THE UNION OF INDIA versus THE COMMERCIAL TAX OFFICER, WEST BENGAL AND OTHERS

1955

Rajalzmundry Eketric Supp/;! Corporation Ltd. v. A· Nageswara Rao and others

1955

D1tnnbt' 19.

1076

SUPREME COURT REPORTS

[1955]

appointed to manage its affairs, when action section 153-C. This contention must under ingly be rejected.

is

taken accord-

In the result, with costs, of the administrator will come out of the estate.

the appeal fails and first respondent. The costs of

is dismissed the

THE UNION OF INDIA v. THE COMMERCIAL TAX OFFICER, WEST BENGAL AND OTHERS (WITH CONNECTED APPEAL)

[S, R. DAs, ACTING C. J., VIVIAN BosE, BHAGWATI, JAGANNADHADAS and B. P. SINHA JJ.]

Sales Tax-Sale of hessian to the Ministry of Industry and Supplies of the Government of India-If exempt from payment of sales tax-Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941), s. 5(2)(•)(iii).

.

-Per S. R. DAs, AcTING C.J., V1v1AN BosE, BHAGWATI AND JAGANNADHADAS JJ., SINHA J. · dissenting.-The exemption created by the provisions of s. 5(2)(a)(iii) of the Bengal Finance (Sales Tax) Act of 1941 must be construed strictly and cannot be extended to sales to Government departments other than those mentioned there in.

The Department of Industries and Supplies, which was subse quently rcdesignated as the Ministry of Industries and Supplies, was not ·the same as the Indian Stores Department or the Supply Dc- partmcnt of the Government. of India and~ consequently, sales _made to the Ministry of Industries and. Supplies are not exempt from pay~ ment of sales tax under that section.

In a welfare State with

ever expanding activities in different fields including trade and commerce, Government departments arc often entrusted with the performance of well~defined activities and are authorised to deal with the outside world and enter into transac tions in the .same way as an ordinary person or a Company may do and may well 0 be. regarded as distinct units or quasi-legal entities for µie ·purpose for which they are created.

Consequently,

Industries and Supplies of lant Mills were hot exempt Act and the State of West Bengal was entitled to levy the same.

the. sales _of hessian made to the Ministry of the Government of India by the appel from payment of sales tax under the

2 S.C.R.

SUPREME COURT REPORTS

um

Per S1NHA J.-The language of a statute has sometimes

to be construed in a modified form in order to give effect to the real inten tions of the legislature where, as in the present case, the language is only of a descriptive nature and not a definitive one.

Miller v. Salomons ([1852] 7 Exchequer 475), referred to. Commissioners of Inland Revenue v. Forest ( [1890] 15 A. C.

1955

Thi Union of India v. The Commneial T tJJt Ojfim, Wut B1ngal and otlwrs

334 ), held inapplicable.

The terms of s. 5(2)(a)(iii) indicate that the exemption created the Government of India des

attaches to a particular function of cribed by a certain name.

The change of nomenclature was, therefore, of no consequence so long as a particular department continued to discharge that func· tion, namely, that of purchasing articles including hessian for the Government of India.

History of the department shows

that the Ministry of Industry and Supply is a lineal descendant of the Tndian Stores Department and was at the time of the contract discharging its function on be half of the Government of India and, consequently, the sales made to it must ~ held to be exempt from payment of sales tax.

A department of the Government is neither a natural nor a legal person but is one of the many functions of a Government placed in charge of a hierarchy of officials with the head of the de partment at the apex.

CIVIL

APPELLATE Nos. 9 and 10 of 1954.

JuRISDICTION: Civil Appeals

On appeal from

the Judgment and Order dated the 9th day of June 1952 of the Calcutta High Court in Appeal No. 26 of 1952 arising out of the Order dated the 6th day of December 1951 of the said High Court exercising its Ordinary Original Civil Jurisdic tion in Matter No. 110 of 1950.

C .

. K. Daphtary, Solicitor-General of India, (R. Ganapathy Iyer and R. H. Dhebar, with him) for the appellant in C. A. No. 9 of 1954 and respondent No. 3 in No. lO·of 1954.

S. Chowdhury, (S. N. Mukherji, B. N. Ghosh and in C. A. No.

the appellant

A. K. Bose, with him) for 10 of 1954.

S. M. Bose, Advocate-Genera/. of West Bengal, (B. for respondents Nos. 1

Sen and P. K. Bose, with him) and 2 in both appeals.

19!>5

The Union of India v. T!w Commercial T 4" Officer, West Bengal and others

1078

-SUPREME COURT REPORTS

[1955]

in

1955. December 19. DAs AcTING C. J.-The only question canvassed before us the above appeals, which have been heard together, is whether certain sales of goods made by Shri Ganesh Jute Mills, Ltd. (hereinafter referred to the Government of India, Ministry to as the Mills) of Industry and Supplies are to be deducted from the taxable turnover of to be exempt from tax dernanded by the Commercial Tax sales the State of West Bengal. The relevant Officer of facts are stated beki.w.

the Mills so as

to

that

supply

as given

stipulated

specifically mentioned

different descriptions at It was

On the first of September 1948 the Government of India, Ministry of Industry and Supplies, in Calcutta, placed with the Mills a confirmatory order in writing bearing No. Cal/J-1/2001/103 for the the India of a large quantity of hessian Government of cloth of different prices therein mentioned. that the con tract would be governed by the conditions of contract specified in Form WSB 133 as amended up-to-date. It was the goods ordered were required to meet an international obligation of the Government of India and as such the execution in accordance with the programme of of the contract thereto deliveries in the schedule attached was essential. The agreed prices were stated to be exclusive of the Bengal Sales Tax and it was stipu India would arrange lated that direct payment of sales the Government of tax West Bengal that Sales if it was ultimately in respect of that contract. Pursuant Tax was payable the Mills supplied goods to the aforesaid contract, to India of the aggregate value of the Government of the prices agreed upon. Rs. 2,10,040 calculated at The Commercial Tax Officer, Beadon Street, Dis trict sales the should be Mills and assessed to sales the other hand, claimed exemption under section 5 of the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 194.1). The relevant portion of section 5 ran as follows:-

the Government of to

II Charge, claimed included

aforesaid turnover of on

tax. The Mills,

the taxable

in the

found

that

1955

Tht l,"nim1 ~( ln.Jia \". T ht ctmmztrcial Tax OJfim·, Wes! Ben~:al and othtrs

Dru Actg. C.].

2 S.C.R.

SUPREME -COURT REPORTS

1079

"5. (1) The tax payable by a dealer under this Act shall be kYie,\ at the rate of one quarter of an anna in the rupee on his u:uble turnover ;

thi.; Act

(2) In o\'cr" means during any period r hcrdrom-

the expression tlut part of a dealer's gross

turn- turno\'cr renums, after deducting

"taxable

\\"hich

( a) his tunwYer during th:1t period 011-

(i) .................. .. (ii) .................. .. (iii) sales Indian Stores Department: to Sul'Ph Department tli. the CoYc·rnment of India,

the :md any r;1ilway or water transport ::,lministration ;

the

(iY) ................... . (Y) ........ .° .......... . (Yi) ................... . .•.•••.••••••••••••• "

1.__\,)

J-.[ills further

the same was payable

rnntended tlut if anv sales

tax was The the Govern at all payable ment of Jn,\ia and not bv them. The Commercial Tax Officer o\'erruk,I both· these obiections an,\ on the 8th November 1950 he assessed the Mills to sales tax in respect of the· supplies made by to the Mills the Government of the aforesaid con tract an,\ demanded a sum of Rs. 9,401-10-6.

India under

l1\;

On

to cancel an,l/or reca II

the 6th December 1950 the Mills filed a petition under article 226 of the Constitution of India before the High Court at Calcutta. In the petition the Mills the Commercial Tax Officer, impkadeJ as n:spondents the Union of India. the State of West Bengal and the res The Mills praved for a writ of m1111dam11.r on pon,knts from the 8th acting or giving effect tht· sum of Rs. Nm-ember 1950 and from realising 9,401-10-6 an,\ for a writ of cer!ion1ri for production of the records and proceedings before the Commercial Tax Officer an,! for quashing the same and for other reliefs. On the same day a rule was issued incident:il to show cause why respondents on the orders prayed for should not be made.

the demand date,!

:md/or forbear

the

to

The Commercial Tax Officer

filed an affidavit m the contentions put forward by

opposition disputing

1955

Tiu Union of India v. Th1 Comm"cial T 6't Officer, Wtsl Bengal and others

D., Actg. C.J.

1080

SUPREME COURT REPORTS

[1955]

the

their claim for exemption and the Mills in support of maintaining that sales tax was due and had been legitimately assessed and demanded. On behalf of the Union of India was filed an affidavit affirmed by in one M. P. Pai, the Joint Secretary then Ministry of Works, Production & Supply. It was the Government therein stated that a department of of India named the Department of Supply came into in the month of September 1939 immedi existence the commencement of World War II and ately on (Sales before the enactment of the Bengal Finance (Bengal Act VI of 1941). It was Tax) Act, 1941 the 7th January 1946 the said De averred that before the procure partment of Supply was charged with including ment of Stores Indian Bengal and that Stores Department in the United Kin~dom and of the in India States of America. by Resolution No. that 227/45-Pub(c) dated the 31st December 1945 the Gov the creation with ernor-General the Department effect from the existing De of Industries & Supply partment of Supply and of Industries and Civil Sup It was claimed that the powers and functions plies. of Industries and Supplies were the same as those of the Department of Supply and that there was no variation in the nature of the said functions whatsoever.

from all places it also directed the work of

in Council announced the 7th January 1946 of

Supply Mission It was added

the Department of

in place of

the United

India

In

the

that

The rule came up for hearing before Bose, J., who the newly created Department of took the view Industries & Supplies was charged with same work of procurement of stores for Government as had the Department of Supply and· to been entrusted the name certain additional works and that Industry and was again changed to Ministry of Supply. The learned Judge pointed out that although the designation of the Indian there was a change Stores Department and the Supply Department of the Government of India, section. 5(2) (a)(iii) was not ·when by an amend amended in any way until 1949 ing Act (West Bengal Act X of 1949) the exemption

later on

in

1955

T!.. Union of lrulia v. Thi Commercial Tax Ojjicer, W tsl Bengal and ot/urs D1J1 Aclg. C. J.

2 S.C.:R.

SUPREME COURT REPORTS

1081

granted under section 5(2)(a)(iii) was withdrawn. The learned Judge appears to have regarded this con tinuance of section 5(2)(a) (iii) in the Bengal Finance (Sales Tax) Act, 1941 as indicative of the fact that in view of the State of West Bengal the Ministry of Industry & Supply was the same as Indian Stores Department and the Supply Department of the Gov section. The ernment of India learned Judge accordingly held the Mills were to the benefit of the exemption and were not entitled liable to pay sales in respect of tax in on the 3rd January 1952, question. He accordingly, made the rule absolute.

referred to in

the supplies

that

the

the

J.

from

learned Judges taken by

The Commercial Tax Officer and the State of West Bengal went up on appeal the said judgment and order of Bose, J. The appeal came up fot hearing before a Bench consisting of K. C. Das Gupta, J. and In separate but concurring judg P. N. Mookerjee, ments both the prelimi rejected the the Mills and the Union of nary objection the appeal. On the India as to the maintainability of the Department of merits both of them held that Industries & Supplies was not the same as Indian the Stores · Department or the Supply Department of the Government departments of ceased to exist and a new department combining some of the functions of these departments and some new functions was created and that, to the newly created department could not be deducted turnover under section 5(2)(a)(iii). from the Appeal Court allowed the appeal In with costs, set aside the order of Bose, J. and dis the application of the Mills under Article 226. missed the Union of India have now The Mills as well as come up on appeal before us with a certificate of fit ness granted by the High Court.

India. The old

the result,

therefore,

taxable

sales

the

In view of the• decision of this Court in National Sewing Thread Co. Ltd. v. fames Chadwick & Bros. the question of maintainability of the appeal Ltd.( ), before the High Court has not been raised before us. The appeals have been fought out on the merits only.

(I) [1953] S. C.R. 1028.

lOSi

'. \. "

. SUPREME COURT REPORTS

. [1955]

1955

The appeals came: up before this·. Court for hearing Th• Union ,j India on the 22nd and -_ 23rd September 1955: After going The c~ _ . through the r~cords ·.it-was • felt that the materials on Tax Off~"• w,,1 the Court to· de Bmgal. mu! ot"4rs c_ termine . tlie the Das A-;;:C.-j • . \parties.-· The appeals were accordingly adjourned and directions were· - given for the filing of sup_plementary affidavits· ·,setting . out the facts relied on by the parties respectively •. -Fresh affidavits have since been filed.

to enable .real •point - of · controversy ' between

record were not sufficient

·

)

Indian

to avail

including

textile goods

It . appears from the affidavit of· · one - A. R. Iyer, of Supplies Deputy· · . Director, Directorate ' General and Disposals, under the Ministry of Works, Housing & Supply, that in 1918 a department called · the Con tracts Directorate had been - constituted · as _ a pur chasing organisation ·for the needs of the Army. : With ·stores effect from - the -lst January 1922 the · Department . .was constituted . as - a result of .the recom mendations of the Stores Purchase Committee. The to" act as a pur functions of this department were chasing and inspection agency . in. respect of -. certain for· ~ll Central commodities departments and minor Local · Governments and such themselves other authorities as might desire of the services of this · department. · Annexure III to that it was not obliga the ~davi.t _of Iyer indicates tory - on the · other departments inake purchases to Indian s;ores Department. Originally through • the this department . was constituted for a period of two years but by Resolution No. S. 217 of the Govern ment of India, dated the 6th May 1924, · -it was placed on a permanent basis and continued the to this Re -same functions. Rules 5 and 6 -attached solution -. show that purchases could - also be made ' locally. by other departments in case of emergency or for convenience.

. - In 1939 when the outbreak of World War II was for- creating -a new depart- in the Governor-General ment was keenly felt and the-- Home Department Council _ by a. Resolution:· of (Annexure V to Iycr's the 26th August 1939 dated affidavit) announced the creation from that date of a department of Supply "to deal directly with ques-

to discharge

the necessity

_

-

-

. -. - -- - imminent

1955

The Union of India v. The Commercial Tax Officer, West Bengal and others

Das Actg. C. J.

2S.C.R.

SUPREME COURT REPORTS

1083

to

in

lose

relating

their identity,

required to

India which were being

of war". Annexure VIII

Indian Stores Department and

for tions concerning supplies of all kinds Iyer's the prosecution the control of the Indian Stores affidavit shows that the Department and all other matters then purchase of stores to dealt with in the Department of Commerce were as a tem be dealt with in the department Supply the war. That porary measure for the duration of the Contracts the is shown by Directorate did not the Office Memorandum dated the 3rd August 1940 (Annexure X, Clause 4) and Office Memorandum (Annexure XI, Clause dated the 2nd December 1941 1(a) and Clause 4). the for end of the year 1940 purchases used and on account of the Government of the Indian Stores Department Contracts Directorate, that purchases the Department of Supply and and It was were also made locally by other departments. then that on the 1st July 1941 the Bengal Legislature passed (Sales Tax) Act, 1941 the which by section 5(2) (a)(iii) exempted Indian Stores Department, the Supply Department of the Government of India and any railway or water to transport administration from other departments of the Government of India were not so exempted.

thus clear that up to to be made India by

the Bengal Finance

tax. Sales

sales

sales

the

to

It

is

in

it shows

the Iyer's affidavit)

By a Press Note dated the 2nd September 1941 issued by the Government of Supply India Department (Annexure XIII a to for purchase branch of the Supply Department the duration of the war was created with effect from the 1st August 1941 and the Contracts that Indian Stores Department had Directorate and the the then "ceased duration of the war and a new branch was being orga nised in their place. the Then came 23rd December 1941 the Government of the Department of Supply (Annexure XIV) India which the previous office memorandum dated the 13th December 1940 (Annexure XII). The 14-85 s. C. lndia/59

the Office Memorandum dated

separate entities"

to exist as

superseded

issued by

for

in

195.'l

Tiu Union o.( Indict v.

The Comm<"r..ial T°'" Offeer, Jl'e.rt ffthl'rs Bengal and

Das A~·t_i;. (.'. J.

1084

SUPREME COURT REPORTS

r 1955J

referred

touch with it

though working

therein were and,

I annexed that

is clearly mentioned

in Statement therein to

the Central Governmellt concerned authorities under the production, manufacture and p_urchase of with thereto. supplies were shown departments It in other than the ones to the contrary, would remain the absence of orders in independent of the department close (Clause 3). Powers of local pur chase were also not disturbed in any way (Clause 4). Statement I indicates sup plies, e.g., medical and veterinary supplies, coal and for Railway and other civil and military auth coke India, etc., and Printing and Stationery ont1es the Supply Department. stores, were independent of Indian Stores Department thus clear that It and the Supply Department of the Government of the only departments which had auth India were not ority to make purchases for and on behalf of the Gov ernment of India in its various departments.

that purchases of various

the

in

is

On

Shortly

(iii) Controls.

107/43-Pub(c) whereby

to deal with (i) Statistics and Research,

the 21st April 1943 came Notification No. 2rB the Governor-Gcnr No. the 22nd ral in Council announced the creation, from April 1943, of a Department of Industries and Civil (ii) Supplies Development and thereafter the 14th May Office Memorandum No. E4(179) dated 1943 intimated issued by the Department of Supply the Governor-General that in Council had decided that the Department of Industries and Civil Supplies would, with effect from the 15th May 1943, take over textiles responsibility Iyer's and cotton affidavit). So this Department of Industries and Civil Supplies became another purchasing organisation of the Department the Government of India apart from of Supply.

for the procurement of cotton textile

(Annexure XVI to

stores

the 7th

The Government of India Resolution dated the 31st December 1945 announced the creation, with effect January 1946, of the Department of from Industries and Supplies in place of the existing De partment of Supply and the Department of Industries and Civil Supplies. By Indian

this Resolution

the

1955

The Union of India v. The Commercial Tax Oificer, West Bengal and others

Dar Aclg. C. ].

2S.C.R.

SUPREME COURT REPORTS

1085

for

and

incorporated

formerly assigned

It will be noticed

the Government of

the war had been brought under

to the Department of to

the Contracts Directorate Stores Department the which during in the newly Supply Department, were that this newly created department. to it the work of the <:reated department had assigned India procurement of stores the Department of which was Industries and Civil Supply and this department these duties Supplies. In addition things, namely, was authorised also to deal with other industries, administration of Govern development of ment specialised depart ments, Disposals of Surplus and Civil Supplies. The nature and volume of the purchases made by this newly created department became obviously different those of the two departments it from and larger that the Department replaced. of Supply which was created the prosecution of war was abolished as soon as the war was over (An nexure XVII to the affidavit of Iyer).

factories not allocated

It is also noteworthy

than

for

to

dated

The Resolution of the Government of India dated the 2nd September 1947 published in the Gazette of India (Annexure XVIII) announced, amongst other that with effect from the 29th August 1947 the Department of re-designated as Industries and Supplies would be .the Ministry of Industries and Supply.

the 6th September 1947

things,

the Ministry of

From the summary of the annexures to the affidavit it is quite clear that of Iyer filed in these proceedings Industries and Supply was a while Industries and new designation of the Department of Supplies, the Department of Industries and Supplies cannot be regarded merely as a new designation of the Department of Supply and the Department of the Resolu Industries and Civil Supplies. the "creation" of the Department of tion announced in place of the two existing Industries and Supplies This newly created departments mentioned above. department had wider powers and was a new depart ment altogether. The the (Sales-Tax) Act, 1941 was given to Bengal Finance the two departments by name.

It was not given

granted by

exemption

Indeed,

to

•,\

1086

·. SUPREME COURT REPORTS

[19551

1955

. 1

that the

It is true

these . two

departments

Th4 U•ionofl•dia ments.

sales to· ilie·. Government 'of India

. and the ·Supply ·Department of

if they were distinct entities. · The Act,

.-· - in alh itS' depart- Indian Stores· ·Department TM c:· the Govetnment of Tax o.ou:':'"W,,, . India were not corporate bodies but. they evidently Bengal and •thtrs - were . sufficiently well defined organisations to be in some of the· Press Notes to as. "entities" Das Jct&· C.J \ . referred and Resolutions mentioned above and even· in the the affidavits filed .. in· these. proceedings. Further, Bengal Finance (Sales Tax) Act, 1941 . by section· 5 two departments (2)(a)(iii) certainly dealt with these in a as manner, conferred ' on the status, as it were, of well defined and distinct entities the purposes of that Act, namely for at least for making sales to them exempt from the tax .. If it were the object of the Bengal Legislature to give exemp tion to all sales to all departments of the Government of India it would ·have been quite easy · for it to frame (iv) sub-clause had been two to be regarded as covering sales to departments were the ·all departments of the Government of India then if sales India not wholly, belonged to ·need not have been separately mentioned in _ the way it · has been in sub-clause (iii). As - already stated, there were, at the date when the Act was passed, the Government of various other departments of India which were concerned with purchase of stores the but quite dearly section was not to these those departments. Therefore, the section cannot two . particular departments ·possibly be read as a reference to the Government of India generally. the real object of section · to give exemption not to the parti 5(2)(a)(iii) was ·cu1ar departments but to the sales of such goods as, . at the date of the Act, used to -be made to those de, those goods made therefore, sales · of partments ·and, to any department of the Government of India which came to be charged with the duty of purchasing those

(iii) in a general way as framed. Further,· if sales · to

to the Railways which at that

t)le exemption conferred by

the Government of

sub-clause these

It has · been urged

the reference ·to

time mostly,

to the sales

to extend

intended

that

in

·-

+

1955

The Union of lndi• v. The CommtrciaJ Ta, Ojf1ur, w,.i &ngal and olhm

Da< A<tg. C.J.

2S.C.R.

SUPREME COURT REPORTS

1087

to

to

in

the

sold

those

to those

involves

to those

to them at

for the court

reasoning. This

to the benefit of

to all sales made

it. We are unable

for the prosecution of

the sales were only of

addition of it

the section which ordinarily

language med by it to the section

should also come within the purview of

the goods section and be entitled the exemp tion conferred by to accept this line of interpretation will unduly the scope and ambit of the exemption by limit narrow those goods as, at the date of ing it to sales of only two departments the Act, used to be two depart and sales of other goods even ment',, however necessary the war, would not get the benefit of the exemption. Such intention of the legislature could not possibly be framing· as fxpressed by the the section. According the exemption two deparunents, is given the kind of no matter whether goods which used to be sold the date of the Act or of other kinds of goods. The suggested qualifying the interpretation words is not per the press notes missible and the resolutions of the Government of India sum there were other indicate marised above clearly purchasing departments which were independent of Indian Stores Department or the Supply Depart the ment of the Government of India and that the auth ority of other departments of making local purchases interfered with by t~e creation of these · two was not departments. Therefore that, same or similar at the date of the passing of the Act, two depart kinds of goods used to be ments as well as it in view of the language of the cannot be contended, section, that to extend intended the to of similar kinds goods those other departments also. is not necessary for us to pronounce any opinion as to the validity or soundness of the extreme position taken the learned Advocate-General of West Bengal up by namely _that as is given by a statute to sales made to two departments eo nomine it will not extend to re for our present designated by a new name.

to to other departments but surely

the exemption was same or

it may well have been

the same department

to do. Further,

to sales made

the exemption

It is enough

these

sales

that

sold

the

of

to

It

1955

Tht Union of India v. The Commtrcial Tax Olficer, We.\'t Bengal and others

Das Artg. C.J.

1088

SUPREME COURT REPORTS

[1955}

to

that

language

the scope of

those of the two departments,

the Department of subsequently

the Ministry of Industries and Supply was not

Industries say purpose and Supplies which was re-designated the ·as same as the Indian Stores Department or the Supply Department of the Government of India under a diff the work en erent name. The scope and volume of Industries and Supplies trusted to the Department of was much wider and larger than that with· which the two departments which it replaced had been charged. Unlike its purchases to goods necessary for the prq_secu were not confined tion of the war. To extend the benefit of the statu tory exemption to the sales made to the newly created department of Industries and Supplies, of goods not required for war purposes but, say, for meeting inter the present case, will neces national obligations as in sarily widen the exemption and impose greater loss of revenue on the State of West Bengal than what the Act by its to do. In view of the ever expanding activities of the modern welfare State in different fields including that of trade departments are and commerce, the performance of well defined often entrusted with activities and are authorised to deal with the outside world and to enter into contracts of sale and purchase the same way as an ordi and other nary person or company may do. Such Government therefore, may well be regarded as dis departments, tinct units or quasi the for which they are created. At particular purposes the Bengal Finance (Sales Tax) Act, 1941 by any rate, providing for two turnover cer named departments as distinct tainly entities. This exemption is the creation of the statute and must be construed strictly and cannot be ex tended that the section was not amended until 1949 does not at all indicate that intended to ex to any but the depart tend the benefit of the section In our ments specifically mentioned the Appeal opinion

the conclusion arrived at by

to other departments. The fact

taxable departments

the Bengal Legislature

the deduction of

the Government

legal entities, at

the sales to the

in the section.

transactions

to sales

intends

treated

those

from

least

two

the

for

in

2 S.C.R.

SUPREME COURT REPORTS

1089

Court, namely sale in question dismissed with costs.

the

that is payable on the is correct and these appeals must be

sales tax

in the

in these

S1NHA J.-I regret

the appellant (Messrs Shrcc Ganesh

ed brethren tion involved sales by 1954 appellant India transactions <,a]es 1941 (Bengal Act VI of 1941), inafter as " The Act".

(the Government of

tax under

to have determination of

appeals, namely, . whether

Jute Mills Ltd.)

to differ from my

learn the only ques the in Civil Appeal No. 10 of to the the Union of the to payment of (Sales Tax) Act, referred to here

India at the liable

the Bengal Finance to be

in Civil Appeal No. 9 of 1954,

in question) were

time of

Tht~Union of India \'. 'f ht Commtrcial Tax Ojfuu, Wt>I Bl!ngal ari.rl othtrJ

Do• Actg. C.J.

in

The farn

leading up to these appeals may shortly the be stated as follows : The Government of India sake Ministry of Industry and Supply (which for of brevity may be called "The Government" entered into a contract on the 1st September 1948 with Messrs Jute Mills Ltd., which may be desig Shree Gane<,h supply of hessian at cer nated "The Mills", description appearing tain in filed on behalf of the Mills. Exhibit A to the affidavit With the reference contract contains the following stipulation :-

for the rates and of certain

the question of

sales

the

tax

to

"The prices

shown above are exclusive of

the India will the Govern that

found

as

tax

the conditions of contract specified

to if it is ultimately

Bengal Sales Tax. The Government of arrange direct payment of sales ment of Wt'>t Bengal in respect of this contract". sales tax is payable that "This contract will be govern It is also provided c:.d by in Form to date". This contract WSB. 133 "A Huq, Deputy was entered into for and on behalf of the Gover Director of Supplies, In pursuance of the aforesaid nor-General of India". the Mills rnpplied hessian goods to the Gov contract ernment of India of a certain valuation on which the the main contest :~ommercial Tax Officer of Bengal, as ing respondent, made a demand of Rs. 9,401-10-6 the to .sales tax from the Mills.

The Mills demurred

amended up

'>igned by

and

1955

The U11io11 of India v The CfJmmercial Tax O.fficer, H'est IJengal and others

Sinha].

1090

SUPREME COURT REPORTS

[1955]

the

the

that

to pay

the contesting

the Mills moved

in appeal under

respondents 1 and 2 to

sales in questjon payment and contended were exempt from payment of the sales tax demand ed in view of the provisions of section 5(2)(a)(iii) of the Act. Eventually the High Court of Calcutta for an appropriate writ under article 226 of respondents. the Constitution against The matter was heard by a Single Judge of that Court who by his judgment dated the 6th December 1951 held that the Mills were not liable sales the notice of demand tax demanded and cancelled and directed forbear from the the demand. Respondents 1 and 2 went enforcing the Letters Patent. The appeal up the was heard by a Division Bench which came judg contrary conclusion. The major portion of the to ment of the Letters Patent Bench was devoted the discussion of the question whether judgment of the writ matter was the amenable the Letters Patent. That question has not been pressed therefore no more in during that was canvassed controversy. The only question before us was the applicability of section 5(2) (a) (iii) the benefit of the Act which contains in each of which case. The exemption is in these terms :-

learned Single to

is being sought by

the arguments and

Judge appellate

the exemption,

the appellants

jurisdiction

under

the

the

in

to

is

"Sales

to Supply Di'partment of any railway or water transport administration".

the Stores Department, the Government of India, and

Indian

the

to

It has been contended on behalf of the sale of hessian by the Mills

that ment of India is within the On the other hand, Sales Tax Department of Bengal the aforesaid exemption clause. sary development of the Department in question.

the appellants the Govern in the Ministry of Industry and Supply terms of the exemption quoted above. the it is contended on behalf of \Vest in question were not covered by It is therefore neces the formation and

into some detail of

the Government of

the sales

to go

that

The supplementary affidavit filed on behalf of the Government and sworn to by Shri A. R. Iyer, Deputy of Supplies & Director

of Directorate General

1955

The Uni.on of India v. Thi Commercial Tax Officer, Wtst Bengal and others

Sinha J.

2S.C.R.

SUPREME COURT REPORTS

1091

the

the

required

following

the public

facts. The

such major

for Indian

India for Government

January 1922 as a result of

and functions of to act as a purchasing and

Disposals, discloses Indian Stores Department was constituted with effect from the 1st the recommenda the Stores Purchase Committee which had tions of been constituted by the Government of India to exa mine the whole question of the constitution of an ex to carry out on a large scale purchase of pert agency supplies services, as recom mended by the Industrial Commission, with purchase · of the object of encouraging articles made in requirements. The the Department, inter alia, scope were inspection agency, and in an advisory capacity in all matters connected with the purchase of stores fqr the public services, on behalf of all Central Departments of the Government and of the minor local Governme11ts and also on be local Governments, Company half of worked Railways, Corporations, Port Trusts, Munici palities and quasi public bodies and Indian States as might desire the Department's assistance. The activities of the Department consisted in the purchase and large inspection variety of goods and articles including "textile goods", that the purchase of hessian which is the particular so commodity involved included in the activities of the Department. The Department had been constituted in the first instance for a period of two years. But by a Resolution of the Govern the 6th May 1924 ment of India dated it was placed on a permanent basis. the same functions as before. It made purchases not only for the needs of the civilian departments of the Gov ernment of India but also of all the requirements of the Army. Hessian which had been purchased from the Mills in this case was one of the products which the Government of India used purchase only Indian Stores Department whenever through needed for Government purposes. A Department called the "Contracts Directorate" had been constituted in 1918 as a purchasing organization for the needs of the Indian Army. But

It continued to discharge

to avail themselves of

this case, would be

in India of a

constitution of

after

the

the

the

in

to

1955

The (/nifJn qf India v; TM Commtrcial 1·ax O.fficer, WtJl IJ~ngal and r1lhtn

Sinha J.

1092

SUPREME COURT REPORTS

[1955]

for

the

and

that

to meet

amongst

and textiles

required by

·position was

the needs of

Jute products

the demands of the

the services of procurement of them. By

imminent the Contracts Directorate and the

Stores Department in 1922 the Army authorities alsr> began to utilize the Indian Stores De partment categories of several the a Resolution of stores Home Department dated the · 26th August 1939, appa rently second Indian world war, Stores Department were in· 1940. amalgamated with the Department of Supply so that in 1941, when the the Depart Act was passed, ment of Supply as reorganized on the 3rd August 1940 included the its activities functions the Government. purchase of stores for the This branch of its activity was administered by located at New Directorate General, Supply Branch, including hessian Delhi. had to be purchased only by placing. indents by the department concerned with the Directorate General this Department absorb of Supply, New Delhi. Thus the purchasing sec ed for the duration of tions of the Contracts Directorate which were placed under com pletely to empowered for war purposes or procure all to be supplies otherwise. All indents or procured demands on the Directorate General concerned. With from the 1st August 1941 the Contracts Directo effect Indian Stores Department ceased to exist rate and in the Supply Department and be as separate entities in the said Depart came one purchasing organization ment. This organisation arranged supply of all .classes of stores for purposes of Government, such as leather goods, etc. Thus hessian which came textiles, the head of "textiles" which was being pur under chased Indian Stores in the first instance only by the to be purchased by the Supply Department Department when Indian Stores Department the control of the Supply Department. came under By a notification dated the 21st April· 1943 issued by the Home Department, the Government of India and Industries another Department

the war Store's Department and

supplies, whether authorities

self-contained

organizations

in called

India had

continued

to place

requmng

Indian

their

the

the

the

the

for

in

1955

The L'11ion of lndi,o ''· T ht Commercial Tax Offim, Wr.<i Bmgnl and othrn

Si11ha].

2 S.C.R.

SUPREME COURT REPORTS

1093

as

for

the

civil

to be

(other

textiles

continued

take over

and cotton

responsibility

the Department of

of cotton till

Industries and Supplies

activity. But with effect

then were being dealt with by

industries, than supplies this Department was first created,

Civil Supplies Department was created. This Depart- statistics and ment was primarily concerned with and development of research also foodstuffs). controls on it had no \Vhen the from purchasing the Government directed that the new 15th May 1943 the department should textile procurement the stores which Indian Stores Department which later came under the Supply Department as aforesaid. Purchase of jute and woollen textiles responsibi lity of the Supply Department. By a Resolution of the Government of India dated the 31st December 1945 in place of the existing Departments of Supply and of Industries and Civil Supplies was created with effect the that date from the 7th res Department of Industries and Supplies became the procurement of stores from all places ponsible for in India the Department of Supply had been doing previously its amalgama tion with the new Department. The powers and func tions of the Department of Industries and Supplies the matter of procurement of stores continued as in before. The Department continued to procure and the same kinds of articles as the Depart purchase only the coming ment of Supply had been doing before Industries and into existence of the Department of Supplies the Department of the creation of Industries and Supplies did not make any difference relating to purchase of stores. There in its functions was no addition to or subtraction in the matter of purchase of stores.

in the same manner as

1946. From

from its

activities

January

that

to

so

functions of the Government of

reference to the procurement of

From what has been stated above,

it is clear that India the purchasing textiles with special including hessian with which we are immediately con Indian Stores Depart cerned were discharged by the ment from 1st functions were . Supply m 1940. taken over by the Department of

January 1922. Those

1955

Tht Union Qf India v. The Cornrntrcial Tax Officer, J.Vest Btngal and others

Sinha J.

1094

SUPREME COURT REPORTS

[1955]

that

1947

the Ministry of

itself merged m

the Department of

result of the emergence of

the The Department of Supply Department of Industries and Supplies with effect from the 7th January 1941\. By a notification of the Industries 2nd September the Ministry of In and Supplies was redesignate<l as dustry and Supply with effect from the 29th August India as an 1947 as a Independent State. Thus Industry and Supply is a lineal descendant of the Indian Stores Department, of course, with an added volume of work functions, but the original activity of purchase and the same in bulk and in character. of stores remaining Indian Stores It has already been noticed the function, the concerned with Department was amongst others, of purchasing stores of a large variety of articles and goods on behalf of all Central Depart ments of the Government of India and Local Gov Port ernments, Railway Companies, Corporations, Trusts, Municipalities and other quasi public bodies, if they availed of the services of as also Indian Stores the infant in the in stature and volume Department has grown sapling course of the last about 25 years. The same the has grown sole purchasing agency of India the Government of for a large variety of goods and other Governments ·has contiilued. The nomenclature and commodities has undergone successive changes, but function the Central and of purchasing agency on behalf of as aforesaid other Governments and public bodies the purchase has the same. Furthermore, of hessian, which is the subject-matter of the demand in question has continued in the same organization, though under a different name.

Indian States department. Thus

into a shady

tree but its

function as

remained

the

the

they existed at the year 1941

the provisions of a statute It is well settled that state of to the reference have to be construed with affairs as time the statute was In passed. the Supply Department of the Government of India which Indian Stores Department. had the main According to above, and commodities activities of purchase of

the to the affidavit referred goods

there was in existence

incorporated

the

1955

The ( .. /nion of /ndit; v. T ht Commercial Tax Officer, lf'"est Bengal and others

Si,,hn ].

2S.C.R.

SUPREME COURT REPORTS

1095

to

to

forage,

referred

later was

re-designated

stated above,

the exemption

the reason why

local bodies, etc., except

that is to say, not exceeding Rs. 100

is based chiefly on the consideration

specified commodities, stores, etc.

required by the Government of India and other Gov for · purchases of ernments, small values, in each case and of certain like foodstuffs, lethal !n para. 7 of the affidavit (at p. 18 of the supplementary the Supply Depart paper book) were carried on by ment. That is the Government of India was worded as it stands in sec the Supply De tion 5(2)(a)(iii). As partment existed as a separate department up to the 6th January 1946. With effect from the 7th January the Department of Industries & Supplies into came existence which the as Ministry of Industry & Supply. The judgment under appeal the exemption clause in question does not in terms refer to the newly created department which now goes by the Industry & Supply. But name of this di:partment industry, is not concerned with the main purchasing activities India. The exemption was of granted in the respect of Government of India and that function continues to be assigned the Supply Department which has now become a wing of the newly created department therefore arises of whether the Government of the benefit of the exe.mption. The India could claim High Court the nega tive ha,s gone upon mere nomenclature. It has em phasize1l the name and overlooked in the sub1;tance of the matter.

the Government. The question

in so far as it deals with

the purchasing activity of

the Government of

those circumstances

the Ministry of

that question

in answering

change

that

the

in

in

to

After all, what is a Department of a Government ? It is is not a mere name, whatever else it may be. It not a person, either natural or artificial. A Depart ment of Government function. The Government has so many its functious or a group of functions in charge of a particular Department which may be made up of a number of clerks organized in a group, whose Is supervised by a hierarchy of officials with work

a particular functions and each of is placed

is

1935

'!ht Union of India v. T ht Commercial Ta.-r Offutr, ~Vest Brngal and others

Sinha].

1096

SUPREME COURT REPORTS

[1955]

the

The

therefore consist of a single

the apex. A depart function out the many functions of the Government, or it may in charge of a single Indian Stores Department in the Supply Depart India and later merged larger Department of the Ministry of Industry its separate existence it did until 1939 or could have become part of a the 3rd August it did after the 7th January 1946, or the 29th August its activities could be split up under different the nature of the com in my opinion, the in either direction should function, namely, of pur the India and other Governments con It is a matter of substance

the head of the department at ment may of .comprise several functions placed departmental head. which came to be incorporated ment of the Government of in & Supply, could have continued as larger department as 1940, or 1947 ; and conversely, into a number of heads classified according modities change not matter so long as the chasing articles and Government of tinued and not of form.

sub-departments to

to be purchased. But,

in the nomenclature

required by

commodities

the same.

to be

to

the

the

raised

tertium quid between tbe High Court has not said so

The Department concerned cannot be' equated with a natural person. Nor can it be level of a legal person. I am not aware of any principle of justify placing a depart jurisprudence which would ment of Government on the pedestal of a legal person. two positions. There is no in so many Though the department either as a legal words, it has treated person or as something in between a legal person and a natural person. That, in my opinion, is not sound for treating a logic. Nor department of Government either as a legal person or as a natural person. terms of s. In my view, the show that it was an exemption granted to 5(2) (a) (iii) India a particular function of described by a certain name. And one might feel the great poet Shakespeare inclined to exclaim with "What is in a name !" It the is but a description of main purchasing activity of the Government of India, set out shows. as the history of the department above

the Government of

legal basis

there any

is

1955

The C.:nion of India '" The Commercial Tax Officer, West Bengal and others

Sinha .J.

2S.C.R.

SUPREME COURT REPORTS

1097

form

the language

in order to give effect

the language of a statute has to be con Sometimes to strued in a modified the the real intentions of the legislature where, as in present case, is only of a descriptive nature and not a definitive one. An instance of this )· In is furnished by the case of Miller v. Salomons( 1 that case the question arose whether a person of Jewish persuasion who was to Parliament as a Member of the House of Commons was entitled taking the prescribed oath. The form to sit without the oath as given by 6 Geo. 3, c. 53, mentioned of It was argued on the name of "King George" only. the oath was confined to behalf of that member that name. But it .the name of a sovereign who bore was held by the Court that it was a mere description intention of the statute was to include and all sovereigns who came after King George III. The relevant portion of the observations of the Court are in these terms :

returned

that

that

the

to be

the both

thereafter,

the obligation

to administer

that Sovereign, because

the 6 Geo. 3, c. 53, mentions

than to him. It is clear that the taken always

"The second question arising on the construction of the Act is, whether, as the form of the oath given the name of King by it ceased George only, it was reign of with the I think this argu applicable to no other ment cannot prevail. legislature meant for the enactment is general-that it shall be taken with out limit of time-and the oath to the existing monarch, but mentions 'the successors' ; and as it could not be in those words during the reign of a Sovereign not of the name of George, it follows is merely used by that the name George the existing Sovereign ; and the way of designating oath must be altered from in the name to time of the Sovereign, iq the manner it was when actually administered in this case, the obvi ous meaning of the enactment is an instance in which the language of the legislature must be modified, to avoid absurdity and incon sistency with its manifest intentions".

to carry into effect. This

is not confined

in order

in order

taken

time

(]) [1852] 7 Exch~quer 475: 155 E.R. 1036, 1068.

1955

The Union of India v. Tht Commercial Tax Offiar, VVtJt Bengal and others

Sinh11}.

1098

SUPREME COURT REPORTS

[1955]

to

to

in

to

India

the effect

the Provinces of

as stated on behalf of

receiving subsidies and

The High Court referred

that the exemption was granted

should be the burden of

the community. Those observations,

the observation of Lord Halsbury in the case of Commissioners of Inland Revenue v. Forrest(!) that exemptions strictly construed because from taxation taxation will fall on other otherwise in members of my opinion, have no relevance facts and cir to the the present controversy, because we cumstances of the Gov know the department dealing with ernment of purchase of certain commodities and articles with to quantity. As already pointed out, out reference Indian Stores Department was concerned with the for public services on behalf of all purchase of stores Central Departments of Government and local Gov the Government of Bengal as ernments, etc., and then constituted was one of India subventions which have been in their budget~. As a matter to make up the deficit of fact, the Bengal Govern ment the concesswn was granted to enable the Province of Bengal business communities within terms with others outside to compete on favourable the Bengal liberal Government. Hence throwing construction of the exemption a greater burden on other citizens. On the other in the Province of Bengal the sales hand, 2s it used to the bmi the greater ness community doing business within that Province. though the It -was present case involved than less for · determination Rs. 10,000, amounts because in this case affected much such to several crores. the business com munity in the Province of Bengal having had the the Govern advantage of fairness should have allowed ment of Bengal the purchasing agency of the Government of India that benefit was in the benefit of the exemption until

stated at the Bar that taxes amounting arising larger the Province amounted

in the matter of supplying

transactions of sale,

the larger to be,

is no question of

I should have

the question

sales within

the needs of

the benefit

in order

therefore

resulting

thought

in all

there

that

the

in

to

(I) (1890] 15 A.C. 334.

1955

The Union o,( bu!ia \' The Commercial Ta., Officer, We-11 Ben,~al and othen

Sin:.a J.

2 S.C.R.

SUPREME COURT REPORTS

1099

if

in

of

In

through

incorporated

the purchasing agency of

terms withdrawn some time in the beginning of 1949. The matter can be looked at from another point of view also. We are concerned here with the sale of hcssian. As ,pointed out in the affidavit filed on be India, the purchase of half of the Government hessian has all along been the concern of the Supply Department, now the Ministry of lndustry & Supply. Sab tax is a tax on sale of goods and tax on hessians falls :within the contemplation of the law granting the sales were the exemption effecteJ the Gov ernment of India. The beneficiary certainly was not an amorphous body like a department but the Gov it is the Government of eniment of India, because hdia which could be a unit for purposes of the Act. this connection our attention was invited to the last clause of the words transport administra "and any tion". The argument was if the Government of India as such was there just quoted. But this' was no necessity for railway or a that a argument overlooks administration need not necessarily water there were, be a department of Government because and are, rai~way systems or water transport systems which are owned and administered by cor porate bodies other the Government of India. Sales even to those public or semi-public bodies were terms of the exemption. Those words within limitation but words therefore are which widen in so far as the railways and water transport administrations not owned and carried on by the Government of India.

Railway or water that the beneficiary,

the scope of the exemption

the exemption covered by

same may be available

the words the

not words

transport

to be

then

than

fact

still

the

of

to

that

there was nothing

Another reason which may be adduced m answer to prevent to the contention that the exemption was the Legislature the Government granted of India Indian Stores Department and its later substitutes had to make purchases not only for local govern the Government of the exemption ments and other public bodies. Hence

from stating in respect of all purchases by is that

India but also for

the

15-85 S. C. India/59.

1955

Tht Union ef India v. T Ju Commtrdal Ta:it Officer, Wesl Btngal and olhtrs

Sinha ].

1100

SUPREME COURJ' REPORTS

[1955!

that if the

commodities,

the exemption

through through

discharged later

in the was not an exemption in of India only but also lic bodies which could avail of purchase through that department. Another argument was urged

terms in which it occurs in section 5(2) (a) (iii) the Government favour of to other Governments and pub themselves of the facilitv · to meet the appel lant's case that really the exemption was meant for the its function of purchase of in Government of India the and stores Indian Stores Department and the legis Supply Department. It was argued the Govern to grant lature meant ment of India, to do would then have been to the Government of that sales tax. But it has not been India were exempt from the that all the contention of the appellant to the sales Government of India are within the the ex terms of the emption. Only purchasing department 9f the Government of India were so exempt. In para. 7 of the affidavit referred to above it has been stated on behalf of the Govern the different departments were entitled ment that to make local purchases of small values, to say, not exceeding Rs. 100 and of certain specified com modities the purchasing activity of the departments aforesaid of the Government of in my opinion, there is no validity

like foodstuffs which were

in this argument either.

India. Hence,

to thing

the easiest

not within

transacted

through

.that is

to say

sales

the

to be related

then such an interpretation would

It was also suggested during the argument

that if the exemption were to only such com modities and articles as were within the purview of the Stores Department and later of the Supply De partment, involve addition of qualifying words the section which is not ordinarily within the function of the courts. But, in my opinion, the infirmity the departments mentioned legal the exemption clause quoted above with a in person,-an argument which has already been dealt with. · 'In my opinion, the there conclusion that those are mere words of description and are not words with defined connotation, because

this argument also suffers

that it equates

is no escape

from

from

to

1955

The UniMi of l•dia v. Tiu CatRmucia Tax Ojfiar, Wis B•ngal and othtTJ

Sinha J

1955

D1ctmher 20.

2S.C.R.

SUPREME COURT REPORTS

1101

from

there

is no escape

neither the Act nor the rules framed thereunder define If the nomenclature only matt those departments. ·ered, the conclusion then that whatever articles and commodities were pur chased by the Indian Stores Department or its later substitutes, of whatever magnitude and value, would be within in question. But in tention of the framers of the Act. They knew what those de the activities of the Government partments were and granted only in respect of those functions of the Government, as already indicated.

the mischief of the exemption clause in my opinion, was not the

the exemption was

through

that,

For the aforesaid reasons I would allow

these ap the orders of the Letters Patent Bench the orders passed by the Single Judge of

peals, set aside and restore the Calcutta High Court, with costs throughout.

BY THE COURT.

in accordance with the Judgment of the majority

the appeals are dismissed with costs.

P. L. LAKHANPAL v. THE STATE OF JAMMU AND KASHMIR. ls. R. DAS, ACTING C.J., BHAGWATI, }AGANNADHA DAS, B. P. SINHA and }AFER IMAM JJ.]

Constitution of .India, Arts. 13, 21, 22 and 35(c)-/ammu and Kashmir Preventive Detention Act, 2011 (Act VI of 2011), s. 3(1) (a )(i) and s. 8(1) Proviscr-Constitution (Application to /am mu and Kashmi,.) 01·der, 1954-Detention order under the provisions of ss. 3 (J)(a)(i) and 8(1) Proviso of the Act-Whether violates fundamental .-ights guaranteed under Arts. 21 and 22 of the Constitution-Non supply of grounds of detention to Detenu-Whether violates his funda mental right-Addition of clause (c) to Art. 35 of the Constitution Effect of.

The petitioner was detained in Kothibagh sub-jail in Srinagar by the order of Jammu and Kashmir Government under the provi sions of s. 3(1)(a) (i) of the Jammu and Kashmir Preventive Deten- tion Act, 2011.

·