Poppatlal Shah v State of Madras - 1953 AIR 274
Interpretation of statutes is a vast area which basically means that statue be
interpreted in such a way that it provides justice to the parties. Legislators
make different laws and are amended time to time for having greater efficient,
but laws cannot be made for each and every situation as it would be just
compiling up things unnecessarily. Statute is basically a document which helps
and guides citizens what to do and what not.
Basically, Law is a fractal and as H.L.A Hart hypothetically explained it that
for every situation law can't be made and has to interpret the existing things.
He uses that:
legal rule prohibits from taking the vehicle to the park
, here he
generalises the word vehicle
which as to be interpreted. Similarly
there can't be a law stating the conditions when can be vehicle allowed in park
and that has to be interpreted differently with different meanings. There may
be a case of emergency where ambulance might need to go in the park, then that
can't be stated in a law. Therefore, interpretation is required as law is a very
I will be analysing the case of Poppatlal Shah v State of Madras 1953
which is a post-independence case of 1953.
This is an appeal against the order passed by the division bench of Madras High
Court, against a criminal appeal, which convicted the appellant under section 15
of the Madras General sales tax act. The appellant was directed to pay fine of
Rs. 1000/- and imprisonment of 3 months.
The appellant, Mr. Poppatlal Shah, was a partner in a firm under the name Indo
Malayan Trading Company. The company was based in Madras and also had its head
office there only. The business that firm conducting was with sale and purchase
of oil, sago, and kirana (confectionary) items1.
The dispute arose for the non-payment of taxes in Madras under Madras Sales Tax
Act, and so was the suit instituted against him. In the course of business, he
used to pay sales tax in Calcutta. His business was with respect to the sale of
goods and delivery was done in other states.
The = business was conducted in such a way that the company in their Madras head
office used to get orders from merchants in Calcutta. Thereafter, the orders
were dispatched to Calcutta by rail and steamers. All the monetary transaction
was done in Calcutta at the time of delivery of orders to the consignees. He
was later convicted, and sentencing was pronounced.
Legislation in Issue:
- Madras Sales tax Act, to interpret the scope of taxation on sale that
took outside the province.
- Sales of Goods Act, to interpret the scope of phrase Sale and when is
sale considered as complete?
the scope of word sale was interpreted for paying of sales tax.
Scope of explanation 2 of Madras Act XXV 1947 w.r.t what would account sale?
The rules and presumptions used in the interpretation are:
- Statute must be read as whole- Subsidiary Rule
Briefly, it means that words or provisions shouldn't be read alone and must be
read in statute as a whole.
- Rule of harmonious construction- Secondary Rule
If two laws or provisions exists on the same subject matter, court should
interpret in maximizing the possible attempt to harmonize the different laws.
- Retrospective Effect – Presumption
Nothing should be interpreted in a retrospective manner, unless expressly
mentioned in the statute.
Briefly discussing the outline of case and procedural history for understanding
purpose, appellant argued that they were liable to pay taxes in Calcutta as
delivery of goods took place there and mere orders were received in Calcutta
only. On the other hand, state had made an argument that true test is to look
where sale took place and not where the goods are to be delivered. Further,
state argued that they used to maintain all the records in Madras, hence they
are liable to pay taxes in Madras only. High Court agreed with the contentions
of the state.. Hence the appeal before the Supreme Court.
Supreme Court took note of the contentions raised by the appellant that we need
to have a proper interpretation and construction of the legislature and when
interpreting the whole statute, it is clear that act doesn't authorize to levy
tax upon the sale where goods are delivered outside the state/province.
Statute must be read as whole is basically a secondary rule which means that the
constituent parts of the statute i.e. preamble, every word, phrase, or any
sentence are to be read together so as to achieve the actual intent of the
In interpreting the statute and considering the wide scope of statute and the
word sale w.r.t the Madras Sales tax Act, the act itself defines the purpose
that tax has to be levied on sale transactions. In my opinion, the Supreme Court
has rightly interpreted the statute and also given wide ambit to the word sale
and also referred to what actually is considered sale under Sale of Goods act.
Clearly, sale under Sale of Goods Act is the ownership of the property has to be
transferred to the other party and then only sale would be concluded. During the
interpretation of the phrase sale, few elements were laid down i.e. Order
placing, bargaining/negotiating, processing the order, delivery, and
possession. For sale to be considered complete, these elements needs to be
fulfilled and actual ownership and possession needs to be changed.
Here, In my opinion, court has used the secondary rule of Rule of Harmonious
Construction by harmonizing the word sale under Madras Sales Tax Act with the
phrase Sale under Sales of Goods Act to interpret the actual meaning and intent
of the Madras sales tax act. In the case of MSM Sharma v Sri Krishan Sinha
the court said that one section shouldn't defeat the other section and has to
maximize the interpretation by construing the principles of both statutes in
order to harmonize them and reach a maximum possible meaning.
The presumption of Retrospective operation was also used in the
interpretation while interpreting the explanation 2 of Madras Act XXV, which
Notwithstanding anything to the contrary in the Indian Sale of Goods Act, 1930,
the sale or purchase of any goods shall be deemed, for the purposes of this Act,
to have taken place in this Province, wherever the contract of sale or purchase
might have been made:
- if the goods were actually in this Province, at the time when the
contract of sale or purchase…
- in case the contract was for the sale or purchase of future goods by
description, then, if the goods are actually produced in this Province at
any time after the contract of sale or purchase…..
The said explanation was added in 1947 and the subject matter in issue is in
dispute to the act of 1939 as appellant was made liable to pay taxes. Under the
presumption of Retrospective operation, it means that no one should be charged
for the act which is not an offense at the time of committal, basically, it is a
principle of natural justice. This presumption is backed by the meaning that
every statute has a prospective effect unless expressed in a statute and has to
be applied from future date and not from past date, unless specified.
In the case of Garkiapati Veeraya v N. Subbiah Choudhary
 , the court
observed that in absence of anything in a statute that it will be retrospective,
it can't be presumed and construed in a way that it has a retrospective
operation. In case of J.P Jani, ITO Circle IV Ahmdebad, v Induprasad
, the court was of the opinion that principle behind this is
that unless terms doesn't expressly provide in a statute, the statute can't be
give retrospective operation and has to be construed prospectively.
In my opinion court had given their best attempt in order to provide justice.
The secondary rule, Statute must be read as whole, backed the interpretation of
the Madras Sales Tax act in order to know the actual intent of the statute and
applying rule of harmonious construction, the meaning of phrase Sale has been
interpreted correctly, and fulfilled the criteria that one section of statute
must not defeat the purpose and meaning of other section in the statute.
Here, the phrase sale under the madras sales tax act was duly harmonized with
sale under sale of goods act so as to maximize the possible meaning. In addition
to this, in my opinion court could also have used the theory of textualism in
interpreting the word statute with rule of harmonious construction, as
textualism means that focusing on a word rather than any purpose of statute, and
here the word sale under sale of goods act was interpreted by the general
meaning which clearly stated that transfer of ownership construes to be sale as
Also, in my opinion the application of retrospective operation presumption was
used to avoid double taxation upon citizens as if it was not applied, then the
appellant would have suffered prejudice of paying double tax on the sale
The objective of interpretation of phrase, statute and act in the present case
is to avoid double taxation upon citizens which is not free and fair and to
prevail the justice.
- Hart, H. L. A. Positivism and the Separation of Law and
Morals. Harvard Law Review, vol. 71, no. 4, 1958, pp. 593–629. JSTOR,
www.jstor.org/stable/1338225. Accessed 1 June 2020.
- Deep, A. (2014). Interpretation of Statutes. Retrieved June 01, 2020,
- Brannon, V. C. (2018). Statutory Interpretation: Theories, Tools, and
Trends. Congressional Research Service. Retrieved May 31, 2020, from