Case: Tika Ram &amp; Sons Ltd. Etc Vs. The Commissioner Of Sales Tax U.P., Lucknow

that question. Also, in Gannon Dunkerley and Co. v. State of Madras, ILR (1955) Mad 832 = (AIR 1954 Mad 1130 ), the proceeding reached the High Court of Madras in a revision petition under Section 12-B of the Madras General Sales Tax Act, 1939 and the High Court entertained the plea of ultra vires and decided it in favour of the tax-payer.7. It is, however, not necessary in the present case for us to decide the question as to whether the principle laid down in K. S. Venkataramans case, (1966) 2 SCR 229 = (AIR 1966 SC 1089 ) is applicable. The reason is that the appellants did not challenge the jurisdiction of the High Court to examine the question of law regarding the constitutional validity of Explanation II to Section 2 (h) of the Act. Nor was any such challenge made in the Special Leave Petition to this Court or in the statement of the case. On the contrary the appellant has itself applied to the Judge, Revisions under Section 10 of the Act contending the Explanation II to Section 2 (h) was ultra vires. It is not therefore open to the appellants to deny the jurisdiction of the Revisional Authority to decide the question or to challenge the jurisdiction of the High Court to examine the question of law referred to it under Section 11 of the Act and to pronounce upon the constitutional validity of the impugned section.In other words, it must be taken that the appellants had voluntarily submitted to the jurisdiction of the Revisional Authority and of the High Court on the matter in issue and having submitted to the jurisdiction and having taken the chance of judgment in its favour, it is not right that the appellants should take exception to the jurisdiction of the High Court when the judgment has gone against it. We cannot therefore permit the appellants to canvass in this Court for the first time the question whether it was competent for the High Court to decide the question of law referred to it under Sec. 11 of the Act. We accordingly reject the argument of the appellants on this aspect of the case.8. It was lastly submitted by Mr. Chagla that a reference to the High Court under Section 11 of the Act at the instance of the Commissioner of Sales-tax was incompetent as the Commissioner was neither a dealer nor a person aggrieved within the meaning of the section as it originally stood, and the amendment effected in sub-section (3) of Section 11 by U. P. Sales Tax Act 8 of 1954 which came into force on April 1, 1954 was not retrospective in character and could not apply to proceedings which had been initiated earlier before Sales-tax Authorities as well as before the Revising Authority. It was pointed out that the appellate order was made on January 4, 1952 and the revision application was filed before the amending Act of 1954 came into force. It further appears that the revision application was disposed of on July 8, 1957 by the Revising Authority. The contention put forward on behalf of the appellants was that the Commissioner had no power to apply for a reference at the time the appellants had made the application for revision. It was conceded by Mr. Chagla that at the time the Commissioner applied for a reference under Section 11 of the Act the amending Act 1954 had already come into force and under the amended section the Commissioner was empowered to ask for a reference. The point taken was that the material date was the date on which the appellants made the application for revision and not the date on which the application was actually decided by the Revising Authority. We are unable to accept this argument as correct. The right to apply for a reference is conferred upon a person aggrieved by an order passed under Section 10 and this right exists regardless of when the application for revision was made. Only the existence of an order under Section 10 is required for the accrual of the right to make an application for a reference. It was suggested by Mr. Chagla that the Commissioner did not have the right to apply for a reference because the right did not exist when the appellants had made the application for revision. But the right did exist on the date on which the Commissioner applied for a reference and there is nothing in the language or context of Section 11 to suggest that the Commissioner could exercise the right only if it existed on the date on which the application for revision had been made. On behalf of the appellants Mr. Chagla referred to the well- recognised rule that a statute should be interpreted, as far as possible, so as to respect vested rights.But this rule has no application to the present case for we do not think that amendment of Section 11 of the Act by enabling the Commissioner also to ask for a reference of a question to the High Court alters any vested or substantive right of the assessee. On the contrary, we consider that the amendment is merely to procedural matter and the present case falls within the general principle that the presumption against a retrospective construction has no application to enactments which affect only the procedure and practice of courts.For "it is perfectly settled that if the legislature forms a new procedure, that, instead of proceeding in this form or that, you should proceed in another and a different way, clearly there bygone transactions are to be sued for and enforced according to the new form of procedure. Alterations in the form of procedure are always retrospective, unless there is some good reason or other why they should not be". Gardner v. Lucas, (1878) 3 AC 582. We are accordingly of the opinion that Mr. Chagla is unable to make good his argument on this aspect of the case.

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

Explanation:
0[ds]4. It was argued by Mr. Chagla in the first place that Cl. (ii) of Explanation 11 to Section 2 (h) of the Act means that the goods should have been manufactured and produced in Uttar Pradesh for sale to the person who had contracted to buy them. In other words, there must be a contract for the sale before manufacture or produce. It was pointed out that in the present case the contract was entered into after the goods were manufactured and exported out of Uttar Pradesh. It was contended that as a matter of construction Explanation 11 does not cover these sales and the deeming provision will not make the appellants liable to pay sales-tax in regard to such sales. We are unable to accept this argument as correct. There is nothing in the language or context of Explanation II to suggest that the goods should be produced or manufactured in Uttar Pradesh after the contracts for sale had been entered into. There is hence no warrant for the argument that for attracting the tax liability the goods must have been manufactured or produced after and not before the agreement for sale.In other words it is only necessary for the application of Explanation II that the goods must have been sold by the person who produced or manufactured them but there is no requirement that he must have manufactured or produced them after the agreement for sale.It is the admitted position in these appeals that the goods were manufactured or produced in Uttar Pradesh by the appellants carrying on business in Uttar Pradesh in those goods and therefore the appellants are liable to pay the tax on their sales irrespective of where and when the cotracts for sale were entered into and also irrespective of the fact that the contracts were entered into after the goods had been exported out of Uttar Pradesh. We accordingly hold that the first question was rightly answered by the Highwas argued by Mr. Chagla that the doctrine of nexus was not applicable to sales-tax legislation, because such legislation was concerned with the tax on the transaction of sale, that is to say, a completed sale and to break up a sale into its component parts and to take one or more such parts and to apply the theory to it would mean that the State would be entitled to impose tax on one or more of the ingredients or constituent elements of the transaction of sale which by itself will not amount to ais manifest that a transaction of sale is a composite transaction and consists of legal ingredients like agreement of sale, passing of title and delivery of goods but it is not necessary for the purpose of legislative jurisdiction that all legal ingredients of sale or even the transfer of title should have taken place inside the Province. It is sufficient if there is a proper territorial nexus or connection between the taxing authority and the transaction sought to be taxed. The fact that the goods are manufactured in the Province constitutes a real and pertinent nexus or connection which confers jurisdiction upon the Provincial Legislature to impose theour opinion, the ratio of this decision applies to the present case and it must be accordingly held that Explanation II to Section 2 (h) of the Act is not ultra vires as being outside the legislative competence of the State of Uttar Pradesh.It was lastly submitted by Mr. Chagla that a reference to the High Court under Section 11 of the Act at the instance of the Commissioner of Sales-tax was incompetent as the Commissioner was neither a dealer nor a person aggrieved within the meaning of the section as it originally stood, and the amendment effected in sub-section (3) of Section 11 by U. P. Sales Tax Act 8 of 1954 which came into force on April 1, 1954 was not retrospective in character and could not apply to proceedings which had been initiated earlier before Sales-tax Authorities as well as before the Revising Authority. It was pointed out that the appellate order was made on January 4, 1952 and the revision application was filed before the amending Act of 1954 came into force. It further appears that the revision application was disposed of on July 8, 1957 by the Revising Authority. The contention put forward on behalf of the appellants was that the Commissioner had no power to apply for a reference at the time the appellants had made the application for revision. It was conceded by Mr. Chagla that at the time the Commissioner applied for a reference under Section 11 of the Act the amending Act 1954 had already come into force and under the amended section the Commissioner was empowered to ask for a reference. The point taken was that the material date was the date on which the appellants made the application for revision and not the date on which the application was actually decided by the Revising Authority. We are unable to accept this argument as correct. The right to apply for a reference is conferred upon a person aggrieved by an order passed under Section 10 and this right exists regardless of when the application for revision was made. Only the existence of an order under Section 10 is required for the accrual of the right to make an application for a reference. It was suggested by Mr. Chagla that the Commissioner did not have the right to apply for a reference because the right did not exist when the appellants had made the application for revision. But the right did exist on the date on which the Commissioner applied for a reference and there is nothing in the language or context of Section 11 to suggest that the Commissioner could exercise the right only if it existed on the date on which the application for revision had been made. On behalf of the appellants Mr. Chagla referred to the well- recognised rule that a statute should be interpreted, as far as possible, so as to respect vested rights.But this rule has no application to the present case for we do not think that amendment of Section 11 of the Act by enabling the Commissioner also to ask for a reference of a question to the High Court alters any vested or substantive right of the assessee. On the contrary, we consider that the amendment is merely to procedural matter and the present case falls within the general principle that the presumption against a retrospective construction has no application to enactments which affect only the procedure and practice of courts.For "it is perfectly settled that if the legislature forms a new procedure, that, instead of proceeding in this form or that, you should proceed in another and a different way, clearly there bygone transactions are to be sued for and enforced according to the new form of procedure. Alterations in the form of procedure are always retrospective, unless there is some good reason or other why they should not be".Gardner v. Lucas, (1878) 3 ACWe are accordingly of the opinion that Mr. Chagla is unable to make good his argument on this aspect of the case.