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

P. N. Mookerjee, J. In separate but concurring judg-ments both the learned Judges rejected the prelimi-nary objection taken by the Mills and the Union of India as to the maintainability of the appeal. On the merits both of them held that the Department of Industries & Supplies was not the same as the Indian Stores · Department or the Supply Department of the Government of India. The old departments ceased to exist and a new department combining some of the functions of these departments and some new functions was created and that, therefore, sales to the newly created department could not be deducted from the taxable turnover under section 5(2)(a)(iii).

In the result, the Appeal Court allowed the appeal with costs, set aside the order of Bose, J. and dis-missed the application of the Mills under Article 226.

The Mills as well as the Union of India have now come up on appeal before us with a certificate of fit-ness granted by the High Court.

In view of the• decision of this Court in National Sewing Thread Co. Ltd. v. fames Chadwick & Bros.

Ltd.( ), the question of maintainability of the appeal before the High Court has not been raised before us.

The appeals have been fought out on the merits only.

'. \. "

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 record were not sufficient to enable the Court to· de-Bmgal. mu! ot"4rs c_ termine . tlie .real •point -of · controversy ' between 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. · 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 Con-tracts Directorate had been - constituted · as _ a pur-chasing organisation ·for the needs of the Army. : With effect from - the -lst January 1922 the Indian ·stores · Department . .was constituted . as - a result of .the recom-

mendations of the Stores Purchase Committee. The functions of this department were to" act as a pur-chasing and inspection agency . in. respect of -. certain commodities including textile goods for· ~ll Central departments and minor Local · Governments and such other authorities as might desire to avail themselves of the services of this · department. · Annexure III to the ~davi.t _of Iyer indicates that it was not obliga-tory - on the · other departments to inake purchases through • the Indian s;ores Department. Originally 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 to discharge the -same functions. Rules 5 and 6 -attached to this Re-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 new War II was . -. - -- - imminent the necessity for-creating -a depart-

ment was keenly felt and the Governor-General in Council _ by a. Resolution:· of the-- Home Department dated the 26th August 1939 (Annexure V to Iycr's affidavit) announced the creation from that date of a department of Supply "to deal directly with ques-tions concerning supplies of all kinds required for 1955 the prosecution of war". Annexure VIII to Iyer's The Union of India affidavit shows that the control of the Indian Stores v. Department and all other matters relating to the The Commercial Tax Officer, West purchase of stores in India which were being then Bengal and others dealt with in the Department of Commerce were to Das Actg. J. be dealt with in the department Supply as a tem-porary measure for the duration of the war. That the Indian Stores Department and the Contracts Directorate did not 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). 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. 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. Sales to other departments of the Government of India were not so exempted.

By a Press Note dated the 2nd September 1941 issued by the Government of India in the Supply Department (Annexure XIII to Iyer's 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 orga-nised in their place.

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 14-85 s. C. lndia/59 195.'l authorities under the Central Governmellt concerned Tiu Union o.( Indict with the production, manufacture and p_urchase of

v. supplies were shown in Statement I annexed thereto. The Comm<"r..ial It is clearly mentioned therein that departments T°'" Offeer, Jl'e.rt Bengal and ffthl'rs other than the ones referred to therein were and, in Das (.'. J. the absence of orders to the contrary, would remain

A~·t_i;.

independent of the department though working in close touch with it (Clause 3). Powers of local pur-chase were also not disturbed in any way (Clause 4). Statement I indicates that purchases of various sup-plies, e.g., medical and veterinary supplies, coal and coke for Railway and other civil and military auth-ont1es in India, etc., and Printing and Stationery stores, were independent of the Supply Department. It is thus clear that the Indian Stores Department and the Supply Department of the Government of India were not the only departments which had auth-ority to make purchases for and on behalf of the Gov-ernment of India in its various departments.

On the 21st April 1943 came Notification No. 2rB-No. 107/43-Pub(c) whereby the Governor-Gcnr-ral in Council announced the creation, from the 22nd April 1943, of a Department of Industries and Civil Supplies to deal with (i) Statistics and Research, (ii) Development and (iii) Controls. Shortly thereafter Office Memorandum No. 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 cotton textiles and cotton textile stores (Annexure XVI to Iyer's affidavit). So this Department of Industries and Civil Supplies became another purchasing organisation of the Government of India apart from the Department of Supply.

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 De-partment of Supply and the Department of Industries and Civil Supplies. By this Resolution the Indian Stores Department and the Contracts Directorate 1955 which during the war had been brought under the The Union of India Supply Department, were incorporated in the newly v. It The Commercial created department. will be noticed that this newly Tax Oificer, West <:reated department had assigned to it the work of the Bengal and others procurement of stores for the Government of India Dar Aclg. C. which was formerly assigned to the Department of Supply and the Department of Industries and Civil Supplies. In addition to these duties this department was authorised also to deal with other things, namely, development of industries, administration of Govern-ment factories not allocated to 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 from and larger than those of the two departments it replaced. It is also noteworthy that the Department of Supply which was created for the prosecution of war was abolished as soon as the war was over (An-nexure XVII to the affidavit of Iyer).

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.

From the summary of the annexures to the affidavit of Iyer filed in these proceedings it is quite clear that while the Ministry of Industries and Supply was a new designation of the Department of Industries and Supplies, the Department of Industries and Supplies cannot be regarded merely as a new designation of the Department of Supply and the Department of Industries and Civil Supplies. Indeed, the Resolu-tion announced the "creation" of the Department of Industries and Supplies in place of the two existing departments mentioned above. This newly created department had wider powers and was a new depart-ment altogether. The exemption granted by the Bengal Finance (Sales-Tax) Act, 1941 was given to two departments by name. It was not given to the .-· 1955 - sales to· ilie·. Government 'of India in alh itS' depart-Th4 U•ionofl•dia c:· . ments. It is true that the Indian Stores· ·Department TM . and the ·Supply ·Department of the Govetnment of

o.ou:':'"W,,, 1 . India were not corporate bodies but. they evidently Tax Bengal and •thtrs - were . sufficiently well defined organisations to be Das Jct&· C.J \ . referred to as. "entities" in some of the· Press Notes

and Resolutions mentioned above and even· in the affidavits filed .. in· these. proceedings. Further, the Bengal Finance (Sales Tax) Act, 1941 . by section· 5 (2)(a)(iii) certainly dealt with these two departments as if they were distinct entities. · The Act, in a manner, conferred ' on these . two departments the status, as it were, of well defined and distinct entities at least for the purposes of that Act, namely 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 sub-clause (iii) in a general way as sub-clause (iv) had been framed. Further,· if sales · to these two departments were to be regarded as covering sales to ·all departments of the Government of India then the sales to the Railways which at that time mostly, if not wholly, belonged to the Government of India ·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, various other departments of the Government of India which were concerned with purchase of stores but quite dearly t)le exemption conferred by the section was not intended to extend to the sales to those departments. Therefore, the reference ·to these two . particular departments in the section cannot ·possibly be read as a reference to the Government of India generally.

· It has · been urged that the real object of section 5(2)(a)(iii) was to give exemption not to the parti- ·cu1ar departments but to the sales of such goods as, . at the date of the Act, used to -be made to those de,

partments ·and, therefore, sales · of those goods made to any department of the Government of India which came to be charged with the duty of purchasing those goods should also come within the purview of the 1955 section and be entitled to the benefit of the exemp-The Union of lndi• tion conferred by it. We are unable to accept this v. line of reasoning. This interpretation will unduly The CommtrciaJ w,.i Ta, Ojf1ur, narrow the scope and ambit of the exemption by limit- &ngal and olhm ing it to sales of only those goods as, at the date of Da< A<tg. C.J. the Act, used to be sold to those two departments and sales of other goods even to those two depart-ment',, however necessary for the prosecution of the war, would not get the benefit of the exemption. Such could not possibly be the intention of the legislature as fxpressed by the language med by it in framing· the section. According to the section the exemption is given to all sales made to those two deparunents, no matter whether the sales were only of the kind of goods which used to be sold to them at the date of the Act or of other kinds of goods. The suggested interpretation involves the addition of qualifying words to the section which ordinarily it is not per-missible for the court to do. Further, the press notes and the resolutions of the Government of India sum-marised above clearly indicate that there were other purchasing departments which were independent of the Indian Stores Department or the Supply Depart-ment of the Government of India and that the auth-ority of other departments of making local purchases was not interfered with by t~e creation of these · two departments. Therefore it may well have been that, at the date of the passing of the Act, same or similar kinds of goods used to be sold to these two depart-ments as well as to other departments but surely it cannot be contended, in view of the language of the section, that the exemption was intended to extend to the sales of the same or similar kinds of goods to those other departments also. It is not necessary for us to pronounce any opinion as to the validity or soundness of the extreme position taken up by the learned Advocate-General of West Bengal namely _that as the exemption is given by a statute to sales made to two departments eo nomine it will not extend to sales made to the same department re-designated by a new name. It is enough for our present 1955 purpose to say that the Department of Industries Tht Union of India and Supplies which was subsequently re-designated

v. ·as the Ministry of Industries and Supply was not the The Commtrcial same as the Indian Stores Department or the Supply Tax Olficer, We.\'t Bengal and others Department of the Government of India under a diff-Das Artg. C.J. erent name. The scope and volume of the work en-

trusted to the Department of Industries and Supplies was much wider and larger than that with· which the two departments which it replaced had been charged. Unlike those of the two departments, its purchases were not confined to goods necessary for the prq_secu-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-national obligations as in the present case, will neces-sarily widen the scope of the exemption and impose greater loss of revenue on the State of West Bengal than what the Act by its language intends to do. In view of the ever expanding activities of the modern welfare State in different fields including that of trade and commerce, the Government departments are often entrusted with the performance of well defined activities and are authorised to deal with the outside world and to enter into contracts of sale and purchase and other transactions in the same way as an ordi-nary person or company may do. Such Government departments, therefore, may well be regarded as dis-tinct units or quasi legal entities, at least for the particular purposes for which they are created. At any rate, the Bengal Finance (Sales Tax) Act, 1941 by providing for the deduction of the sales to the two named departments from the taxable turnover cer-tainly treated those two departments as distinct entities. This exemption is the creation of the statute and must be construed strictly and cannot be ex-tended to sales to other departments. The fact that the section was not amended until 1949 does not at all indicate that the Bengal Legislature intended to ex-tend the benefit of the section to any but the depart-ments specifically mentioned in the section. In our opinion the conclusion arrived at by the Appeal Court, namely that the sales tax is payable on the sale in question is correct and these appeals must be Tht~Union of India dismissed with costs. \'. 'f ht Commtrcial S1NHA J.-I regret to have to differ from my learn-Tax Ojfuu, Wt>I Bl!ngal ari.rl othtrJ ed brethren in the determination of the only ques-tion involved in these appeals, namely, . whether the Do• Actg. C.J. sales by the appellant in Civil Appeal No. 10 of 1954 (Messrs Shrcc Ganesh Jute Mills Ltd.) to the appellant in Civil Appeal No. 9 of 1954, the Union of India (the Government of India at the time of the transactions in question) were liable to payment of <,a]es tax under the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941), to be referred to here-inafter as " The Act".

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

With reference to the question of sales tax the contract contains the following stipulation :-

"The prices shown above are exclusive of the Bengal Sales Tax. The Government of India will arrange direct payment of sales tax to the Govern-ment of Wt'>t Bengal if it is ultimately found that sales tax is payable in respect of this contract".

It is also provided that "This contract will be govern-c:.d by the conditions of contract specified in Form WSB. 133 as amended up to date". This contract was entered into and '>igned by "A Huq, Deputy Director of Supplies, for and on behalf of the Gover-nor-General of India". In pursuance of the aforesaid contract the Mills rnpplied hessian goods to the Gov-ernment of India of a certain valuation on which the :~ommercial Tax Officer of Bengal, the main contest-ing respondent, made a demand of Rs. 9,401-10-6 as .sales tax from the Mills. The Mills demurred to the 1955 payment and contended that the sales in questjon The U11io11 of India were exempt from payment of the sales tax demand-

v ed in view of the provisions of section 5(2)(a)(iii) of The CfJmmercial the Act. Eventually the Mills moved the High Court Tax O.fficer, H'est IJengal and others of Calcutta for an appropriate writ under article 226 of

Sinha]. the Constitution against the contesting respondents.

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 to pay the sales tax demanded and cancelled the notice of demand and directed the respondents 1 and 2 to forbear from enforcing the demand. Respondents 1 and 2 went up in appeal under the Letters Patent. The appeal was heard by a Division Bench which came to the contrary conclusion. The major portion of the judg-ment of the Letters Patent Bench was devoted to the discussion of the question whether the judgment of the learned Single Judge in the writ matter was amenable to the appellate jurisdiction under the Letters Patent. That question has not been pressed during the arguments and is therefore no more in controversy. The only question that was canvassed before us was the applicability of section 5(2) (a) (iii) of the Act which contains the exemption, the benefit of which is being sought by the appellants in each case. The exemption is in these terms :- "Sales to the Indian Stores Department, the Supply Di'partment of the Government of India, and any railway or water transport administration".

It has been contended on behalf of the appellants that the sale of hessian by the Mills to the Govern-ment of India in the Ministry of Industry and Supply is within the terms of the exemption quoted above. On the other hand, it is contended on behalf of the Sales Tax Department of the Government of \Vest Bengal that the sales in question were not covered by the aforesaid exemption clause. It is therefore neces-sary to go into some detail of the formation and development of the Department in question.

The supplementary affidavit filed on behalf of the Government and sworn to by Shri A. R. Iyer, Deputy Director of Directorate General of Supplies & Disposals, discloses the following facts. The Indian 1955 Stores Department was constituted with effect from The Uni.on of India the 1st January 1922 as a result of the recommenda-v. tions of the Stores Purchase Committee which had Thi Commercial Tax Officer, Wtst been constituted by the Government of India to exa-Bengal and others mine the whole question of the constitution of an ex-Sinha J. pert agency to carry out on a large scale purchase of supplies required for the public services, as recom-mended by the Indian Industrial Commission, with the object of encouraging the purchase · of articles made in India for Government requirements. The scope and functions of the Department, inter alia, were to act as a purchasing and 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-half of such major local Governments, Company-worked Railways, Corporations, Port Trusts, Munici-palities and quasi public bodies and Indian States as might desire to avail themselves of the Department's assistance. The activities of the Department consisted in the purchase and inspection in India of a large variety of goods and articles including "textile goods", so that the purchase of hessian which is the particular commodity involved in this case, would be 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-ment of India dated the 6th May 1924 it was placed on a permanent basis. It continued to discharge 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 to purchase only through the Indian Stores Department whenever needed for Government purposes. A Department called the "Contracts Directorate" had been constituted in 1918 as a purchasing organization for the needs of the Army. But after the constitution of the Indian 1955 Stores Department in 1922 the Army authorities alsr> The (/nifJn qf India began to utilize the services of the Indian Stores De-

v; partment for procurement of several categories of TM Commtrcial stores required by them. By a Resolution of the 1·ax O.fficer, WtJl IJ~ngal and r1lhtn Home Department dated the · 26th August 1939, appa-

Sinha J. rently 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 the Depart-ment 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. This branch of its activity was administered by the Directorate General, Supply Branch, located at New Delhi. Jute products and textiles including hessian had to be purchased only by placing. indents by the department concerned with the Directorate General of Supply, New Delhi. Thus this Department absorb-ed for the duration of the war the purchasing sec-tions of the Indian Store's Department and the Contracts Directorate which were placed under com-pletely self-contained organizations empowered to procure all supplies, whether for war purposes or otherwise. All authorities requmng supplies to be procured in India had to place their indents or demands on the Directorate General concerned. With effect from the 1st August 1941 the Contracts Directo-rate and the Indian Stores Department ceased to exist as separate entities in the Supply Department and be-came one purchasing organization in the said Depart-ment. This organisation arranged for supply of all .classes of stores for purposes of Government, such as textiles, leather goods, etc. Thus hessian which came under the head of "textiles" which was being pur-chased in the first instance only by the Indian Stores Department continued to be purchased by the Supply Department when the Indian Stores Department came under the control of the Supply Department. By a notification 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. This Depart-1955 ment was primarily concerned with statistics and The L'11ion of lndi,o research and development of industries, as also ''· T ht Commercial controls on civil supplies (other than foodstuffs). Tax Offim, Wr.<i \Vhen this Department was first created, it had no Bmgnl and othrn purchasing activity. But with effect from the Si11ha]. 15th May 1943 the Government directed that the new department should take over responsibility for the procurement of cotton textiles and cotton textile stores which till then were being dealt with by the Indian Stores Department which later came under the Supply Department as aforesaid. Purchase of jute and woollen textiles continued to be the responsibi-lity of the Supply Department. By a Resolution of the Government of India dated the 31st December 1945 the Department of Industries and Supplies in place of the existing Departments of Supply and of Industries and Civil Supplies was created with effect from the 7th January 1946. From that date the Department of Industries and Supplies became res-ponsible for the procurement of stores from all places in India in the same manner as the Department of Supply had been doing previously to its amalgama-tion with the new Department. The powers and func-tions of the Department of Industries and Supplies in the matter of procurement of stores continued as before. The Department continued to procure and purchase only the same kinds of articles as the Depart-ment of Supply had been doing before the coming into existence of the Department of Industries and Supplies so that the creation of the Department of Industries and Supplies did not make any difference in its activities relating to purchase of stores. There was no addition to or subtraction from its functions in the matter of purchase of stores.

From what has been stated above, it is clear that the purchasing functions of the Government of India with special reference to the procurement of textiles including hessian with which we are immediately con-cerned were discharged by the Indian Stores Depart-ment from 1st January 1922. Those functions were taken over by the Department of . Supply m 1940.

1955 The Department of Supply itself merged m the Tht Union Qf India Department of Industries and Supplies with effect

v. from the 7th January 1941\. By a notification of the The Cornrntrcial 2nd September 1947 the Department of Industries Tax Officer, J.Vest Btngal and others and Supplies was redesignate<l as the Ministry of In-

Sinha J. dustry and Supply with effect from the 29th August

1947 as a result of the emergence of India as an Independent State. Thus the Ministry of Industry and Supply is a lineal descendant of the Indian Stores Department, of course, with an added volume of work and functions, but the original activity of purchase of stores remaining the same in bulk and in character. It has already been noticed that the Indian Stores Department was concerned with the function, 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-ernments, Railway Companies, Corporations, Port Trusts, Municipalities and other quasi public bodies, as also Indian States if they availed of the services of the department. Thus the infant Indian Stores Department has grown in stature and volume in the course of the last about 25 years. The same sapling has grown into a shady tree but its function as the sole purchasing agency of the Government of India and other Governments for a large variety of goods and commodities ·has contiilued. The nomenclature has undergone successive changes, but the function of purchasing agency on behalf of the Central and other Governments and public bodies as aforesaid has remained the same. Furthermore, the purchase of hessian, which is the subject-matter of the demand in question has continued in the same organization, though under a different name.

It is well settled that the provisions of a statute have to be construed with reference to the state of affairs as they existed at the time the statute was passed. In the year 1941 there was in existence the Supply Department of the Government of India which had incorporated the Indian Stores Department. According to the affidavit referred to above, the main activities of purchase of goods and commodities required by the Government of India and other Gov-1955 ernments, local bodies, etc., except for · purchases of The ( .. /nion of /ndit; small values, that is to say, not exceeding Rs. 100 in v. each case and of certain specified commodities, like T ht Commercial Tax Officer, lf'"est foodstuffs, forage, lethal stores, etc. referred to !n Bengal and others para. 7 of the affidavit (at p. 18 of the supplementary Si,,hn ]. paper book) were carried on by the Supply Depart-ment. That is the reason why the exemption to the Government of India was worded as it stands in sec-tion 5(2)(a)(iii). As stated above, the Supply De-partment existed as a separate department up to the 6th January 1946. With effect from the 7th January the Department of Industries & Supplies came into existence which later was re-designated as the Ministry of Industry & Supply. The judgment under appeal is based chiefly on the consideration that the exemption clause in question does not in terms refer to the newly created department which now goes by the name of the Ministry of Industry & Supply. But this di:partment in so far as it deals with industry, is not concerned with the main purchasing activities of the Government of India. The exemption was granted in respect of the purchasing activity of the Government of India and that function continues to be assigned to the Supply Department which has now become a wing of the newly created department of the Government. The question therefore arises whether in those circumstances the Government of India could claim the benefit of the exe.mption. The High Court in answering that question in the nega-tive ha,s gone upon mere nomenclature. It has em-phasize1l the change in the name and overlooked the sub1;tance of the matter.

After all, what is a Department of a Government ?

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

1935 the head of the department at the apex. A depart- '!ht Union of India ment may therefore consist of a single function out

v. of the many functions of the Government, or it may T ht Commercial .comprise several functions placed in charge of a single Ta.-r Offutr, ~Vest Brngal and others departmental head. The Indian Stores Department

Sinha]. which came to be incorporated in the Supply Depart-

ment of the Government of India and later merged in the larger Department of the Ministry of Industry & Supply, could have continued its separate existence as it did until 1939 or could have become part of a larger department as it did after the 3rd August 1940, or the 7th January 1946, or the 29th August 1947 ; and conversely, its activities could be split up into a number of sub-departments under different heads classified according to the nature of the com-modities to be purchased. But, in my opinion, the change in the nomenclature in either direction should not matter so long as the function, namely, of pur-chasing articles and commodities required by the Government of India and other Governments con-tinued to be the same. It is a matter of substance and not of form.

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

Sometimes the language of a statute has to be con-1955 strued in a modified form in order to give effect to The C.:nion of India the real intentions of the legislature where, as in the '" present case, the language is only of a descriptive The Commercial Tax Officer, West nature and not a definitive one. An instance of this Bengal and others is furnished by the case of Miller v. Salomons( 1 )· In .J. Sinha that case the question arose whether a person of Jewish persuasion who was returned to Parliament as a Member of the House of Commons was entitled to sit without taking the prescribed oath. The form of the oath as given by 6 Geo. 3, c. 53, mentioned the name of "King George" only. It was argued on behalf of that member that the oath was confined to .the name of a sovereign who bore that name. But it was held by the Court that it was a mere description and that the intention of the statute was to include all sovereigns who came after King George III. The relevant portion of the observations of the Court are in these terms :

"The second question arising on the construction of the Act is, whether, as the form of the oath given by the 6 Geo. 3, c. 53, mentions the name of King George only, the obligation to administer it ceased with the reign of that Sovereign, because it was applicable to no other than to him. I think this argu-ment cannot prevail. It is clear that the legislature meant the both to be taken always thereafter, for the enactment is general-that it shall be taken with-out limit of time-and the oath is not confined to the existing monarch, but mentions 'the successors' ;

and as it could not be taken in those words during the reign of a Sovereign not of the name of George, it follows that the name George is merely used by way of designating the existing Sovereign ; and the oath must be altered from time to time in the name of the Sovereign, iq the manner it was when actually administered in this case, in order to carry the obvi-ous meaning of the enactment into effect. This is an instance in which the language of the legislature must be modified, in order to avoid absurdity and incon-sistency with its manifest intentions".

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

1955 The High Court referred to the observation of The Union of India Lord Halsbury in the case of Commissioners of Inland

v. Revenue v. Forrest(!) to the effect that exemptions Tht Commercial from taxation should be strictly construed because Tax Offiar, VVtJt Bengal and others otherwise the burden of taxation will fall on other

Sinh11}. members of the community. Those observations, in

my opinion, have no relevance to the facts and cir-cumstances of the present controversy, because we know that the exemption was granted to the Gov-ernment of India in the department dealing with purchase of certain commodities and articles with-out reference to quantity. As already pointed out, the Indian Stores Department was concerned with purchase of stores for public services on behalf of all Central Departments of Government and local Gov-ernments, etc., and the Government of Bengal as then constituted was one of the Provinces of India which have been receiving subsidies and subventions to make up the deficit in their budget~. As a matter of fact, as stated on behalf of the Bengal Govern-ment the concesswn was granted in order to enable business communities within the Province of Bengal to compete on favourable terms with others outside Bengal in the matter of supplying the needs of the Government. Hence there is no question of liberal construction of the exemption resulting in throwing a greater burden on other citizens. On the other hand, the larger the sales in the Province of Bengal 2s it used to be, the greater the benefit to the bmi-ness community doing business within that Province. It -was therefore stated at the Bar that though the present case involved taxes amounting to less than Rs. 10,000, the question arising for · determination in this case affected much larger amounts because such sales within the Province amounted to several crores. I should have thought that the business com-munity in the Province of Bengal having had the advantage of the transactions of sale, the Govern-ment of Bengal in all fairness should have allowed the purchasing agency of the Government of India the benefit of the exemption until that benefit was in terms withdrawn some time in the beginning of 1949. 1955

The matter can be looked at from another point of The Union o,( bu!ia view also. We are concerned here with the sale of \' hcssian. As ,pointed out in the affidavit filed on be-The Commercial Ta., Officer, We-11 half of the Government of India, the purchase of Ben,~al and othen hessian has all along been the concern of the Supply Sin:.a J. Department, now incorporated in 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 exemption if the sales were effecteJ through the purchasing agency of the Gov-ernment of India. The beneficiary certainly was not an amorphous body like a department but the Gov-eniment of India, because it is the Government of hdia which could be a unit for purposes of the Act.

In this connection our attention was invited to the last clause of the exemption covered by the words "and any Railway or water transport administra-tion". The argument was that if the Government of India as such was to be the beneficiary, then there was no necessity for the words just quoted. But this'

argument overlooks the fact that a railway or a water transport administration need not necessarily be a department of Government because there were, and still are, rai~way systems or water transport systems which are owned and administered by cor-porate bodies other than the Government of India.

Sales even to those public or semi-public bodies were within the terms of the exemption. Those words therefore are not words of limitation but words which widen the scope of the exemption in so far as the same may be available to railways and water transport administrations not owned and carried on by the Government of India.

Another reason which may be adduced m answer to the contention that there was nothing to prevent the Legislature from stating that the exemption was granted in respect of all purchases by the Government of India is that the Indian Stores Department and its later substitutes had to make purchases not only for the Government of India but also for local govern-ments and other public bodies. Hence the exemption

15-85 S. C. India/59.

1100 SUPREME COURJ' REPORTS [1955!

1955 in the terms in which it occurs in section 5(2) (a) (iii) Tht Union ef India was not an exemption in favour of the Government

v. of India only but also to other Governments and pub-T Ju Commtrdal Ta:it Officer, Wesl lic bodies which could avail themselves of the facilitv Btngal and olhtrs of purchase through that department. ·

Sinha ]. Another argument was urged to meet the appel-

lant's case that really the exemption was meant for the Government of India in its function of purchase of stores and commodities, discharged through the Indian Stores Department and later through the Supply Department. It was argued that if the legis-lature meant to grant the exemption to the Govern-ment of India, then the easiest thing to do would have been to say that sales to the Government of India were exempt from the tax. But it has not been the contention of the appellant that all sales to the Government of India are within the terms of the ex-emption. Only the sales transacted through the 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-ment that the different departments were entitled to make local purchases of small values, .that is to say, not exceeding Rs. 100 and of certain specified com-modities like foodstuffs which were not within the purchasing activity of the departments aforesaid of the Government of India. Hence, in my opinion, there is no validity in this argument either.

It was also suggested during the argument that if the exemption were to be related to only such com-modities and articles as were within the purview of the Stores Department and later of the Supply De-partment, then such an interpretation would involve addition of qualifying words to the section which is not ordinarily within the function of the courts. But, in my opinion, this argument also suffers from the infirmity that it equates the departments mentioned in the exemption clause quoted above with a legal person,-an argument which has already been dealt with. · 'In my opinion, there is no escape from the conclusion that those are mere words of description and are not words with defined connotation, because

neither the Act nor the rules framed thereunder define 1955 those departments. If the nomenclature only matt-The UniMi of l•dia ·ered, then there is no escape from the conclusion v. that whatever articles and commodities were pur-Tiu CatRmucia Tax Ojfiar, Wis chased by the Indian Stores Department or its later B•ngal and othtTJ substitutes, of whatever magnitude and value, would Sinha J be within the mischief of the exemption clause in question. But that, in my opinion, was not the in-tention of the framers of the Act. They knew what the activities of the Government through those de-partments were and the exemption was granted only in respect of those functions of the Government, as already indicated.

For the aforesaid reasons I would allow these ap-peals, set aside the orders of the Letters Patent Bench and restore the orders passed by the Single Judge of 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 1955

v. D1ctmher 20.

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. ·