9,401 10 6.
On the first of September 1948 the Government of India, Ministry of Industry and Supplies, in Calcutta, placed with the Mills a companyfirmatory order in writing bearing No.
The Commercial Tax Officer and the State of West Bengal went up on appeal from the said judgment and order of Bose, J. The appeal came up for hearing before a Bench companysisting of K. C. Das Gupta, J. and P. N. Mookerjee, J. In separate but companycurring judgments both the learned Judges rejected the preliminary objection taken by the Mills and the Union of India as to the maintainability of the appeal.
The learned Judge appears to have regarded this companytinuance 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 the Indian Stores Department and the Supply Department of the Government of India referred to in the section.
Jute products and textiles including hessian had to be purchased only by placing indents by the department companycerned with the Directorate General of Supply, New Delhi.
The Mills as well as the Union of India, have number companye up on appeal before us with a certificate of fitness granted by the High Court.
By a resolution of the home Department dated the 26th August, 1939, apparently to meet the demands of the imminent second world war, the Contracts Directorate and the Indian Stores Department were in 1940 amalgamated with the Department of Supply so that in 1941, when the Act was passed, the position was that Department of Supply as reorganized on the 3rd August, 1940 included amongst its activities and functions the purchase of stores for the needs of the Government.
So this Department of Industries and Civil Supplies became another purchasing organisation of the Government of India apart from the Department of Supply.
On the merits both of them held that the Department of Industries Supplies was number the same as the Indian Stores Department or the Supply Department of the Government of India.
It is thus clear that the Indian Stores Department and the supply Department of the Government of India were number the only Departments which had authority to make purchases for and on behalf of the Government of India in its various departments.
Thus this Department absorbed for the duration of the war the purchasing sections of the Indian Stores Department and the Contracts Directorate which were placed under companypletely self contained organizations empowered to procure supplies, whether for war purposes or otherwise.
In view of the decision of this Court in National Sewing Thread Co. Ltd. v. James Chadwick Bros. Ltd. 1953 S.C.R. 1028 , the question of maintainability of the appeal before the High Court has number been raised before us.
By this Resolution the Indian Stores Department and the Contracts Directorate which during the war had been brought under the Supply Department, were incorporated in the newly created department.
On the 21st April 1943 came Notification No.
Sales to other Departments of the Government of India were number so exempted.
On the 6th December 1950 the Mills filed a petition under article 226 of the Constitution of India before the High Court at Calcutta.
The rule came up for hearing before Bose, J., who took the view that the newly created Department of Industries Supplies was charged with the same work of procurement of stores for Government as had been entrusted to the Department of Supply and certain additional works and that later on the name was again changed to Ministry of Industry and Supply.
All authorities requiring supplies to be procured in India had to place their indents or demands on the Directorate General companycerned.
1 The tax payable by a dealer under this Act shall be levied at the rate of one quarter of an anna in the rupee on his taxable turnover In this Act the expression taxable turnover means that part of a dealers gross turnover during any period which remains, after deducting therefrom a his turnover during that period on i ii sales to the Indian Stores Department the Supply Department of the Government of India, and any railway or water transport administration iv v vi b The Mills further companytended that if any sales tax was at all payable the same was payable by the Government of India and number by them.
2,10,040 calculated at the prices agreed upon.
The Government of India Resolution dated the 31st December, 1945 announced the creation, with effect from the 7th January, 1946, of the Department of Industries and Supplies in place of the existing Department of Supply and the Department of Industries and Civil Supplies.
The functions of this department were to act as a purchasing and inspection agency in respect of certain companymodities including textile goods for all Central Departments and minor Local Government and such other authorities as might desire to avail themselves of the services of this department.
Rules 5 and 6 attached to this Resolution show that purchases companyld also be made locally by other departments in case of emergency or for companyvenience.
The Commercial Tax Officer, Beadon Street, District II Charge, claimed that the aforesaid sales should be included in the taxable turnover of the Mills and assessed to sales tax.
The old departments ceased to exist and a new department companybining some of the functions of these departments and some new functions was created and that, therefore, sales to the newly created department companyld number be deducted from the taxable turnover under section 5 2 a iii .
It appears from the affidavit of one A. R. Iyer, Deputy Director, Directorate General of Supplies and Disposals, under the Ministry of Works, Housing Supply, that in 1918 a department called the Contracts Directorate had been companystituted as a purchasing organisation for the needs of the Army.
It was stipulated that the companytract would be governed by the companyditions of companytract specified in Form WSB 133 as amended up to date.
The relevant portion of section 5 ran as follows 5.
On the same day a rule was issued on the respondents to show cause why the orders prayed for should number be made.
It was therein stated that a Department of the Government of India named the Department of Supply came into existence in the month of September 1939 immediately on the companymencement of World War II and before the enactment of the Bengal Finance Sales Tax Act, 1941 Bengal Act VI of 1941 .
In the result, the Appeal Court allowed the appeal with companyts, set aside the order of Bose, J. and dismissed the application of the Mills under Article 226.
The exemption granted by the Bengal Finance Sales Tax Act, 1941 was given to two Departments by name.
It was averred that before the 7th January, 1946 the said Department of Supply was charged with the procurement of Stores from all places in India including Bengal and that it also directed the work of Indian Stores Department in the United Kingdom and of the India Supply Mission in the United States of America.
The Mills prayed for a writ of mandamus on the respondents to cancel and or recall and or forbear from acting or giving effect to the demand dated the 8th November, 1950 and from realising the sum of Rs.
The Commercial Tax Officer filed an affidavit in opposition disputing the companytentions put forward by the Mills in support of their claim for exemption and maintaining that sales tax was due and had been legitimately assessed and demanded.
209 No.
S. 217 of the Government of India, dated the 6th May, 1924, it was placed on a permanent basis and companytinued to discharge the same functions.
It was claimed that powers and functions of the Department of Industries and Supplies were the same as those of the Department of Supply and that there was numbervariation in the nature of the said functions whatsoever.
He accordingly, on the 3rd January, 1952, made the rule absolute.
The Commercial Tax Officer overruled both these objections and on the 8th November 1950 he assessed the Mills to sales tax in respect of the supplies made by the Mills to the Government of India under the aforesaid companytract and demanded a sum of Rs.
The appeal was heard by a Division Bench which came to the companytrary companyclusion.
9,401 10 6 and for a writ of certiorari for production of the records and proceedings before the Commercial Tax Officer and for quashing the same and for the other incidental reliefs.
Annexure III to affidavit of Iyer indicates that it was number obligatory on the other departments to make purchases through the Indian Stores Department.
In the petition the Mills impleaded as respondents the Commercial Tax Officer, the State of West Bengal and the Union of India.
It was specifically mentioned that the goods ordered were required to meet an international obligation of the Government of India and as such the execution of the companytract in accordance with the programme of deliveries as given in the schedule attached thereto was essential.
The agreed prices were stated to be exclusive of the Bengal Sales Tax and it was stipulated that the Government of India would arrange direct payment of sales tax to the Government of West Bengal if it was ultimately found that Sales Tax was payable in respect of that companytract.
By a numberification dated the 21st April, 1943 issued by the Government of India in the Home Department, another Department called the Industries and Civil Supplies Department was created.
227/45 Pub c dated that 31st December, 1945 the Government General in Council announced the creation with effect from the 7th January, 1946 of the Department of Industries Supply in place of the existing Department of Supply and of Industries and Civil Supplies.
The learned Judge accordingly held that the Mills were entitled to the benefit of the exemption and were number liable to pay sales tax in respect of the supplies in question.
Then came the Office Memorandum dated the 23rd December, 1941 issued by the Government of India in the Department of Supply Annexure XIV which superseded the previous office memorandum dated the 13th December, 1940 Annexure XII .
The authorities under the Central Government companycerned with the production, manufacture and purchase of supplies were shown in Statement I annexed thereto.
It was then that on the 1st July 1941 the Bengal Legislature passed the Bengal Finance Sales Tax Act, 1941 which by section 5 2 a iii exempted sales to the Indian Stores Department, the Supply Department of the Government of India and any railway or water transport administration from sales tax.
The Resolution of the Government of India dated the 2nd September 1947 published in the Gazette of India dated the 6th September, 1947 Annexure XVIII announced, amongst other things, that with effect from the 29th August 1947 the Department of Industries and Supplies would be re designated as the Ministry of Industries and Supply.
On behalf of the Union of India was filed and affidavit affirmed by one M. P. Pai, the then Joint Secretary in the Ministry of Works, Production Supply.
Shortly thereafter Office Memorandum No.
It is clearly mentioned therein that departments other than the ones referred to therein were and, in the absence of orders to the companytrary, would remain independent of the department though working in close touch with it Clause 3 .
The Mills, on the other hand, claimed exemption under section 5 of the Bengal Finance Sales Tax Act, 1941 Bengal Act VI of 1941 .
The learned Judge pointed out that although there was a change in the designation of the Indian Stores Department and the Supply Department of the Government of India, section 5 2 a iii was number amended in any way until 1949 when by an amending Act West Bengal Act X of 1949 the exemption granted under section 5 2 a iii was withdrawn.
With effect from the 1st January, 1922 the Indian Stores Department was companystituted as a result of the recommendations of the Stores Purchase Committee.
Originally this department was companystituted for a period of two years but by Resolution No.
The relevant facts are stated below.
This Department was primarily companycerned with statistics and research and development of industries, as also companytrols on civil supplies other than foodstuffs .
With effect from the 1st August, 1941 the Contracts Directorate and the Indian Stores Department ceased to exist as separate entities in the Supply Department and became one purchasing organization in the said Department.
Annexure VIII to Iyers affidavit shows that the companytrol of the Indian Stores Department and all other matters relating to the purchase of stores in India which were being then dealt with in the Department of Commerce were to be dealt with in the department of Supply as a temporary measure for the duration of the war.
The appeals have been fought out on the merits only.
107/43 Pub c whereby the Governor General in Council announced the creation, from the 22nd April, 1943, of the Department of Industries and Civil Supplies to deal with i Statistics and Research, ii Development and iii Controls.
This Branch of its activity was administered by the Directorate General, Supply Branch, located at New Delhi.
Thus hessian which came under the head of textiles which was being purchased in the first instance only by the Indian Stores Department companytinued to be purchased by the Supply Department when the Indian Stores Department came under the companytrol of the Supply Department.
By a Press Note dated the 2nd September 1941 issued by the Government of India in the Supply Department Annexure XIII to Iyers Affidavit a Purchase Branch of the Supply Department for the duration of the war was created with effect from the 1st August, 1941 and it shows that the Contracts Directorate and the Indian Stores Department had then ceased to exist as separate entities for the duration of the war and a new branch was being organised in their place.
In 1939 when the outbreak of World War II was imminent the necessity for creating a new department was keenly felt and the Governor General in Council by a Resolution of the Home Department dated the 26th August, 1939 Annexure V to Iyers affidavit announced the creation from that date of a department of Supply to deal directly with questions companycerning supplies of all kinds required for the prosecution of war.
The appeals came up before this Court for hearing on the 22nd and 23rd September 1955.
Fresh affidavits have since been filed.
Powers of local purchase were also number distributed in any way Clause 4 .
That the Indian Stores Department and the Contracts Directorate did number lose their identity is shown by the Office Memorandum dated the 3rd August, 1940 Annexure X, Clause 4 and Office Memorandum dated the 2nd December, 1941 Annexure XI, Clause 1 a and Clause 4 .
Cal J 1/2001/103 for the supply to the Government of India of a large quantity of hessian cloth of different descriptions at different prices therein mentioned.
The appeals were accordingly adjourned and directions were given for the filing of supplementary affidavits setting out the facts relied on by the parties respectively.
It is thus clear that up to the end of the year 1940 purchases used to be made for and on account of the Government of India by the Contracts Directorate, the Indian Stores Department and the Department of Supply and that purchases were also made locally by other departments.
Statement I indicates that purchases of various supplies, e.g., medical and veterinary supplies, companyl and companye for Railway and other civil and military authorities in India, etc.,
It was added that by Resolution No.
After going through the records it was felt that the materials on record were number sufficient to enable the Court to determine the real point of companytroversy between the parties.
and Printing and Stationary stores, were independent of the Supply Department.
E4 179 dated the 14th May, 1943 issued by the Department of Supply intimated that the Governor General in Council had decided that the Department of Industries and Civil Supplies would, with effect from the 15th May, 1943, take over responsibility for the procurement of companyton textiles and companyton textile stores Annexure XVI to Iyers affidavit .
Das Acting C.J. The only question canvassed before us in the above appeals, which have been heard together, is whether certain sales of goods made by Shri Ganesh Jute Mills Ltd. hereinafter referred to as the Mills to the Government of India, Ministry of Industry and Supplies are to be deducted from the taxable turnover of the Mills so as to be exempt from sales tax demanded by the Commercial Tax officer of the State of West Bengal.
