Governor-General in Council vs The Province of Madras

Gwyer, C.J.—In this case the Governor-General in Council brings an action against the Province of Madras for a declaration that Madras

General Sales Tax Act, 1939, is an encroachment upon the rights of the Central Legislature. Under that Act, a tax is levied on the sale of goods in

the Province of Madras; and, it is contended on behalf of the Government of India that, so far as sales by a producer or a manufacturer are

concerned, the tax is a duty of excise and therefore within the exclusive competence of the Central Legislature to impose by virtue of entry No. 45

of List I in Schedule 7 to the Constitution Act. It is contended on behalf of the Government of Madras that the tax is a tax on the sale of goods

within the competence of the Provincial Legislature by virtue of entry No. 48 of List II in Schedule 7, and that there is no reason for distinguishing

the first sale of goods produced or manufactured in the Province from the second or any subsequent sale. The validity of the Act, so far as

concerns first sales, was challenged in The Province of Madras v. Boddu Paidanna and Sons (''42) 29 AIR 1942 FC 33, which came before this

Court on appeal from the High Court of Madras last year, and the judgment of the Court, disagreeing with the judgment of the High Court, was in

favour of the Province. The Advocate-General of India, who appeared on behalf of the plaintiff in the present case, stated that he was unable to

contend that the decision of the Court in The Province of Madras v. Boddu Paidanna and Sons (''42) 29 AIR 1942 FC 33 did not govern the

present suit, and that he did not think that he should be able to persuade this Court that their earlier decission was incorrect. In these circumstances

he informed us that he would submit, though he could not consent, to judgment being entered against him. He frankly stated that, the Court having

refused the application by the respondents in Boddu Paidanna and Sons v. The Province of Madras (''42) 29 AIR 1942 FC 48 for leave to appeal

to His Majesty in Council, he desired to test elsewhere the decision of the Court, as Under Section 208(a), Constitution Act, he has the right to do

without asking for leave.

We agree that substantially the same issue is raised in the present suit as in the appeal last year and we see no reason to modify the decision

which we then gave. The Advocate-General of Madras, who appeared on behalf of the defendant, in asking for judgment, stated that he must not

be taken as abandoning the contention which he had raised in his pleading that, notice of the proceedings in the earlier case having been given to

the Advocate-General of India Under Order 86, Rule 1 of the Federal Court Rules, and the Advocate-General having appeared and argued

against the validity of the tax in that case, it was no longer open to the Governor-General in Council to challenge in those proceedings the earlier

decision of the Court. He drew attention in this connexion to certain observations made by the Court in United Provinces v. Atiqa Begam (''41) 28

AIR 1941 FC 16. An application was also made by the Advocate-General of the Bengal under Order 36, Rule 2 of Federal Court Rules for leave

to be heard; but, in view of the course which the proceedings in the case have taken, it has not been necessary to hear him. Mr. Raghubir Singh, on

behalf of Boddu Seetharamaswami, Senior partner and Agent of the firm who were respondents in The Province of Madras v. Boddu Paidanna

and Sons (''42) 29 AIR 1942 FC 33, applied to be made a party to the proceedings under Order 19, Rule 3 of the Federal Court Rules as a

person interested in the final result of the case. He invited us to give a ruling at to the circumstances in which a person alleging an interest in litigation

between one Province and another or between the Central Government and a Province might be added as a party to a litigation. We reject Mr.

Raghubir Singh''s application to have his client added as a party, and,we do not think it necessary to give any ruling on the general question of the

interpretation of Order 19, Rule 3 of the Federal Court Rules, as he invited us to do. There will be judgment for the defendant with costs.