can be judged. Mr. Dholakia submitted that the Act is in pith and substance an Act levying tax on purchase and not one levying tax on consignment, and referred to the observations of this Court in State of Karnataka v. Ranganatha Reddy, (1978) 1 SCR 641 : (AIR 1978 SC 215 ). According to him, the consignment contemplated in S.13AA is only manufactured goods and no tax is levied under S.13AA in respect of such manufactured goods. He emphasised as aforesaid It is well settled that while determining nature of a tax, though the standard or the measure on which the tax is levied may be a relevant consideration, it is not the conclusive consideration. One must have regard to such other matters as decided by the Privy Council in Governor General in Council v. Province of Madras (AIR 1945 PC 98 ) (supra) not by the name of tax but to its real nature, its pith and substance which must determine into what category it falls. See the observations of R. R. Engineering Co. v. Zila Parishad, Bareilly, (1980) 3 SCR 1 : (AIR 1980 SC 1088 ), in re: A reference under the Govt. of Ireland Act, 1920 (1936) AC 352 at p. 358 and Navnitlal C. Javeri v. K. K. Sen, Appellate Asstt. Commr. of Income-tax, D Range, Bombay, (1965) 1 SCR 909  at p. 915 : (AIR 1965 SC 1375 at Pp. 1379-80)73. On an analysis we find that the goods which are despatched are different products from the goods on the purchase of which purchase tax was paid. The Maharashtra legislation has to be viewed in the context of 46th Amendment to the Constitution. The 46th Amendment introduced Art.269(1)(h) which lays down that the proceeds of the tax on consignment of goods (whether the consignment is to the person making it or to any other person) where such consignment takes place in the course of inter State trade or commerce will be assigned to the States. The said Amendment also introduced Entry No. 92B in List I of the 7th Schedule. The said Amendment was made on the consideration of the 61st Report of the Law Commission. Entry 92B in List I of the 7th Schedule and Art.269(1)(h) of the Constitution bring within its sweep the consignment of goods by a person either to himself or to any other person in the course of inter State trade or commerce. Art.269(3) gives the power to Parliament to formulate the principles for determining when a consignment of goods takes place in the course of inter State trade or commerce. If Entry 92B in List I is to be given the widest interpretation, as it should be, it would be clear that the Constitutional changes introduced by the 46th Amendment in Art.269 read with the Entry, the tax on consignment of goods now comes within the exclusive legislative field of Parliament. The true test to find out what is the pith and substance of the legislation is to ascertain the true intent of the Act which will determine the validity of the Act. If the Parliament in exercise of its plenary power under Entry 92B of List I imposes any tax on the despatch or consignment of goods, Parliament will be competent to do so. It is, therefore, not possible to accept the argument that the chargeable event was lying dormant and is activated only on the occurrence of the event of despatch. The argument on the construction of the enactment is misconceived. The charging event is the event the occurrence of which immediately attracts the charge. Taxable event cannot be postponed to the occurrence of the subsequent condition. In that event, it would be the subsequent condition the occurrence of which would attract the charge which will be taxable event. If that is so, then it is a duty on despatch. In that view of the matter, this charge cannot be sustained74. As mentioned hereinbefore, the section. has been challenged as being violative of Art.14 of the Constitution. This attack is based on the discrimination between the two types of taxes but in the way we have construed the section, in our opinion, this question does not survive. It was further submitted by Dr. Pal that S.13AA of the Act is violative of Art.301 of the Constitution. It makes a discrimination between the dealer/ manufacturer who despatches the goods outside the State and the other dealer/ manufacturer. Both the dealer/ manufacturers purchase the goods on payment of purchase tax and use them in the manufacture of taxable goods. The incidence of additional tax on the purchase of goods is attracted only when such manufactured goods are despatched outside the State. If a dealer/ manufacturer has to despatch the goods outside the State, he has to pay a higher rate of tax and thus he is discriminated as compared to the other dealer/ manufacturer who purchases the raw material on payment of 4% purchase tax, but despatches the raw material straight outside the State and uses them in the manufacture of goods outside the State. The High Court held that there was no violation of Art.301 of the Constitution. Reference was made to the decision of this Court in Atiabari Tea Co. Ltd. v. State of Assam, (1961) 1 SCR 809 : (AIR 1961 SC 232 ); Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan, (1963) 1 SCR 491 : (AIR 1962 SC 1406 ); Andhra Sugars Ltd. v. State of Andhra Pradesh (AIR 1968 SC 599 ) (supra); State of Madras v. N. R. Natraja Mudaliar, (1968) 3 SCR 829 : (AIR 1969 SC 147 ) and State of Kerala v. A. B. Abdul Khadir, (1970) 1 SCR 700 : (AIR 1970 SC 1912 )75. One has to determine: does the impugned provision amount to restriction directly and immediately on the trade or commerce movement? As was observed by this Court in Kalyani Stores v. State of Orissa, (1966) 1 SCR 865 : (AIR 1966 SC 1686 ), imposition of a duty or tax in every case would not tantamount per se to any infringement of Art.301 of the Constitution. Only such restrictions or impediments which directly or immediately impede free flow of trade, commerce and intercourse fall within the prohibition imposed by Art.301. A tax in certain cases may directly and immediately restrict or hamper the flow of trade, but every imposition of tax does not do so. Every case must be judged on its own facts and its own setting of time and circumstances. Unless the Court first comes to the finding on the available material whether or not there is an infringement of the guarantee under Art.301 the further question as to whether the Statute is saved under Art.304(b) does not arise. The goods taxed do not leave the State in the shape of raw material, which change their form in the State itself and there is no question of any direct, immediate or substantial hindrance to a free flow of trade. On the evidence adduced, we are in agreement with the High Court that the challenge to the imposition in the background of Art.301 cannot be sustained and, therefore, no question whether such imposition is saved under Art. 304(b) of the Constitution arises76. In the aforesaid view of the matter and for the reasons mentioned hereinbefore, it must be held that so far as the appeals in respect of the Haryana Act are concerned, the High Court was right in the view it took in Goodyear India Ltd.s case (1983) 53 STC 163 (Punj and Har) as well as the views expressed by the High Court in Bata India Ltd. v. State of Haryana, (1984) 54 STC 226: (1984 Tax LR are correct and are affirmed. The views of the High Court expressed in Des Raj Pushap Kumar Gulatis case (1985 Tax LR 2882) (Punj and Har) (FB) (supra) are incorrect for the reasons mentioned hereinbefore. The last mentioned judgment and the judgment and orders following passed by the Punjab and Haryana High Court are, therefore, set aside. In the premises, civil appeals Nos. 1166-72/85 (M/s. Goodyear India Ltd. v. State of Haryana and Anr.), civil appeal No. 1173-77 (NT)/ 85 (Gedore (I) Pvt. Ltd. v. State of Haryana and Anr.), civil appeal No. 2674/ 86 (M/ s. Kelvinator of India Ltd. and Another v. State of Haryana and others), civil appeal No. 1633 (NT)/85 (The F.C.I. v. The State of Haryana and Anr.) and civil appeal No. 3033 (NT)/86 (The F.C.I., Karnal v. The State of Haryana and others) are allowed and the judgment and order of the High Court are set aside80. RANGANATHAN, J :I agree but wish to add a few words81. The question raised in these appeals is a fairly ticklish one. Simply stated, S.9 of the Haryana General Sales Tax Act, 1974 as well as S.13AA of the Bombay Sales Tax Act, 1959, purport only to levy a purchase tax. The tax, however, becomes exigible not on the occasion or event of purchase but only later. It materialises only if the purchaser (a) utilises the goods purchased in the manufacture of taxable goods and (b) despatches the goods so manufactured (otherwise than by way of sale) to a place of business situated outside the State. The legislation, however, is careful to impose the tax only on the price at which the raw materials are purchased and not on the value of the manufactured goods consigned outside the State. The States describe the tax as one levied on the purchase of a class of goods viz. those purchased in the State and utilised as raw material in the manufacture of goods which are consigned outside the State otherwise than by way of sale. On the other hand, according to the respondents assessees this is nothing but a tax on consignment of goods manufactured in the State to places outside the State, camouflaged as a purchase tax, by quantifying the levy of the tax with reference to the purchase price of the goods purchased in the State and utilised in the manufacture. To me it appeared as plausible to describe the levy as a tax on purchase of goods inside the State (which attaches itself only in certain eventualities) as to describe it as a tax on goods consigned outside the State but limited to the value of the raw material purchased inside the State and utilised therein. I, therefore. had considerable doubts not only during the arguments but even some time thereafter as to whether so long as the tax purports to be a tax on purchases and has a nexus, though a little distant, with purchase of goods in the State, the State Governments competent to impose such a tax should not be upheld. But, on deeper thought, I am inclined to agree with the conclusion of my learned brother. It is one thing to levy a purchase tax where the character and class of goods in respect of which the tax is levied is described in a particular manner (vide, Andhra Sugars Ltd. v. State, (1968) 1 SCR 705 : (AIR 1968 SC 599 ) and a case like the present where the tax, though described as purchase tax, actually becomes effective with reference to a totally different class of goods and, that too, only on the happening of an event which is unrelated to the act of purchase. The "taxable event", if one might use the expression often used in this context is the consignment of the manufactured goods and not the purchase. I also agree with my learned brother that the decision in State of Tamil Nadu v. Kandaswami, (1975) 36 STC 191 : (AIR 1975 SC 1871 ),though rendered in the context of an analogous provision does not touch the issue in the present case82. The above distinction becomes significant particularly in the background of the constitutional amendments referred to in the judgment of my learned brother. These indicate that there were efforts at sales tax avoidance by sending goods manufactured in a State out of raw materials purchased inside other States by way of consignments rather than by way of sales attracting tax. This situation lends force to the contention of the assessees that the States unable to tax the exodus directly, attempted to do so indirectly by linking the levy ostensibly to the "purchases" in the State16. It is well settled that what is the taxable event or what necessitates taxation in an appropriate Statute, must be found out by, construing the provisions. The essential task is to find out what is the taxable event. In what is considered to be indirect tax, there is a marked distinction between the consequence of manufacture and the consequence of sale17. It is well to remember that in construing the expressions of the Constitution to judge whether the provisions like S.9(1)(b) of the Act, are within the competence of the State Legislature, one must bear in mind that the Constitution is to be construed not in a narrow or pedantic sense. Constitution is not to be construed as mere law but as the machinery by which laws are to be made30. It is, therefore, necessary in all cases to find out what is the essence of the duty which is attracted. A taxable event is that which is closely related to imposition, In the instant section, there is such close relationship only with despatch. Therefore, the goods purchased are used in manufacture of new independent commodity and thereafter the said manufactured goods are despatched outside the State of Haryana. In this series of transactions the original transaction is completely eclipsed or ceases to exist when the levy is imposed at the third stage of despatch of manufacture. In the instant case the levy has no direct connection with the transaction of purchase of raw materials, it has only a remote connection of lineage. It may be indirectly and very remotely connected with the transaction of the purchase of raw material wherein the present levy would lose its character of purchase tax on the said transaction41. Therefore, the nomenclature given by the Haryana Legislature is not decisive. One has to find out whether in pith and substance, a consignment tax is sought to be imposed, a tax on despatch in the course of inter State trade or commerce. I have no hesitation in holding that it is a tax on despatch. Inter State trade or commerce, it has been emphasised, is of great national importance and is vital to the federal structure of our country. As the imposition of consignment tax requires very deep consideration of all its aspects and certain amount of consensus among the States concerned, especially with regard to the rates, grant of exemption, and ratio relating to distribution of proceeds amongst the States inter se, the actual imposition of tax is bound to take some time till an agreeable solution is found, but that would not make the consignment tax to be in suspended animation in the State, and make us hold that a tax which is in essence a tax on consignment should be taxed by the States by the plea either that otherwise there is ample scope of evasion and further states are without much resources in these days when there is such a tremendous demand on the revenue of the States42. It is well settled that the Entries in the Constitution only demarcate the legislative fields of the respective legislatures and do not confer legislative powers as such. The tax on despatch of goods outside the territory of the State certainly is in the course of inter State trade or commerce, and in other words, amounts to imposition of consignment tax, and hence the latter part of S.9(1)(b) is ultra vires and void44. In this connection, it may be mentioned that before the Full Bench of the Punjab and Haryana High Court on behalf of the State, a statement was made, which has been recorded in (1985) 58 STC 393  at p. 408: (1985 Tax LR 2882 at p. 2890), as follows:"Counsel appearing for the State of Haryana made a statement that if the Full Bench held that Bata India Limiteds case (1983) 54 STC 226 : (1984 Tax LR 2982) did not lay down the correct law and the amendment effected by Act No. 11 of 1984 to S.9 was intra vires, then the provision of sub-section (3) of S.24 regarding the rate of tax shall not be enforced and only the old rate will be leviable."In view of the aforesaid statement, no higher rate except the old rate admissible factually would be applicable46. S.24(3) was introduced by the Haryana Act with retrospective effect from May 27, 1971, which is as follows:"Notwithstanding any other provisions of this Act or any judgment, decree or order of any Court or other authority to the contrary if a dealer who purchases goods, without payment of tax under sub-section (1) and fails to use the goods so purchased for the purpose specified therein he shall be liable to pay tax on the purchase value of such goods, at the rates notified under S.15 without prejudice to the provisions of S.50 provided that the tax shall not be levied where tax is payable on such goods under any other provision of this Act."This provision without making any. change in the substantive provision purports to give a direction to ignore the judgment, in other words, purports to overrule the judgments, namely, Goodyear (1983-53 STC 163 (Punj and Hry) and Bata India (1984 Tax LR 2982) (Punj and Hry)), which is beyond the legislative competence of the State Legislature and this provision is void in view of the decision of this Court. See Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality (1969) 2 SCC 283  at p. 286 : (AIR 1970 SC 192 at p. 194). For the same reason, applying the main section instead of S.9(1), S.24 should also fail as amended. Civil appeal No. 1515/84 is also liable to be dismissed in view of the judgment of this Court in Dy. Commr. of Sales Tax (Law), Board of Revenue (Taxes) v. Thomas Stephen and Co. Ltd., Quilon (1988) 2 SCC 264 : (AIR 1988 SC 997 ), where this Court observed that "disposal means transfer of title in the goods to any other person", and therefore it would not include mere despatch to own self or to its agents or to its branch offices or depots. In the premises, the decision of the Punjab and Haryana High Court in Goodyear India Ltd. (1983) 53 STC 163  is correct on merits as well48. In the aforesaid view of the matter, it cannot be held that S.9(1) and sub-S.(3) of S.24 are constitutionally valid52. No tax is payable under the Haryana Act when exports outside the State take place either in the course of inter State sale or export out of the territory of India. No tax is therefore payable in regard to export outside India but the tax is payable for sale in the course of inter State trade and commerce i.e. under the Central Sales Tax Act. It is only when the goods are despatched/ consigned to the depots of the FCI in other States that tax is levied under S.9 of the Haryana Act. This is in addition to the sales tax paid by the FCI on the sale of grains in the recipient States. On perusal of S.14 and 15 ofthe Central Sales Tax Act,it becomes clear that wheat is one of the commodities specified as declared goods and in respect of which the intention is clear that the tax is payable only once on the declared goods. In the case of inter State sale if any tax has been paid earlier on declared goods inside the State the same is to be refunded to the dealer who is paying tax on such inter State sales. On these transactions no tax is leviable in the recipient State, while in case of inter State despatches, the tax is leviable twice. The appeals of the M are confined to S.9(1)(c), which insofar as it purports to tax export, is beyond the legislative competence of the State of Haryana65. The power to tax the sale or purchase of goods is different from the right to impose taxes on use or consumption. According to Dr. Pal, such power to levy sales tax cannot be exercised at the earlier stage of import or manufacture/ production nor the said power can be exercised at the later stage of use or consumption but only at the stage of sale or purchase. In respect of sales tax, the right to levy duty would not at all come into being before the time of sale/purchase. Sales tax cannot be imposed unless the goods are actually sold and may not be leviable if there is a transfer in some other form. See in this connection the observations of the Federal Court in Mukunda Murari Chakravarti v. Pabitramoy Ghosh AIR 1945 FC 1 at p. 22. Therefore, in this case it is necessary to ascertain what is the taxable event under S.13AA of the Act which attracts duty. A taxing event is that event the occurrence of which immediately attracts the levy or the charge of tax.,66. In the fiscal legislations normally a charge is created. The mischief of taxation occurs on the happening of the taxable event. Different taxes have different taxable events. In the instant case, Dr. Pal canvassed before as that the incidence of the levy of additional tax of two paise in the rupee is not on the purchase of goods but such a levy is attracted only when (a) the goods which so purchased on payment of purchase tax are used in the manufacture of taxable goods; and (b) the goods so manufactured are despatched to his own place of business or to his agents place of business outside the State. Therefore, the incidence of tax is attracted not merely on the purchase but only when the goods so purchased are used in the manufacture of taxable goods and are despatched outside the State. In our opinion, it was rightly submitted that it is the effect of S.13AA of the Act. It was further highlighted by Dr. Pal on behalf of the assessee that additional tax is not levied on the goods purchased on payment of purchase tax and despatched outside the State. The goods which are purchased on payment of purchase tax are used in the manufacture of taxable goods. What is despatched is not the raw material which have been purchased on payment of purchase tax but a completely different commodity, namely, vanaspati and soap. If the raw materials as such purchased on payment of purchase tax are despatched outside the State, the additional tax under S.13AA of the Act is not attracted. Hence, the incidence of additional tax has no nexus with the purchase of the raw materials, as was contended by Mr. S. K. Dholakia, appearing for the State and as held by the High Court.