TMI Blog1958 (4) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution period were validly made under sub-section (2) of section 4 of the Act. The effect of the invalid notification under sub-section (1) was that there was no liability thereunder, and no dealers were liable to pay tax under that sub-section. But that did not mean that any dealer who properly came under sub-section (2) was free to escape his liability to pay tax. Surely, the position cannot be worse than what it would have been if the Provincial Government had failed to issue a notification under sub-section (1). The assessments for the post-Constitution period in this case were hit by clause (1)(a) of Article 286 as also section 30(1)(a)(i) of the Act and were rightly held to be without jurisdiction. The result, therefore, is that in our view this appeal should succeed in part, as we hold that the assessments for the two quarters of the pre-Constitution period were valid under sub-section (2) of section 4 of the Act and the assessments for the post-Constitution period were invalid. - Civil Appeal No. 230 of 1956 - - - Dated:- 15-4-1958 - DAS S.R., VENKATARAMA AIYAR T.L., DAS S.K., SARKAR A.K. AND VIVIAN BOSE JJ. S.N. Andley, J.B. Dadachanji and Rameshwar Nath, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of such expiry as may be prescribed and on the expiry of this latter period his liability to pay tax shall cease. (4) Every dealer whose liability to pay tax has ceased under the provisions of sub-section (3) shall again be liable to pay tax under this Act with effect from the commencement of the year immediately following that during which his gross turnover again exceeds Rs. 5,000." On August 14, 1947, a notification was issued by the Government of Orissa appointing September 30, 1947, as the date with effect from which that sub-section was to come into force in the then Province of Orissa. On January 1, 1948, by a covenant of merger executed by its ruler, the feudatory State of Pallahara merged into the Province of Orissa. In exercise of the powers delegated to it by the Government of India under what was then known as the Extra Provincial Jurisdiction Act, 1947, the Government of Orissa on December 14, 1948, issued a notification under section 4 of that Extra Provincial Jurisdiction Act, extending the Orissa Sales Tax Act to the territories of the erstwhile feudatory States, including Pallahara which had merged into the Province of Orissa. On March 1, 1949, a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution. The High Court accepted both these contentions and by its judgment and order pronounced on April 12, 1955, cancelled the assessments. The Sales Tax Officer, Cuttack, and the Collector of Commercial Taxes, Cuttack, have appealed against the judgment and order of the High Court. As regards the assessment orders for the three post-Constitution quarters, the decision of the High Court purports to have proceeded on the decision of this Court in The State of Bombay v. United Motors (India) Ltd. [1953] S.C.R. 1069; 4 S.T.C. 133. We find ourselves in complete agreement with our learned Brother S.K. Das, J., for reasons stated by him that the assessment orders for the three post-Constitution quarters were hit by clause (1) of Article 286 and also section 30(1)(a)(i) of the Act and were rightly held by the High Court to be without jurisdiction. It is with regard to the assessment orders for the two pre-Constitution quarters that we have come to a conclusion different from that to which our learned Brother has arrived. We proceed to state our reasons. The impugned notification, as hereinbefore stated, was issued on March 1, 1949, under section 4(1) of the said Act. Under that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, therefore, is that by the earlier part of the impugned notification the Government of Orissa properly and rightly exercised its power in appointing March 31, 1949, as the date with effect from which the liability to pay tax under the Act would commence, but by its latter part did something more which it had no business to do, i.e., to indicate, contrary to the sub-section itself, that those dealers whose gross turnover during the year ending on March 31, 1949, would be liable to pay tax under the Act. The notification in so far as it purports to determine the class of dealers on whom the tax liability would fall, was certainly invalid. The question that immediately arises is as to whether the whole notification should be adjudged invalid as has been done by the High Court and as is proposed to be done by my learned Brother S.K. Das, J., or the two portions of the notification should be severed and effect should be given to the earlier part which is in conformity with section 4(1) and the latter part which goes beyond the powers conferred by the sub-section to the Government of Orissa should be rejected. Immediately the question of severability arises. Are the two portions sever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the year immediately preceding March 31, 1949, exceeded Rs. 5,000. We have already held that the notification issued under section 4(1) in so far as it appointed March 31, 1949, as the date with effect from which the liability to pay sales tax would commence was good and valid in law. That finding coupled with the concession mentioned above relieves us from the necessity of remanding the case to the Sales Tax Authorities. Even if we assume, contrary to the afore- said concession, that the gross turnover of the respondents during the financial year ending on March 31, 1948, did not exceed Rs. 5,000 and, therefore, section 4(1) did not apply to them, the respondents will still be liable to pay the sales tax for the two pre-Constitution quarters under section 4(2). For reasons stated above we hold that the assessment orders for the three post-Constitution quarters were invalid and we accordingly agree that this appeal, in so far as it is against that part of the order of the High Court which cancelled the assessment orders for those three post-Constitution quarters, should be dismissed. We further hold that the assessments for the two pre-Constitution quarters were valid for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing taken place in Orissa, the respondent was clearly liable to sales tax for the pre-Constitution period and, for the post-Constitution period, though the sales came within clause (2) of Article 286 of the Constitution, the respondent was liable to sales tax under the Sales Tax Continuance Order, 1950, made by the President. These finding were affirmed by the Assistant Collector of Sales Tax, Orissa, on appeal, by his order dated April 12, 1952. The respondent-assessee then filed a petition under Article 226 of the Constitution in the High Court of Orissa and prayed for the issue of a writ of certiorari or other appropriate writ quashing the aforesaid orders of assessment. The case of the respondent before the High Court was that the assessment orders, both with regard to the pre-Constitution and post-Constitution periods, were invalid and without jurisdiction. The High Court accepted the case of the respondent and held that the assessment orders for the entire period were invalid and without jurisdiction. The present appeal has been brought from the aforesaid judgment and order of the High Court of Orissa dated April 12, 1955. Though before the Sales Tax Authorities and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss turnover first exceeded Rs. 5,000. (3) Every dealer who has become liable to pay tax under this Act shall continue to be so liable until the expiry of three consecutive years, during each of which his gross turnover has failed to exceed Rs. 5,000 and such further period after the date of such expiry as may be pres- cribed and on the expiry of this latter period his liability to pay tax shall cease. (4) Every dealer whose liability to pay tax has ceased under the provision of sub-section (3) shall again be liable to pay tax under this Act with effect from the commencement of the year immediately following that during which his gross turnover again exceeds Rs. 5,000." It is to be noticed that for a liability to arise under sub-section (1) of section 4, a notification by the Provincial Government is necessary, and the notification must fix the date from which every dealer whose gross turnover during the year immediately preceding the commence- ment of the Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so notified. Such a notification was issued for the old Province of Orissa on August 30, 1947, and September 30, 1947, was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Orissa Act XIV of 1947) as applied to Orissa States, the Government of Orissa are pleased to appoint the 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales effected after the said date." Two other provisions of the Act must be referred to here. The word "dealer" is defined in section 2(c) in these terms: " 'dealer' means any person who carries on the business of selling or supplying goods in Orissa, whether for commission, remuneration or otherwise and includes any firm or a Hindu joint family, and any society, club or association which sells or supplies goods to its members;". The word "year" is defined in section 2(j) and means the financial year. Now, with regard to the pre-Constitution period the High Court has found that the notification under sub-section (1) of section 4 dated March 1, 1949, was an invalid notification and therefore the respondent was not liable to tax under that sub-section in respect of the transaction which took place in the pre-Constitution period. The reason why the High Court has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants has conceded that a mistake was made in the notification. However, he has argued-firstly, that the mistake was immaterial and secondly, that the assessment orders for the pre-Constitution period were justified under sub-section (2) of section 4. As to the first argument that the mistake was immaterial, he has submitted that the liability to tax arose under the sub-section and not under the notification, and any mistake in the notification did not affect such liability; he has also submitted that the words and figures which gave rise to the mistake were mere surplusage and could be severed from the rest of the notification. We are unable to accept this argument. For a liability to arise under sub-section (1) of section 4, the issue of a notification is an essential prerequisite, and unless the notification complies with the requirements of the sub-section, no liability to tax can arise under it. The notification not only fixed the relevant date, but fixed the relevant period for deter- mining the class of dealers who would be subject to the liability. In doing so, it made a mistake, the result of which was that the notification was not in conformity with the law. We do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply to such dealers even if their gross turnover exceeded Rs. 5,000 for the first time in that year; because where sub-section (1) applies, sub-section (2) does not apply. But what is the case before us. The year immediately preceding the commencement of the Act in the Pallahara area was 1947-48, and sub-section (1) would have applied to the respondent if the notification had mentioned that year. But it did not, and the result was that it was not necessary to find if the respondent's gross turnover exceeded Rs. 5,000 in 1947-48. What was found was that the respondent's gross turnover exceeded Rs. 5,000 in 1948-49, that is, the year ending March 31, 1949, which was not the year immediately preceding the commencement of the Act in the Pallahara area. Obviously, therefore, sub-section (1) did not apply to the respondent; but he clearly came under sub-section (2). The Act came into force in the Orissa States on March 1, 1949. By March 31, 1949, the respondent's gross turnover exceeded Rs. 5,000. He was, there- fore, liable to pay tax under sub-section (2) with effect from the commencement of the year immediately following March 31, 1949, that is, from April 1, 1949. It has been argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sale involving inter-State elements which do not come within the scope of clause (1) of that Article. On the admitted facts of the present case, clause (1) of Article 286 would apply. The sales involve inter-State elements inasmuch as the buyers are outside Orissa, price is paid outside Orissa and goods are delivered for consumption outside Orissa. Hence, by virtue of clause (1) of Article 286 as explained by their Lordships of the Supreme Court, the State of Orissa is not competent to tax such transactions of sale." The learned Solicitor-General has rightly pointed out that in a later decision of this Court in The Bengal Immunity Company Limited v. The State of Bihar and Others [1955] 2 S.C.R. 603; 6 S.T.C. 446., which was not available to the High Court when it delivered its judgment, the view expressed in The United Motors' case(1) was departed from in so far as the earlier decision held that clause (2) of Article 286 of the Constitution did not affect the power of the State in which delivery of goods was made to tax inter- State sales or purchases of the kind mentioned in the Explanation to clause (1) and the effect of the Explanation was that such transactions were save ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 86, it was observed in the majority judgment of The Bengal Immunity decision [1955] 2 S.C.R. 603; 6 S.T.C. 446.- "These several bans may overlap in some cases but in their respective scope and operation they are separate and independent. They deal with different phases of a sale or purchase but, nevertheless, they are distinct and one has nothing to do with and is not dependent on the other or others. The States' legislative power with respect to a sale or purchase may be hit by one or more of these bans. Thus, take the case of a sale of goods declared by Parliament as essential by a seller in West Bengal to a purchaser in Bihar in which goods are actually delivered as a direct result of such sale for consumption in the State of Bihar. A law made by West Bengal without the assent of the President taxing this sale will be unconstitutional because (1) it will offend Article 286(1)(a) as the sale has taken place outside the territory by virtue of the Explanation to clause (1)(a), (2) it will also offend Article 286(2) as the sale has taken place in the course of inter-State trade or commerce and (3) such law will also be contrary to Article 286(3) as the goods are essential commodit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4 of the Extra Provincial Jurisdiction Act, 1947, and with the permission of the Government of India, issued a Notification applying the Orissa Sales Tax Act, (Orissa XIV of 1947), passed by the Legislature of Orissa, to the areas which previously constituted the feudatory States including Pallahara, then merged in Orissa. The respondents were assessed to sales tax under this Act in respect of their sales which took place during five quarters between July 1, 1949, and December 31, 1950. They had appealed under the provisions of the Act to higher authorities from the original orders of assessment, but were unsuccessful. They then applied to the High Court of Orissa on November 11, 1952, for an appropriate writ directing the Sales Tax Officer, the assessing authority and one of the appellants herein, to refrain from realizing the tax or from giving effect to the assessment orders in any manner whatsoever and quashing such orders and also prohibiting future assessment. By its judgment delivered on April 12, 1955, the High Court allowed the petition and cancelled the assessment orders. From that judgment the present appeal has come to this Court. The question that I propose to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00." It is conceded that the respondents are dealers within the meaning of the Act. The term "turnover" is defined in the Act but for the pur- pose of this judgment it can be taken in its popular sense. It is also unnecessary to consider sections 5, 6, 7 and 8 of the Act, for nothing turns on them in this appeal. Section 1 of the Act came into force in the Pallahara area on December 14, 1948, by virtue of the notification of that date mentioned earlier. On March 1, 1949, the Government of Orissa issued under sec- tion 1(3) of the Act a notification, being Notification No. 2267/F, appointing that date as the date on which the rest of the Act would come into force in the Pallahara area. It is not in dispute that March 1, 1949, has to be considered as the date of the commencement of the Act in the Pallahara area. That is the result of the definition of the commencement of an Act given in section 2(8) of the Orissa General Clauses Act, 1937. As will have been noticed section 4(1) of the Act required a date to be appointed before liability under it could arise. Such a date had been appointed by the Government of Orissa before the Act was applied to the areas previously belonging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents say that the notification is invalid and that therefore no date under the sub-section has been fixed at all. I think that the respondents' contention is right. Under the sub-section, on a date being appointed a dealer becomes liable to tax on sales effected after that date provided his gross turnover during the year immediately preceding the commencement of the Act exceeds Rs. 5,000. Now the Act having commenced on March 1, 1949, and a year contemplated in the Act being under section 2(j), a financial year, the year immediately preceding the commencement of the Act would be the year 1947-48. Therefore, the respondents' liability under the sub-section would depend on his turn- over for the year 1947-48 exceeding Rs. 5,000. But the notification said that the dealer whose gross turnover during the year ending March 31, 1949, that is, the year 1948-49, exceeded Rs. 5,000, would be liable to pay tax on the sales effected after the date mentioned in it. The notification, therefore, is not in terms of the section. It is contended that the words "whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000" in the notification are mere surplusage as they purpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept this contention. When it is said that a person not liable under one provision shall be liable under another, a situation is contemplated in which the liability of the person under the former provision might have arisen. It does not seem to me to be possible to say that a person is not liable under a section, when no question of liability under it can arise at all, when it is really a dead letter in the statute book. Further the appellant's contention seems to me to be against the scheme of the two sub-sections. Sub-section (1) applies to all dealers. Thus after a date has been appointed all dealers would be liable to pay tax under it if their turnover in 1947-48 exceeded Rs. 5,000. But sup- pose there are some dealers whose turnover in the year 1947-48 did not exceed Rs. 5,000. In such a case, sub-section (2) would apply to them and them only, and make such of them liable to tax whose turn- over in the year mentioned in it, exceeded Rs. 5,000. As to this there is no doubt. Thus it would appear that sub-section (2) was not meant to apply to all dealers but to a class of them and tax some or all of this class. If the appellant's contention is right, then it would be possible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been made under sub-section (2), for they were based on the respondents' turnover for 1948-49, exceeding Rs. 5,000 and this year did not commence after the commencement of the Act. If the appellants are correct in their contention, then the respondents' turnover having first exceeded Rs. 5,000 in 1948-49 they became liable under sub-section (2) to pay tax on all sales made from the commencement of the succeeding year, that is, from April 1, 1949. This liability to pay the tax arose on the expiry of the year 1948-49 when their turnover first exceeded Rs. 5,000, that is, it arose on April 1, 1949, though the assessment had to be made later, as it must necessarily be made periodically, after sales have been effected. The liability that arose on April 1, 1949, is to continue for all times but if for three successive years their turnover did not exceed Rs. 5,000, then after these three years and a further period prescribed the liability would cease under sub-section (3). Assume that the period prescribed was three months. So the respondents' liability having arisen on April 1, 1949, it continued in respect of all sales made from that date till at least June 30, 1952, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter sub-section. The fact that under sub-section (1) liability is made to arise on the turnover of the year immediately preceding the commencement of the Act, to my mind, shows that it was contemplated that the date under sub-section (1) would be fixed soon after the Act commenced. That would indicate that the intention was that both sub-sections (1) and (2) of section 4 would begin to operate at the same time. It was not contemplated that any question of liability under sub-section (2) would arise before such a question under sub-section (1) arose. I would, therefore, hold that in the present case the appellants are not entitled to levy any tax on the respondents under sub-section (2). In this view of the matter I find it unnecessary to go into the other questions discussed at the Bar. The conclusion that I come to is that the appeal fails and it be dismissed with costs. Order BY THE COURT.- The appeal is allowed in part. The decree, in so far as it sets aside the assessments for the quarters ending on June 30, 1950, September 30, 1950, and December 31, 1950, is upheld, but the decree, in so far as it sets aside the assessments for the quarters ending on September 30, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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