SABYASACHI MUKHARJI J.

1. Except Civil Appeals Nos. 4162 and 4163 of 1988, in these appeals along with the special leave petitions and the writ petition, we are concerned with sections 9(1) and 24(3) as well as the penalty proceedings initiated under section 50 of the Haryana General Sales Tax Act, 1973 (hereinafter referred to as " the"). So far as Civil Appeals Nos. 4162 and 4163 of 1988 are concerned, these involve the scope, effect and validity of section 13AA of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the Bombay Act"), as introduced by the Maharashtra Act No. 28 of 1982. It will, therefore, be desirable first to deal with the provisions of the, and then with the provisions of the Bombay Act as mentioned hereinbefore. The appellant/petitioner, Goodyear India Ltd., was engaged at all relevant times, inter alia, in the manufacture and sale of automobile tyres and tubes. It manufactured the said tyres and tubes at its factory at Ballabhgarh in the district of Faridabad in the State of Haryana. For the said manufacturing activity, the appellant had, from time to time, to purchase various kinds of raw materials both within the State and outside the State. It is stated that about 7 to 10 per cent. of the total needs of raw materials on an all India basis were locally procured by the appellant from Haryana itself. The raw materials purchased in Haryana were : (i) pigments (partly), (ii) chemicals (partly), (iii) wires (partly), (iv) carbon black (partly), (v) rubber (partly) and (vi) fabric (partly). The rest of the requirements were imported from other States. The appellant had its depots at different places in the State of Haryana as well as in other States. After manufacturing the said tyres and tubes, about 10 to 12 per cent. of the total manufactured products used to be sold in the State of Haryana either locally or in the course of inter-State trade and commerce or in the course of export outside the country and also sold locally against declaration form No. S.T. 15. It was stated that, at the relevant time, the local sales including sales in the course of inter-State trade and commerce and in the course of export from the State of Haryana was about 30 to 35 per cent. The appellant was a registered dealer both under the Haryana Act and the Central Sales Tax Act, and had been submitting its quarterly returns and paying sales tax in accordance with law. According to the appellant, in 1979, the assessing authority, Faridabad, imposed upon the appellant the purchase tax under section 9 of thefor the assessment year 1973-74, and subsequently for the years 1974-75 and 1975-76, as well on the despatches made by the appellant of the manufactured goods to its various depots outside the State. Subsequently, the relevant Revenue authorities sought to impose purchase tax under section 9(l) of theand imposed purchase tax on despatches of manufactured goods, namely, tyres and tubes, to its various depots in other States. "his led to the filing various writ petitions in the Punjab and Haryana High Court by the appellant/petitioner. In respect of the assessment years 1976-77 to 1979-80, these questions were considered by the Punjab and Haryana High Court, and the writ petitions were decided in favour of the appellant on December 4, 1982, the said decision being the decision in Goodyear India Ltd. v. State of Haryana [1983] 53 STC 163. [LQ/PunjHC/1982/508] The Division Bench of the High Court, in the said decision, held that, both on principle and precedent, a mere despatch of goods out of the State by a dealer to his own branch while retaining both title and possession thereof, does not come within the ambit of the phrase "disposes of the manufactured goods in any manner otherwise than by way of sale", as employed in section 9(1)(a)(ii) of the. The High Court further held that the decision of this court in State of Tamil Nadu v. M.K. Kandaswami [1975] 36 STC 191 [LQ/SC/1975/219] , was no warrant for the proposition that a mere despatch of goods was within the ambit of disposing of them. The High Court also distinguished the decision of this court in Ganesh Prasad Dixit v. Commissioner of Sales Tax [1969] 24 STC 343 [LQ/SC/1969/34] , and held that Notification No. S.O. 119/H.A. 20/73/Ss. 9 and 15/74 dated July 19, 1974, issued under section 9 (prior to its amendment by Act No. 11 of 1979) was ultra vires section 9 of the. It was held that whereas the section provided only for the levy of purchase tax on the disposal of manufactured goods, the impugned notification, by making mere despatch of goods to the dealers themselves taxable, in essence, legislates and imposes a substantive tax which it obviously could not. It was held that this was contrary to and in conflict with the provisions of section 9. The High Court referred to the relevant portion of the unamended section 9 of thewith which it was confronted and the notification. In order to appreciate the said decision and the position, it will be appropriate to set out the said provisions, namely, the unamended provisions of section 9 as well as the notification "9. Where a dealer liable to pay tax under this Act purchases goods other than those specified in Schedule B from any source in the State and- (a) uses them in the State in the manufacture of, - (i) goods specified in Schedule B or (ii) any other goods and disposes of the manufactured goods in any manner otherwise than by way of sale whether within the State or in the course of inter-State trade or commerce or within the meaning of sub-section (1) of section 5 of the Central Sales Tax Act, 1956, in the course of export out of the territory of India, (b) exports them, in circumstances in which no tax is payable under any other provision of this Act, there shall be levied, subject to the provisions of section 17, a tax on the purchase of such goods at such rate as may be notified under section 15."The relevant notification was as follows: Notification No. S. O. 119/H.A. 20/73/Ss. 9 and 15/74 dated the 19th July, 1974.-In exercise of the powers conferred by section 9 and sub-section (1) of section 15 of the Haryana General Sales Tax Act, 1973, the Governor of Haryana hereby directs that the rate of tax payable by all dealers in respect of the purchases of goods other than goods specified in Schedules C and D or goods liable to tax at the first stage notified as such under section 18 of the said Act, if used by them for purposes other than those for which such goods were sold to them, shall be the rate of tax leviable on the sale of such goods : Provided that where any such dealer, instead of using such goods for the purpose for which they were sold to him, despatches such goods or goods manufactured therefrom at any time for consumption or sale outside the State of Haryana to his branch or commission agent or any other person on his behalf in any other State and such branch, commission agent or other person is a registered dealer in that State and produces a certificate from the assessing authority of that State or produces his own affidavit and the affidavit of the consignee of such goods duly attested by a Magistrate or Oath Commissioner or Notary Public in the form appended to this notification to the effect that the goods in question have been so despatched and received and entered in the account books of the consignee, the rate of tax on such goods shall be three paise in a rupee on the purchase value of the goods so despatched." The High Court, as stated before, referred to section 9 and held that the expression "disposes of" was not basically a term of legal art and, therefore, it was proper and necessary to turn first to its ordinary meaning in order to determine whether a mere despatch of goods by a dealer to himself would connote "disposal of" such goods by him. The High Court referred to the dictionary meaning of "disposes of" in Websters Third New International Dictionary. Reference was also made to 27 Corpus Juri Secundum, page 345, and, ultimately, it came to the conclusion that the phrase "disposes of" or "disposal" cannot be possibly equated with the mere despatch of goods by a dealer to himself. After referring to the relevant provisions with which this court was concerned in Kandaswamis case [1975] 36 STC 191 [LQ/SC/1975/219] , the High Court held that that case was no warrant for construing the expression "despatch" as synonymous to "disposal". On the other hand, the court held that the decision of this court emphasises that the expression "disposal" of goods is separate and distinct from despatch thereof. According to the High Court, the same position was applicable to Ganesh Prasad Dixits case [1969] 24 STC 343 (SC) and, in those circumstances, held that the term "disposes of" cannot be synonymous with "despatch", and once that is held, then the notification mentioned above travelled far beyond what is provided in section 9 of thewhile the said provision provided only for levy of purchase tax on disposal of manufactured goods. The High Court observed as follows (at p. 169 of 53 STC): "Once it is held as above, the impugned Notification No. S. O. 119/H. A. 20/73/Ss. 9 and 15/74 dated 19th July, 1974 (annexure P-2), plainly travels far beyond the parent section 9 of the. Whereas the said provision provided only for the levy of a purchase tax on the disposal of manufactured goods, the notification by making a mere despatch of goods to the dealers themselves taxable in essence, legislates and imposes a substantive tax which it obviously cannot. Indeed, its terms run contrary to and are in direct conflict with the provisions of section 9 itself. There is thus no option but to hold that the notification, which is a composite one, is ultra vires section 9 of theand is hereby struck down."The High Court also noted that though the challenged assessment orders were appealable, as the challenge was to the very validity of the notification which was obviously beyond the scope of the appellate authority, the writ petitions were entertainable as the assessment was based on the notification which was frontally challenged. As a result, the High Court quashed the notification and set aside the assessment orders. The said decision is under challenge in appeal to this court.

2. It may be mentioned that sub-section (1) of section 9 of thehad been introduced by the Haryana Act, 55 of 1976 in the. After the aforesaid decision of the High Court, the Haryana Legislature intervened and enacted the Haryana General Sales Tax (Amendment and Validation) Act, 1983, by which section 9 of the principal Act was amended as follows : Amendment of section 9 of Haryana Act 20 of 1973.-In section 9 of the principal Act, - (a) in sub-section (1), - (i) for clause (b), the following clause shall be substituted and shall be deemed to have been substituted for the period commencing from the 27th day of May, 1971, and ending with the 8th day of April 1979, namely:- (b) purchases goods, other than those specified in Schedule B, from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches 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 commerce or in the course of export outside the territory of India within the meaning of sub-section (1) of section 5 of the Central Sales Tax Act, 1956 ; or ; (ii) after clause (b), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 9th day of April, 1979, namely: - (bb) purchases goods, other than those specified in Schedule B except milk, from any source in the State and uses them in the State in the manufacture of any other goods and either disposes of the manufactured goods in any manner otherwise than by way of sale in the State or despatches 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 commerce or in the course of export outside the territory of India within the meaning of sub-section (1) of section 5 of the Central Sales Tax Act, 1956 ; or(iii) the following proviso shall be added, namely: -

"Provided that no tax shall be leviable under this section on scientific goods and guar gum, manufactured in the State and sold by him in the course of export outside the territory of India within the meaning of sub-section (3) of section 5 of the Central Sales Tax Act, 1956. ; and (b) in sub-section (3), the words other than railway premises shall be omitted."

After the aforesaid amendment, writ petitions were filed in the High Court by Bata India Ltd. In the meantime, the petitioner-company also filed writ petitions for the assessment years 1973-74 to 1975-76 and 1980-81, in the High Court challenging the assessments. The High Court decided these matters on August 2, 1983. The said decision, Bata India Ltd. v. State of Haryana, has been reported in [1983] 54 STC 226 (P [LQ/PunjHC/1983/315] & H). The High Court held that "mere despatch of goods to a place outside the State in any manner otherwise than by way of sale in the course of inter-State trade or commerce" is synonymous with or is in any case included within the ambit of the "consignment of goods either to the person making it or to any other person in the course of inter-State trade or commerce" as specified in article 269(1)(h) and entry No. 92-B of List I of the Seventh Schedule to the Constitution. Hence, the levy of sales or purchase tax on such a despatch or consignment of goods and matters ancillary or subsidiary thereto, will be within the exclusive legislative competence of Parliament to the total exclusion of the State Legislatures. Therefore, section 9(1)(b) of the Haryana General Sales Tax Act, 1973, as amended by the Haryana General Sales Tax (Amendment and Validation) Act, 1983, in so far as it levies a purchase tax on the consignment of goods outside the State in the course of inter-State trade or commerce is beyond the legislative competence of the State of Haryana and is void and inoperative. It was held that the retrospective validation of the Notification dated July 19, 1974, referred to hereinbefore, and the consequential validation of all actions taken thereunder were liable to be quashed. The High Court further held that mere manufacture and consignment of goods outside the State to himself by a manufacturer is riot sale or disposal thereof with the result that it will not be within the ambit of entry No. 54 of List 11 of the Seventh Schedule to the Constitution. Consequently, it was held that, irrespective of the Forty-sixth Amendment, an attempt to tax the mere consignment or despatch of manufactured goods outside the State in the course of inter-State trade or commerce will not come within the ambit of entry No. 54 of List II of the Seventh Schedule and consequently of the competence of the respective State Legislatures. Even before the Forty-sixth Amendment, the mere consignment of goods in the course of inter-State trade or commerce was beyond the scope of the said entry and thus not within the legislative competence of the States and was entirely within the parliamentary field of legislation by virtue of article 248 and the residuary entry No. 97 of list IThe High Court was of the view that neither the original purchase of goods nor the manufacture thereof into the end-product by itself attracts purchase tax and consequently are not even remotely the taxable events. What directly and pristinely attracts the tax and can be truly labelled as the taxing event under section 9(1)(b) of theis the three-fold exigency of : (i) disposal of the manufactured goods in any manner otherwise than by way of sale in the State ; or (ii) 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 commerce ; or (iii) disposal or despatch of the manufactured goods in the course of export outside the territory of India. It was these three exigencies only which were the taxable events in the amended section 9(l)(b) of the. Consequently, in a statute where the taxable event is the despatch or consignment of goods outside the State, the same would come squarely within the wide sweep of entry No. 92B of list I of the Constitution, and thus excludes taxation by the States.

3. The High Court was of the view that section 9 of themust be strictly construed as it was a charging section. If the charging section travels beyond the legislative entry and thereby transgresses the legislative field, then the same cannot possibly be sustained. The constitutional changes brought by the Forty-sixth Amendment in article 269 of the Constitution read with the insertion of entry No. 92B in the Union list leave no doubt that the legislative arena of tax on the consignment of goods (whether to ones own self or to any other person) in the course of inter-State trade or commerce and all ancillary or complementary or consequential matters are now declared to be exclusively reserved for parliamentary legislation and any intrusion into this field by the State Legislatures would be barredIn 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 that the principles laid down in Heydons case [1584] 3 Co Rep 7a are instructive. Hence, in a situation of this nature, it was just and proper to see what the position was before the Forty-sixth 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. In Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffen-burg A G [1975] 1 All ER 810, 814 (HL), Lord Reid observed as follows: "One must first read the words in the context of the 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 mind.

4. It has always been said to be important to consider the mischief which the was apparently intended to remedy. The word mischief is traditional. I would expand it in this way. In addition to reading the, you look at the facts presumed to be known to Parliament when the Bill which became the 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 . ......."The state of affairs that Parliament has sought to remedy by the Forty-sixth 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 article 286. The High Court, in the judgment referred to hereinbefore, mentioned these factors. It is in this background that article 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 No. 54 in list II of the Seventh Schedule. However, this legislative authority of the States is restricted by three limitations contained in articles 286(1)(a), 286(1)(b) and 286(3) of the Constitution. It may be mentioned that Parliament by the Sixth amendment to the Constitution, enacted the Central Sales Tax Act, 1956, with the object of formulating 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 or 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 a plain reading of these would leave no 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 [LQ/SC/1963/296] , Navinchandra Mafatlal v. CIT [1954] 26 ITR 758 [LQ/SC/1954/156] ; [1985] 1 SCR 829 and Waverly jute Mills Co. Ltd. v. Raymon and Co. (India) Pvt. Ltd. [1963] 3 SCR 209 [LQ/SC/1962/233] 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 light of the aforesaid, the High Court construed section 9(1)(b) of the Haryana Act, 1973. Analysing the provisions in detail, it observed that section 9 of thewas the charging section for the levy of purchase tax. It imposed a liability for payment of purchase tax and 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 situs of the goods without any change in the basic incidents 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 equivalent of a sale either as a term of art in the existing sales tax legislation or remotely so in common parlance, and construing section 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 commerce. The High Court found that there was no distinction between the despatch as defined in the said amended section and the consignment of goods by the manufacturer to himself or to any other person in the course of inter-State trade or commerce, and referred to the meanings of the expressions "despatch" and "consign", which are similar and almost inter-changeable when used in a specific commercial sense. The High Court referred to Websters New International Dictionary, Shorter Oxford English Dictionary and also to Random House Dictionary for their meanings . On construction, the High Court came to the conclusion that the amended provisions of section 9(1)(b) of theattempt to levy an identical tax in, the garb of a levy on the despatch of manufactured goods to places outside the State of Haryana and, therefore, intruded and trespassed into an arena exclusively meant for taxation by the Union of India. The High Court also viewed it from another point of view, namely, who was liable as it was the consignment of goods which attracted the liability of purchase tax and in pristine essence was the "taxable event" under section 9(1)(b) of the. The High Court also analysed it from the point of view that, under section 9(1)(b), where a dealer purchases goods for the express purpose of manufacturing other goods within the State, then in a strict sense, such purchase by itself did not attract any tax under the pro-vision. Hence, the High Court set aside the amended provision so far as it sought to levy purchase tax on the consignment of goods outside the State in the course of inter-State trade or commerce, and, consequently, it also set aside the retrospective validation of the notification and the consequential validation of all actions taken thereunder. Special leave petitions were filed in this court against the said decision of the High Court. These are Special Leave Petitions Nos. 8397 to 8402 of 1983. During the pendency of the special leave petitions, show cause notices were issued by the assessing authority in respect of the assessment years 1973-74 to 1980-81 (except for 1978-79 and 1979-80) and also for 1982-83, asking the petitioner to show cause why in addition to purchase tax, it should not be liable to penalty as well. The petitioner-company again filed writ petitions in the Punjab and Haryana High Court challenging the validity of those notices. It appears that, in the meantime, a Full Bench of the High Court decided the question again in the case of Des Raj Pushap Kumar Gulati v. State of Punjab. This decision was rendered on January 24, 1985, and is reported in [1985] 58 STC 393 (P [LQ/PunjHC/1985/86] & H). The assessment years involved in all these appeals are 1973-74 to 1982-83. According to the Full Bench, the taxing event is the act of purchase and not the act of despatch Or consignment as held in Bata India Ltd. [1983] 54 STC 226 (P [LQ/PunjHC/1983/315] & H). In the premises, it was held that section 9(1)(b), as amended, was neither invalid nor ultra vires and overruled the decision of Bata India Ltd. [1983] 54 STC 226 (P [LQ/PunjHC/1983/315] & H). The writ petitions filed were also dismissedThe petitioner-company filed special leave petitions against the aforesaid judgment of the Punjab and Haryana High Court which were admitted in Civil Appeals Nos. 1166 to 1172 of 1985. Goodyear India also filed Writ petition No. 3834 of 1985, in respect of the assessment year 1981-82, as he notices for assessment and penalty were received after the decision of he Punjab and Haryana High Court in Des Raj Pushap Kumars case [1985] 58 STC 393 [FB]. The said decision was passed in appeal against he decision of the said court in Goodyear India reported in [1983] 53 TC 163, number being 1514 of 1984. All these questions are the subject-matters of these appeals.

5. 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 an indirect tax, there is a marked distinction between the consequence of manufacture and the consequence of sale.

6. It is well to remember that, in construing the expressions of the Constitution to judge whether the provisions like section 9(1)(b) of theare 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. The Constitution is not to be construed as mere law but as the machinery by which laws are to be made. It was observed by Lord Wright in James v. Commonwealth of Australia and State of New South Wales [1936] AC 578 (PC) (at 614) that the rules which apply to the interpretation of other statutes, however, apply equally to the interpretation of a constitutional enactment. In this context, Lord Wright referred to the observations of the Australian High Court in Attorney-General for the State of New South Wales v. Brewery Employees Union [1908] 6 CLR 469, where it was observed that the words of the Constitution must be interpreted on the same principles as any ordinary law, and these principles compel us to consider the nature and scope of the, and to remember that the Constitution is a mechanism under which laws are to be made, and not a mere Act which declares what the law is to be. Hence, such mechanism should be interpreted broadly, bearing in mind in appropriate cases, that the Supreme Court like ours is a nice balance of jurisdiction. A constitutional court, one must bear in mind, will not strengthen, but only derogate from its position if it seeks to do anything but declare the law ; but it may rightly reflect that a Constitution is a living and organic thing which, of all instruments, has the greatest claim to be construed broadly and liberally. See the observations of Gwyer C. J., In " Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 [1938] 1 STC 1 (FC) at 34; AIR 1939 FC 1 [LQ//1938/1 ;] , 4. Mr. Justice Sulaiman, in his judgment at page 66 of STC , (page 22 of AIR), observed that the power to tax the sale of goods is quite distinct from any right to impose taxes on use or consumption. It cannot be exercised at the earlier stage of import or manufacture or production, nor at the later stage of use or consumption, but only at the stage of sale (emphasis supplied). The essence of a tax on goods manufactured or produced is that the right to levy it accrues by virtue of their manufacture.

7. On the other hand, a duty on the sale of goods cannot be levied merely because goods have been manufactured or produced. Nor can it be levied merely because the goods have been consumed or used or even destroyed. The right to levy the duty would not at all come into existence before the time of the sale. In this connection, reference may be made to the observations of Chief Justice Gwyer in Province of Madras v. Boddu Paidanna and Sons [1938-50] 1 STC 104 (FC) ; AIR 1942 FC 33 [] Mr. Rajaram Aggarwal, learned counsel for the appellant/assessees, contended before us that it is necessary to find out or identify the taxable event. If, on a true and proper construction of the amended provisions of section 9(1)(b), it is the despatch or consignment of the goods that is the taxable event as contended by the petitioners and appellants, then the power is beyond the States competence. If, on the other hand, it is the purchase of the goods that is the taxable event as held by the Full Bench of the High Court, then it will be within its competence. The Full Bench in Des Raj Pushap Kumars case [1985] 58 STC 393 (P [LQ/PunjHC/1985/86] & H) has relied on the background of the facts and the circumstances which necessitated the introduction of the amendment. Mr. Tewatia, learned counsel appearing for the State, canvassed before us the historical perspective and stated that the Haryana State came into being as a result of the Punjab State Reorganisation Act, 1966 ; therefore, part of the legislative history of the taxing statute like any other statute is shared by the Haryana State with the Punjab State, and as such it is proper to notice the concept of purchase tax as it was evolved in the State of Punjab. Purchase tax was introduced in the State of Punjab for the first time by the East Punjab General Sales Tax (Amendment) Act, 1958. Section 2(ff) was introduced for the first time to define the expression "purchase". The definition of the term "dealer" was changed to include therein a purchaser of goods also. The definition of the term "taxable turnover" was also altered. Some dealers who crushed oil seeds were called upon to pay purchase tax on the raw material purchased by them on the ground that the raw material had not been subjected to a manufacturing process as the process of crushing oil seeds did not involve a process of manufacturing. He referred to the fact that Punjab had originally exempted purchase tax on the purchase of raw material by the dealers if such raw material was to be used for the manufacture of goods for sale in Punjab and thus generate more revenue to the State as a result of the sales tax on such manufactured goods. But when the dealers started avoiding this condition for sale in Punjab by various ingenious devices after having escaped the payment of purchase tax on the raw material purchased by them, the Legislature amended the Act and Punjab Act No. 18 of 1960 was brought on the statute book with effect from April 1, 1960. Section 2(ff) of thewas amended and provided that all the goods mentioned in Schedule C when purchased shall be exigible to purchase tax and thus the concession given to the manufacturers was withdrawn.

8. Explaining this background, Mr. Tewatia contended that section 9, sub-section (1) of the, envisages payment of tax at such rate as may be notified under section 15 on the purchase of goods from any source within the State by a dealer liable to pay tax under the when such goods, not being Schedule B goods, were consumed either in producing Schedule B goods or when the manufactured goods were other than Schedule B goods, the same not being sold within the State or in the course of inter-State trade or commerce, or in the course of export outside the territory of India, or the purchased goods were exported outside the StateAfter referring to the relevant provisions and the provisions of section 9(1)(b), Mr. Tewatia emphasised that the contingency contemplated by "or despatches 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 commerce or in the course of export outside the territory of India within the meaning of section 5(1) of the Central Sales Tax Act, 1956 ; or" as well as clause (c) of section 9(1) which encompasses "purchases goods, other than those specified in Schedule B, from any source in the State and exports them, in circumstances in which no tax is payable under any other provision of this Act, there shall be levied, subject to the provisions of section 17, a tax on the purchase of such goods at such rate as may be notified under section 15", have to be judged for determining their validity in the true historical perspective as well as bearing in mind the remedial aspect of the provisions for the purpose for which these were enacted. Therefore, the main question is whether the tax envisaged by section 9(1) is a tax on purchase/sale of given goods or is a tax on the despatch/consignment of such goods and that depends on, as to whether the taxable event is a purchase/sale of goods or despatch/consignment of such goods. As mentioned hereinbefore, Mr. Tewatia laid a great deal of emphasis on the background of the provisions of section 9(1). He urged that the said section is both a taxing as well as a remedial provision, as would be evident from the scheme of the. The legislative policy was to see that all goods, except non-taxable goods, i.e., Schedule B goods, must yield tax/revenue to the State in the hands of a dealer, at one stage or the other, according to Mr. Tewatia. He analysed the scheme and referred us to section 6 along with section 27 of the Act, and then submitted that the provision of section 9(1) along with sub-section (3) of section 24 of theare both composite provisions, i.e., they are both charging provisions as also remedial provisions. According to him, such composite provisions of a fiscal statute deserve to be interpreted properly and in such a manner as to further the remedy and thus effectuate the legislative intent and suppress the mischief intended to be curbedReliance was placed by the High Court as well as Mr. Tewatia before us on the observations of this Court in State of Tamil Nadu v. M. K. Kandaswami [1975] 36 STC 191 [LQ/SC/1975/219] , where, at page 198, this court, while dealing with section 7A of the Madras General Sales Tax Act, observed that it was at once a charging as well as a remedial provision. Its main object was to plug leakage and prevent evasion of tax. In interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book should be eschewed. If more than one construction is possible, that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile, observed this court in that case. While bearing the aforesaid principle in mind, it has to be examined as to how far the application of this provision can be construed with the well-settled principle of fiscal legislation and the terms and conditions of the present legislation. It has been said on numerous occasions that fiscal laws must be strictly construed, words must say what these mean, nothing should be presumed or implied, these must say so. The true test must always be the language used.

9. On behalf of the assessee, Mr. Rajaram Aggarwal, however, further contended that the ratio of Kandaswamis case [1975] 36 STC 191 (SC) to which Mr. Tewatia referred, must be understood in the light of the question involved in that case. The said decision of this court was concerned with the limited point as to whether the Madras High Court was right in observing "whether one could say that the sale which is exempted is liable to tax and then assume that because of exemption, the tax is not payable". This court held that the language of section 7A of the said Act was far from clear as to its intention and was not concerned with the identification of the taxing event. Furthermore, it has to be borne in mind, as emphasised by Mr. Aggarwal, that if at all the taxing event was spelt out, it was on the assumption that the goods in question were generally taxable and these were to put to tax under section 7A of the Tamil Nadu Act, if these came to be purchased without payment of tax and then sought to be dealt with in any manner as to escape payment of State sales/purchase tax within the State. Mr. Tewatia drew our attention to the observations of this court in Kandaswamis case [1975] 36 STC 191 [LQ/SC/1975/219] to prove that the observations in Malabar Fruit Products Co. v. Sales Tax Officer [1972] 30 STC 537, where these questions were decided by Justice Poti of the Kerala High Court who spelt out that the taxing event was not the event of despatch but the event of purchase/sale of goods. It has, however, to be borne in mind that the questions involved in Malabar Fruit Products [1972] 30 STC 537 (Ker) and Kandaswamis [1975] 36 STC 191 (SC) cases were not concerned with the actual argument with which we are concerned in the instant matter. It is well-settled that a precedent is an authority only for what it actually decides and not for what may remotely or even logically follow from it. See Quinn v. Leathem [1901] AC 495 (HL) and State of Orissa v. Sudhansu Sekhar Misra [1968] 2 SC R 154. Therefore, the ratio of the said decision cannot be properly applied in construing the provisions of section 9(1)(b) in this case to determine what is the taxable eventIt was contended by Mr. Rajaram Aggarwal that clause (b) of section 9(1) dealt with non-exempted goods purchased in the State, and used in the manufacture of any goods whether exempted or not, but when despatched outside the State of Haryana, i.e., by way of stock transfer consignment, will attract the tax liability under this section, hence, the event of despatch or consignment is the immediate cause which attracts the tax liability under section 9. The quality or the character of goods which should be liable to tax under section 9 in clause (1)(a) is the non-exempted goods purchased in the State ; while under the first part of clause (b) the quality of goods liable to tax is the non-exempted goods purchased in the State and under the second part of clause (b), the quality of goods must be non-exempted goods purchased and manufactured in the State, whether exempted or not in the State which is liable to tax on despatch outside Haryana ; and, under clause (e), the goods purchased in Haryana without undergoing any further change or use is the quality of goods liable to tax when exported.

10. The submission of the State is that the taxable event is the purchase of goods in Haryana while the obligation to pay is postponed to the fulfilment of certain conditions. The further argument is that there is a general liability to purchase tax which the dealer avoids on furnishing a declaration in form No. S. T. 15 as provided by section 24 at the time of purchase, wherein certain conditions are mentioned and when those conditions are not fulfilled, those revive. It was further argued that the conditions are incorporated in section 9 of the. For testing which of the contentions are nearer to find out the exact taxable event, certain indicia and illustrations may be seen. Their analysis will indicate that there is no liability to pay sales tax under the Haryana Act on the purchaser. It is admitted that, on such sales, the selling dealer is liable to pay sales tax. On such purchases, the sale and purchase being the two sides of the same coin, no purchase tax is imposed under the. This has been the accepted position by the State also for, while replying to the question of double taxation, counsel for the State admitted that sales as well as purchase tax is imposable under the scheme of the which are of two sides. Hence, it was rightly urged by Mr. Rajaram Aggarwal that the first condition for attracting the applicability of section 9(1), "where a dealer is liable to pay tax under this Act purchases goods", is missing when sub-section (1) talks of a dealer liable to pay tax under the, obviously it is with reference to his purchasing activity and if on that activity, no purchase tax is payable, section 9(1) would not be applicableTo 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 Commissioner of Sales Tax v. Modi Sugar Mills Ltd. [1961] 12 STC 182 (SC) ; [1961] 2 SCR 189 [LQ/SC/1960/251] and Baidyanath Ayurved Bhawan (Pvt.) Ltd. v. Excise Commissioner [1971] 2 SCR 590 [LQ/SC/1970/415] at 592.

11. In that background, it must be noted that section 9 of thenowhere makes a reference to section 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. Section 9 of theopens 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 must relate to liability to pay sales-tax on such purchases. 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 a 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 a 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 in Whitney v. IRC [1926] AC 37 (HL) at page 52 and of the Federal Court in Chatturam v. CIT [1947] 15 ITR 302 [] at 308. The taxable event is that which on its occurrence creates or attracts the liability to tax. Such liability does not exist or accrue at any earlier or later point of time. The identification of the subject-matter of a tax is to be found in the charging section. In this connection, one has to analyse the provisions of section 9(2)(b), as well as sections 9(1)(b) and 9(1)(c). Analysing the section, it appears to us that the two conditions specified before the event of despatch outside the State as mentioned in section 9(1)(b), namely, (i) purchase of goods in the State, and (ii) using them for the manufacture of any other goods in the State, are only descriptive of the goods liable to tax under section 9(1)(b) in the event of despatch outside the State. If the goods do not answer both the descriptions cumulatively, even though these are despatched outside the State of Haryana, the purchase of those goods would not be put to tax under section 9(1)(b). The focal point in the expression "goods, the sale or purchase of which is liable to tax under the", is the character and class of goods in relation to exigibility. In this connection, reference may be made to the observations of this court in Andhra Sugars .Ltd. v. State of 4P [1968] 21 STC 212 [LQ/SC/1967/292] ; [1968] 1 SCR 705. [LQ/SC/1967/292] On a clear analysis of the said section, it appears that section 9(1)(b) has to be Judged as and when liability accrues under that section. The liability to pay tax under this section does not accrue on purchasing the goods simpliciter, but only when these are despatched or consigned out of the State of Haryana. In all these cases, it is necessary to find out the true nature of the tax. Analysing the section, if one looks to the purchase tax under section 9, one gets the conclusion that the section itself does not provide for imposition of the purchase tax on the transaction of purchase of the taxable goods but when further the said taxable goods are used up and turned into independent taxable goods, losing their original identity, and thereafter when the manufactured goods are despatched outside the State of Haryana and only then tax is levied and liability to pay tax is created. It is the cumulative effect of that event which occasions or causes the tax to be imposed, to draw a familiar analogy, it is the last straw on the camels back.

12. In this connection, reference may be made to the observations of Justice Vivian Bose in Tata Iron & Steel Co. Ltd. v. State of Bihar [1958] 9 STC 267 (SC) at 287 ; [1958] SCR 1355 [LQ/SC/1958/14] at 1381, where he observed as follows : "I would therefore reject the nexus theory in so far as it means that any one sale can have existence and entity simultaneously in many different places. The States may tax the sale but may not disintegrate it and, under the guise of taxing the sale in truth and in fact, tax its various elements, one its head and one its tail, one its entrails and one its limbs by a legislative fiction that deems that the whole is within its claws simply because, after tearing it apart, it finds a hand or a foot or a heart or a liver still quivering in its grasp. Nexus, of course, there must be but nexus of the entire entity that is called a sale, wherever it is deemed to be situate. Fiction again. Of course, it is fiction, but it is a fiction as to situs imposed by the Constitution Act and by the Supreme Court that speaks for it in these matters and only one fiction, not a dozen little ones". 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 the manufacture of a 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 after 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 purchase of raw material wherein the present levy would lose its character of purchase tax on the said transaction. Mr. Rajaram Aggarwal submitted that the measure of tax is with reference to the value of purchased goods in the State of Haryana. As mentioned before, reference has been made to the decision in Kandaswamis case [1975] 36 STC 191 [LQ/SC/1975/219] , where this court dealt with section 7A of the Tamil Nadu Act which was not identical but similar to section 9 of the. There at page 196 of the report, this court observed as follows : "Difficulty in interpretation has been experienced only with regard to that part of the sub-section which relates to ingredients (4) and (5). The High Court has taken the view that the expression goods, the sale or purchase of which is liable to tax under this Act, and the phrase purchases ... in circumstances in which no tax is payable under sections 3, 4 or 5 are contradiction in terms." Ingredients Nos. 4 and 5 are as follows:

"4. The goods purchased are goods, the sale or purchase of which is liable to tax under this Act

5. Such purchase is, in circumstances, in which no tax is payable under sections 3, 4 or 5, as the case may be;"

The relevant ingredient involved, as mentioned at page 196, was as under : 6. The dealer either (a) consumer such goods in the manufacture of other goods for sale or otherwise, or

(b) despatches all such goods in any manner other than by way of sale in the State, or

(c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce."

13. This ingredient was neither argued nor was considered, and so the passing reference based on the phraseology of the section is not the dictum of Kandaswamis case [1975] 36 STC 191 (SC). Secondly, in section 9, in the instant case, the raw materials purchased are 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 section 7A of the Tamil Nadu Act which was considered in Kandaswamis case [1975] 36 STC 191 (SC). In that decision, this court approved the Kerala High Courts decision in Malabar Fruit Products [1972] 30 STC 537, which was confined to the interpretation of the words "goods, the sale or purchase of which is liable to tax under the". A decision on a question which has not been argued cannot be treated as a precedent. See the observations of this court in Rajpur Ruda Meha v. State of Gujarat [1980] 2 SCR 353 [LQ/SC/1979/486] at 356. The decision of the Division Bench of the Kerala High Court in Yusuf Shabeer v. State of Kerala [1973] 32 STC 359 [LQ/KerHC/1973/156] , is clearly distinguishable. In Ganesh Prasad Dixits case [1969] 24 STC 343 (SC), the question of constitutional validity was not argued. A reference was made by Mr. Tewatia to the decision of the High Court in Coffee Board v. Commissioner of Commercial Taxes [1985] 60 STC 142 (Kar) [LQ/KarHC/1985/347] and the decision of this court in Coffee Board v. Commissioner of Commercial Taxes. [1988] 70 STC 162. [LQ/SC/1988/317] 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 appeals. Prior to the Forty-sixth Amendment, entry 54 of List II of the Seventh Schedule to the Constitution of India which demarcated the exclusive field of State legislation, read with article 246(3) of the Constitution, conferred power on the State Legislature to impose tax on the transactions of sale or purchase of goods. The said entry read as follows : "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I." Entry 92A of List I, which is in the exclusive domain of the Union, was to the following extent .Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce." The mere consignment of goods by a manufacturer to his own branches outside the State does not in any way amount to a sale or disposal of the goods as such. The consignment or despatch of goods is neither a sale nor a purchase. The first judgment in the case of Goodyear India [1983] 53 STC 163 (P [LQ/PunjHC/1982/508] & H) was on December 4, 1982, when it was held that the notification was beyond the, as the word "disposal" did not include the word "mere despatch" as mentioned in the notification. The Constitution (Forty-sixth Amendment) Act 1982, came into force on February 2, 1983, whereby section 9 was amended. This amendment was after the Forty-sixth Constitution Amendment Act, 1982. The Forth-sixth Constitution Amendment Act, in the Statement of Objects and Reasons, inter alia, stated as follows:

"There were reports from State Governments to whom revenues from sales tax have been assigned, as to the large scale avoidance of Central sales tax leviable on inter-State sales of goods through the device of consignment of goods from one State to another and as to the leakage of local sales tax in works contracts, hire-purchase transactions, lease of films, etc. Though Parliament could levy a tax on these Transactions, as tax on sales has all along been treated as an item of revenue to be assigned to the States, in regard to these transactions which resemble sales also, it is considered that the same policy should be adopted."

The Law Commission of India in its 61st Report, as indicated before, made certain recommendations, and noticed that the provisions of the existing Central Sales Tax Act were insufficient to tax the consignment transfers from one branch to another, as it was beyond the concept of sale, and its recommendations are contained in paragraph 2.23 of Chapter II (at page 66) ; it recommended that the definition of "sale" in the Central Sales Tax Act, after carrying out the requisite Constitution amendment be amended somewhat on the lines indicated by them in their report The Union of India, in part, accepted the recommendations but instead of amending the definition of "sale" in Central Sales Tax Act, inserted a new entry in the Union List in the shape of entry 92B and also inserted a new sub-clause (h) after sub-clause (g) in article 269(1) of the Constitution. Parliament also amended clause (3) of article 269.

14. It appears to us that the effect of the aforesaid amendment is that the field of taxation on the consignment/despatch of goods in the course of inter-State trade or commerce expressly comes within the purview of the legislative competence of Parliament. It is well-settled that the nomenclature of the is not conclusive and, for determining the true character and nature of a particular tax, with reference to the legislative competence of a particular legislature, the court will look into its pith and substance. See the observations of Governor-General in Council v. Province of Madras [1945] 1 STC 135 (PC) ; [1945] 72 IA 91 (PC). There, Lord Simonds observed as follows (p. 137 of 1 STC):

". . . For in a Federal Constitution, in which there is a division of legislative powers between Central and Provincial Legislatures, it appears to be inevitable that controversy should arise whether one or other Legislature is not exceeding its own, and encroaching on the others constitutional legislative power, and in such a controversy it is a principle, which their Lordships do not hesitate to apply in the present case, that it is not the name of the tax but its real nature, its pith and substance, as it has sometimes been said, which must determine into what category it falls."

15. We must, therefore, look not to the form but to the substance of the levy. See the observations of the Federal Court in Ralla Ram v. Province of East Punjab, AIR 1949 FC 81 [] . 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 as 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 a 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 the 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 levied by the States on the plea that otherwise there is ample scope for evasion and further, States are without much resources in these days when there is such a tremendous demand on the revenue of the StatesIt 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 section 9(1)(b) is ultra vires and void.

16. In these cases, we are concerned with the validity of the latter part of section 9(1)(b) of the Haryana Act which imposes a tax on despatch of manufactured goods outside the territories of Haryana. If it is accepted that section 9(1)(b) is ultra vires, the penalty proceedings would automatically go as they are, in substance, based on the violation of section 9(1)(b) of theand the consequent proceedings flowing therefrom. It is in that context that in Writ Petition No. 3834 of 1985, Mr. Soli Sorabjee urged that the attempt and action of the State in imposing tax and attempting to penalise are bad.

17. 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 [LQ/PunjHC/1985/86] , 408, (Des Rai Pushap Kumar Gulati v. State of Punjab) 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 [LQ/PunjHC/1983/315] did not lay down the correct law and the amendment effected by Act No. 11 of 1984 to section 9 was intra vires, then the provision of sub-section (3) of section 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 applicableSection 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 purchases goods, without payment of tax, under sub-section (1) and fails to use the goods so purchased for the purposes specified therein, he shall be liable to pay tax, on the purchase value of such goods, at the rates notified under section 15, without prejudice to the provisions of section 50

Provided that the tax shall not be levied where tax is payable on such goods under any other provision of this Act."

18. This provision, without making any change in the substantive provision, purports to give a direction to ignore the judgment or in other words, purports to overrule the judgments, namely, Goodyear India Ltd [1983] 53 STC 163 (P [LQ/PunjHC/1982/508] & H) and Bata India Ltd. [1983] 54 STC 226 (P [LQ/PunjHC/1983/315] & H), 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 [1971] 79 ITR 136 [LQ/SC/1969/191] at 140 ; [1969] 2 SCC 283 [LQ/SC/1969/191] at 286. For the same reason, applying the main section instead of section 9(1), section 24 should also fail as amended. Civil Appeal No. 1515 of 1984 is also liable to be dismissed in view of the judgment of this court in Deputy Commissioner of Sales Tax (Law) v. Thomas, Stephen and Co. Ltd. [1988] 69 STC 320 [LQ/SC/1988/173] ; [1988] 2 SCC 264 [LQ/SC/1988/173] , 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 Good-year India Ltd. [1983] 53 STC 163 [LQ/PunjHC/1982/508] is correct on merits as wellIn the aforesaid view of the matter, it cannot be held that section 9(l) and sub-section (3) of section 24 are constitutionally valid.

19. In Civil Appeals Nos. 1633 of 1985 and 3033 of 1986 which are the appeals by the Food Corporation of India, Mr. Sen submitted that the FCI is a service agency of the Government of India and is discharging the statutory functions of distribution of food grains by procuring/purchasing from the surplus States and despatching the same to the deficit States in accordance with the policy of the Government of India. He further submitted that the Corporation procures food grains from the farmers through commission agents in the mandis of Haryana and despatches them to its own branches in the deficit States of the country. The Corporations branches in the recipient States supply these stocks to the State agencies/fair price shops and also pay tax as per the provisions of the sales tax law of the respective States. Some of the stocks are distributed within Haryana for the Public Distribution System (PDS) for which sales tax is charged and deposited with the sales tax department as per the provisions of the Haryana General Sales Tax Act. In case the stocks are also sold in the course of inter-State trade or commerce, Central sales tax is levied and deposited with the Haryana sales tax authorities. Some of the grains" are also exported out of India on which there is exemption from payment of any tax. In fact, the points at which the tax is to be levied have been indicated in Scheduled to the. It is clear from a perusal of the Schedule that, in case of paddy, the taxable event is the last purchase. Similarly, in case of rice, the taxable event is the first sale point in the State. In case of wheat and other cereals, the point of taxation is the last sale to the consumer by a dealer liable to pay tax under theIn respect of inter-State despatch of wheat and other food grains by FCI to its own branches, tax is attracted at the time of despatch under section 9(1)(c) of the Haryana Act. Section 9 is, therefore, the charging section for taxation in cases where the goods are purchased for export. There is no other provision for levy of purchase or sales tax in such cases of export. Incidentally, "export" has been defined in section 2(e) of thewhich reads as follows:

" 2. (e) export means the taking out of goods from the State to any, place outside it otherwise than by way of sale in the course of inter-State trade or commerce or in the course of export out of territory of India;".

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 section 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 a perusal of sections 14 and 15 of the 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 had 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 liable in the recipient State, while in the case of inter-State despatches, them is leviable twice. The appeals of the FCI are confined to section 9(1)(c) which, in so far as it purports to tax export, is beyond, the legislative competence of the State of HaryanaOn behalf of the State in Bata India Ltd. v. State of Haryana [1983] 54 STC 226 (P [LQ/PunjHC/1983/315] & H), the submission of the State was on the basis that it had power to tax consignments or despatches of goods. But, after the Forty-sixth amendment, the State Legislature is incompetent to legislate about consignments/despatches otherwise than by way of sale under which no purchase/sales tax is leviable under the Haryana Act. It is Parliament alone which is legislatively competent to enact a legislation on consignment..

20. Now, it is necessary to deal with Civil Appeals Nos. 4162 and 4163 of 1988 which deal with the validity of section 13AA of the Bombay Sale Tax Act. These appeals are by Hindustan Lever Ltd., and Wipro Products Ltd., the appellants herein. The appellants, at all material times, manufacture, make and deal in vanaspati, soaps, etc., chemicals and agro-chemicals, and they used to purchase various types of VNE oils for their manufacture of vanaspati, soaps and other products. Since the appellants had a wide net of distribution of their products all over India, they appointed 40 and more clearing and forwarding agents in the country. The appellants used to despatch the goods so manufactured from their factory to the clearing and forwarding agents. They also used to purchase VNE oils and other raw materials and paid 4 per cent tax byway of purchase tax under section 3 of the Bombay Sales Tax Act, 1959 (hereinafter called "the, Bombay Act"). The raw materials are used in the manufacture of the Said goods and as the said manufactured goods are despatched outside the State to the several distributing agencies, the appellant companies were held to be liable to pay, under section 13AA of the Act, an additional tax at 2 per cent on purchase of the said goods.

21. The question, therefore, that arises, is : whether the levy of additional tax at 2 per cent under section 13AA of theis a tax on purchases falling under entry 54 of List II of the Seventh Schedule or it is a tax on the despatch or consignment of the manufactured goods outside the State. In case of the 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, under a true construction of section 13AA of the Act, on what is the imposition of tax made, or in other words, what is the incidence of that taxation or taxable event In both these appeals, namely, Civil Appeals Nos. 4162 of 1988 and 4163 of 1988, the appellants, M/s. Wipro Products Ltd., and Hindustan Lever Ltd., are contending that the levy is bad. The issue involved in both the appeals is the constitutional validity and legality of the provisions of section 13AA of the Act, which was introduced into the by the Maharashtra Act 28 of 1982. The appellant had a factory at Amalnar 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 (failing under Schedule C, Part I at entry 35) purchased within the State of Maharashtra from non-registered dealers increased from 3 per cent to 4 per cent. by the Maharashtra Act 32 of 1981Section 13AA was introduced into the providing for levy of 2 percent. additional purchase tax on the purchase of goods, input goods, specified in Part I of the Schedule from a non-registered dealer if such goods were used in the manufacture of taxable goods within Maharashtra and thereafter the manufactured goods were transferred outside Maharashtra in the manner indicated in the said section.

22. The appellants filed writ petitions. An order was passed by the Bombay High Court on July 19, 1988, in respect of these two writ petitions by Wipro Products as well as Hindustan Lever Ltd. The decision of the High Court is reported in [1989] 72 STC 69 (Bom) [LQ/BomHC/1988/363] ( Wipro Products Ltd. v. State of Maharashtra).

23. Dismissing the petitions of the appellants, the High Court held that (i) three different phases are contemplated in section 13AA of the Act, namely, the initial purchase of the raw material, the consumption thereof in the manufacture of taxable goods, and the despatch of the manufactured goods outside the State. If the goods purchased remain in the same form within the State, the question of levying additional tax would not arise. The High Court came to the conclusion that there was no ground to hold that the additional tax was levied on the despatch of goods and was unconnected with the initial transaction of purchase, as it was required to be paid in addition to the sales or purchase tax paid or payable in respect of the same goods which had been so purchased before the conditions specified in section 13AA are fulfilled, (ii) in the context of the other provisions of the, a sort of concession is given at the time of purchase on the quantum of tax payable on the purchase of goods which fall under Part I of Schedule C. However, there is a clear mandate of law which is clearly understood between seller and buyer, that though tax at the concessional rate is paid, the obligation to pay the additional tax on the happening of certain events, namely, use of such goods in manufacture of finished goods, and despatch of finished goods outside the State is undertaken by the purchaser ; and (iii) implicit in the low rates of tax prescribed on raw material attributable to goods in Part I of Schedule C is the condition precedent that, to avail of this concession, the goods, in question are required to be sold in the State after being used in the manufacture of other taxable goods. The High Court, further, was of the opinion that a manufacturer who purchases raw material at a concessional rate on the strength of declaration in form 15 cannot transfer the goods manufactured out, of such raw material outside the State. The High Court held that if he does so, he is liable to pay purchase tax at the full rate on the raw material under section 14. According to the High Court, similarly, a manufacturer who purchases goods covered in Part III of Schedule C, and uses them in the manufacture of other taxable goods which he despatches outside the State, is liable to pay tax at rates ranging from 6 per cent. to 15 per cent Section 13AA, therefore, far from being discriminatory, serves to wipe out any discrimination between the two categories of manufacturers mentioned above and manufacturers purchasing raw material covered by Part I of Schedule C, according to the Revenue. The High Court was of the opinion that the additional purchase tax leviable under section 13AA of the Bombay Act is on the purchase value of VNE oil used in the manufacture of goods transferred outside the State and not on the value of the manufactured goods so transferred. It further held that the tax levied under section 13AA of the Bombay Act falls squarely and exclusively under entry 54 of the State List in the Seventh Schedule to the Constitution of India and the State Legislature was competent to levy it. It does not even remotely fall under entry 92B of the Union List, according to the High CourtThe High Court was also of the view that the goods taxed under section 13AA of the Bombay Act are consumed in the State as raw material in the process of producing other commodities. Hence, there was no question of any hindrance to a free flow of trade bringing into operation article 301 of the Constitution. According to the High Court, the petitioners had not brought forth any material to show how the free flow of trade has been affected by this additional rate of tax ; and held that section 13AA is not violative of article 14 of the Constitution ; and that section 13AA of the Bombay Act and the orders requiring the appellants to pay additional tax at 2 per cent. on purchase of VNE oil used by them as raw material in the manufacture of goods despatched outside the State, were valid.

24. The High Court, in the judgment under appeal, has set out the relevant provisions of the which were enacted to consolidate and amend the law relating to levy of tax on the sale or purchase of certain goods in the State of. Bombay. Section 2 contains some of the definitions. Section 24 deals with authorisations of turnover, etc. Section 13AA of the Bombay Act with which the High Court and these appeals are concerned, is in the following terms:

"13AA. Purchase tax payable on goods in Schedule C, Part I, when manufactured goods are transferred to outside branches. -Where a dealer who is liable to pay tax under this Act, purchases any goods specified in Part I of Schedule C, directly or through a commission agent, from a person who is or is not a registered dealer and uses such goods in the manufacture of taxable goods and despatches the goods, so manufactured, to his own place of business or to his agents place of business situated outside the State within India, then such dealer shall be liable to pay, in addition to the sales tax paid or payable, or as the case may be, the purchase tax levied or leviable under the other provisions of this Act in respect of purchases of such goods, a purchase tax at the rate of two paise in the rupee on the purchase price of the goods so used in the manufacture, and accordingly the dealer shall include the purchase price of such goods in his turnover of purchases in his return under section 32, which he is to furnish next thereafter."

25. The questions involved in these appeals are : whether section 13AA of the Bombay Act is beyond the legislative competence of the State Legislature and violative of article 14 of the Constitution ; and thirdly, whether the said provision is violative of article 301 of the Constitution. It was contended on behalf of the appellant that section 13AA of theis a charging section and imposes a charge of an additional rate of 2 per cent. in the rupee if the following conditions laid down therein are satisfied : (i) the charge is levied upon a dealer who is liable to pay tax under the ; , (ii) such a dealer purchases any goods specified in Part I of Schedule C, directly or through a commission agent, from a person who is or is not a registered dealer ; (iii) the goods so purchased are used in the manufacture of taxable goods ; and (iv) the goods which are so manufactured (and not the goods on which purchase tax had been paid) are despatched to the dealers own place of business or to his agents place of business situated outside the StateAccording to the appellant, the said section specifies the person who is liable to pay tax, the goods on which the same is leviable and the taxable event which would attract the liability of additional tax of two paise in the rupee, namely, the despatch or consignment of goods by the dealer/manufacturer outside the State.

26. According to Dr. Pal, counsel for the appellant, the taxable event is not the purchase of goods as such which is the raw material, but it is the despatch or consignment of goods manufactured by the dealer/manufacturer to its own branch outside the State ; and that thus manufactured goods are different from a commercial commodity, distinct and separate from the raw materials on which purchase tax has already been paid. It is well-settled, it was reiterated before us, that, in case of excise duty, the taxable event is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. In case of sales tax, the taxable event is the sale of goods. Hence, though both excise duty and sales tax are levied with reference to the goods, the two are different imposts, in one case the imposition is on the act of manufacture or production while, in the case of other the imposition is on the act of sale, but in neither case the impost is a tax directly on the goods. See in this connection, the observations of this court in In re Bill to amend section 20 of the Sea Customs Act, 1878, and section 3 of the Central Excises and Salt Act, 1944 [1964] 3 SCR 787 [LQ/SC/1963/169] at 821 and Guruswami and Co. v. State of Mysore [1967] 1 SCR 548 [LQ/SC/1966/212] at 562.

27. 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 can the said power 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 22. Therefore, in this case, it is necessary to ascertain what is the taxable event under section 13AA of thewhich attracts duty. A taxing event is that event the occurrence of which immediately attracts the levy or the charge of taxIn fiscal legislations, normally a charge is created. The incidence of taxation occurs on the happening of the taxable event. Different taxes have different taxable events. In the instant case, Dr. Pal canvassed before us 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 section 13AA of the: It was further highlighted by Dr. Pal on behalf of the assessee that the 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 has been purchased on payment of purchase tax but a completely different commodity, namely, vanaspati and soap. If the raw materials purchased as such on payment of purchase tax are despatched outside the State, the additional tax under section 13AA of theis 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.

28. Purchase tax under section 3 of theis attracted when the, taxable event, i.e., the purchase of goods occurs, but the taxable event for the imposition of additional tax of two paise in the rupee occurs only when the goods so purchased are used in the manufacture of taxable goods and such taxable goods are despatched outside the State by a dealer-manufacturer. Dr. Pal drew our attention to some of the observations of this court in Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 [LQ/SC/1971/403] ; [1971] 28 STC 672 [LQ/SC/1971/403] ; and State of Madhya Pradesh v. Shyama Charan Shukla [1972] 29 STC 215 [LQ/SC/1971/505] at 218-219. On the other hand, Mr. Dholakia submitted that the submission of the appellant proceeded on the assumption that the liability to pay is the same as the obligation to pay but this was wrong. These two are different. It was submitted that the obligation to pay is not the same thing as liability to tax : and that it was wrong to proceed on the basis that because "obligation to pay" is a later event, "the despatch of goods" is the taxable event. This is a fallacy according to Mr. Dholakia. In this connection, reliance was placed on the observations of this court in R. C. Jall Parsi v. Union of India [1962] Supp 3 SCR 436, where this court reiterated that, subject always to the legislative competence of the enacting authority, the tax can be levied at a convenient stage, so long as the character of the impost is not lost. The method of collection does, not affect the essence of the machinery of collection for administrative convenience. Reliance was also placed on the observations of Union of India v. Bombay Tyre International Ltd. [1984] 1 SCR 347 [LQ/SC/1983/150] ; [1986] 59 Comp Cas 460It was submitted by Mr. Dholakia that the correct approach is to first determine whether the State Legislature, having regard to entry 54 of List 11 of the Seventh Schedule to the Constitution, can levy tax on purchase of a class of goods, which class is to be identified by reference to the condition of use of such goods into other taxable goods and despatch of such taxable goods outside the State. He submitted that, if it is accepted that the State could have the power to tax purchases of goods meant for use in the manufacture of other taxable goods and despatch outside thereafter, then the next question is whether the State enactment (like section 13AA of the Bombay Act) is so formulated as to come within the framework described. He admitted that even if it did, it would still have to be subject to (a) the doctrine of pith and substance, (b) the fundamental rights and (c) article 301.

29. According to Mr. Dholakia, the contains a charging section which is section 3. It levies tax on turnover of sales and purchases within sections 2(30) and 2(35), respectively, of the said Act. Section 13 of thelevies tax on purchases in accordance with rates prescribed in Schedule C if the goods are purchased from an unregistered dealer. Section 13A levies a concessional tax on purchases if the goods are purchased from a registered dealer, provided a declaration in the prescribed form is given under section 12(b) of the Act, if the purchaser buys directly, or one under section 12(d) if the purchaser buys through a commission agent. In both the forms, the relevant conditions are : (a) that the goods fall within Part II of Schedule C ; and (b) that the goods bought would be used for manufacture of other taxable goods within the State and sold within the State. Mr. Dholakia submitted that, on giving the aforesaid declaration, the purchaser would have to pay only 4 per cent. tax. The rates prescribed in Schedule C are as underSchedule C.

Part Minimum rate Maximum rate.

I 2 per cent. 4 per cent

II 6 per cent. 15 per cent. The effect of section 13A without section 13AA, according to Mr. Dholakia, was that only those who bought goods which fell under Part II would have benefited by the declaration, since the rate mentioned in section 13A was 4 per cent. Hence, those buying goods falling within Part I of Schedule C had not to give any declaration under section 12(b) or 12(d), as the case may be, and could still manufacture the taxable goods and despatch them outside the State. According to him, as a result of this situation, two results emerged, i.e., (i) the State lost revenue because the goods manufactured with the help of the infrastructure provided by the State escaped further tax, by goods being resold outside the State ; and (ii) the purchasers of raw materials used by the manufacturers for producing new taxable goods, were not being treated equitably because those whose purchases of goods fell under Part II had to give a declaration to get the benefit of the reduced rate. On the other hand, those whose purchases of goods fell in Part I need not give such a declaration. According to him, from the standpoint of the object of encouraging resale within the State, the classification in the form of Parts I and II had no rational nexus. Therefore, that construction should be made which may make section 13AA of theavoid this mischief. According to Mr. Dholakia, section 13AA speaks of the requirement of additional purchase tax from those who have paid purchase tax, if the object of the purchases is to use the goods falling in Part I of Schedule C for manufacture of taxable goods and the despatch of such goods outside the State. He alleged it to be a fair and reasonable construction and it will subserve the purpose of the amendmentIt is well-settled that a reasonable construction should be followed and a literal construction may be avoided if that defeats the manifest objects and purposes of the. See CWT v. Kripashankar Dayashanker Worah [1971] 81 ITR 763 (SC) [LQ/SC/1971/350 ;] at 768, and Income-tax Commissioners for City of London v. Gibbs[1942] 10 ITR (Suppl) 121 (HL) at 132 Mr. Dholakia further submitted that the Statement of Objects and Reasons also helps this construction. In our opinion, he rightly submitted that 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. Ltd. [1976] 1 SCR 552 [LQ/SC/1975/320] and Prafulla Kumar Mukherjee v. Bank of Commerce Ltd., AIR 1947 PC 60 [LQ/PC/1947/7] at 65.

30. Therefore, the proper question which one should address to oneself is, whether section 13AA is, in pith and substance, not one levying tax on purchase but one levying tax on consignment. Depending upon the answer to the question, the validity of the section can be judged. Mr. Dholakia submitted that the 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. [LQ/SC/1977/287] According to him, the consignment contemplated in section 13AA is only of manufactured goods and no tax is levied under section 13AA in respect of such manufactured goods. He emphasised as aforesaid. It is well-settled that, while determining the 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 [1945] 1 STC 135, 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 in R. R. Engineering Co. v. Zila Parishad, Bareilly [1980] 3 SCR 1 [LQ/SC/1980/114] , In re : A reference under the Govt. of Ireland Act, 1920 [1936] AC 352 (PC) at 358, and Navnit Lal C. Jhaveri v. K. K. Sen, AA C of I.T. [1965] 56 ITR 198 (SC) [1965] 1 SCR 909 [LQ/SC/1964/293] at 915On 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 the Forty-sixth Amendment to the Constitution. The Forty-sixth Amendment introduced article 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 Seventh Schedule. The said amendment was made on the consideration of the 61st Report of the Law Commission. Entry 92B in List I of the Seventh Schedule and article 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. Article 269(3) gives 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 of List I is to be given the widest interpretation, as it should be, it would be clear that as a result of the constitutional changes introduced by the Forty-sixth a amendment in article 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 which will determine the validity of the. If 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. The taxable event cannot be postponed to the occurrence of the subsequent condition.

31. In that event it would be the subsequent condition the occurrence of which would attract the charge which will be the taxable event. If that is so, then it is a duty on despatch. In that view of the matter, this charge cannot be sustainedAs mentioned hereinbefore, the section has been challenged as being violative of article 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 section 13AA of theis violative of article 301 of the Constitution. It makes a discrimination between the dealer/manufacturer who despatches the goods outside the State and other dealers/manufacturers. Both the dealers/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 lie is discriminated against as compared to the other dealer/manufacturer who purchases the raw material on payment of 4 per cent. purchase tax, but despatches the raw material straightaway outside the State and uses them in the manufacture of goods outside the State. The High Court held that there was no violation of article 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 [LQ/SC/1960/173] , Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan [1963] 1 SCR 491 [LQ/SC/1962/152] , Andhra Sugars Ltd. v. State of Andhra Pradesh [1968] 21 STC 212 [LQ/SC/1967/292] ; [1968] 1 SCR 705 [LQ/SC/1967/292] , State of Madras v. Nataraja Mudaliar (N. K. ) [1968] 22 STC 376 [LQ/SC/1968/116] ; [1968] 3 SCR 829 [LQ/SC/1968/116] and State of Kerala v. A. B. Abdul Kadir [1970] 1 SCR 700. [LQ/SC/1969/240]

32. 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 [LQ/SC/1965/229] , imposition of a duty or tax in every case was not tantamount perse to any infringement of article 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 article 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 or, the available material whether or not there is an infringement of the guarantee under article 301, the further question as to whether the statute is saved under article 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 freeflow of trade. On the evidence adduced, we are in agreement with the High Court that the challenge to the imposition in the background of article 301 cannot be sustained and, therefore, no question whether such imposition is saved under article 304(b) of the Constitution arisesIn 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 (P [LQ/PunjHC/1982/508] & H), as well as the views expressed by the High Court in Bata India Ltd. v. State of Haryana [1983] 54 STC 226 (P [LQ/PunjHC/1983/315] & H), are correct and are affirmed. The views of the High Court expressed in Des Raj Pushap Kumar Gulatis case [1985] 58 STC 393 (P [LQ/PunjHC/1985/86] & H) [FB] are incorrect for the reasons mentioned herein before. The last mentioned judgment and the judgments and orders following that passed by the Punjab and Haryana High Court are, therefore, set aside. In the premises, Civil Appeals Nos. 1166 to 1172 of 1985 (Goodyear India Ltd. v. State of Haryana), Civil Appeals Nos. 1173 to 1177 of 1985 (Gedore (India) P. Ltd. v. State of Haryana), Civil Appeal No. 2674 of 1985 (Kelvinator of India Ltd. v. State of Haryana), Civil Appeal No. 1633 of 1985 (Food Corporation of India v. State of Haryana) and Civil Appeal No. 3033 of 1986 (Food Corporation of India v. State of Haryana) are allowed and the judgment and order of the High Court are set aside.

33. Civil Appeals Nos. 1512 of 1984 (State of Haryana v. Gedore Tools (P.) Ltd.) and 1515 of 1984 (State of Haryana v. Goodyear India Ltd.) are dismissed. Special Leave Petitions Nos. 8398 to 8402 of 1983 are dismissed and for the reasons mentioned hereinbefore, Civil Appeals Nos. 4162 of 1988 (Wipro Products Ltd. v. State of Maharashtra) and 4163 of 1988 (Hindustan Lever Ltd. v. State of Maharashtra) are allowed and the judgment and order of the High Court passed therein, are hereby set aside.

34. In the facts and the circumstances of this case, the parties will pay and bear the respective costs. So far as Civil Appeals Nos. 1633 of 1985 and 3033 of 1986 are concerned, wherein the appellants are the Food Corporation of India, I allow these appeals and set aside the judgment of the High Court on the ground that tax on despatch or consignment was not within the competence of the State Legislature. I am, however, not dealing with or expressing any opinion on the other contentions of the Food Corporation of India that, in view of the nature of its business, it was not liable to tax in respect of the sales tax. This contention will be decided in appropriate proceedingsSo far as the contention regarding penalty under the Haryana Act, is concerned, these proceedings fail because the charging provisions fail. In so far as the penalty Proceedings are impugned on other grounds apart from the failure of the charging provisions, I am expressing no opinion on those aspects.

35. RANGANATHAN J. - I agree but wish to add a few words.

36. The question raised in these appeals is a fairly ticklish one. Simply stated, section 9 of the Haryana General Sales Tax Act, 1973, as well as section 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 respondent-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 sometime 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 competence 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 of A. P. [1968] 21 STC 212 (SC) ; [1968] 1 SCR 705 [LQ/SC/1967/292] ) 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 (M. K.) [1975] 36 STC 191 (SC), though rendered in the context of an analogous provision, does not touch the issue in the present caseThe above distinction becomes significant particularly in the back-ground 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 assessee that the States, unable to tax the exodus directly, attempted to do so indirectly by linking the levy ostensibly to the "purchases, " in the State.

37. Viewing the impugned statutory provisions from the perspectives indicated above, I agree with my learned brother that the appeals have to be allowed as held by him.