1. The petitioner-company is a registered dealer both under the Bengal Finance (Sales Tax) Act, 1941, and under the Central Sales Tax Act, 1956. The petitioner's jute mill is also registered under the Bengal Raw Jute Taxation Act, 1941. During the material period it had purchased raw jute from the sellers in the State of West Bengal, Assam, Bihar, Orissa and Andhra Pradesh and had processed, weaved and fabricated the same in its mill and then sold the processed and fabricated jute goods.

2. The petitioner has stated that during the relevant period it had deposited tax under the Bengal Raw Jute Taxation Act, 1941, called the Jute Tax Act, at the rate of three per cent of the value of the purchase of raw jute inside West Bengal and had furnished return under the said Act. The petitioner has also claimed that it had furnished returns both under the Bengal Finance (Sales Tax) Act, 1941, and under the Central Sales Tax Act, 1956, for the four quarters ending 31st March, 1971. The petitioner claimed that no sales tax was payable in respect of the said inter-State sales of jute goods manufactured out of jute upon which it had paid jute tax at the time of purchase of raw jute. The petitioner in its said returns had also shown the amounts of its sale of jute goods in the course of export. Further it had claimed deductions from its gross turnover of sales allegedly covered by declarations furnished by other dealers.

3. The Commercial Tax Officer, Esplanade Charge, had served notices in form VI under Section 11(1) of the State Sales Tax Act and also in form 3 under Section 9 of the Central Sales Tax Act, 1956, for assessment of sales tax in respect of the aforesaid period. The petitioner has prayed in these rules for writs in the nature of prohibition or prohibiting the respondents from proceeding with the aforesaid notices of assessments under the State and Central Sales Tax Acts for the four quarters ending March, 1971. The petitioner has also prayed that writs in the nature of mandamus be issued directing the respondents to complete pending jute tax assessments and for directing the respondents to refund sales taxes already paid and deposited by the petitioner. The petitioner has further prayed that writs of certiorari be issued quashing the aforesaid notices of the assessment proceeding under the Bengal Finance (Sales Tax) Act, 1941, and under the Central Sales Tax Act, 1956.

4. The substance of the petitioner's contention is that the raw jute purchased by the petitioner and the jute goods manufactured in the petitioner's mill are both one and the same commodities and both are included in entry (v) of Section 14 of the Central Sales Tax Act, 1956. The State of West Bengal, having levied tax under the Bengal Raw Jute Taxation Act, 1941, upon the raw jute purchased by the petitioner, was not entitled to again demand sales tax upon the jute goods manufactured by the petitioner and the said jute goods were only another "stage" of the raw jute within the meaning of condition (a) of Section 15 of the Central Sales Tax Act. The petitioner has also challenged the validity of the rates of taxation under Section 5 of the Bengal Finance (Sales Tax) Act, 1941, and under Section 3 of the Bengal Raw Jute Taxation Act, 1941, on the ground that the same were ultra vires Article 286 of the Constitution of India and Section 15 of the Central Sales Tax Act, 1956. The petitioner has further challenged the jurisdiction of the respondents to assess Central sales tax in respect of the aforesaid quarters upon it on the ground that Section 8(2)(a) of the Central Sales Tax Act, 1956, was inoperative and ineffectual in the absence of any valid rate under the West Bengal sales tax law.

5. The petitioner in its writ petitions has stated that being aggrieved by the assessment order in respect of the quarters ending 31st March, 1967, it has obtained another rule and the same is pending. The petitioner has also obtained two other rules being Civil Rules Nos. 1339(W) and 1340(W) of 1973 relating to the assessment orders for the period ending 31st March, 1970 Thus the assessment orders relating to the years ending 31st March, 1969, and 31st March, 1970, which have been impugned in the aforesaid rules are not subject-matters of the present rules. As already stated, in the present rules the petitioner has challenged the validity of the assessment proceedings for the period ending 31st March, 1971.

6. Article 286 of the Constitution as amended by the Constitution (Sixth Amendment) Act, 1956, provides for restrictions on imposition of tax on the sale or purchase of goods. Under Clause (1), no State can enact any law imposing or authorising the imposition of tax on sales or purchases taking place outside the State or in the course of import of goods into, or export of goods out of, India. The Parliament has been empowered under Clause (2) to make laws formulating principles for determination when the above two kinds of sales or purchases of goods take place. In these rules, we are concerned with the scope of Clause (3) of Article 286, which provides that the Parliament may by law declare goods to be of special importance in inter-State trade or commerce. Secondly, all State laws imposing tax on sale or purchase of goods declared to be of special importance are subject to such restrictions and conditions regarding system of levy, rate or incidence as may be specified by parliamentary legislation.

7. The Parliament of India has enacted the Central Sales Tax Act, 1956, to give effect to the above provisions contained in Article 286 of the Constitution. The preamble of the said Act states :

An Act to formulate principles for determining when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India, to provide for the levy, collection and distribution of taxes on sales of goods in the course of inter-State trade or commerce and to declare certain goods to be of special importance in inter-State trade or commerce and specify the restrictions and conditions to which State laws imposing taxes on the sale or purchase of such goods of special importance shall be subject.

8. Section 14 of the said Act declares the goods specified there to be of special importance in inter-State trade or commerce. Clause (v) mentions "jute". The said clause was substituted by Section 11 of the Central Sales Tax (Amendment) Act, 1972, with effect from 1st April, 1973. Even after the said amendment Clause (v) remains substantially the same except that the substituted entry mentions plants of a few more species whose fibres would be considered as jute. Section 15 of the Central Sales Tax Act, 1956, contains the restrictions and conditions with regard to tax on sale or purchase of goods declared by Section 14 to be of special importance in inter-State trade or commerce.

9. In the first place, the State laws relating to sale of declared goods inside the State are subject to the following two restrictions and conditions : (i) tax payable under the State law shall not exceed the specified percentage of the sale or purchase price thereof; (ii) the tax is "not to be levied at more than one stage". Section 15 further provides for reimbursement of the State sales or purchase tax on declared goods in case after such tax had been paid the goods are again sold in the course of inter-State trade or commerce.

10. It may be noted that previously Section 15 specified that the tax payable under the State law shall not exceed two per cent, but Section 51 of the Finance Act of 1966 (Act 13 of 1966) substituted the words "three percent" in place of the words "two per cent" in Section 15 of the Central Sales Tax Act.

11. The learned Advocate for the petitioner has contended that the said substitution of the words "three per cent" in Section 15 made by the Finance Act, 1966, is no longer in force. The Finance Act, 1966, was an annual Act, and, after the expiry of the financial year 1966, the said Act expired and the amendment made by Section 51 of the Finance Act, 1966, became ineffectual. Therefore, the State laws cannot impose tax in respect of sale or purchase of jute goods of special importance at a rate exceeding two per cent. Accordingly, Section 3 of the Bengal Raw Jute Taxation Act, 1941, was ultra vires. On the same ground, the learned Advocate for the petitioner has challenged the vires of Section 5(l)(c) of the Bengal Finance (Sales Tax) Act and other consequential provisions in the said Act relating to imposition of sales tax on jute goods. The learned Advocate for the petitioner has also contended that the Bengal Raw Jute Taxation Act imposes tax at one stage of jute. Therefore, the imposition of tax on finished jute goods under the Bengal Finance (Sales Tax) Act is in contravention of the restrictions in Section 15 that tax payable under the State law on sale or purchase of declared commodities cannot be at more than one stage.

12. I am unable to accept the submission of the learned Advocate for the petitioner that the substitution of the words "three per cent" in place of "two per cent" in Section 15 made by Section 51 of the Finance Act (Act 13 of 1966) was valid only for the financial year 1966-67, and that the said amendment has expired. The Finance Act of 1966 was no doubt passed to give effect to the financial proposals of the Central Government for the financial year 1966-67. The said Act also provided for amendment of a number of statutes relating to various direct and indirect taxes including the Central Sales Tax Act, 1956 (vide Section 51 of the Finance Act). But the said Act did not provide that such amendments in Section 15 of the Central Sales Tax Act, 1956, would be temporary or that it would be in force only for the financial year in question.

13. Mr. Mukherjee, the learned Advocate for the petitioner, referred to the constitutional provisions regarding the procedure in financial matters. Article 112 provides presentation before both the Houses of Parliament of an annual statement of estimated receipts and expenditures of the Government of India for each financial year commonly called annual budget. Article 117 lays down the specific provisions as to financial bills. Any bill or amendment making provision for any of the matters specified in Sub-clauses (a) to (f) of Article 110 is a financial bill. Such a bill can be introduced or moved only on the recommendation of the President. Such a bill can only originate in the House of People. But these constitutional provisions do not further lay down that the Act passed by the Parliament (properly called the Finance Act) to give effect to proposals regarding matters enumerated in Sub-Clauses (a) to (f) of Article 110 would be temporary. Therefore, it would not be correct to contend that merely because the annual Finance Bill is introduced immediately after the presentation of the annual budget all the provisions of the said Act are temporary. It is not correct to contend that the amendments made in the Central Sales Tax Act, 1956, under Section 51 of the Finance Act, 1966, was effectual and valid only for the year 1966-67.

14. Chakravartti, C. J., and Lahiri, J., in McGregor and Balfour Ltd. v. Commissioner of Income-tax, West Bengal [1955] 27 I.T.R. 389, considered the above questions in relation to the Finance Act, 1945, and laid down :

The Finance Acts, though annual Acts, are not temporary Acts. If certain provisions in the Acts are limited to the particular assessment year, it is not because the Act itself is a temporary Act, limited for all purposes to a single year, but because the particular assessment year is specifically mentioned in the provisions as the year to which they solely relate. There may, however, be and often are provisions of a general character which are of permanent operation and which are available for application, whenever circumstances are found to which they are, by their terms, applicable. It is not unoften that the Income-tax Act or some other Act is amended by a Finance Act or that some principle of taxation or computations of income is laid down in a Finance Act, which is intended to form part of the general law of the country. Section 11, Sub-section (14), of the Finance Act of 1946 is a provision of that character and it is not intended to be limited to the accounting year 1946-47 alone.

15. I respectfully agree with the above views of the Division Bench in McGregor and Balfour Ltd. v. Commissioner of Income-tax, West Bengal [1955] 27 I.T.R. 389, and hold that the provisions of Section 51(b) of the Finance Act, 1966, were intended to form part of the general law of this country. Neither expressly nor by necessary intendment the substitution of the words "three per cent" in place of "two per cent" in Section 15 of the Central Sales Tax Act, 1956, was limited to the year 1966-67, but the same was permanent in nature subject to the power of further amendment by the Parliament. In the result, I hold that after the above amendment by the Finance Act, 1966 (Act 13 of 1966), the power of the West Bengal State Legislature to impose sales tax on sale of declared goods inside the State was subject to the limitation that such tax shall not exceed three per cent. Accordingly, Section 3(1) of the Bengal Raw Jute Taxation Act, 1941, and Section 5(1) of the Bengal Finance (Sales Tax) Act, 1941, were not ultra vires Section 15 of the Central Sales Tax Act, 1956, and Article 286 of the Constitution. As already stated, the rate of purchase tax on the turnover of raw jute under the Bengal Raw Jute Taxation Act, 1941, and the sales tax on declared goods under the Bengal Finance (Sales Tax) Act, 1941, do not exceed the rate specified in condition (a) of Section 15 of the Central Sales Tax Act, 1956.

16. The next point is whether or not the tax on sale or purchase was levied upon the jute goods manufactured in the petitioner's mill at more than one "stage" within the meaning of Section 15 of the Central Sales Tax Act, 1956. In this case the relevant period is the four quarters ending 31st March, 1971. Clause (v) of Section 14 before its substitution by Section 11 of Act 61 of 1972 was as follows:

Jute, that is to say, the fibre extracted from plants belonging to the species corchorus capsularis and corchorus olitorius and the fibre known as mesta or bimli extracted from plants of the species hibiscus cannapinus and hibiscus sabdariffa-Var-altissima, whether baled or otherwise.

17. Thus, under the said clause the fibres extracted from the plants belonging to different species named therein were declared goods.

18. The learned Advocate for the petitioner relied upon the Supreme Court decision in Lilavati v. State of Bombay A.I.R 1957 S.C. 521, which laid down that the word "otherwise" in Section 6 of the Bombay Land Requisition Act, 1948, had not been used ejusdem generis. But at the same time the word "otherwise" in Section 14(v) of the Central Sales Tax Act, 1956, must be construed in the context in which it appears. The Shorter Oxford English Dictionary (1959), Volume I, gives the meaning of the word "bale" as a "large bundle or package, orig. more or less round in shape; now spec. one closely pressed, done up in canvas, etc., and corded or hooped, for transportation". The Shorter Oxford English Dictionary, Volume II, gives the meaning of the word "otherwise" as "in other manner". Thus in the context of Clause (v) "otherwise" means the jute fibre carried or transported in any other way distinct or different from bale. The word "otherwise" in juxtaposition with "baled" is referable to the state or conditions of package. Therefore, the expression "baled" or "otherwise" is referable to the different manner in which jute fibres may be packed for carriage.

19. I am unable to accept the submission of the learned Advocate for the petitioner that the word "otherwise" means not only jute fibre, but also things manufactured out of jute fibre. clause (v) of section 14 only refers to fibres extracted from the plants mentioned therein. "Fibre" is commonly understood as "one of the thread-like bodies or filaments, that in part compose animal and vegetable tissue" (vide The Shorter Oxford English Dictionary, Volume I). Such thread-like filaments by manufacturing process may be made into yarns which in their turn when woven become the finished materials. It is true that the words "that is to say" are not words of restriction, but are words of illustration (see Bhola Prosad v. Emperor A.I.R. 1942 P.C. 17 at 20 ; Megh Raj v. Allah Rakhia A.I.R. 1947 P.C 72. But it could not thereby mean that finished jute goods which are manufactured out of jute fibres are within clause (v) of section 14, because such finished jute goods like hessian, gunny bags, etc., are commercial commodities distinct from jute fibre out of which they are manufactured.

20. Section 2(8) of the Bengal Raw Jute Taxation Act, 1941, defines "raw jute" for the purposes of the Bengal Raw Jute Taxation Act, 1941, as follows :

'raw jute' means the fibres of jute which has not been subjected to any process of spinning or weaving and includes jute cuttings, whether loose or packed in drums or bales.

21. The said Act does not impose any tax on finished jute goods manufactured out of such fibre of jute. Section 6 of the Bengal Finance (Sales Tax) Act, 1941, provides :

No tax shall be payable under this Act on the sale of goods specified in the first column of Schedule I, subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof.

22. The State Government by a notification dated 2nd June, 1942, published in the Calcutta Gazette dated 11th June, 1942, inserted "raw jute" as entry No. 32 in Schedule I of the Bengal Finance (Sales Tax) Act, 1941. Therefore, the raw jute is tax-free goods within the meaning of Section 6 of the Bengal Finance (Sales Tax) Act, 1941, and the turnover of purchase of such raw jute is only subject to levy of tax under the Bengal Raw Jute Taxation Act, 1941. Accordingly, the prohibition against levy of tax on declared goods at more than one stage has not been infringed by the above two State laws.

23. The learned Advocate for the petitioner tried to contend before me that the expression "more than one stage" in the context of Section 15 is referable to different stages of production of jute goods. The learned Advocate for the petitioner drew my attention to the meaning of the word "stage" given in different dictionaries and contended that here the said word would mean all the different steps or stages in the process of manufacture of declared goods up to their finished stage. Accordingly, it was contended that the intention of the law was that tax on sale or purchase of goods of special importance would be either at the stage of the raw material or at the stage of the finished produce and any such tax at more than one stage would be in contravention of Section 15.

24. I am unable to accept the meaning of the words "more than one stage" suggested by the learned Advocate for the petitioner.

25. The "stage" in Section 15 refers to the stages of successive sales and purchases. In my view, the word "stage" in Section 15 means that tax on internal sale on declared goods should be single point and not multi-point, and the said expression is not at all referable to stages which raw materials may undergo resulting in the manufacture of different commercial commodities. The prohibition in Section 15 is against imposition of sales tax on internal sale of the same commodity which is declared as goods of special importance. In this case, the averments made in the petition and the affidavit-in-reply on behalf of the petitioner themselves show that the goods manufactured in the petitioner's mill out of jute fibre are different commodities having special traits and attributes not possessed by raw jute. Such attributes and traits are imparted to raw jute so as to produce a new commodity or material.

26. Section 15 of the Central Sales Tax Act, 1956, has been twice amended. The cause and necessity of the amendment of the Section of the Central Sales Tax Act may be discovered by the state of law at the time when the Act was passed [see Craies on "Statute Law" (6th Edn.), page 127]. We may also refer to the objects and reasons of the Acts by which Section 15 of the Central Sales Tax Act was amended for the limited purpose of ascertaining the conditions prevailing at the relevant time and the objective of the said statutes. I am fully alive to the restrictions on the admissibility of objects and reasons for interpreting the words in a statute. We may also look into the circumstances in which the said amendments were effected. The Section was first amended by act 16 of 1957. Thereafter, again the Central Sales Tax (Second Amendment) Act, 1958 (Act 31 of 1958), substituted Section 15. Paragraph 3 of the Statement of Objects and Reasons (Act 16 of 1957) was as follows :

Section 15 of the Act as it now stands restricts the levy of tax under the State law to only one stage but leaves it to the State to select the point of levy. The Taxation Enquiry Commission had recommended that the stage of levy of tax should be the last stage of sale or purchase within a State. The amendment proposed in Clause 4 seeks to give effect to that part of the recommendation and at the same time to provide that no tax shall be levied under the State law at the last stage if the goods are intended for sale in the course of inter-State trade or commerce.

27. Similarly, paragraph (vii) of the Statement of Objects and Reasons of the Central Sales Tax (Amendment) Act, 1958, stated :

One of the conditions laid down in Section 15 is that tax on declared goods shall be levied at the stage of last sale or purchase inside the State. Certain State Governments levy tax at the first point of purchase on some of the declared goods under their respective laws, and to accommodate their views, it is proposed to leave with the States the option regarding the point of levy of tax on declared goods without in any way disturbing the scope of the present restrictions imposed by Parliament.

Note 6, Clause (ii), of the amendment bill, which proposed the substitution of Section 15 of the Central Sales Tax Act, similarly stated :

Section 15 is being revised so as to leave the discretion of the State Governments unfettered with respect to the levy of tax on declared goods at any stage under their local laws, the only condition sought to be imposed being that if, under the local sales tax law, a tax is collected, provision is made in the law for the refund of such tax if the goods are sold in the course of inter-State trade or commerce. In such cases, Central sales tax alone should be leviable. The State Governments are left free to lay down their own procedure for the making of such refunds.

28. The Taxation Enquiry Commission, 1954, in their Report, Volume III, at page 50, which was cited by the learned Advocate for the petitioner stated :

To give effect to our recommendations regarding the Central regulation of States' sales taxes on goods of special importance in inter-State trade, the Central legislation will have, firstly, to specify such goods and, secondly, to impose conditions and restrictions subject to which the State Governments can impose their tax on the internal trade in those goods. The main condition will be that r.o State shall have a system of levy other than a single point levy on such specified goods. The tax may either be on sales or on purchases, but it will be recoverable only at the last stage of sale or purchase by a registered dealer. The condition is necessary to ensure that the tax burden on goods of importance in inter-State trade is properly regulated and not allowed to remain vague or undetermined as would be the case under any other system of sales tax...

29. This passage, cited by the learned Advocate for the petitioner himself, would indicate the context in which Article 286 of the Constitution was amended by the Constitution (Sixth Amendment) Act, 1956, and the Central Sales Tax Act, 1956, provided for restrictions and conditions subject to which States may impose tax on sales or purchases of goods of special importance.

30. Several Supreme Court decisions have also interpreted the word "stage" in Section 15 of the Central Sales Tax Act, 1956, as point of taxation and in none of the reported decisions the word "stage" was considered as referable to the different steps in the production of declared goods. In this connection reference may be made to the Supreme Court decision in Modi Spinning and Weaving Mills Co. Ltd. v. Commissioner of Sales Tax, Punjab A.I.R. 1965 S.C. 957 at 960. Reference may be also made to the observation of the Supreme Court in Bhawani Cotton Mills Ltd. v. State of Punjab A.I.R. 1967 S.C. 1616 at 1622. The Supreme Court in Devi Dass Gopal Krishnan v. State of Punjab A.I.R. 1967 S.C. 1895 at 1905-1906, considered the vires of the Punjab General Sales Tax Act (46 of 1948) in the context of Section 15 of the Central Sales Tax Act as amended by the Central Sales Tax (Amendment) Act, 1958. Subba Rao, C.J. (as he then was), delivering the judgment of the court in Devi Dass Gopal Krishnan v. State of Punjab A.I.R. 1967 S.C. 1895 at 1905-1906, rejected the argument that "while Section 15 of the Central Sales Tax Act, 1956, imposes a restriction on the State not to tax at more than one stage, the amending Act by introducing the definition of 'purchase' enables the State to tax the goods at the purchase point and at the sale point" by observing :

But this argument misses the point that goods purchased and the goods sold are not identical ones. Manufacture changes the identity. Therefore, the same goods are not taxed at two stages.

31. Subba Rao, C.J. (as he then was), in the same case interpreted the amended Section 15 of the Central Sales Tax Act by observing:

While Section 15 of the Central Sales Tax Act before the amendment described the stage at which the purchase tax can be levied, Section 15 after the amendment only declared that it cannot be levied at more than one stage.

32. Recently, the Supreme Court in B.G. Somanna & Sons v. State of Andhra Pradesh A.I.R. 1972 S.C. 2227, upheld the vires of the Andhra Pradesh General Sales Tax Act, 1957, in the context of Section 15(a) of the Central Sales Tax Act, 1956, on the ground that the liability to pay tax on groundnut fell only at one point. The Supreme Court rejected the contention that "groundnuts" purchased by the appellants would be taxed at the point of purchase by them and also again in the hands of "last dealers" to whom they might sell by observing :

The short answer to this argument could be that the validity of the levy of a tax upon a purchase by a last dealer could be questioned by one of the appellants only if he was being taxed as a last dealer and not as a miller. It is apparent that they are being taxed at the point of purchase by them as millers only. When they purchase groundnuts as millers they do so presumably in order to convert the groundnuts into another product altogether and, they would, therefore, presumably be the last purchasers of groundnuts as 'groundnuts'. They may be selling their products in forms other than groundnuts.

33. The same reasonings apply to the petitioner's case who purchases raw jute and converts them into finished products, which are different commodities.

34. In the above view of the matter, all the contentions raised on behalf of the petitioner fails. Before I close this judgment I must express the desirability of expeditiously completing pending assessments against the petitioner under the Bengal Raw Jute Taxation Act, 1941, and the two sales tax laws.

I accordingly discharge these rules.

There will be no order as to costs.

35. On the prayer of the learned Advocate for the petitioner I direct that the respondents will remain restrained for a period of 8 (eight) weeks hence from communicating the assessment order or from serving demand notices in respect of the year ending March, 1971.