State of Orissa & Other Vs. The Tltaghur Paper Mills Company Ltd. & ANR [1985] INSC 43 (1 March 1985)
MADON, D.P. MADON, D.P.
TULZAPURKAR, V.D.
SEN, AMARENDRA NATH (J)
CITATION: 1985 AIR 1293 1985 SCR (3) 26 1985 SCC Supl. 280 1985 SCALE (2)410
CITATOR INFO:
RF 1986 SC1085 (12) RF 1988 SC1164 (4) R 1988 SC1531 (46) RF 1991 SC 672 (2,3,10)
ACT:
Orissa Sales Tax Act 1947-Sections 3B and 5 (1)-Scope of-Notifications levying purchase tax on bamboos agreed to be served and standing trees agreed to be severed-Whether Ultra vires the Act-Whether create new class of goods not known to law-Whether amount to tax on immovable property - and not on goods-notifications issued in supersession of all previous notifications on the subject-Whether wipe out all tax liability accruing under previous notifications.
"Timber" and "logs"-Whether mean the same thing.
Bamboo contract-Nature of-Whether an easement.
Interpretation-Nature and meaning of a document-Whether can be determined by the end-result-Court-if could go into policy matters.
Constitution of India-Article 141-Conflicting views of the Supreme Court on same point-View of larger Bench to be followed in preference to view of smaller Bench.
HEADNOTE:
Section 3B of the Orissa Sales Tax Act 1917 empowers the State Government to declare from time to time any goods or class of goods to be liable to tax on turnover of purchases. The proviso provides that no tax shall be payable on the sales of such goods or class of goods declared under this section. Section 5(1) prior to its amendment by the Orissa Sales Tax (Amendment) Ordinance, 1977 provides that the tax payable by a dealer under the Orissa Act should be levied on his taxable turnover at such rate not exceeding thirteen percent and subject to such conditions as the State Government might from time to time by notification specify.
On May 23, 1977 the State Government issued two notifications. Notification No. SRO 372/77 was made under section 3B amending the earlier notification dated April 23, 1976. This notification made standing trees and bamboos agreed to be severed liable to tax on the turnover of purchase with effect from 27 June 1, 1977. Notification SRO No. 373177 issued under the first proviso to section 5(1) of the Orissa Act amended with effect from June 1, 1977 the second of the two notifications of April 23, 1976 and directed that the tax payable by a dealer under the Orissa Act on account of purchase of bamboos agreed to be severed and standing trees agreed to be severed would be at the rate of 10%.
On December 29, 1977 the Orissa Sales Tax (Amendment) Ordinance, 1977 was promulgated amending the Orissa Act with effect from January, 1978. With effect from the same date two notifications SRO No 900177 and SRO No. 901177 were issued; the first notification which was issued under the provisions of section 3B and in supersession of all previous notifications on the subject, declared that the goods mentioned in Column (2) of the schedule to the notification were liable to be taxed on the turnover of purchase with effect from January 1, 1978. Entries 2 and 17 in the schedule of this notification specified "bamboos agreed to be severed" and "standing trees agreed to be severed" respectively. Notification No. 901/77 issued under section 5 (1) was in supersession of all previous notifications in that regard. The State Government, by this notification, directed that with effect from January l 1978 the tax payable by a dealer under the Orissa Act on account of purchase of goods specified in column (2) of the schedule to the notification would be at the rate specified against it in column (3) thereof. The rate of purchase tax for bamboos agreed to be severed and standing trees agreed to be severed was prescribed at 10%. The Ordinance was repealed and replaced by Orissa Sales Tax (Amendment) Act of 1978.
A large number of writ petitions were filed before the High Court impugning the notifications dated May 23, 1977 and December 29, 1977. One group of petitioners consisted of those who had entered into agreements with the State for the felling, cutting, obtaining and removing bamboos from forest areas for the manufacture of paper (bamboo contracts), and the other group consisted of those who had entered into agreements for the purchase of standing trees (Timber Contracts).
The bamboo contracts were a grant of exclusive right and license to fell, i cut and remove bamboos from the forest. Under the terms of auction the respondent was bound to pay a minimum royalty irrespective of the quantity of bamboos cut and removed. The Governor of the State was called the "grantor" of the licence. The bamboo contracts were in respect of different areas for periods ranging from 11 to 14 years with an option to renew the agreements for further periods.
The respondent in CA No. 219182 contended before the High Court that the subject matter of the Bamboo contract was not a sale or purchase of goods but was a lease of immovable property or in any went was a creation of an interest in immovable property by way of grant profit a prendre which amounted to an easement under the Indian Easements Act 1882 and that for that reason the royalty payable under the bamboo contracts could not be made exigible to either sales tax or purchase tax and that the impugned provisions of the notifications were ultra vires the Act. It was also contended that the bamboo contract was 28 a works contract and for this reason also the transaction was not exigible to sales tax or purchase tax, and since the two notifications of December 29, 1977 were expressed to be made in supersession of all earlier notifications on the subject, the liability to sales tax under the said notifications of May 23, 1977 was wiped out.
In Civil Appeal No. 220/82 the bids of the respondent firm at auctions held by the Government in respect of trees standing in forest areas were accepted and on confirmation of the bids by the competent authority it entered into agreements with the Government for felling and removing such trees. The respondent, in turn, sold the trees felled by it in the form of logs to others- At the relevant time the respondent was successful at five auction sales and on ratification of the bids entered into five separate agreements (timber contracts) for felling and removing the trees standing in the forest areas.
After the issue of the notifications of May 23. 1977 the respondent filed a writ petition in the High Court against the State and the Sales Tax and Forest Authorities contending (I) that the levy of purchase tax on standing timber agreed to be severed was beyond the legislative competence of the State Legislature and (2) the notifications imposed a tax both at the point of sale and at the point of purchase and for this reason were invalid and ultra vires the Act. It was also contended that timber contracts were works contracts and the amounts payable under them were not exigible either to purchase tax or sales tax.
The High Court allowed all the writ petitions and quashed the impugned notifications.
In appeal to the Supreme Court the State contended that the subject matter of the impugned provisions is "goods" within the meaning of the term in the Sales of Goods Act and the Orissa Act, and that what was made exigible to tax under the impugned provisions notifications, was a completed purchase of goods.
^
HELD: (I) Notification SRO Nos. 372/77 and 373/77 dated May 23, 1977, (2) entries Nos. 2 and 17 in the schedule to notification No. 900177 and (3) entries Nos. 2 and 17 in the schedule to notification No. 901177 dated December 29, 1977 levying purchase tax at the rate of ten per cent on the purchase of bamboos agreed to be severed and standing trees agreed to be severed, are not ultra vires either Entry 54 List II of the Seventh Schedule to the Constitution of India or the Orissa Sales Tax Act 1947 but are constitutional and valid [145D-F] (a) The Legislative competence to enact the Orissa Act, which was a pre-constitution enactment, was derived from section 100 (3) of the Government of India Act, 1935 read with Entry 48 in List II in the Seventh Schedule to that Act. While Entry 48 spoke of "taxes on the sale of goods" Entry 54 of List II of the Seventh Schedule of the Constitution speaks of "taxes on the sale or 29 purchase of goods." The addition of the word "purchase" in Entry 54 permits the State Legislature to levy a purchase tax and does not confine its taxing power merely to levying sales-tax. [62F; H] (b) A cantena of decisions of this Court had held that the expression "sale of goods" had been used in the Government of India Act, 1935 in the same sense in which it is used in the Sale of Goods Act, 1930 and that it authorised the imposition of a tax only when there was a completed sale involving transfer of title to the goods.
While construing Entry 54 in List II of the Seventh Schedule to the constitution interpretation was adopted and any attempt by the State Legislature to give that expression an artificial meaning or an enlarged meaning or to bring within its scope what would not be comprehended within that expression would be unconstitutional and ultra vires. [63F;
64G-H; 63G] State of Madras v. Cannon Dunkerley & Co. (Madras) Ltd. [1959] SCR 379; The Sales Tax Officer Pilibhit v.
Messrs. Budh Prakash Jai Prakash [955] 1 SCR 243, 247.
Bhopal Sugar Industries Ltd. M.P. & Anr. v. P. Dube Sales Tax Officer Bhopal Region Bhopal & Anr. AIR 1964 SC 1037; K.L. Johar & Co v. Deputy Commercial Tax Officer [1965] 2 SCR 112; Joint Commercial Tax Officer Harbour Div. II Madras v. Young Men's India Association (Reg.) Madras & Anr. [1970] 3 SCR 680; State of Maharashtra & Anr. v. Champalal Kishanlal Mohta [1971] 1 SCR 46, followed.
(c) Although a State is free to impose a tax at one or more points in a series of sales or purchases in respect of the same goods, the Orissa Act has adopted a single point levy by enacting the proviso to section 3 under which no tax is payable on the sale of goods or class of goods declared under that section to be liable to tax on the turnover of purchases. The proviso to section 8 states that "the same goods shall not be taxed at more than one point in the same series of sales or purchases by successive dealers." Therefore, where in a series of sales or purchases tax is levied at a particular point neither sales tax nor purchase tax can be levied at another point in the same series. [65C- E] (d) Since any attempt on the part of the State to impose by-legislation tax on sales or purchases in respect of what would not be "sale" or a "sale of goods" under The Sale of Goods Act, 1930 is unconstitutional, any attempt by it to do so in the exercise of its power of making subordinate legislation, would be equally unconstitutional.
Similarly. where any rule or notification travels beyond the ambit of the parent Act, it would be ultra vires the Act.
Equally, sales tax authorities purporting to act under the Act or under any rule made or notification issued thereunder cannot travel beyond the scope of such Act, rule or notification. Thus, the sales tax authorities under the Orissa Act cannot assess to sales tax or purchase tax, a transaction which is not a sale or purchase of 30 goods or assess to sales tax any goods or class of goods which are liable to purchase tax or assess to tax, whether sales tax or purchase tax, goods at another point in the same series of sales or purchases of those goods by successive dealers who are liable to be taxed at a different point in that series.
[65G-H: 56A-C] (2) There is no substance in the argument of the respondent that by the impugned provisions a new class of goods. not known to law, had been created. The definition of the expression "goods ' in both the Sale of Goods Act and the Orissa Act which is almost in identical terms, includes "things attached to or forming part of The land which are agreed to be severed before sale or under the contract of sale." [66E; G-H] (a) An examination of the definitions of movable property and immovable property given in the General Clauses Act, Registration Act and Transfer of Property Act, show that things attached to the earth are "immovable property." The term "attachment" means "rooted in the earth as in the case of trees and shrubs." Thus, while trees rooted in the earth are immovable property as being things attached to the earth by reason of the definition of the term "immovable property" in various statutes namely the General Clauses Act and the Orissa General Clauses Act and the Registration Act read with the definition of the expression "attached to the earth" given in the Transfer of Property Act, standing timber is "movable property" by reason of its exclusion from the definition of "immovable property" in the Transfer of Property Act and the Registration Act and by being expressly included within the meaning of the term "movable property" given in the Registration Act. [67E; 68F; 68G-H; 69A] (b) The term "standing timber" has been judicially recognised as "a tree which ii in a state fit for the purposes of being used as wood for buildings, houses, bridges, windows, whether on the tree or cut and seasoned", that is, a tree meant to be converted into timber so shortly that it could already be looked upon as timber for all practical purposes even though it is still standing. Thus, trees which are ready-to be felled would be standing timber and therefore "movable property." While trees (including bamboos) rooted in the earth being things attached to the earth are immovable property and if they are "standing timber", are movable property, trees (including bamboos) rooted in the earth which are agreed to be severed before sale or under the contract of sale are not only movable property but also goods. [o9D-E; 70B-C] Smt. Shantabai v. State of Bombay & Ors. [1959] SCR, 265, 275-6, followed.
(c) The distinction which existed in English law between fructus naturales (natural growth of soil regarded as part of the soil until severance) and fructus industriales (which are chattels considered as representing the labour and expense of the occupier and thing independent of the land) does not exist in Indian law. In a case of this nature the only question that falls for consideration in Indian law is whether a transaction relates to "goods" or "movable 31 property". If it is sale of immovable property, a document of the kind specified in section 17 of the Registration Act is required to be compulsorily registered but a document relating to sale of goods or of movable property is not required to be registered. Secondly under Entry 54 of List 11 of the Seventh Schedule the State cannot levy a tax on the sale or purchase of any property other than goods. [71C- D]
3. The respondent's contention that the impugned provisions levied a purchase tax on immovable property and not on goods and that the State Government has travelled beyond its taxing power has no merit. [71F] (a) The High Court erred in holding that the impugned provisions amounted to levying a tax on an agreement to sell and not on actual sale or purchase, that standing trees being unascertained goods continued to be the property of the State Government until felled and therefore the title to such trees or bamboos is transferred in favour of the Forest Contractor only when the trees or bamboos were felled and severed in accordance with the terms of the contract. There is a fallacy in the reasoning of the High Court in that the High Court read merely the description of the goods given in the impugned provisions by itself and not in conjunction with their governing words.
[71G-H; 72A-B] (b) Tax levied under section 3B is not on goods declared under that section but on the turnover of purchases of such goods. A reading of the notification, issued under sections 3B and 5(1) as a whole makes it clear that the taxable event is not an agreement to sever standing trees or bamboos but the purchase of bamboos or standing trees agreed to be severed. [72C-D] (c) The use of the terms "agreed" in the description of goods showed that there must be an agreement between the buyer and the seller and under this agreement standing trees as also bamboos must be agreed to be severed. According to the definition of "goods" such severance may be either before sale or under the contract of sale, The Sale of Goods Act makes a distinction between sale and agreement to sell and provides that where there is a transfer from the buyer to the seller of property in the goods which are the subject matter of the agreement to sell, the contract of sale is a sale but when the transfer of property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled it is an agreement to sell which becomes a sale when the time elapses or such conditions are fulfilled. In the first case the contract is "executed contract" while in the second it is "executory." [72E; 73C-D] (d) A conspectus of the relevant sections o, the Sale of Goods Act shows that a purchase would be complete when the goods (in the case standing trees or bamboos) are specific goods. If these factors exist, then unless a different intention appears either from the terms of the contract or can be inferred from the conduct of the parties and other circumstances of the case, the property in such goods would pass from the seller to the buyer when the contract is made and it is immaterial whether the time of payment of the price or the time of 32 taking their delivery (of standing trees agreed to be severed or bamboos agreed to be severed or both) is postponed. If, however, there is an unconditional contract for the sale of unascertained goods then unless a different intention appear-, the property in them would be transferred to the buyer when the goods are ascertained and it would be immaterial whether the time of payment of the price or the time of taking delivery of standing trees agreed to be severed or bamboos agreed to be severed or both is postponed. In either event, the sale and purchase would be completed before severance. Therefore for the impugned provisions to apply the severance of the standing trees or bamboos must not be before sale but under the contract of sale, that is, after the sale thereof is completed. The absence in the impugned provisions of the words "before sale or under the contract of sale" thus made no difference. The subject matter of the impugned provisions was goods and the tax levied thereunder was on the completed purchase of goods. [76F-H; 77A-C]
4. The High Court has confused the question of interpretation of the impugned provisions with the interpretation of Timber Contracts and Bamboo Contracts. The question of the validity of the impugned provisions had nothing to do with the legality of any action taken thereunder to make exigible to tax a particular transaction.
If a notification is invalid, all action taken under it would be invalid also. Where on the other hand, a Notification is valid, an action purported to be taken thereunder contrary to the terms of that notification would be bad in law without affecting in any manner the validity of the notification. Were the interpretation placed by the High Court on the Bamboo contracts and the Timber Contracts correct, the transactions covered by them would not be liable to be taxed under the impugned provisions and any attempt or action by the State to do so would be illegal but the validity of the impugned provisions would not be affected thereby. There is no merit in the challenge to the validity of the impugned provisions on the ground of their unconstitutionality. [77D; F-H; 78A]
5. (a) The High Court also erred in its view that bamboos and trees agreed to be severed were the same as bamboos and timber after they were felled and that since bamboos and trees were liable to tax at the sale point, taxation of the same goods at the purchase point amounted to double taxation and that this was contrary to the provisions of the Orissa Act. [78C] (b) Not only does the Orissa Act expressly forbids double taxation but it also forbids the levying of tax at more than one point in the same series of sales or purchases by successive dealers This is evident from the provisos to sections 3B and 8. Under the proviso to section 3B no tax is payable sales of goods or class of goods declared under that section to be liable to tax on the turnover of purchases.
Under the proviso to section 8 the same goods are not to be taxed at more than one point in the same series of sales or purchases by successive dealers. [78E-F] (c) The two notifications of December 29, 1977 were issued as a result the Orissa Sales Tax (Amendment) ordinance 1977 which later became the 33 Orissa Sales Tax (Amendment) Act, 1978, while the two notifications of May 23, 1977 were issued prior to the amendment. [79A] (d) Prior to January 1, 1978 under section 5(1) tax was payable by a dealer on his taxable turnover of sales as also purchases at n certain fixed percentage. This rate applied both to sales tax and purchase tax. But the purchase tax was payable only on the turnover of purchases of goods declared B under section 3B. In respect of goods not so declared a dealer was liable to pay only sales tax. Under the proviso to this section, if goods were declared to be liable to purchase tax, no tax was payable on sales of such goods. Under section 5(1) the State Government was required to issue t notification only when it wanted to fix a rate of tax higher or lower than that specified in this section. If no such notification was issued then the tax payable, be it sales tax or purchase tax, was to be at the rate mentioned in section 5(l). Where, however, any goods were declared under section 3B to be liable to tax on the turnover of purchases, the notification prescribing a higher or lower rate of sales tax issued under the first proviso to section 5(1) would thereupon ceases to be observative by reason of the operation of the proviso to section 3B and it was not necessary to repeal expressly that notification. It was also not necessary for the State Government to issue a notification fixing the rate of purchase tax unless it wanted to fix a rate higher or lower than that specified in section 5(1). Where no such notification was issued, the rate of purchase tax would be the one which was mentioned in section 5(1). [79C-H] (e) After January 1, 1978 no rate of tax was specified in the Orissa Act. Under section 5(1) the State Government is given power to notify from time to time the rate of tax- sales tax or purchase tax by issuing notifications. The notification dated December 29, 1977 issued under section 5(1) does not contain any entry in respect of bamboos, or timber or in respect of bamboos agreed to be severed or standing trees agreed to be severed. If they were liable to sales tax, they would fall under the residuary entry No. 101 and be liable to sales tax at the rate of seven percent. If any goods feeling under the residuary entry or any other entry in that notification are declared under section 3B to be liable to tax on the turnover of purchases, the residuary entry or that particular entry would automatically cease to operate in respect of those goods by reason of the proviso to section 3B without there being any necessity to delete that particular entry or to amend the residuary entry by excluding those goods therefrom. It would be necessary for the State Government to issue a notification specifying the rate of purchase tax on those goods because unlike what the position was prior to January 1, 1978, on and after that date the new sub-section 5(1) does not specify any rate of tax but leaves it to the State Government to notify it from time to time. The High Court was in error in holding that the impugned provisions were ultra vires the Orissa Act as they amounted to "double taxation." [80A-E]
6. (a) There was no substance in the contention that the two notifications of December 29, 1977 having been made in supersession of all previous notifications issued on the subject their effect was to wipe out all tax liability which accrued under the earlier notifications of May 23, 1977.
[80G-H] 34 (b) The word "supersession" in the notifications of December 29, 1977 was used in the same sense as the words "repeal and replacement" and, there fore, does not have the effect of wiping out the tax liability under the previous notifications. All that was done by using the words "in supersession of all previous notification" in the Notifications of December 29, 1977, was to repeal and replace the previous notifications and not to wipe out any liability incurred under the previous notifications. [146C- D] (c) Both sections 3B and 5(1) in express terms conferred power upon the State Government to issue notification from time to time. Under these provisions the State Government can issue a notification and repeal and replace it by another notification. [81C] (d) The issuance of the notifications became necessary by reason of the change brought about in the scheme of taxation in 1977. With effect from January 1, 1978 unless a notification was issued specifying the rate of tax, no dealer would be liable to pay any tax under the Orissa Act.
Under the amended section if the State Government wanted to tax any goods or class of goods at a higher or lower rate it issued notifications specifications specifying such rate.
Since no rate of lax was specified in the new section but was left to the State Government to fix it, it was necessary to issue a notification consolidating all previous notifications on the subject in respect of goods liable to purchase tax which the State Government did. [82E; 83A; C; D]
7. (a) Timber contracts were not works contracts but were agreements to sell standing timber. [146D] (b) Timber contracts were not transactions of sale or purchase of standing trees agreed to be severed- They were merely agreements to sell such trees. The property in the trees passed to the respondent firm only in the trees which were felled, that is, in timber, after all the conditions of the contract had been complied with and after such timber was examined and checked and removed from the contract area.
The impugned provisions, therefore, did not apply to the transactions covered by the Timber Contracts [98 A-B] (c) A conspectus of the terms of the Sale Notice, the Special Conditions of Contract, the General Conditions of Contract and the various statutory provisions shows that the heading "sale notice of timber`' as also the use of the words ' timber and other forest products will be sold by public auction" are not determinative of the matter. The other terms and conditions of the contract make it clear that the Timber Contracts were not unconditional contracts for the sale of goods in a deliverable state and the property in the trees specified in Schedule I of the Contract did not pass to the respondent firm when each of the contracts was made. The signing of the Timber Contracts did not result in a concluded contract because each contract was conditional upon the y State Government ratifying the acceptance of the bid, the ratification order did not become an unconditional contract for the sale of specific goods in a deliver able state for the respondent firm had no right to sever the trees and take them away before complying with the other conditions of the contract, namely, furni 35 shing a Coupe Declaration Certificate within the prescribed time, registering the property mark or trade mark, making the security deposit and so on. This apart, the respondent firm was not at liberty to fell trees of his choice nor was he entitled to remove the felled trees by any route which it liked but only by specified routes. [95F-H; 96B-C; 97A-B] (d) Although under rule 40 of the Orissa Forest Contract Rules 1966, Rules stipulates that the respondent, firm was not entitled to any compensation for loss sustained by reason of fire, tempest, disease, natural calamity or any wrongful act of a third party this only showed that after a Timber Contract was concluded the risk passed to the respondent firm. Under section 26 of the Sale of Goods Act when the property is transferred to the buyer, the goods are at the buyer's risk whether delivery had been made or not;
but this section is qualified by the phrase "unless otherwise agreed." The Timber Contracts in this case were subject to contract to the contrary. This is made clear by rule 44 which states that "all forest produce removed from a contract area in accordance with these rules shall be at the absolute disposal of the forest contractor." [97E-H]
8. (a) On the question whether the words "timber" and "logs" mean the same thing in commercial parlance the no material had been produced by the parties. Where a term has not been statutorily defined or judicially interpreted and there is insufficient material on record as to the meaning of the words, the Court must seek to ascertain its meaning in common parlance with such aid as is available to it. The court may take the aid of dictionaries in such cases to ascertain its meaning in common parlance. In doing so, the Court must bear in mind that a word is used in different senses according to its context and a dictionary gives all the meanings of a word and the Court would have to select the particular meaning which would be relevant to the context in which it has to interpret that word. [104E; 105B- C; 146G-H] (b) The Orissa Act does not define the term "timber" or "logs." The statutory definition of "timber" given in the Orissa Forest Act, 1972 is that timber includes "trees fallen or felled and all wood cut up or sawn." The Madras Forest Act, 1882 and the Indian Forest Act 1927, the two Acts in force in the State of Orissa prior to the enactment of the Orissa Forest Act, 1972 too have not given any exhaustive definition of the term "timber." But what is apparent from these definitions is that the word "timber" is not confined merely to felled trees in the forests- In subsequent Act like the Orissa Forest Produce (Control of Trade) Act, 1981 the concept that timber is not merely felled trees has been emphasised. Therefore. a conspectus of the meanings given to the term "timber" in statutes, different dictionaries and as judicially interpreted by this Court as well as by some High Courts shows that it means "building material, generally wood, used for building of houses, ships etc.- and the word is applied to wood of growing trees capable of being used for structural purposes.
Hence, collectively to the trees themselves." A log according to the dictionaries means a bulky mass of wood now usually an unhewn portion of a felled tree or a length cut off for firewood. These logs will be nothing more than wood cut up or 36 sawn and would be timber. Similarly, a beam is timber sawn in a particular way. So too ratters would be timber logs put to a particular use. In ordinary parlance a plank would be flattened and smoothed timber.
[105C; F; 106C; 107A-D; F] Mohanlal Vishram v. Commissioner of Sales Tax, Madhya Pradesh, Indore [1969] 24 STC 101; G. Ramaswamy and others v. The State of Andhra Pradesh and others [1973] 32 STC 309, approved and Krupasindhu Sahu & Sons v. State of Orissa [1975] 35 STC 270. overruled.
9. (a) Sales of dressed or sized logs having been assessed to sales tax, sales to the respondent Firm of timber by the State Government from which logs were made by the respondent firm cannot be made liable to sales tax as it would amount to levying tax at two points in the same series of sales by successive dealers, assuming that the retrospectively substituted definition of "dealer" in clause (c) of section 2 of the Orissa Sales Tax Act, 1947 is valid.
[147B-C] (b) Sales of logs by the respondent firm during the period June 1, 1977 and December 31, 1977 would be liable to tax at the rate of ten percent. Assuming that the sales had been assessed to tax at the rate of six percent as contended by reason of the period of limitation prescribed by section 12(8) of the Orissa Act, the respondent-firms assessment for the relevant period cannot be re-opened to reassess such sales at ten per cent. [147D-E]
10. (a) The Bamboo Contract is not a lease of the contract area to the respondent company in CA 219182. Nor is it a grant of an easement to the respondent company, as it was not a grant of any right for the beneficial equipment of any of the respondent company. In addition to the right of entry there are other important rights flowing from the contract. It is a grant of a profit a prendre which in Indian law is a benefit to arise out of land and thus creates an interest is immovable property. A profit a prendre is a benefit arising out of land and in view of section 3(26) of the General Clauses Act, it is "immovable property" within the meaning of the Transfer of Property Act. [147F-H] (b) There are countervailing factors which 80 to show that a Bamboo contract is not a contract of sale of goods.
It is a grant of exclusive right and licence to fell, cut, obtain and remove bamboos. The person giving the grant the Governor of the State, is referred to as "grantor"; the consideration payable is "royalty" which is not a term used in legal parlance for the price of goods sold. It is not an agreement to sell bamboos standing in the contract area with the accessory licence to enter upon such area for the purpose of felling and removing bamboos nor is it for a particular felling season only. It is an agreement for a period ranging from fourteen, thirteen and eleven years with the option to renew the contract for further terms of twelves years. The payment of royalty has no relation to the actual quantity of bamboos cut and removed. The respondent company was bound to pay a minimum royalty and the royalty paid was always in excess of the royalty due on the bamboos cut in the contract areas. The Bamboo contract conferred upon the respondent-company a 37 benefit to arise out of land, namely, the right to cut and remove bamboos which would grow from the soil coupled with several ancillary rights and was thus a grant of a profit a prendre. Being a profit a prendre or a benefit to arise out of land any attempt on the part of the State Government to tax the amounts payable under the Bamboo Contract would not only be ultra vires the Orissa Act but also unconstitutional as being beyond the State's taxing power under Entry 54 in List II in the Seventh Schedule to the Constitution of India.
[119C; E; 120B-D; 121G-H]
11. The decision of Firm Chhotabhai Jethabhai Patel & Co. v. The State of Madhya Pradesh [1963] SCR 476 on which the appellant relied is not good law and has been overruled by decisions of larger Benches of this Court. (State of Madhya Pradesh v. Yakinuddin [1963] 3 SCR 13) [148A] M/s Mohanlal Hargovind of Jubbulpore v. Commissioner of Income Tax C.P. & Berar Nagpur L.R. [1949] 76 I A. 235;
ILR 1949 Nagpur 892; AIR 1449 PC 311; Ananda Behra and another v. The State of Orissa and another [1955] 2 SCR 919 and Smt. Shantabai v. State of Bombay & Orissa [1959] SCR 265 275-6 referred to; and Board of Revenue Etc. v. A.M. Ansari Etc.[1976] 3 SCR 661 held 1 inapplicable.
12. (a) The case of State of M.P. v. Orient Paper Mills Ltd. [1977] 2 SCR 1219 on which the appellant relied is not good law as that decision was given per incurium and had laid down principles of interpretation which are wrong in law. The basic and salient features of the agreement before the Court in Orient Paper Mills' Case were the same as in the case of Mahadeo v. State of Bombay and the Court was not justified in not adverting to that case and the other cases referred to on the ground that these cases dealt with the general law of real property. [142 H; 143A].
(b) The enunciation of law made by the Court in the Orient Paper Milts case that a document should be so construed as t o bring it within the ambit of a particular statute relevant for the purpose of the dispute before the court and that in order to do so, the Court could look at only such of the clauses of the document as also to just one or more, of the consequences flowing from he document which would fit in with the interpretation which the court wanted to put on the document to make that statute applicable, is fraught with considerable danger and mischief as it may expose documents to the personal predilictions and philosophies of individual judges depending upon whether according to them it would be desirable that documents of the type they have to construe should be made subject to a particular statute or not. [139E-G] (c) Secondly, in observing that the State Government, for reasons best known to it had "left the exploitation of the forest resources in part to the private sector" the court had overlooked that it was a matter of policy for the State to decide whether such transactions should be entered into or not, whether the transactions entered into by the State was for the industrial development of 38 the State and whether the transaction ensured employment for the people of the area and so on.
(d) Thirdly, the nature and meaning of a document cannot be deter mined by its end-result or one of the consequences which flow from it. In look in merely at the end-result of the agreement the court overlooked a firmly established principle that both the agreement and the sale must relate to the same subject matter and therefore, there cannot be an agreement relating to one kind of property and a sale as regards another. [141C-D] (e) In coming to the conclusion that the term "royalty" used in the document before it was merely a 'euphimism" for the "price of timber". the court overlooked the fact that the amount of royalty payable by the respondent was consideration for all the rights conferred upon it under the contract though it was to be calculated according to the quantity of bamboos felled.[141H; 142A]
13. Where there are two or more conflicting views of this court on the same point the proper course for the High Court or even for smaller Benches of this court is to find out and follow the views expressed by larger Benches of this court in preference to those expressed by smaller benches- This practice has crystallised into a rule of law declared by this Court. [142E-F] U.O.I. v. K.S. Subramanian [1977]1 SCR 87, 92, followed.
14. A works contract is a compendious term to describe conveniently a contract for the performance of work or services in which the supply of materials or some other goods is incidental. In the instant case, the timber Contracts being agreements relating to movable property and the Bamboos Contracts being a grant of an interest in immovable property, cannot be works contracts. The payee of the price, namely, the Government has not undertaken to do any work or labour. It was the contractor who had to enter upon the land to fell the trees and remove them. So is the case of Bamboo Contracts.
[144H; 145A] Commissioner of Sales tax, M.P. v- Purshottam Premji [1970] 26 STC 38, 41 S.C., referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 219 220 of 1982.
From the Judgment and Order dated 19.9.1979 of the High Court of Orissa in D.J C. Nos. 811 & 1048/77.
Anil B. Divan and R. K. Mehta for the Appellants.
S.,T. Desai, S.R. Banerjee and Vinoo Bhagat, B.R.
Aggarwal, Miss Vijaylakshmi Menon Vinod Bobde for the Respondents.
39 The Judgment of the Court was delivered by MADON J. These two Appeals by Special Leave granted by this Court are against the judgment and order of the Orissa High Court allowing 209 writ petitions under Article 226 of the Constitution of India filed before it.
Genesis of the Appeals On May 23, 1977, the Government of Orissa in the Finance Department issued two Notifications under the Orissa Sales Tax Act 1947 (Orissa Act XIV of 1947). We will hereinafter for the sake of brevity refer to this Act as "the Orissa Act". These Notifications were Notification S.R.O. 372/77 and Notification S.R.O No. 373/ 77.
Notification S.R.O. No. 372/77 was made in exercise of the powers conferred by section 3-B of the Orissa Act and Notification S.R.O. No. 373/77 was made in exercise of the powers conferred by the first proviso to sub-section (1) of section 5 of the Orissa Act. We will refer to these Notifications in detail in the course of this judgment but for the present suffice it to say that notification S.R.O.No. 372/77 amended notification no. 20209-CTA-14/76-F dated April 23, 1976, and made bamboos agreed to be severed and standing trees agreed to be severed liable to tax on the turnover of purchase with effect from June 1, 1977, while notification S.R.O. No 373/77 amended with effect from June 1, 1977, Notification No. 20212-CTA -14/76-F dated April 23, 1979, and directed that the tax payable by a dealer under the Orissa Act on account of the purchase of bamboos agreed to be severed and standing trees agreed to be severed would be at the rate of ten per cent. After the promulgation on December 29, 1977, of the Orissa Sales Tax (Amendment) Ordinance 1977 (Orissa Ordinance No, 10 of 1977 ), which amended the Orissa Act, two other notifications were issued on December 29, 1977, by the Government of Orissa in the- Finance Department, namely Notification No. 67178- C.T.A.135/77(Pt.) F(S.R.O. No900/77) and Notification No.
67181-C.T.A. 135/77-F (S.R.O. No. 901/77). The first Notification was expressed to be made in exercise of the powers conferred by section 3-B of the Orissa Act and in supersession of all previous notifications issued on that subject. By the said notification the State Government declared that the goods set out in the Schedule to the said Notification were liable to be taxed on the turnover of purchase with effect from January 1. 1978. Entries Nos. 2 40 and 17 in the Schedule to the said Notification specified bamboos agreed to be severed and standing trees agreed to be severed respectively. The second Notification was expressed to be made in exercise of the powers conferred by sub- section (1) of section 5 of the Orissa Act and in supersession of all previous notifications in that regard.
By the said notification the State Government directed that with effect from January 1, 1978, the tax payable by a dealer under the Orissa Act on account of the purchase of goods specified in column (3) of the Schedule to the said Notification would be at the rate specified against it in column (3) thereof. In the said Schedule the rate of purchase tax for bamboos agreed to be severed and standing trees agreed to be severed was prescribed as ten per cent.
The relevant entries in the Schedule in that behalf are Entries Nos. 2 and 17. The Orissa Tax (Amendment) Ordinance, 1977, was repealed and placed by the Orissa Sales Tax (Amendment) Act, 1978 (Orissa Act No. 4 of 1978).
As many as 209 writ petitions under Article 226 of the Constitution of India were filed in the High Court of Orissa challenging the validity of the aforesaid two Notifications dated May 23, 1977, and the said Entries Nos. 9 and 17 in each of the said two notifications dated December 29, 1977 (hereinafter collectively referred to as "the impugned provisions"). The petitioners before the High Court fell into two categories. The first category consisted of those who has entered into agreements with the State of Orissa for the purpose of felling, cutting obtaining and removing bamboos from forest areas "for the purpose of converting the bamboo into paper pulp or for purposes connected with the manufacture of paper or in any connection incidental therewith". This agreement will be hereinafter referred to as "the Bamboo Contract". The other group consisted of those who had entered into agreements for the purchase of standing trees. We will hereinafter refer to this agreement as "The Timber Contract". All the Bamboo Contracts before the High Court were in the same terms except with respect to the contract area, the period of the agreement and the amount of royalty payable; and the same was the case with the Timber contracts. By a common judgment delivered on September 19, 1979, reported as The Titaghur Paper Mills Company Ltd. and another v. State of Orissa and other (and other cases)1, the High Court allowed all the (1) (1980) 45 S.T.C. 170.
41 said writ petitions and qauashed the impugned provisions.
The High Court made no order as to the costs of these petitions.
Each of the present two Appeals has been filed by the State of Orissa, the Commissioner of Sales Tax Orissa, and the Sales Tax Officer concerned ill the matter, challenging the correctness of the said judgment of the High Court. The Respondents in Civil Appeal No. 219 of 1982 are the Titaghur Paper Mills Company Limited (hereinafter referred to as 'the Respondent Company") and one Kanak Ghose, a shareholder and director of the Respondent Company. The Respondents in Civil Appeal No. 220 of 1982 are Mangalji Mulji Khara, a partner of the firm of Messrs. M.M. Khara, and the said firm. The Chief Conservator of Forests, Orissa, the Divisional Forest Officer, Rairkhol Division. and the Divisional Forest Officer, Deogarh Division have also been joined as proforma Respondents to the said Appeal.
Facts of C. A. No. 219 of 1985 D The Respondent Company is a public limited company. Its registered office is situated at Calcutta in the state of West Bengal. The Respondent Company carries on inter alia the business of manufacturing paper. For this purpose it owned at the relevant time three paper mills-one at Titaghur in the State of West Bengal, the second at Kankinara also in the State of west Bengal and the third at P. O. Choudwar, Cuttack District, in the State of Orissa. For the purpose of obtaining raw materials for its business of manufacturing paper, the Respondent Company entered into a Bamboo Contract dated January 20, 1974, with the State of Orissa. This agreement was effective for a period of fourteen years from October 1, 1966, in respect of Bonai Main Areas of Bonai Division, for a period of thirteen years of with effect from October 1, 1967, in respect of Kusumdih P. S. Of Bonai Division; and for a period of eleven years with effect from October 1, 1969, in respect of Gurundia Rusinath P. S. Of Bonai Division, with an option to the Respondent Company to renew the agreement for a further period of twelve years from October 1, 1980. For the present it is not necessary to refer to the other terms and conditions of this Bamboo Contract.
After the said two Notification dated May 23, 1977, were issued, the Sales Tax Officer, Dhenkanal Circle, Angul, Ward (the Third Appellant in Civil Appeal No. 219 of 1982) issused to 42 the manager of the Respondent Company's mill at P. O. Choudwar a notice dated August 18, 1977, under Rules 22 and 28(2) of the Orissa Sales Tax Rules, 1947, stating that though the Respondent Company's gross turnover during the year immediately preceding June 1, 1977, had exceeded Rs. 25,000; it had without sufficient cause failed to apply for registration as a dealer under section 9 of the Orissa Act and calling upon him to submit within one month a return in Form IV of the forms appended to the said Rules, showing the particulars of "turnover for the quarter ending 76-77 & 6/77". By the said notice the said manager was required to attend in person or by agent at the Sales Tax Office at Angul on October 30, 1977, and to produce or cause to be produced the accounts and documents specified in the said notice and to show cause why in addition to the amount of tax that might be assessed a penalty not exceeding one and half times that amount should not be imposed under section 12(5) of the Orissa Act that is, for carrying on business without being registered as a dealer. By its letter dated August 25, 1977 the Respondent Company asked for time to seek legal advice. Thereafter by its letter dated September 27, 1977 addressed to the said Sales Tax Officer, the Respondent Company contended that the said notice was invalid and called upon him to cancel the said notice. A copy of the said letter was also sent to the Commissioner of Sales Tax, Orissa, who is Second Appellant in Civil Appeal No. 219 of 1982 as also to the Chief Secretary to the Government of the State of Orissa. As no reply was received to the said letter, the Respondent company and the said Kanak Ghosh filed writ petition in the High Court of Orissa, being O.J.C No. 811 of 1977, challenging the validity of the said two Notifications dated May 23, 1977, and the said notice. While the said writ petition was part-heard, the said two Notifications were replaced by the said two Notifications dated December 29, 1977. Accordingly, the Respondent Company applied for amendment of the said writ petition. It also filed along with Kanak Ghosh another writ petition, being O.J.C. No. 740 of 1978, challenging the validity not only of the said two Notifications dated May 23, 1977, but also of Entries Nos. 2 and 17 of the said two Notifications dated December 29, 1977, and the said notice dated August 18 1977, on the same grounds as those in the earlier writ petition.
The principal contentions raised in the said writ petitions were that the subject-matter of the Bamboo Contract was not a sale or 43 purchase of goods but was lease of immovable property or in any event was the creation of an interest in immovable property by way of grant of profit a prendre which according to the Respondent Company amounted in Indian law to an easement under the Indian Easements Act, 1882 (Act V of 1882), and that for the said reason the amounts of royalty payable under the Bamboo Contract could not be made exigible to either sales tax or purchase tax in the exercise of the legislative competence of the State, and, therefore, the impugned provisions were unconstitutional and ultra vires the Orissa Act. It was further contended that the Bamboo Contract was a works contract and for the said reason also the transaction covered by it was not exigible to sales tax or purchase tax. It was also contended that as the said Notifications dated December 29, 1977, were expressed to be made in supersession of all earlier notifications on the subject, the liability, if any, under the said Notifications dated May 23, 1977, was wiped out. The said writ petitions prayed for quashing the impugned provisions and for writ of mandamus against the respondents to the said petitions, namely, the State of Orissa, the Commissioner of Sales Tax, Orissa, and the said Sales Tax Officer, restraining them from giving any effect or taking any further steps or proceedings against the Respondent Company on the asis Or the impugned provisions or the said notice.
In addition to the said two writ petitions filed by the Respondent Company and the said Kanak Ghosh, three other writ Petitions were also filed by other parties Who had entered into Bamboo Contracts with the State of Orissa in which similar contention were raised and reliefs claimed.
The record is not clear whether any assessment order was made against the Respondent Company in pursuance of the said notice or whether further proceedings in pursuance of the said notice were stayed by the High Court by an interim order. As mentioned earlier, by the said common judgment delivered by the High Court, the said writ petitions were allowed. As a natural corollary of the High Court, quashing the impugned provisions it ought to have also quashed, the said notice dated August 18, 1977, and the assessment order, if any, made in pursuance thereof. The High Court, however, did not do so, perhaps because as it heard and decided all the said 209 writ petitions together it did not ascertain the facts of each individual petition or the exact consequential reliefs to be given to the petitioner therein.
44 Facts of C. A. No. 220 of 1982 Messrs. M.M. Khara, Second Respondent to Civil Appeal No. 220 of 1982 (hereinafter referred to as "the Respondent Firm"), is a-partnership firm of which the first Respondent to the said Appeal, Mangalgi Mulji Khara, is a partner. The Respondent Firm carried on business at P. O. Sambalpur in the District of Sambalpur in the State of Orissa and was registered as a dealer both under the Orissa Act and the Central Sales Tax Act, 1956 (Act LXXIV of 1956), with the Sales Tax Officer, Sambalpur I Circle. The business of the Respondent Firm so far as concerns this Appeal consisted of bidding at auction held by the Government of Orissa in respect of trees standing in forest areas and if it was the highest bidder, entering into an agreement with the Government for felling and removing such trees and in its turn selling the trees felled by it in the shape of logs to other. The procedure followed by the State of Orissa in giving forest areas was to publish notices of proposed auction sales of timber and other forest products in particular forest areas. After the auctions were held, ratification orders would be issued by the State Government to the forest contractors who were the highest bidders as also an agreement would be entered into between the State of Orissa through its Governor and the forest contractor in respect of the forest produce governed by the agreement.
During the relevant period, the Respondent Firm was successful at five auction sales held by the State of Orissa. Its bids were ratified by the State Government. The Respondent Firm also entered into five separate agreements (hereinafter referred to as "Timber Contractors") for felling and removing trees standing in such forest areas.
Three of the said five Timber Contracts were for the period October 31, 1977, to January 31, 1979, the fourth was for the period October 1, 1977 to December 31, 1978, and the fifth was for the period October 28, 1977 to July 31, 1979.
After the said Notifications dated May 23, 1977 were issued, the Respondent Firm along with its said partner Mangalji Mulji Khara filed a writ petition in the Orissa High Court, being O.J.C. No. 1048 of 1977, against the State of Orissa, Commissioner of Commercial Taxes, Orissa, Sales Tax Officer, Sambalpur Circle, Divisional Forest Officer, Roirkhol Division, and Divisional Forest Officer, Deogarth Division. Two main grounds were taken in the 45 said writ petition, namely, (l) the levy of a purchase tax on standing timber agreed to be severed was beyond the legislative competence of the State Legislature and (2) the said Notifications imposed a tax both at the point of sale and point of purchase and were, therefore, invalid and ultra vires the Orissa Act. It was also contended that the power conferred upon the State Government under section 3-B of the Orissa Act to declare any goods or class of goods to be liable to tax on the turnover of purchase as also the power conferred upon the State Government to specify the rate of tax subject to the conditions that it should not exceed thirteen per cent amounted to excessive delegation of legislative power to the State Government and that too without prescribing any guidelines in respect thereof. It was further contended that the Timber Contracts were works contracts and the amounts payable under them were, therefore, not exigible either to purchase tax or sales tax.
The reliefs sought in the said writ petition were for quashing the said two Notifications dated May 23, 1977- D While the said writ petition was pending, the Sales Tax Officer, Sambalpur I Circle, by his assessment order dated November 28, 1978, assessed the Respondent Firm to tax under the Orissa Act for the period April 1, 1977, to March 31, 1978. He held that the Respondent Firm had paid royalty to the Forest Department in the aggregate sum of Rs. 11,52,175 on which purchase tax at the rate of ten per cent was payable by it. It was further stated in the said assessment order that the Respondent Firm had not shown this amount in its gross turnover. Accordingly, the Sales Tax Officer enhanced the gross turnover to include this amount. The amount of purchase tax assessed on the Respondent Firm amounted to Rs. 1,16,217.50p. Thereupon, the Respondent Firm and its partner amended the said writ petition No. O.J.C.
1048 of 1977 and challenged the validity of the said assessment order and prayed for quashing the same. On an application made by the Respondent Firm and its said partner, by an interim order the High Court stayed the recovery of the amount of purchase tax pending the hearing and final disposal of the said writ .
Apart from the Respondent Firm, 203 other forest contractors who had entered into similar agreements with the State Government also filed writ petitions in the High Court challenging the validity of the impugned provisions. By its judgment under appeal, 46 the High Court allowed the said petition filed by the Respondent Firm. As in the case of the writ petition filed by the Respondent Company and very probably for the same reason, the High Court did not pass any order quashing the said assessment order consequent upon it holding that the impugned provisions were ultra vires the Act.
Judgment of the High Court All the said 209 writ petitions were heard by a Division Bench of the Orissa High Court consisting of S.K.Ray, C.J., and N.K. Das, J. The main judgment was delivered by Das. J., while Ray, C.J., delivered a short, concurring judgment. Das, J. rejected the contention that the effect of the word 'supersession' used in the Notifications dated December 29, 1977, was to wipe out the liability under the earlier Notifications dated May 23, 1977. He held that the Notifications dated May 23,1977, remained in force until the Notifications dated December 29, 1977, came into operation. So far as the other points raised before the High Court were concerned, Das, J., summarized the conclusions reached by the court in paragraphs 19 and 2() of his judgment as follows:
"19. For the reasons stated above, we hold as follows:
(1) That the bamboos all i trees agreed to be severed are nothing but bamboos and timber after those are felled. When admittedly timber and bamboos are liable for taxation at the sale point, taxation of those goods at the purchase point amounts to double taxation and, as such, the notifications arc ultra vires the provisions of the the Act.
(2) The impugned notifications amount to taxation on agreements of sale, but not on sale and purchase of goods; and (3) In the case of bamboo exploitation contracts, the impugned notifications amount also to impost of tax on profit-a-prendre and, as such, arc against the provisions of the Orissa Sales Tax Act.
"20. In view of the aforesaid findings, we do not consider it necessary to go into the other questions raised 47 by the petitioners, namely, whether it is a works contract and whether the notifications amount to excessive delegation or whether there has been business of purchase by the petitioners or whether there has been restriction on trade and business" In his concurring judgment Ray, C. J., agreed with Das, J.
and further held that in the series of sales in question the first sale, that is the taxable event, started from the Divisional Forest Officer and that the Divisional Forest Officer was the taxable person who had sold taxable goods, namely, timber, and that as what was sold by the Divisional Forest Officer was purchased by the petitioners before the High Court the identity of goods sold and purchased was the same, and that where such a sale was taxed, the purchase thereof was excluded from the levy of tax by virtue of sections 3-B and 8 of the Orissa Act and consequently the levy of purchase tax by the impugned provisions was bad in law.
In view of its above findings, the High Court allowed all the writ petitions and quashed the impugned provisions.
The High Court made no order as to the costs of the writ petitions.
We will set out the submissions advanced at the Bar at the hearing of these Appeals when we deal with the various points which fall to be decided by us. In order, however, to test the correctness of the judgment of the High Court as also of the rival contentions of the parties, it is necessary to see first the relevant provisions of the constitution of India as also of the Orissa Act and of the various notifications issued thereunder.
Constitutional provisions The Orissa Act received the assent of the Governor- General of India on April 26, 1947, and was published in the Orissa Gazette on May 14, 1947. Under section 1(13) of the Orissa Act, section 1 was to come into force at once and the rest of the Orissa Act on such date as the Provincial Government may by notification in the Orissa Gazette appoint. The rest of the Orissa Act was brought into force on August l, 1947. The Orissa Act is thus a pre-constitution Act. At the date when it was enacted as also when it came into force? the constitutional law of India was the Government of 48 India Act, 1935, prior to its amendment by the Indian Independence Act, 1947. Under section 100(3) of the Government of India Act 1935, the Legislature of a Province alone had the power to make laws for a province or any part thereof in respect any of the matters enumerated in List 11 in the Seventh Schedule to that Act, namely the Provincial Legislative List. Entry 48 in the provincial Legislative List provided for "Taxes on the sale of goods and on advertisements". Thus, under the Government of India Act, 1935, Sales tax was an exclusively provincial subject and the legislative competence of the Orissa Provincial Legislature to enact the Orissa Act was derived from section 100(3) of the Government of India Act, 1935, read with Entry 48 in the Provincial Legislative List. Under the Constitution of India as originally enacted, the legislative topic "Taxes on the sale or purchase of newspapers and on advertisements published therein" was exclusively a Union subject in respect of which under Article 245(1) read with Article 246(1) parliament alone could make laws for the whole or any part of the territory of [India, this topic being the subject-matter of Entry 92 in List I in the Seventh Schedule to the Constitution (namely, the Union List), while "Taxes on the sale or purchase of goods other than news papers" and "Taxes on advertisements other than advertisements published in newspapers" were exclusively State subjects in respect of which under Article 245(1) read with Article 246(3) of the Constitution of India, the Legislature of a State alone could make laws' for such State or any part thereof, these topics being the subject-matter of Entries 54 and 55 in , Li
