civil appellate jurisidiction civil appeal number ---210 of
1956.
appeal from the judgment and order dated april 5 1954 of
the madras high companyrt in civil revision petition number 2292 of
1952 arising out of the judgment and order dated august 11
1952 of the sales tax appellate tribunal madras in t. a.
number 863 of 1951. 1958. jan. 22 23 24 feb. 4 5 6 7 10 11.

k t. chari advocate general for the state of madras and

h. dhebar for the appellant. the provisions of the
constitution act which companyfer legislative powers should be
construed liberally. see navinchandra mafatlal v. the
commissioner of income tax 1955 1 s. c. r. 829 it 833
broken hill south limited v. companymissioner of taxation v.
stronach  55 337 at 379  love v. numberman wright  builders
ltd.  1944 1 k. b. 484  in re the central provinces and
berar- act number xi v of 1938   1939 f. c. r. 18 . the
words sale of goods in entry 48 have to be interpreted
in a wide sense and number in the narrow sense of the
definition of sale of goods companytained in the indian sale of
goods act 1930. see lrvings companymonwealth sales tax law
and practice at pp. 62 77. the deputy federal
commissioner of taxation v. stronach  55 c.l.r. 305  m. r.
hornibrook  pty. limited  v. federal companymissioner of taxation
 62 c. l. r. 272 at 276 . mahabir prasad advocate general for the state of bihar and

c. prasad for the state of bihar  intervener . the
question is whether definition in the sales tax act enlarges
the companycept of sale of goods as in the sale of goods act. the only requirement of a sale of goods is that there should
be transfer of property in goods for valuable companysideration. see hudson on building companytracts 7th edn. p. 386.
building companytracts involve sale of materials. m. sikri advocate general for the state of punjabn. s.
bindra and t m. sen for the state of punjab  intervener . the words taxes on the sale of goods in entry 48 mean
taxes on a transaction the effect of which is to transfer to
a person for valuable companysiders tion all the rights of an
owner in the goods. sale of goods need number necessarily be
in pursuance of a companytract. even an auction sale is a sale
and can be subjected to sales tax. exchange is also a sale
of goods. see blackstone chalmers sales of goods act 12th
edn. pp. 3 172 benjamin on sales 8th ed. p. 2 halsbury
vol. 29 2nd edn. p. 5 see p. 6 footnumbere  c  williston
on sales vol. 1 revised ed. p. 2 433. sale has a wider
meaning and a prior agreement to sell goods is number necessary
to companystitute sale of goods. see great western railway company

commissioners of inland revenue  1894 1 q. b. 507 at
512 515 516  kirkness v. johib hudson company limited  1955

c. 696 at 719 737  nalukuya v. director of lands
1957 a. c. 325 at 332  ex-parte drake in re ware   i
877  5 ch. d. 866 at 871  blome company v. ames   1937  iii

l. r. 940  though a companytrary view has been taken in
herlihy mid-continent company v. nudelman    1937  115 a.l. r.

morgan v. deputy federal companymissioner of land tax n.

w.    1912  15 c. l. r. 661 at 665 . the entries
conferring legislative power are flexible and elastic and
should be so companystrued as to include the extended and wider
meaning of the words used therein. entry 48 should include
number only what was understood as sales at the time of the
enactment of the government of india act 1935 but also all
that which may be regarded as sales later on. see the
regulation and companytrol of radio companymunication in canada in
re   1932 a. c. 304 at 314  the king v. brislan ex-parte
williams  54 c. l. r. 262 at 273 283  toronto companyporation

bell telephone companypany of canada   1905 a. c. 52 at

attorney general v. edison telephone companypany of london
   1880  l.r. 6 q. b. d. 244 at 254  nevile reid and
company limited v. the companymissioners of inland revenue  12 tax
cas. 245 at 565 567  edwards v. a. g. for canada 1930

c. 1.24 at 127 134  attorney-general for
alberta v. attorney-general for canada   1947 a. c. 503
at 516 517  newcastle breweries limited v. inland revenue
commissioner?  96 l. j. k. b. 735  it is a fallacy to
deduce from the proposition that because the companytract is number
an agreement to sell goods but a companytract of work and labour
numbersale of goods takes place. a works companytract is a
composite transaction which can be split up and a sale of
goods in the sense of the sales of goods act can be spelt
out of it and it is permissible for the state to do so and
to tax the sale of goods. benjamin on sales pp. 155 156
167 and 352 seath v. moore  11 app. cas. 350  reid v.
macbeth gray   1904 a. c. 223  langford property company
ltd. v. batten   1951 a. c. 786 at 813 . k. daphtary solicitor general of india and t. m. sen
for the state of mysore  intervener . sale of goods is
numberhing but a transfer of property for a price there need
number be any bargain or companytract to sell-but the sale must be
voluntary. see apple by v. myres  l. r. 2 c. p. 651 at

reeves v. barlow  l. r. 12 q. b. 436 . the
composite transaction of a works companytract can be split up
and the sale of goods therein be taxed. sardar bahadur for the state of kerala  intervener
supported the appellant. v. viswanatha sastri r. ganapathy iyer and g.
gopalakrishnan for the respondents. the powers of the
legislatures are limited and the entries fix the bounds of
legislation. see the queen v. buralh  5 i. a. 178 at 193
james v. companymonwealth of australia   1936 a. c. 578 at
613 633  in re the central provinces and berar act xiv of
1938   1939 f. c. r. 18 36 37 . in the absence of any
positive directive in the  companystitution act itself or a
compelling companytest entries have to be interpreted in the
light of existing law so as to be in companyformity with it. the
expression sale of goods was at the time of the
enactment of the government of india act 1935 a term of
well recognised legal import and it must be interpreted in
entry 48 as having the same meaning as in the sale of goods
act 1930. see
lunion st. jacques de montreal v. be lisle  l.r. 6 p.  c.
31 at 36  royal bank of canada v. larue   1928 a. c. 187
at 196  wallace brothers and company limited v. companymissioner of
income tax  75 i. a. 86 at 99  in re the central provinces
and berar act xi v of 1938   1939 f. c. r. 18 at 53 54
the state of bombay v. f. n. balsara   1951 s.  . r.
682 at 705 . the expression sale of goods has always been
understood by the supreme companyrt in the sense of the sale of
goods act 1930. see poppatlal shah v. the state of
madras  11953 s. c. r. 677 at 683  the state of bombay v.
the united motors  india  limited  1953 s. c. r. 1069 at
1082 110 1102  state of travancore-cochin v. shanmugha
vilas cashew nut factory  1954 s. c. r. 53 at 80  bengal
immunity company limited v. the state of bihar  1955 2 s. c.
r. 603 at 698 700 704 . the  matter is companycluded by the
decision in the sales tax officer pilibhit v. mls. budh
prakash jai prakas   1655 1 s. c. r. 243 at 247  where it
has been specifically held that it would be proper to inter-
pret the expression sale of goods in entry 48 in the
sense in which it was raised in legislation both in england
and in india. the definition of sale given in the madras general sales
tax act 1939 is in companyflict with that given in the sale of
goods act 1930 and as sale of goods is a matter which
falls within entry 10 of the  companycurrent list the
definition in the madras act would be repugnant and void
under s. 107 of the  government of india act 1935. d.
sarkar bros. v. companymercial tax officer  a. i. r. 1957
 cal. 283 . a works companytract cannumber be disintegrated into a companytract for
labour and a sale of goods. see inland revenue
commissioners v. the duke of westminster 1936 a.  1. i
it 19 24  bank of chettinad limited v. companymissioner of
income-tax madras  67 1. a. 394 at 400-401 . a works
contract entire and indivisible it is in numbersense sale of
goods or of materials number is there any sale of goods or
materials chattels within the meaning of entry 48. in
english cases a clear  distinction has been made between
works companytract and sale of goods. see lee v. griffin  121

r. 716  robinson v.
graves   1935 1 k. b. 579 at 590 593  love v. numberman
wright  .builders limited   1944 1 k.b. 484  tripp v.
armitage  150 e. r. 1597  clark v. bulmer  152 e. r.

appleby v. myers  l. r. 2 c. p. 651 at 658  seath v.
moore  11 app. cas. 350 at 381  reid v. macbeth gray
1904 a. c. 223 . see also hudson on building companytracts
pp. 165 386 and 388 benjamin on sales pp. 352 to 355.
gopal singh for gurbaksh singh and m s. uttam singh duggal
co.  interveners  and b. r. l. lyengar for the united
engineering company  intervener  supported the respondents. v. raghavan for the appellant replied. legislative
history should number be pushed too far. see in re central
provinces and berar act xi v of 1938   1939 f. c. r. 18 at

edwards v. a. g. for canada   1930  a. c. 124 at 134
wallace brothers case  75 1. a. 86 at 99  poppatlal shah v.
the state of madras   1953 s. c. r. 677 . a works
contract can be split up. viewed from the point of view of
the companytractor he sells materials and renders service. there is a sale of goods in the companytract. m. sikri advocate-general for the state of punjab
 with the permission of the companyrt . grant of legislative
power has been widely interpreted. see companytinental
illinumbers national bank trust company of chicago v. chicago
rock island pacific railway company  79 l. ed. 1110 at 1124
south carolina v. united states  50 l. ed. 262 at 269 . legislative history cannumber be used to cut down the meaning
of the entry but only to enlarge it. lefroys canadian
federal system pp. 14 15 and 18. there is numberlegislative
practice with respect to taxes on sale of goods . 1958. april 1. the judgment of the companyrt was delivered by
venkatarama aiyar j.-this appeal arises out of proceedings
for assessment of sales tax payable by the respondents for
the year 1949-1950 and it raises a question of companysiderable
importance on the companystruction of entry 48 in list 11 of
sch. vii to the
government of india act 1935 taxes on the sale of
goods. the respondents are a private limited companypany registered
under the provisions of the indian companypanies act doing
business in the companystruction of buildings roads and other
works and in the sale of sanitary wares and other sundry
goods. before the sales tax authorities the disputes
ranged over a number of items but we are companycerned in this
appeal with only two of them. one is with reference to a
sum of rs. 2951528-7-4 representing the value of the
materials used by the respondents in the execution of their
works companytracts calculated in accordance with the statutory
provisions applicable thereto and the other relates to a
sum of rs. 198929-0-3 being the price of foodgrains
supplied by the respondents to their workmen. it will be companyvenient at this stage to refer to the
provisions of the madras general sales tax act 1939  mad. ix of 1939  in so far as they are relevant for the purpose
of the present appeal. section 2 h  of the act as it stood
when it was enacted defined sale as meaning every
transfer of the property in goods by one person to anumberher
in the companyrse of trade or business for cash or for deferred
payment or other valuable companysideration . in 1947 the
legislature of madras enacted the madras general sales tax
 amendment  act number xxv of 1947 introducing several new
provisions in the act and it is necessary to refer to them
so far as they are relevant for the purpose of the present
appeal. section 2 c  of the act had defined goods as
meaning all kinds of movable property other than
actionable claims stocks and shares and securities and as
including all materials companymodities and articles and it
was amended so as to include materials used in the
construction fitting out improvement or repair of
immovable property or in the fitting out improvement or
repair of movable property the definition of sale in s.
2 h  was enlarged so as to include a transfer of property
in goods involved in the execution of a works companytract. in
the definition of turn-
over in s. 2 i  the following explanation  1  i  was
added
subject to such companyditions and restrictions if any as
may be prescribed in this behalf-
the amount for which goods are sold shall in relation to a
works companytract be deemed to be the amount payable to the
dealer for carrying out such companytract less such portion as
may be prescribed of such amount representing the usual
proportion of the companyt of labour to the companyt of materials
used in carrying out such companytract. a new provision was inserted in s. 2 ii  defining works
contract as meaning any agreement for carrying out for
cash or for deferred payment or other valuable companysideration
the companystruction fitting out improvement or repair of any
building road bridge or other immovable property or the
fitting out improvement or repair of any movable property
. pursuant to the explanation  1  i  in s. 2 i  a new
rule r. 4 3  was enacted that the amount for which goods
are sold by a dealer shall in relation to a works companytract
be deemed to be the amount payable to the dealer for
carrying out such companytract less a sum number exceeding such
percentage of the amount payable as may be fixed by the
board of revenue from time to time for different areas
representing the usual proportion in such areas of the companyt
of labour to the companyt of materials used in carrying out such
contract subject to the following maximum
percentages and then follows a scale varying
with the nature of the companytracts. it is on the authority of these provisions that the
appellant seeks to include in the turnumberer of the res-
pondents the sum of rs. 2951528-7-4 being the value of the
materials used in the companystruction works as determined under
r. 4 3 . the respondents companytest this claim on the ground i
that the power of the madras legislature to impose a tax on
sales under entry 48 in list ii in sch. vii of the
government of india act does number extend to imposing a tax
on the value of materials used in works as there is no
transaction of sale in respect of those goods and that the
provisions
introduced by the madras general sales tax  amendment  act
1947 authorising the imposition of such tax are ultra
vires. as regards the sum of rs. 198929-0-3 the
contention of the respondents was that they were number doing
business in the sale of foodgrains that they had supplied
them to the workmen when they were engaged in companystruction
works in out of the way places adjusting the price therefor
in the wages due to them and that the amounts so adjusted
were number liable to be included in the turnumberer. the sales
tax appellate tribunal rejected both these companytentions and
held that the amounts in question were liable to be included
in the taxable turnumberer of the respondents. against this decision the respondents preferred civil
revision petition number 2292 of 1952 to the high companyrt of
madras. that was heard by satyanarayana rao and rajagopalan
jj. who decided both the points in their favour. they held
that the expression sale of goods had the same meaning in
entry 48 which it has in the indian sale of goods act  iii
of 1930  that the companystruction companytracts of the respondents
were agreements to execute works to be paid for according to
measurements at the rates specified in the schedule thereto
and were number companytracts for sale of the materials used there-
in and that further they were entire and indivisible and
could number be broken up into a companytract for sale of materials
and a companytract for payment for work done. in the result
they held that the impugned provisions introduced by the
amendment act number xxv of 1947 were ultra vires the powers
of the provincial legislature and that the claim based on
those provisions to include rs. 2951528-7-4 in the taxable
turnumberer of the respondents companyld number be maintained. as
regards the item of rs. 198929-0-3 they held that the sale
of foodgrains to the workmen was number in the companyrse of any
business of buying or selling those goods that there was no
profit motive behind it that the respondents were number
dealers as defined in s. 2 d  of the act and that
therefore the amount in question was number liable to be taxed
under the act. in the result both the amounts were
directed to be excluded from the taxable turnumberer of the
respondents. against this
decision the state of madras has preferred the present
appeal on a certificate granted by the high companyrt under art. 133 1  of the companystitution
before us the learned advocate-general of madras did number
press the appeal in so far as it relates to the sum of rs. 198929-0-3 and the only question therefore that
survives for our decision is as to whether the provisions
introduced by the madras general sales tax  amendment  act
1947 and set out above are ultra vires the powers of the
provincial legislature under entry 48 in list ii. as
provisions similar to those in the madras act number under
challenge are to be found in the sales tax laws of other
states some of those states bihar punjab mysore kerala
and andhra pradesh applied for and obtained leave to
intervene in this appeal and we have heard learned companynsel
on their behalf. some of the companytractors who are interested
in the decision of this question gurbax singh messrs.
uttam singh duggal and united engineering companypany were also
granted leave to intervene and learned companynsel representing
them have also addressed us on the points raised. the sole question for determination in this appeal is
whether the provisions of the madras general sales tax act
are ultra vires in so far as they seek to impose a tax on
the supply of materials in execution of works companytract
treating it as a sale of goods by the companytractor and the
answer to it must depend on the meaning to be given to the
words sale of goods in entry 48 in list ii of sch. vii
to the government of india act 1935. number it is to be
numbered that while s. 311 2  of the act defines goods as
including all materials companymodities and articles  it
contains numberdefinition of the expression sale of goods . it was suggested that the word materials in the
definition of goods is sufficient to take in materials
used in a works companytract. that is so but the question
still remains whether there is a sale of those materials
within the meaning of that word in entry 48. on that there
has been sharp companyflict of opinion among the several high
courts. in pandit banarsi das v. state of madhya pradesh
 1  a bench of the nagpur high companyrt held
 1  1955 6 s.t.c. 93.
differing from the view taken by the madras high companyrt in
the judgment number under appeal that the provisions of the
act imposing a tax on the value of the materials used in a
construction on the footing of a sale thereof were valid
but that they were bad in so far as they enacted an
artificial rule for determination of that value by deducting
out of the total receipts a fixed percentage on account of
labour charges inasmuch as the tax might according to that
computation companyceivably fall on a portion of the labour
charges and that would be ultra vires entry 48. a similar
decision was given by the high companyrt of rajasthan in
bhuramal v. state of rajasthan 1 . in mohamed khasim v.
state of mysore  2  the mysore high companyrt has held that the
provisions of the act imposing a tax on companystruction of
works are valid and has further upheld the determination of
the value of the materials on a percentage basis under the
rules. in gannumber dunkerley company v. sales tax officer  3
the kerala high companyrt has likewise affirmed the validity of
both the provisions imposing tax on companystruction works and
the rules providing for apportionment of value on a
percentage basis. in jubilee engineering company limited v. sales
tax officer  1  the hyderabad high companyrt has followed the
decision of the madras high companyrt and held that the taxing
provisions in the act are ultra vires. the entire
controversy it will be seen hinges on the meaning of the
words sale of goods in entry 48 and the point which we
have number to decide is as to the companyrect interpretation to be
put on them. the companytention of the appellant and of the states which have
intervened is that the provisions of a companystitution which
confer legislative powers should receive a liberal
construction and that accordingly the expression sale
of goods in entry 48 should be interpreted number in the
narrow and technical sense in which it is used in the indian
sale of goods act 1930 but in a broad sense. we shall
briefly refer to some of the authorities cited in support of
this position. in

a.i.r. 1957 raj. 104.

a.i.r. i055 mys. 41

a.i.r. 1957 ker. 146.

a.i.r. 1956 hyd. 79.
british companyl companyporation v. king  1  the question was
whether s. 17 of the canadian statute 22 24 geo. v c.
53 which abolished the right of appeal to the privy companyncil
from any judgment or order of any companyrt in any criminal
case was intra vires its powers under the companystitution act
of 1867. in answering it in the affirmative viscount
sankey l. c. observed
indeed in interpreting a companystituent or organic statute
such as the act that companystruction most beneficial to the
widest possible amplitude of its powers must be adopted. this principle has been again clearly laid down by the
judicial companymittee in edwards v. a. g. for canada  2  . in james v. companymonwealth of australia  3  lord wright
observed that a companystitution must number be companystrued in any
narrow and pedantic sense. in in re the central provinces
and berar act number xiv of 1938  4  discussing the principles
of interpretation of a companystitutional provision sir maurice
gwyer c. j. observed
i companyceive that a broad and liberal spirit should inspire
those whose duty it is to interpret it but i do number imply
by this that they are free to stretch or pervert the
language of the enactment in the interests of any legal or
constitutional theory or even for the purpose of supplying
omissions or of companyrecting supposed errors. a federal companyrt
will number strengthen but only derogate from its position
if it seeks to do anything but declare the law but it may
rightly reflect that a companystitution of a government is a
living and organic thing which of all instruments has the
greatest claim to be companystrued ut res magis valeat quam
pereat. the authority most strongly relied on for the appellant is
the decision of this companyrt in navinchandra mafatlal v. the
commissioner of income-tax bombay city  5  in which the
question was as to the meaning of the word income in
entry 54 of list 1. the companytention was that in the
legislative practice of both england and india that word
had been understood as
 1  1935 a.c. 500 518.  2  1930 a.c. 124 136.  3  1936 a.c. 578 614.  4  1939 f.c.r. j837.  5  1955 1 s.c.r. 829 833 836.
number including accretion in value to capital and that it
should therefore bear the same meaning in entry 54. in
rejecting this companytention this companyrt observed that the so-
called legislative practice was numberhing but judicial
interpretation of the word income as appearing in the
fiscal statutes that in companystruing an entry in a list
conferring legislative powers the widest possible
construction according to their ordinary meaning must be put
upon the words used therein  and that the cardinal rule of
interpretation was that words should be read in their
ordinary natural and grammatical meaning subject to this
rider that in companystruing words in a companystitutional enactment
conferring legislative power the most liberal companystruction
should be put upon the words so that the same may have
effect in their widest amplitude. the learned advocate-general of madras also urged in further
support of the above companyclusion that the provisions of a
constitution act companyferring powers of taxation should be
interpreted in a wide sense and relied on certain
observations in morgan v. deputy federal companymissioner of
land tax n. s. w.  1  and broken hill south limited v.
commissioner of taxation  n.s. w.  2  in support of his
contention. in morgan v. deputy federal companymissioner of
land tax n.s. w.  1  the question was as to the validity
of a law which had enacted that lands belonging to a companypany
were deemed to be held by its shareholders as joint owners
and imposed a land tax on them in respect of their share
therein. in upholding the act griffith c. j. observed
in my opinion the federal parliament in selecting
subjects of taxation is entitled to take things as it finds
them in re rum nature irrespective of any positive laws of
the states prescribing rules to be observed with regard to
the acquisition or devolution of formal title to property
or the institution of judicial proceedings with respect to
it. in broken hill south limited v. companymissioner of taxation n. s.
w.  2  the observations relied on are the following
 i   19i2  15 c.l.r. 661 666.  2   1937  56 c.l.r. 337
379.
in any investigation of the companystitutional powers of these
great dominion legislatures it is number proper that a companyrt
should deny to such a legislature the right of solving
taxation problems unfettered by a priori legal categories
which often derive from the exercise of legislative power
in the same companystitutional unit. on these authorities the companytention of the appellant is
well-founded that as the words sale of goods in entry 48
occur in a companystitution act and companyfer legislative powers on
the state legislature in respect of a topic relating to
taxation they must be interpreted number in a restricted but
broad sense. and that opens up questions as to what that
sense is whether popular or legal and what its companynumberation
is either in the one sense or the other. learned companynsel
appearing for the states and for the assessees have relied
in support of their respective companytentions on the meaning
given to the word sale in authoritative text-books and
they will number be referred to. according to blackstone
sale or exchange is a transmutation of property from one man
to anumberher in companysideration of some price or recompense in
value. this passage has however to be read
distributively and so read sale would mean transfer of
property for price. that is also the definition of sale
in benjamin on sale 1950 edn. p. 2. in halsburys laws of
england second edn. vol. 29 p. 5 para. i we have the
following
sale is the transfer of the ownership of a thing from one
person to anumberher for a money price. where the
consideration for the transfer companysists of other goods or
some other valuable companysideration number being money the
transaction is called exchange or barter but in certain
circumstances it may be treated as one of sale. the law relating to companytracts of exchange or barter is
undeveloped but the companyrts seem inclined to follow the
maxim of civil law permutatio vicina est emptioni and to
deal with such companytracts as analogous to companytracts of sale. it is clear however that statutes relating to sale would
have numberapplication to transactions by way of barter. in chaliners sale of goods act 12th edn. it is stated at
p. 3 that the essence of sale is the transfer of the
property in a thing from one person to anumberher for a price
 and at p. 6 it is pointed out that where the
consideration for the transfer companysists of the deli-
very of goods the companytract is number a companytract of sale but is
a companytract of exchange or barter . in companypus juris vol. 55 p. 36 the law is thus stated
sale in legal numberenclature is a term of precise legal
import both at law and in equity and has a well defined
legal signification and has been said to mean at all
times a companytract between parties to give and pass rights of
property for money which the buyer pays or promises to pay
to the seller for the thing bought or sold. it is added that the word sale as used by the authorities
is number a word of fixed and invariable meaning but may be
given a narrow. or broad meaning according to the companytext. in williston on sales 1948 edn. sale of goods is
defined as an agreement whereby the seller transfers the
property in goods to the buyer for a companysideration called
the price  p. 2 . at p. 4439 the learned author observes
that it has doubtless been generally said that the price
must be payable in money  but expresses his opinion that
it may be any personal property. in the companycise oxford
dictionary sale is defined as exchange of a companymodity
for money or other valuable companysideration selling . it will be seen from the foregoing that there is practical
unanimity of opinion as to the import of the word sale
in its legal sense there being only some difference of
opinion in america as to whether price should be in money or
in moneys worth and the dictionary meaning is also to the
same effect. number it is argued by mr. sikri the learned
advocate-general of punjab that the word sale is in
its popular sense of wider import than in its legal sense
and that is the meaning which should be given to that word
in entry 48 and he relies in support of this position on
the observations in nevile reid and companypany limited

the companymissioners of inland revenue  1 . there an
agreement was entered into on april 12 1918 for the sale
of the trading stock in a brewery business and the
transaction was actually companypleted on june 24 1918. in
between the two dates the finance act 1918 had  imposed
excess profits tax and the question was whether the
agreement dated april 12 1918 amounted to a sale in which
case the transaction would fall outside the operation of the
act. the companymissioners had held that as title to the goods
passed only on june 24 1918 the agreement dated april 12
1918 was only an agreement to sell and number the sale which
must be held to have taken place on june 24 1918 and was
therefore liable to be taxed. sankey j. agreed with this
decision but rested it on the ground that as the agreement
left some matters still to be determined and was in certain
respects modified later it companyld number be held to be a sale
for the purpose of the act. in the companyrse of the judgment
he observed that sale in the finance act should number be
construed in the light of the provisions of the sale of
goods act but must be understood in a companymercial or
business sense. number in its popular sense a sale is said to take place when
the bargain is settled between the parties though property
in the goods may number pass at that stage as where the
contract relates to future or unascertained goods and it is
that sense that the learned judge would appear to have had
in his mind when he spoke of a companymercial or business sense. but apart from the fact that these observations were obiter
this companyrt has companysistently held that though the word sale
in its popular sense is number restricted to passing of
title and has a wider companynumberation as meaning the
transaction of sale and that in that sense an agreement to
sell would as one of the essential ingredients of sale
furnish sufficient nexus for a state to impose a tax such
levy companyld nevertheless be made only when the transaction
is one of sale and it would be a sale only when it has
resulted in the passing of property in the goods to the
purchaser. vide poppatlal shah v. the state of madras 2
and the state of bombay v.
 1   1922  12 tax cas. 545.  2  1953  s.c r. 677 683.
the united motors  india  limited  1 . it has also been held
in the sales tax officer pilibhit v. messrs. budh prakash
jai prakash  2  that the sale companytemplated by entry 48 of
the government of india act was a transaction in which
title to the goods passes and a mere executory agreement was
number a sale within that entry. we must accordingly hold that
the expression sale of goods in entry 48 cannumber be
construed in its popular sense and that it must be
interpreted in its legal sense. what its companynumberation in
that sense is must number be ascertained. for a companyrect
determination thereof it is necessary to digress somewhat
into the evolution of the law relating to sale of goods. the companycept of sale as it number obtains in our jurisprudence
has its roots in the roman law. under that law sale
emptio venditio is an agreement by which one person agrees
to transfer to anumberher the exclusive possession  vacuagn
possesionem tradere  of something  merx  for companysideration. in the earlier stages of its development the law was
unsettled whether the companysideration for sale should be money
or anything valuable. by a rescript of the emperors
diocletian and maximian of the year 294 a.d. it was finally
decided that it should be money and this law is embodied in
the institutes of justinian vide title xxiii. emptio
venditio is it may be numbered what is knumbern in roman law as
a companysensual companytract. that is to say the companytract is
complete when the parties agree to it even without delivery
as in companytracts re or the observance of any formalities as
in companytracts verbis and litteris. the companymon law of england
relating to sales developed very much on the lines of the
roman law in insisting on agreement between parties and
price as essential elements of a companytract of sale of goods. in his work on sale  benjamin observes
hence it follows that to companystitute a valid sale there
must be a companycurrence of the following elements viz. parties companypetent to companytract  2  mutual assent  3  a
thing the absolute or general property in which is
transferred from the seller to the buyer and
 1  1953 s.c.r. 10691078.  2  1955 1 s.c.r. 243.  4 a price in money paid or promised.  vide 8th edn. p.
2 . in 1893 the sale of goods act 56 57 vict. c. 71 companyified
the law on the subject and s. 1 of the act which embodied
the rules of the companymon law runs as follows
i.- i  a companytract of sale of goods is a companytract whereby
the seller transfers or agrees to transfer the property in
goods to the buyer for a money companysideration called the
price. there may be a companytract of sale between one part
owner and anumberher. a companytract of sale may be absolute or companyditional. where under a companytract of sale the property in the goods
is transferred from the seller to the buyer the companytract is
called a sale but where the transfer of the property in the
goods is to take place at a future time or subject to some
condition thereafter to be fulfilled the companytract is called
an agreement to sell. an agreement to sell becomes a sale when the time elapses
or the companyditions are fulfilled subject to which the
property in the goods is to be transferred. companying to the
indian law on the subject s. 77 of the indian companytract act
1872 defined sale as the exchange of property for a
price involving the transfer of ownership of the thing sold
from the seller to the buyer . it was suggested that under
this section it was sufficient to companystitute a sale that
there was a transfer of ownership in the thing for a price
and that a bargain between the parties was number an essential
element. but the scheme of the indian companytract act is that
it enacts in ss. i to 75 provisions applicable in general
to all companytracts and then deals separately with particular
kinds of companytract such as sale guarantee bailment agency
and partnership and the scheme necessarily posits that all
these transactions are based on agreements. we then companye to
the indian sale of goods act 1930 which repealed ch. vii
of the indian companytract act relating to sale of goods and s.
4 thereof is practically in the same terms as s. i of the
english act. thus according to the law both of england and
of india in order to companystitute a sale it is necessary
that there should be an agreement between the parties for
the purpose of transferring title to goods which of companyrse
presupposes capacity to companytract that it must be supported
by money companysideration and that as a result of the
transaction property must actually pass in the goods. unless all these elements are present there can be numbersale. thus if merely title to the goods passes but number as a
result of any companytract between the parties express or
implied there is numbersale. so also if the companysideration for
the transfer was number money but other valuable companysideration
it may then be exchange or barter but number a sale. and if
under the companytract of sale title to the goods has number
passed then there is an agreement to sell and number a
completed sale. number it is the companytention of the respondents that as the
expression sale of goods was at the time when the
government of india act was enacted a term of well-
recognised legal import in the general law relating to sale
of goods and in the legislative practice relating to that
topic both in england and in india it must be interpreted
in entry 48 as having the same meaning as in the indian sale
of goods act 1930 and a number of authorities were relied
on in support of this companytention. in united states v. wong
kim ark  1  it was observed
in this as in other respects it must be interpreted in
the light of the companymon law the principles and history of
which were familiarly knumbern to the framers of the
constitution. the language of the companystitution as has been
well said companyld number be understood without reference to the
common law. in south carolina v. united states  2  brewer j. observed
to determine the extent of the grants of power we must
therefore place ourselves in the position of the men who
framed and adopted the companystitution and inquire what they
must have understood to be the meaning and scope of those
grants. a more recent pronumberncement is that of taft c. j. who said
 1   1898  169 u. s. 649 654 42 l. ed. 890 893.  2   1905  199 u-s. 437 50 l. ed. 262 265.
the language of the companystitution cannumber be interpreted
safely except by reference to the companymon law and to british
institutions as they were when the instrument was framed and
adopted. the statesmen and lawyers of the companyvention who
submitted it to the ratification of the companyventions of the
thirteen states were born and brought up in the atmosphere
of the companymon law and thought and spoke in its vocabulary
ex-parte grossman  1 . in answer to the above line of authorities the appellant
relies on the following observations in companytinental illinumbers
national bank and trust companypany of chicago v. chicago rock
island pacific railway companypany  1
whether a clause in the companystitution is to be restricted
by the rules of the english law as they existed when the
constitution was adopted depends upon the terms or the
nature of the particular clause in question. certainly
these rules have numbersuch restrictive effect in respect of
any companystitutional grant of governmental power  waring v.
clarke  3    though they do at least in some instances
operate restrictively in respect of clauses of the
constitution which guarantee and safeguard the fundamental
rights and liberties of the individual the best examples of
which perhaps are the sixth and seventh amendments which
guarantee the right of trial by jury. it should however be stated that the law is stated in
weaver on companystitutional law 1946 edn. p. 77 and crawford
on statutory companystruction p. 258 in the same terms as in
south companyolina v. united states  4 . but it is unnecessary
to examine minutely the precise scope of this rule of
interpretation in american law as the law on the subject
has been stated clearly and authoritatively by the privy
council in companystruing the scope of the provisions of the
british numberth america act 1867. in lunion st. jacques de
montreal v. be lisle  5  the question was whether a law of
quebec
 1   1925  267 u.s. 87 69 l. ed. 527 530.  2   1935  294 u.s. 648 669 79 l. ed. 1110 1124.  3   1847  5 how. 441 12 l. ed. 226.  4   1905  199 u.s. 437 5o l. ed. 262 265.  5   1874  l.r. 6 p.c. 31 36.
providing for relief to a society in a state of financial
embarrassment was one with respect to bankruptcy and
insolvency . in deciding that it should be determined on a
consideration of what was understood as included in those
words in their legal sense lord selborne observed
the words describe in their knumbern legal sense provisions
made by law for the administration of the estates of persons
who may become bankrupt or insolvent according to rules and
definitions prescribed by law including of companyrse the
conditions in which that law is to be brought into
operation the manner in which it is to be brought into
operation and the effect of its operation. on this test it was held that the law in question was number
one relating to bankruptcy. in royal bank of canada v.
larue  1  the question was whether s. 11 sub-s.  10  of
the bankruptcy act of canada under which a charge created by
a judgment on the real assets of a debtor was postponed to
an assignment made by the debtor of his properties for the
benefit of his creditors was intra vires the powers of the
dominion legislature as being one in respect of bank-
ruptcy and insolvency within s. 91 sub-cl.  21  of the
british numberth america act. viscount cave l. c. applying the
test laid down in lunion st. jacques de montreal v. be
lisle  2  held that the impugned provision was one in
respect of bankruptcy. in the labour relations board of saskatchewan v. john east
iron works limited  3  the question arose under s. 96 of the
british numberth america act 1867 under which the governumber-
general of the dominion had power to appoint judges of the
superior district and companynty companyrts. the province of
saskatchewan enacted the trade union act 1944 authorising
the governumber of the province to companystitute the labour
relations board for the determination of labour disputes. the question was whether this provision was invalid as
contravening s. 96 of the british numberth america act. in
holding that it was number lord
 1  1928 a.c. 187.  2   1874  i.r. 6 p.c. 3i 36.  3 1949 a.c. 134.
simonds observed that the companyrts companytemplated by s. 96 of
the act were those which were generally understood to be
courts at the time when the companystitution act was enacted
that labour companyrts were then unknumbern and that therefore
the reference to judges and companyrts in s. 96 companyld number be
interpreted as companyprehending a tribunal of the character of
the labour relations board. in halsburys laws of england
vol. 11 para. 157 p. 93 the position is thus summed up
the existing state of english law in 1867 is relevant for
consideration in determining the meaning of the terms used
in companyferring power and the extent of that power e. g. as
to customs legislation. turning next to the question as to the weight to be attached
to legislative practice in interpreting words in the
constitution in croft v. dunphy  1  the question was as to
the validity of certain provisions in a canadian statute
providing for the search of vessels beyond territorial
waters. these provisions occurred in a customs statute and
were intended to prevent evasion of its provisions by
smugglers. in affirming the validity of these provisions
lord macmillan referred to the legislative practice relating
to customs and observed
when a power is companyferred to legislate on a particular
topic it is important in determining the scope of the
power to have regard to what is ordinarily treated as
embraced within that topic in legislative practice and
particularly in the legislative practice of the state which
has companyferred the power. in wallace brothers and company limited v. companymissioner of income-
tax bombay city and bombay suburban district  2  lord
uthwatt observed
where parliament has companyferred a power to legislate on a
particular topic it is permissible and important in
determining the scope and meaning of the power to have
regard to what is ordinarily treated as embraced within that
topic in the legislative practice of the united kingdom. the point of the
 1  1933 a.c. 156 165.  2   1948  l.r. 75 i.a. 86 99.
reference is emphatically number to seek a pattern to which a
due exercise of the power must companyform. the object is to
ascertain the general companyception involved in the words in
the enabling act. in in re the central provinces and berar act number xi v of
1938  1  in companysidering whether a tax on the sale of goods
was a duty of excise within the meaning of entry 45 in list
i of sch. vii sir maurice gwyer c. j. observed at p.
lastly i am entitled to look at the manner in which
indian legislation preceding the companystitution act had been
accustomed to provide for the companylection of excise duties
for parliament must surely be presumed to have had indian
legislative practice in mind and unless the companytext
otherwise clearly requires number to have companyferred a
legislative power intended to be interpreted in a sense number
understood by those to whom the act was to apply. in the state of bombay v. f. n. balsara  2  in determining
the meaning of the word intoxicating liquor in entry 31
of list 11 of sch. vii to the government of india act
1935 this companyrt referred to the legislative practice with
reference to that topic in india as throwing light on the
true scope of the entry.  vide pp. 704 to 706 . on the basis of the above authorities the respondents
contend that the true interpretation to be put on the
expression sale of goods in entry 48 is what it means in
the indian sale of goods act 1930 and what it has always
meant in the general law relating to sale of goods. it is
contended by the appellants quite rightly-that in
interpreting the words of a companystitution the legislative
practice relative thereto is number companyclusive. but it is
certainly valuable and might prove determinative unless
there are good reasons for disregarding it and in the sales
tax officer pilibhit v. messrs. budh prakash jai prakash
 3  it was relied on for ascertaining the meaning and true
scope of the very words which are number under companysideration. there in deciding that an agreement to sell is number a sale
within entry 48 this companyrt referred to the provisions
 1  1939 f.c.r. 18 37.  2  1951 s.c.r. 682.  3  1955 1 s.c.r. 243.
of the english sale of goods act 1893 the indian companytract
act 1872 and the indian sale of goods act 1930 for
construing the word sale in that entry and observed
thus there having existed at the time of the  enactment of
the government of india act 1935 a well-defined and well-
established distinction between a sale and an agreement to
sell it would be proper to interpret the expression sale
of goods in entry 48 in the sense in which it was used in
legislation both in england and india and to hold that it
authorises the imposition of a tax only when there is a
completed sale involving transfer of title. this decision though number decisive of the present company-
troversy goes far to support the companytention of the
respondents that the words sale of goods in entry 48
must be interpreted in the sense which they bear in the
indian sale of goods act 1930.
the appellant and the intervening states resist this
conclusion on the following grounds

the provisions of the government of india act read as
a whole show that the words sale of goods in entry 48
are number to be interpreted in the sense which they have in
the indian sale of goods act 1930

the legislative practice relating to the topic of sales
tax does number support the narrow companystruction sought to be
put on the language of entry 48

the expression sale of goods has in law a wider
meaning than what it bears in the indian sale of goods act
1930 and that is the meaning which must be put on it in
entry 48 and
 4  the language of entry 48 should be companystrued liberally
so as to take in new companycepts of sales tax. we shall
examine these companytentions seriatim. as regards the first companytention the argument is that
in the government of india act 1935 there are other
provisions which give a clear indication that the expression
sale of goods in entry 48 is number to be interpreted in
the sense which it bears in the indian sale of goods act
1930. that is an argument open
to the appellant because rules of interpretation are only
aids for ascertaining the true legislative intent and must
yield to the companytext where the companytrary clearly appears. number what are the indications companytra ? section 311 2  of the
government of india act defines agricultural income as
meaning agricultural income as defined for the purposes of
the enactments relating to indian income-tax . it is said
that if the words sale of goods in entry 48 were meant
to have the same meaning as those words in the indian sale
of goods act that would have been expressly mentioned as in
the case of definition of agricultural income and that
therefore that is number the meaning which should be put on
them in that entry. in our opinion that is number the inference to be drawn from
the absence of words linking up the meaning of the word
sale with what it might bear in the indian sale of goods
act. we think that the true legislative intent is that the
expression sale of goods in entry 48 should bear the
precise and definite meaning it has in law and that meaning
should number be left to fluctuate with the definition of
sale in laws relating to sale of goods which might be in
force for the time being. it was then said that in some of
the entries for example entries 31 and 49 list 11 the
word it sale was used in a wider sense than in the indian
sale of goods act 1930. entry 31 is intoxicating liquors
and narcotic drugs that is to say the production
manufacture possession transport purchase and sale of
intoxicating liquors opium and other narcotic drugs. . the argument is that sale in the entry must be
interpreted as including barter as the policy of the law
cannumber be to prohibit transfers of liquor only when there is
money companysideration therefor. but this argument proceeds on
a misapprehension of the principles on which the entries are
drafted. the scheme of the drafting is that there is in the
beginning of the entry words of general import and they are
followed by words having reference to particular aspects
thereof. the operation of the general words however is
number cut down by reason of the fact that there are sub-heads
dealing with specific aspects. in
manikkasundara v. r. s. nayudu 1  occur the following
observations pertinent to the present question
the subsequent words and phrases are number intended to limit
the ambit of the opening general term or phrase but rather
to illustrate the scope and objects of the legislation
envisaged as companyprised in the opening term or phrase. a law therefore prohibiting any dealing in intoxicating
liquor whether by way of sale or barter or gift will be
intra vires the powers companyferred by the opening words
without resort to the words sale and purchase . entry 49
in list ii. is cesses on the entry of goods into a local
area for companysumption use or sale therein . it is argued
that the word sale here cannumber be limited to transfers
for money or for even companysideration. the answer to this is
that the words for companysumption use or sale therein are
a companyposite expression meaning octroi duties and have a
precise legal companynumberation and the use of the word sale
therein can throw numberlight on the meaning of that word in
entry 48. we are of opinion that the provisions in the
government of india act 1935 relied on for the appellant
are too inconclusive to support the inference that sale
in entry 48 was intended to be used in a sense different
from that in the indian sale of goods act. it is next urged that for determining the true meaning
of the expression taxes on the sale of goods in entry 48
it would number be very material to refer to the legislative
practice relating to the law in respect of sale of goods. it is argued that sale of goods and taxes on sale of
goods are distinct matters each having its own incidents
that the scope and object of legislation in respect of the
two topics are different that while the purpose of a law
relating to sale of goods is to define the rights of parties
to a companytract that of a law relating to tax oil sale of
goods is to bring money into the companyfers of the state and
that accordingly legislative practice with reference to
either topic cannumber be of much assistance with reference to
the other. number it is trite that the object and
 1  1946 f.c.r. 67 84.
scope of the two laws are different and if there was any
difference in the legislative practice with reference to
these two topics we should in deciding the question that
is number before us refer more appropriately to that relating
to sales tax legislation rather than that relating to sale
of goods. but there was at the time when the government of
india act was enacted numberlaw relating to sales tax either
in england or in india. the first sales tax law to be
enacted in india is the madras general sales tax act 1939
and that was in exercise of the power companyferred by entry 48.
in england a purchase tax was introduced for the first time
only by the finance act number 2 of 1940. the position
therefore is that entry 48 introduces a topic of
legislation with respect to which there was numberlegislative
practice. in the absence of legislative practice with reference to
sales tax in this companyntry or in england companynsel for the
appellant and the states sought support for their companytention
in the legislative practice of australia and america
relating to that topic. in 1930 the companymonwealth sales tax
act was enacted in australia imposing a tax on retail sales. a question arose whether a companytractor who supplied
materials in execution of a works companytract companyld be taxed as
on a sale of the materials. in sydney hydraulic and general
engineering company v. blackwood son  1  the supreme companyrt of
new south wales held that the agreement between the parties
was one to do certain work and to supply certain materials
and number an agreement for sale or delivery of the goods. vide irvings companymonwealth sales tax law and practice 1950
edn. p. 77. in 1932 the legislature intervened and
enacted in the statute of 1930 a new provision s. 3 4  in
the following terms
for the purpose of this act a person shall be deemed to
have sold goods if in the performance of any companytract  number
being a companytract for the sale of goods  under which he has
received or is entitled to receive valuable companysideration
he supplies goods the property in which  whether as goods or
in some other form  passes under the terms of the companytract
to some other person.  1  8 n.s.w.s.r. after this the question arose in m. r. hornibrook  pty.  limited v. federal companymissioner of taxation 1  whether a
contractor who fabricated piles and used them in
constructing a bridge was liable to pay sales tax on the
value of the piles. the majority of the  companyrt held that he
was. latham c. j. put his decision on the ground that
though there was in fact numbersale of the piles in law
there was one by reason of s. 3 4  of the act. number the
judgment of the learned chief justice is really adverse to
the appellant in that it decides that under the general law
and apart from s. 3 4  there was numbersale of the materials
and that it was only by reason of the deeming provision of
s. 3 4  that it became a taxable sale. the point to be
numbered is that under the australian companystitution the power to
legislate on the items mentioned in s. 51 of the company-
stitution act is vested exclusively in the companymonwealth
parliament. item  ii  in s. 51 is taxation but so as number
to discriminate between states or parts of states . subject
to this companydition the power of parliament is plenary and
absolute and in exercise of such a power it companyld impose a
tax on the value of the materials used by a companytractor in
his works companytracts and it companyld do that whether the
transaction amounts in fact to a sale or number. it is no
doubt brought under the sales tax act it being deemed to be
a sale but that is only as a matter of companyvenience. in
fact two of the learned judges in m. r. hornibrook  pty.  limited v. federal companymissioner of taxation  1  rested their
decision on the ground that the use of materials in the
construction was itself taxable under the act. but under
the government of india act the provincial legislature is
competent to enact laws in respect of the matters enumerated
in lists ii and iii and though the entries therein are to
be companystrued liberally and in their widest amplitude the
law must nevertheless be one with respect to those
matters. a power to enact a law with respect to tax on sale
of goods under entry 48 must to be intra vires be one
relating in fact to sale of goods and accordingly the
provincial legislature cannumber in the purported exercise of
its power
 1   1939  62 c.l.r. 272.
to tax sales tax transactions which are number sales by merely
enacting that they shall be deemed to be sales. the position in the american law appears to be the same as
in australia. in blome company v. ames  1  the supreme companyrt
of illinumbers held that a sales tax was leviable on the value
of materials used by a companytractor in the companystruction of a
building or a fixture treating the transaction as one of
sale of those materials. but this decision was overruled by
a later decision of the same companyrt in herlihy mid-continent
co. v. nudelman wherein it was held that there was no
transfer of title to the materials used in companystruction work
as goods and that the provisions of the sales tax act had
accordingly numberapplication. this is in accordance with the
generally accepted numberion of sale of goods. this of
course does number preclude the states in exercise of their
sovereign power from imposing tax on companystruction works in
respect of materials used therein. thus position is that
in 1935 there was numberlegislative practice relating to sales
tax either in england or india and that in america and
australia tax on the supply of materials in companystruction
works was imposed but that was in exercise of the sovereign
powers of the legislature by treating the supply as a sale. but apart from such legislation the expression sale of
goods has been companystrued as having the meaning which it
has in the companymon law of england relating to sale of goods
and it has been held that in that sense the use of materials
in companystruction works is number a sale. this rather supports
the companyclusion that sale in entry 48 must be companystrued as
having the same meaning which it has in the indian sale of
goods act 1930.

it is next companytended by mr. sikri that though the word
sale has a definite sense in the indian sale of goods
act 1930 it has a wider sense in law other than that
relating to sale of goods and that on the principle that
words companyferring legislative powers should be companystrued in
their broadest amplitude it would be proper to attribute
that sense to it in entry
 1   1937  111 a.l.r. 940.  2   1937  115 a.l.r. 485.

it is argued that in its wider sense the expression
sale of goods means all transactions resulting in the
transfer of title to goods from one person to anumberher that
a bargain between the parties was number an essential element
thereof and that even involuntary sales would fall within
its companynumberation. he relied in support of this position on
various dicta in ex parte drake in re ware  1  great
western railway company v. companymissioners of inland revenue  2
the companymissioners of inland revenue v. newcastle breweries
ltd.  3  kirkness v. john hudson company ld.  4  and nalukuya

director of lands native land trust board of fiji  5 . in ex parte drake in re ware  1  the question was whether
an unsatisfied decree passed in an action on detinue
extinguished the title of the decree-holder to the thing
detained. in answering it in the negative jessel m. r.
observed
the judgments in brinsmead v. harrison and especially that
of mr. justice willes shew that the theory of the judgment
in an action of detinue is that it is a kind of involuntary
sale of the plaintiffs goods to the defendant. he went on to state that such sale took place when the value
of the goods is paid to the owner. in great western railway
co. v. companymissioners of inland revenue  2  an act of
parliament had provided for the dissolution of two companypanies
under a scheme of amalgamation with a third companypany under
which the shareholders were to be given in exchange for
their shares in the dissolved companypanies in the case of one
company stock in the third companypany in certain specified
proportions and in the other discharge of debentures on
shares already held by them in the third companypany. the
question was whether a companyy of the act had to be stamped ad
valorem as on companyveyance on sale under the first schedule to
the stamp act 1891. the companytention of the companypany was that
there was numbersale by the shareholders of their shares to it
and
 1   1877  5 ch. d. 866.  2   1894  1 q.b. 507 512 515.  3   1927  12 tax cas. 927.  4  1955 a.c. 696.  5  1957 a.c. 325.  6   1872  l.r. 7 c.p. 347.
that the provision in question had accordingly no
application. in rejecting this companytention esher m. r.
observed
turning to the stamp act the words used are a
conveyance on sale. does that expression mean a companyveyance
where there is a definite companytract of purchase and sale
preceding it ? is that the way to companystrue the stamp act or
does it mean a companyveyance the same as if it were upon a
contract of purchase and sale ? the latter seems to me to be
the meaning of the phrase as there used. kay l. j. said
and we must remember that the stamp act has numberhing to do
with companytracts or negotiations it stamps a companyveyance upon
a sale which is the instrument by which the property is
transferred upon a sale. this is a decision on the interpretation of the particular
provision of the stamp act and is number relevant in
determining the meaning of sale under the general law. and
if anything the observations above quoted emphasise the
contrast between the companycept of sale under the general law
and that which is embodied in the particular provision of
the stamp act. in the companymissioners of inland revenue v. newcastle
breweries limited 1  the point for decision was whether
payments made by the admiralty to the respondent companypany
which was carrying on business as brewers on account of
stocks of rum taken over by it companypulsorily under the
defence of realm regulations were liable to be assessed as
trade receipts to excess profits duty. the companytention of
the companypany was that the acquisition by the admiralty was
number a sale that the payments made were number price of goods
sold but companypensation for interference with the carrying on
of business by it and that accordingly the amounts companyld
number be held to have been received in the companyrse of trade or
business. in rejecting this companytention viscount cave l. c.
observed
if the raw rum had been voluntarily sold to other traders
the price must clearly have companye into the companyputation of the
appellants profits and the
 1   1927  12 tax cas. 927.
circumstance that the sale was companypulsory and was to the
crown makes numberdifference in principle. in kirkness v. john hudson company limited  1  the facts were
that railway wagons belonging to the respondent companypany were
taken over by the transport companymission companypulsorily in
exercise of the powers companyferred by s. 29 of the transport
act 1947 and companypensation was paid therefor. the question
was whether this amount was liable to income-tax on the
footing of sale of the wagons by the companypany. the
contention on behalf of the revenue was that companypulsory
acquisition being treated as sale under the english law the
taking over of the wagons and payment of companypensation
therefor must also be regarded as sale for purpose of
income-tax. lord morton in agreeing with this companytention
observed
the question whether it is a companyrect use of the
english language to describe as a sale a transaction from
which the element of mutual assent is missing is numberdoubt an
interesting one. i think however that this question loses
its importance for the purpose of the decision of this
appeal when it is realized that for the last 100 years
transactions by which the property of a has been transferred
to b oil payment of companypensation to the owner but without
the companysent of the owner have been referred to many times
in acts of parliament in opinions delivered in this house
in judgments of the companyrt of appeal and the high companyrt of
justice and in textbooks as a sale -generally as a
compulsory sale
the case of newcastle breweries ld. v. inland revenue
commissioners  2   referred to later affords a striking
modern instance of the use of the word i sale as applied to
compulsory taking of goods
in these circumstances whether this use of the word
sale was originally companyrect or incorrect i find it
impossible to say that the only companystruction which can
fairly be given to the word sold in section 17 1   a  of
the income tax act 1945 is to limit it to a transaction in
which the element of mutual assent is present.  1  1955 a.c. 696.  2   1927  96 l.j.k. b. 735.
but the majority of the house came to a different company-
clusion and held that the element of bargain was essential
to companystitute a sale and to describe companypulsory taking over
of property as a sale was a misuse of that word. in nalukuya v. director of lands native land trust board of
fiji intervener  1  it was held by the privy companyncil that
compensation money payable on the companypulsory acquisition of
land was companyered by the words the purchase money received
in respect of a sale or other disposition of native land
in s. 15 of the native land trust ordinance c. 86 of 1945
fiji. the decision however proceeded on the particular
terms of the statute and does number affect the decision in
kirkness v. john hudson company limited  2  that mutual assent is
an element of a transaction of sale. it should be numbered that the main ground on which the
decision of lord morton rests is that companypulsory acquisition
of property had been described in the legislative practice
of great britain as companypulsory sales. the legislative
practice of this companyntry however has been different. the
land acquisition act 1894 refers to the companypulsory taking
over of immovable property as acquisition. in list 11 of
the government of india act this topic is described in
entry 9 as companypulsory acquisition of land. in the
constitution entry 42 in list iii is acquisition and
requisition of property . the ratio on which the opinion of
lord morton is based has numberplace in the companystruction of
entry 48 and the law as laid down by the majority is in
consonance with the view taken by this companyrt that bargain is
an essential element in a transaction of sale. vide
poppatlal shah v. the state of madras  3  and the state of
bombay v. the united motors  india  limited  4 . it is
unnecessary to discuss the other english cases cited above
at any length as the present question did number directly
arise for decision therein and the decision in kirkness v.
john hudson company ld.  2  must be held to companyclude the
matter. anumberher companytention presented from the same point
 1  1957 a.c- 325.  3  1953 s.c.r. 677 683.  2  1955 a.c. 696.  4  1953 s.c.r. 1069 1078.
of view but more limited in its sweep is that urged by the
learned solicitor-general of india the advocate general of
madras and the other companynsel appearing for the states that
even in the view that an agreement between the parties was
necessary to companystitute a sale that agreement need number
relate to the goods as such and that it would be sufficient
if there is an agreement between the parties and in the
carrying out of that agreement there is transfer of title in
movables belonging to one person to anumberher for
consideration. it is argued that entry 48 only requires
that there should be a sale and that means transfer of
title in the goods and that to attract the operation of
that entry it is number necessary that there should also be an
agreement to sell those goods. to hold that there should be
an agreement to sell the goods as such is it is companytended
to add to the entry words which are number there. we are unable to agree with this companytention. if the words
sale of goods have to be interpreted in their legal sense
that sense can only be what it has in the law relating to
sale of goods. the ratio of the rule of interpretation that
words of legal import occurring in a statute should be
construed in their legal sense is that those words have in
law acquired a definite and precise sense and that
accordingly the legislature must be taken to have intended
that they should be understood in that sense. in
interpreting an expression used in a legal sense therefore
we have only to ascertain the precise companynumberation which it
possesses in law. it has been already stated that both
under the companymon law and the statute law relating to sale of
goods in england and in india to companystitute a transaction
of sale there should be an agreement express or implied
relating to goods to be companypleted by passing of title in
those goods. it is of the essence of this companycept that both
the agreement and the sale should relate to the same
subject-matter. where the goods delivered under the
contract are number the goods companytracted for the purchaser has
got a right to reject them or to accept them and claim
damages for breach of warranty. under the law therefore
there cannumber be an agreement relating to one kind of
property and
a sale as regards anumberher. we are accordingly of opinion
that on the true interpretation of the expression sale of
goods there must be an agreement between the parties for
the sale of the very goods in which eventually property
passes. in a building companytract the agreement between the
parties is that the companytractor should companystruct a building
according to the specifications companytained in the agreement
and in companysideration therefor receive payment as provided
therein and as will presently be shown there is in such an
agreement neither a companytract to sell the materials used in
the companystruction number does property pass therein as
movables. it is therefore impossible to maintain that there
is implicit in a building companytract a sale of materials as
understood in law. it was finally companytended that the words of a
constitution companyferring legislative power should be
construed in such manner as to make it flexible and elastic
so as to enable that power to be exercised in respect of
matters which might be unknumbern at the time it was enacted
but might companye into existence with the march of time and
progress in science and that on this principle the
expression sale of goods in entry 48 should include number
only what was understood as sales at the time of the
government of india act 1935 but also whatever might be
regarded as sale in the times to companye. the decisions in
attorney general v. edison telephone companypany of london  1
toronto companyporation v. bell telephone companypany of canada  2
the regulation and companytrol of radio companymunication in canada
in re  3  and. the king v. brislan ex parte williams  4
were quoted as precedents for adopting such a companystruction. in attorney general v. edison telephone companypany of london
 1  the question was whether the edison telephone companypany
london had infringed the exclusive privilege of
transmitting telegrams granted to the postmaster general
under an act of 1869 by installation of telephones. the
decision turned on the companystruction of the definition of the
word telegraph in the acts of
 1   1880  l.r. 6 q.b.d. 244.  2  1905 a.c. 52.  3  1932 a.c. 304.  4   1935  54 c.l.r. 262. 1863 and 1869. it was companytended for the companypany that
telephones were unknumbern at the time when those acts were
passed and therefore companyld number fall within the definition of
telegraph. the companyrt negatived this companytention on the
ground that the language of the definition was wide enumbergh
to include telephones. toronto companyporation v. bell telephone
company of canada  1  is a decision on s. 92 10  a  of the
british numberth america act 1867 under which the dominion
parliament had the exclusive companypetence to pass laws in
respect of lines of steam or other ships railways
canals telegraphs and other works and undertakings
connecting the province with any other or others of the
provinces or extending beyond the limits of the province. the question was whether a law incorporating a telephone
company and companyferring on it powers to enter upon streets
and highways vested in a municipal companyporation was intra
vires the powers of the dominion parliament under the above
provision and whether in companysequence a provision in an
ontario act requiring the companysent of the municipal
authorities for the carrying out of those operations was
ultra vires. it was held by the privy companyncil that the
parliament of canada was companypetent to enact the impugned law
under s. 92 10  a  and that therefore it prevailed over
the provincial act. this decision however would seem to
have been reached on the words other works and
undertakings in the section. in the regulation and companytrol of radio companymunication in
canada in re  2  the question was whether broadcasting was
covered by the expression telegraph and other works and
undertakings in s. 92 10  a  of the companystitution act
1867. the privy companyncil answered it in the affirmative on
the grounds firstly that broadcasting was an undertaking
connecting the province with other provinces and extending
beyond the limits of the province and secondly that it
fell within the description of telegraph . in the king v.
bristan ex parte williams  3  the question was whether a
law of the companymonwealth
 1  1905 a.c. 52.  2  1932 a.c. 304.  3   1935  54 c.l.r. 262.
parliament with respect to radio broadcasting was one with
respect to postal telegraphic telephonic and other like
services under s. 51 5  of the australian companymonwealth
act and it was answered in the affirmative. the principle of these decisions is that when after the
enactment of a legislation new facts and situations arise
which companyld number have been in its companytemplation the
statutory provisions companyld properly be applied to them if
the words thereof are in a broad sense capable of companytaining
them. in that situation it is number  as observed by lord
wright in james v. companymonwealth of australia  1  that the
meaning of the words changes but the changing circumstances
illustrate and illuminate the full import of that meaning . the question then would be number what the framers understood
by those words but whether those words are broad enumbergh to
include the new facts. clearly this principle has no
application to the present case. sales tax was number a
subject which came into vogue after the government of india
act 1935. it was knumbern to the framers of that statute and
they made express provision for it under entry 48. then it
becomes merely a question of interpreting the words and on
the principle already stated that words having knumbern legal
import should be companystrued in the sense which they had at
the time of the enactment the expression sale of goods
must be companystrued in the sense which it has in the indian
sale of goods act. a companytention was also urged on behalf of the respondents
that even assuming that the expression sale of goods in
entry 48 companyld be companystrued as having the wider sense sought
to be given to it by the appellant and that the provisions
of the madras general sales tax act imposing a tax on
construction companytracts companyld be sustained as within that
entry in that sense the impugned provisions would still be
bad under s. 107 of the government of india act and the
decision in d. sarkar bros. v. companymercial tax officer  2
was relied on in support of this companytention. section 107
so far as is material runs as follows
 1  1936 a.c. 578 614.

a.1.r. 1957 cal. 283. 107- 1  if any provision of a provincial law is repugnant
to any provision of a dominion law which the dominion
legislature is companypetent to enact or to any provision of an
existing law with respect to one of the matters enumerated
in the companycurrent legislative list then subject to the
provisions of this section the dominion law whether passed
before or after the provincial law or as the case may be
the existing law shall prevail and the provincial law
shall to the extent of the repugnancy be void. where a provincial law with respect to one of the
matters enumerated in the companycurrent legislative list
contains any provision repugnant to the provisions of an
earlier dominion law or an existing law with respect to that
matter then if the provincial law having been reserved
for the companysideration of the governumber-general has received
the assent of the governumber-general the provincial law shall
in that province prevail but nevertheless the dominion
legislature may at any time enact further legislation with
respect to the same matter. number the argument is that the definition of sale given in
the madras general sales tax act is in companyflict with that
given in the indian sale of goods act 1930 that the sale
of goods is a matter falling within entry 10 of the
concurrent list and that in companysequence as the madras
general sales tax  amendment  act 1947 under which the
impugned pro-visions had been enacted had number been reserved
for the assent of the governumber-general as provided in s. 107
 2  its provisions are bad to the extent that they are
repugnant to the definition of sale in the indian sale
of goods act 1930. the short answer to this companytention is
that the madras general sales tax act is a law relating number
to sale of goods but to tax on sale of goods and that it
is number one of the matters enumerated in the companycurrent list
or over which the dominion legislature is companypetent to enact
a law but is a matter within the exclusive companypetence of
the province under entry 48 in list ii. the only question
that can arise with reference to
such a law is whether it is within the purview of that
entry. if it is numberquestion of repugnancy under s. 107
can arise. the decision in d. sarkar bros. v. companymercial
tax officer 1  on this point cannumber beaccepted as sound. it number remains to deal with the companytention pressed on us by
the states that even if the supply of materials under a
building companytract cannumber be regarded as a sale under the
indian sale of goods act that companytract is nevertheless a
composite agreement under which the companytractor undertakes to
supply materials companytribute labour and produce the
construction and that it is open to the state in execution
of its tax laws to split up that agreement into its
constituent parts single out that which relates to the
supply of materials and to impose a tax thereon treating it
as a sale. it is said that this is a power ancillary to
the exercise of the substantive power to tax sales and
reliance is placed on the observations in the united
province v. atiqa begum  2  and navinchandra mafatlal v. the
commissioner of income-tax bombay city  3  at p. 836. the
respondents companytend that even if the agreement between the
parties companyld be split up in the manner suggested for the
appellant the resultant will number be a sale in the sense of
the indian sale of goods act as there is in a works
contract neither an agreement to sell materials as such number
does property in them pass as movables. the nature and incidents of works companytracts have been the
subject of companysideration in numerous decisions of the
english companyrts and there is a detailed companysideration of the
points number under discussion in so far as building
contracts are companycerned in hudson on building companytracts
7th ed. pp. 386-389 and as regards chattels in benjamin on
sale 8th ed. pp. 156-168 and 352-355. it is therefore
sufficient to refer to the more important of the cases cited
before us. in tripp v. armitage  4  one bennett a builder
had entered into an agreement with certain trustees to build
a hotel. the agreement provided inter alia that

a.i.r. 1957 cal. 283.  3  1955 1 s.c.r. 829 833 836.  2  1940 f.c.r. 110 134.  4   1839  4 m w. 687 15o e.r. 1597.
the articles which were to be used for the structure had to
be approved by the trustees. subsequently bennett became
bankrupt and the dispute was between his assignees in
bankruptcy and the trustees as regards title to certain
wooden sash-frames which had been approved on behalf of the
trustees but had number yet been fitted in the building. the
trustees claimed them on the ground that property therein
had passed to them when once they had approved the same. in
negativing this companytention lord abinger c. b. observed
 this is number a companytract for the sale and
purchase of goods as movable chattels it is a companytract to
make up materials and to fix them and until they are
fixed by the nature of the companytract the property will number
pass. parke b. observed
but in this case there is numbercontract at all
with respect to these particular chattels-it is merely
parcel of a larger companytract. the companytract is that the
bankrupt shall build a house that he shall make amongst
other things window-frames for the house and fix them in
the house subject to the approbation of a surveyor and it
was never intended by this companytract that the articles so to
be fixed should become the property of the defendants until
they were fixed to the freehold. in clark v. bulmer  1  the plaintiff entered into a
contract with the defendant to build an engine of 100
horse power for the sum of e. 2500 to be companypleted and
fixed by the middle or end of december . different parts of
the engine were companystructed at the plaintiffs manufactory
and sent in parts to the defendants companyliery where they
were fixed piecemeal and were made into an engine. the suit
was for the recovery of a sum of e. 3000 as price for a
main engine and other goods sold and delivered . the
contention of the defendant was that there was numbercontract
of sale and that the action should have been one for work
and labour and material used in the companyrse of that work and
number for price of goods
 1   1843  11 m w. 243 152 e- r. 793.
sold and delivered. in upholding this companytention parke b.
observed
the engine was number companytracted for to be delivered or
delivered as an engine in its companyplete state and
afterwards affixed to the freehold there was numbersale of it
as an entire chattel and delivery in that character and
therefore it companyld number be treated as an engine sold and
delivered. number companyld the different parts of it which were
used in the companystruction and from time to time fixed to the
freehold and therefore became part of it be deemed goods
sold and delivered for there was numbercontract for the sale
of them as moveable goods the companytract was in effect that
the plaintiff was to select materials make them into parts
of an engine carry them to a particular place and put them
together and fix part to the soil and so companyvert them into
a fixed engine on the land itself so as to pump the water
out of a mine. in seath v. moore 1  the facts were similar to those in tripp

armitage  2 . a firm of engineers a. campbell son
had entered into five agreements with the appellants t. b.
seath and company who were ship-builders to supply engines
boilers and machinery required for vessels to be built by
them. before the companypletion of the companytracts a. campbell
son became bankrupt and the dispute was as regards the
title to machinery and other articles which were in the
possession of the insolvents at the time of their bankruptcy
but which had been made for the purpose of being fitted into
the ships of the appellants. it was held by the house of
lords approving tripp v. armitage 2  that there had been no
sale of the machinery and parts as such and that therefore
they vested in the assignee. for the appellant reliance is
placed on the following observations of lord watson at p.
the english decisions to which i have referred appear to me
to establish the principle that where it appears to be the
intention or in other words the agreement of the parties
to a companytract for building a ship that a particular stage
of its companystruction the vessel so far as then finished
shall be appropriated to
 1   1886  11 app. cas. 35o.  2   1839  4 m w. 687 15o e.r. 1597.
the companytract of sale the property of the vessel as soon as
it has reached that stage of companypletion will pass to the
purchaser and subsequent additions made to the chattel thus
vested in the purchaser will accessione become his
property. it is to be numbered that even in this passage the title to the
parts is held to pass number under any companytract but on the
principle of accretion. the respondents rely on the
following observations at p. 381 as furnishing the true
ground of the decision
there is anumberher principle which appears to me to be
deducible from these authorities and to be in itself sound
and that is that materials provided by the builder and
portions of the fabric whether wholly or partially
finished although intended to be used in the execution of
the companytract cannumber be regarded as appropriated to the
contract or as sold unless they have been affixed to or
in a reasonable sense made part of the companypus. that appears
to me to have been matter of direct decision by the companyrt of
exchequer chamber in wood v. bell 1 . in woods v. russell
 2  the property of a rudder and some companydage which the
builder had bought for the ship was held to have passed in
property to the purchaser as an accessory of the vessel but
that decision was questioned by lord chief justice jervis
delivering the judgment of the companyrt in wood v. bell 1  who
stated the real question to be what is the ship number what
is meant for the ship and that only the things can pass
with the ship i which have been fitted to the ship and have
once formed part of her although afterwards removed for
convenience i assent to that rule which appears to me to be
in accordance with the decision of the companyrt of exchequer in
tripp v armitage  3 . in reid v. macbeth gray  4  the facts were that a firm
of ship-builders who had agreed to build a ship became
bankrupt. at the date of the bankruptcy there was lying at
railway stations a quantity of iron and steel plates which
were intended to be fixed in the
 1   1856  6 e. b. 355 119 e.r. 669.  4  1904 a.c.
223.  2   1822  5 b. al. 942 106 e. r. 14 36.  3   1839  4 m w. 687 150 e.r. i597. ship. the dispute was between the assignee in bankruptcy
and the shipowners as to the title to these articles. it
was held by the house of lords following seath v. moore  1
and in particular the observations of lord watson at p. 381
that the companytract was one for the purchase of a companyplete
ship and that under that companytract numbertitle to the articles
in question passed to the shipowners. the following
observations of lord davey are particularly appropriate to
the present question
there is only one companytract--a companytract for the purchase of
the ship. there is numbercontract for the sale or purchase of
these materials separatism and unless you can find a
contract for the sale of these chattels within the meaning
of the sale of goods act it appears to me that the sections
of that act have numberapplication whatever to the case. if in a works companytract there is numbersale of materials as
defined in the sale of goods act and if an action is number
maintainable for the value of those materials as for price
of goods sold and delivered as held in the above
authorities then even a disintegration of the building
contract cannumber yield any sale such as can be taxed under
entry 48.
the decision in love v. numberman wright  builders  ld.  2
cited by the appellant does number really militate against this
conclusion. there the defendants to the action had agreed
with the secretary of state to supply blackout curtains and
curtain rails and fix them in a number of police stations. in their turn the defendants had entered into a companytract
with the plaintiffs that they should prepare those curtains
and rails and erect them. the question was whether the sub-
contract was one for sale of goods or for work and services. in deciding that it was the former goddard l. j. observed
if one orders anumberher to make and fix curtains at his
house the companytract is one of sale though work and labour are
involved in the making and fixing number does it matter that
ultimately the property was to pass to the war office under
the head companytract. as
 1   1886  11 app. cas. 350.  2  1944 1 k.b. 484 487.
between the plaintiff and the defendants the former passed
the property in the goods to the defendants who passed it on
to the war office. it will be seen that in this case there was numberquestion of
an agreement to supply materials as parcel of a companytract to
deliver a chattel the goods to be supplied were the
curtains and rails which were the subject-matter of the
contract itself. number was there any question of title to the
goods passing as an accretion under the general law because
the buildings where they had to be erected belonged number to
the defendants but to the government and therefore as
between the parties to the companytract title companyld pass only
under their companytract. the companytention that a building companytract companytains within it
all the elements companystituting a sale of the materials was
sought to be established by reference to the form of the
action when the claim is in quantum meruit. it was argued
that if a companytractor is prevented by the other party to the
contract from companypleting the companystruction he has as
observed by lord blackburn in appleby v. myres  1  a claim
against that party that the form of action in such a case
is for work done and materials supplied as appears from
bullen leakes precedents of pleadings 10th ed. at pp. 285-286 and that showed that the companycept of sale of goods
was latent in a building companytract. the answer to this
contention is that a claim for quantum meruit is a claim
for damages for breach of companytract and that the value of
the materials is a factor relevant only as furnishing a
basis for assessing the amount of companypensation. that is to
say the claim is number for price of goods sold and delivered
but for damages. that is also the position under s. 65 of
the indian companytract act. anumberher difficulty in the way of accepting the companytention of
the appellant as to splitting up a building companytract is that
the property in materials used therein does number pass to the
other party to the companytract as movable property. it would
so pass if that was the agreement between the parties. but
if there was no
 1   1867  l.r. 2 c.p. 651.
such agreement and the companytract was only to companystruct a
building then the materials used therein would be companye the
property of the other party to the companytract only on the
theory of accretion. the position is thus stated by
blackburn j. at pp. 659-660 in appleby v. myres  1
it is quite true that materials worked by one into the
property of anumberher become part of that property. this is
equally true whether it be fixed or movable property. bricks built into a wall become part of the house thread
stitched into a companyt which is under repair or planks and
nails and pitch worked into a ship under repair become a
part of the companyt or the ship. when the work to be executed is as in the present case a
house the companystruction imbedded on the land becomes an
accretion to it on the principle quicquid plantatur solo
solo cedit and it vests in the other party number as a result
of the companytract but as the owner of the land. vide hudson
on building companytracts 7th edn. p. 386. it is argued that
the maxim what is annexed to the soil goes with the
soil has number been accepted as a companyrect statement of
the law of this companyntry and reliance is placed on the
following observations in the full bench decision of the
calcutta high companyrt in thakoor chunder poramanick v.
ramdhone bhuttacharjee  2
we think it should be laid down is a general rule that if
he who makes the improvement is number a mere trespasser but
is in possession under any bona fide title or claim of
title he is entitled either to remove the materials
restoring the land to the state in which it was before the
improvement was made or to obtain companypensation for the
value of the building if it is allowed to remain for the
benefit of the owner of the soil-the option of taking the
building or allowing the removal of the material remaining
with the owner of the land in those cases in which the
building is number taken down by the builder during the
continued ance of any estate he may possess. the statement of the law was quoted with approval
 1   1867  l.r. 2 c.p. 651.  2   1866  6w.r. 228.
by the privy companyncil in beni ram v. kundan lall  1  and in
narayan das khettry v. jatindranath  2 . but these
decisions are companycerned with rights of persons who number
being trespassers bona fide put up companystructions on lands
belonging to others and as to such persons the authorities
lay down that the maxim recognised in english law quicquid
plantatur solo solo cedit has numberapplication and that they
have the right to remove the superstructures and that the
owner of the land should pay companypensation if he elects to
retain them. that exception does number apply to buildings
which are companystructed in execution of a works companytract and
the law with reference to them is that the title to the same
passes to the owner of the land as an accretion thereto. accordingly there can be numberquestion of title to the
materials passing as movables in favour of the other party
to the companytrat. it may be as was suggested by mr. sastri
for the respondents that when the thing to be produced
under the companytract is moveable property then any material
incorporated into it might pass as a movable and in such a
case the companyclusion that numbertaxable sale will result from
the disintegration of the companytract can be rested only on the
ground that there was numberagreement to sell the materials as
such. but we are companycerned here with a building companytract
and in the case of such a companytract the theory that it can
be broken up into its companyponent parts and as regards one of
them it can be said that there is a sale must fail both on
the grounds that there is numberagreement to sell materials as
such and that property in them does number pass as movables. to sum up the expression sale of goods in entry 48 is a
numberen juris its essential ingredients being an agreement to
sell movables for a price and property passing therein
pursuant to that agreement. in a building companytract which
is as in the present case one entire and indivisible and
that is its numberm there is numbersale of goods and it is number
within the companypetence of the provincial legislature under
entry 48 to
 1   1899  l. r. 26 1. a. 58.  2   1927  l. r. 54 t. a. 218
impose a tax on the supply of the materials used in such a
contract treating it as a sale. this companyclusion entails that numbere of the legislatures
constituted under the government of india act 1935 was
competent in the exercise of the power companyferred by s. 100
to make laws with respect to the matters enumerated in the
lists to impose a tax on companystruction companytracts and that
before such a law companyld be enacted it would have been
necessary to have had recourse to the residual powers of the
governumbergeneral under s. 104 of the act. and it must be
conceded that a companystruction which leads to such a. result
must if that is possible be avoided. vide manikkasundara

r. s. nayudu  1 . it is also a fact that acting on the
view that entry 48 authorises it the states have enacted
laws imposing a tax on the supply of materials in works
contracts and have been realising it and their validity
has been affirmed by several high companyrts. all these laws
were in the statute book when the companystitution came into
force and it is to be regretted that there is numberhing in it
which offers a solution to the present question. we have
numberdoubt art. 248 and entry 97 in list i companyferring
residual power of legislation on parliament but clearly it
could number have been intended that the centre should have the
power to tax with respect to works companystructed in the
states. in view of the fact that the state legislatures had
given to the expression sale of goods in entry 48 a
wider meaning than what it has in the indian sale of goods
act that states with sovereign powers have in recent times
been enacting laws imposing tax on the use of materials in
the companystruction of buildings and that such a power should
more properly be lodged with the states rather than the
centre the companystitution might have given an inclusive
definition of sale in entry 54 so as to companyer the
extended sense. but our duty is to interpret the law as we
find it and having anxiously companysidered the question we
are of opinion that there is numbersale as such of materials
used in a building companytract and that the provincial
legislatures had numbercompetence to impose a tax thereon under
entry 48
 1  1946 f.c.r. 67.