9911796707
TMI Blog1958 (4) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... rissa Sales Tax Act, (Orissa XIV of 1947), hereinafter refer- red to as the said Act, received the assent of the Governor-General on April 26, 1947, when section 1 of the Act came into force. On August 1, 1947, a Notification was issued by the Government of Orissa bringing the rest of the said Act into force in the Province of Orissa, as it was then constituted. Section 4, as it stood at all times material to this appeal, ran as follows: "4(1) Subject to the provisions of section 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by notification in the Gazette, appoint, being not earlier than thirty days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so notified: Provided that the tax shall not be payable on sales involved in the execution of a contract which is shown to the satisfaction of the Collector to have been entered into by the dealer concerned on or before the date so notified. (2) Every dealer to whom sub-section (1) does not apply sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued that the respondents were sought to be made liable to tax. The respondents were assessed under the said Act for five quarters ending respectively on September 30, 1949, December 31, 1949, June 30, 1950, September 30, 1950, and December 31, 1950. It will be noticed that the first two quarters related to a period prior to the commencement of the Constitution and the remaining three quarters fell after the Constitution came into force. The Sales Tax Officer, Cuttack, having assessed the respondents to sales tax under the said Act for each and all of the said five quarters and the respondents' several appeals against the said several assessment orders under the said Act having been dismissed on April 12, 1952, the respondents filed a petition under Article 226 of the Constitution in the Orissa High Court praying, inter alia, for a writ in the nature of a writ of certiorari for quashing the said assessment orders and for prohibiting the appellants from realising the tax so assessed or from making assessments on them in future. The contention of the respondents before the High Court was that the notification issued by the Government of Orissa on March 1, 1949, under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the tax liability would attach to the dealers described and specified in the sub-section itself as the per- sons on whom that liability would fall. The Government of Orissa issued the notification, hereinbefore quoted, "in exercise of the powers conferred by sub-section (1) of section 4" and appointed March 31, 1949, as the date with effect from which the tax liability would commence. It was none of the business of the Government of Orissa to say on what class of dealers the tax liability would fall, for that had been already determined by the sub-section itself. Therefore, by the notification the Government of Orissa properly exercised its powers under sub-section (1) in so far as it appointed March 31, 1949, as the date, but it exceeded its powers by proceeding to say that all dealers whose gross turnover during the year ending March 31, 1949, exceeded Rs. 5,000 should be liable to pay tax under the Act. This part of the notification clearly ran counter to the sub-section itself, for under that sub-section it is only those dealers whose gross turnover exceeded Rs. 5,000 "during the year immediately preceding the commencement of this Act" that became liable to pay the tax. For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any legal efficacy. The result, therefore, is that the charging section was effectively brought into force and the entire charging section became operative and dealers could be properly brought to charge under the appropriate part of the charging section. It is true that the notification having also stated that the dealers, whose gross turnover exceeded Rs. 5,000 during the year ending March 31, 1949, would be liable to pay the tax, the Sales Tax Authorities naturally applied their mind to the question whether during the year ending March 31, 1949, the gross turnover of the respondents exceeded the requisite amount, but did not inquire into the question whether the respondents' gross turnover exceeded Rs. 5,000 during the year immediately preceding the commencement of the Act which in this case was the financial year from April 1, 1947, to March 31, 1948. If the matter stood there, it would have been necessary to send the case back to the Sales Tax Officer to enquire into and ascertain whether the quantum of the gross turnover of the respondents during the last mentioned financial year ending on March 31, 1948, exceeded Rs. 5,000 or it did not. But a remand is not ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court quashed certain orders of assessment of sales tax made against the respondent. The short facts are these. The respondent, Messrs. B.C. Patel and Co., is a partnership firm carrying on the business of collection and sales of kendu leaves. The firm has its headquarters at Pallahara, which was formerly one of the Feudatory States of Orissa and merged in the then Province of Orissa by a merger agreement dated January 1, 1948. The Sales Tax Authorities, Cuttack, in the State of Orissa, assessed the respondent to sales tax in respect of sales of kendu leaves which took place for five quarters ending on September 30, 1949, December 31, 1949, June 30, 1950, September 30, 1950, and December 31, 1950. It should be noted that two of the aforesaid quarters related to a period prior to the commencement of the Constitution, and the remaining three quarters were post-Constitution. The facts which the Sales Tax Authorities found were (1) that the respondent collected kendu leaves in Orissa and sold them to various merchants of Calcutta, Madras and other places on receipt of orders from them, (2) that the goods were sent either f.o.r. Talcher or f.o.r. Calcutta, and (3) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; But before we do so, it is necessary to state some facts with regard to the enactment and enforcement of the Orissa Sales Tax Act, (Orissa XIV of 1947) hereinafter referred to as the Act, in the old Province of Orissa and the ex-Feudatory State of Pallahara. The Act received the assent of the Governor-General on April 26, 1947, and was first published in the Orissa Gazette on May 14, 1947. Section 1 came into force at once in the old Province of Orissa and sub-section (3) of that section said that "the rest of the Act shall come into force on such date as the Provincial Government may, by notification in the Gazette, appoint". The Provincial Government of Orissa notified August 1, 1947, as the date on which the rest of the Act was to come into force in the Province of Orissa. It is necessary at this stage to refer to the charging section, namely section 4 of the Act, which is set out below as it stood at the relevant time: "4. (1) Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by notification in the Gazette, appoint, being not earlier than thirty days after the date of the said notification, every dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act to the former Orissa States including Pallahara by a notification dated December 14, 1948. The only modification made in applying the Act to the Orissa States was to substitute the words "Orissa States" for the words "Province of Orissa", wherever they occurred in the Act. By merely applying the Act to the Orissa States on December 14, 1948, all sections of the Act did not come into force in that area at once, since a notification under sub-section (3) of section 1 was necessary to bring into force section 2 to 29. Such a notification was issued on March 1, 1949. The notification was in these terms: "In exercise of the powers conferred by sub-section (3) of section 1 of the Orissa Sales Tax Act, 1947, (Orissa Act XIV of 1947) as applied to Orissa States, the Government of Orissa are pleased to appoint the 1st day of March, 1949, as the date on which sections 2 to 29 of the said Act shall come into force". The position therefore was this. Section 1 of the Act came into force in Pallahara on December 14, 1948, and the remaining sections came into force on March 1, 1949, namely, those sections which dealt with the liability of a dealer to pay sales tax, set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the sub-section itself is the year immediately preceding the commencement of the Act. Therefore, the sub-section contemplates two matters, one of which may be called the "relevant date" and the other "relevant period". So far as the old Province of Orissa was concerned, there was no difficulty. The notification fixed September 30, 1947, as the relevant date, and the year immediately preceding the commencement of the Act in the old Province of Orissa was the relevant period, viz., the financial year 1946-47 i.e., April 1, 1946, to March 31, 1947. Therefore dealers whose gross turnover exceeded Rs. 5,000 in 1946-47, became liable under sub-sec- tion (1) of section 4 to tax on transactions of sale after September 30, 1947, in the old Province of Orissa. The notification for the Orissa States, however, fixed March 31, 1949, as the relevant period. This was clearly a mistake, because under sub-section (1) of section 4 the crucial year is the year immediately preceding the commencement of the Act. The Act commenced in the Orissa States either on December 14, 1948, or on March 1, 1949, and the financial year immediately pre- ceding was the year 1947-48, i.e., April 1, 1947, to March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent; therefore, the opening words of sub-section (2) barred the application of the sub-section to the respondent. At first sight, there appears to be some force in this view. But on a closer examination we do not think that the view expressed by the High Court is correct. Sub-sections (1) and (2) are mutually exclusive only in the sense that they do not operate in the same field; that is, the relevant periods for their application are different. The relevant period for the application of sub-section (1) is "the year immediately preceding the commencement of the Act." Sub-section (2) however does not require any notification, and under it every dealer is liable to pay tax under the Act with effect from the commencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000. Obviously, the relevant period for the application of sub-section (2) is the year immediately following that during which the gross turnover of a dealer first exceeded Rs. 5,000. The contrast between the two sub- sections is this: for sub-section (1) the crucial year is the year immediately preceding the commencement of the Act; but for sub-section (2) the crucial year is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect 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). We now turn to the post-Constitution period. The short ground on which the High Court held the assessment orders for this period to be invalid was based on the decision of this Court in The State of Bombay v. The United Motors (India) Ltd. [1953] S.C.R. 1069; 4 S.T.C. 133. Said the High Court: "Clause (1) of Article 286 prohibited a State from taxing a sale unless such sale took place within the State as explained in the Explanation to the clause of the Article. Similarly, clause (2) of that Article restricted the power of a State to tax a sale which took place 'in the course of inter-State trade or commerce'. Doubtless, by virtue of the proviso to that clause an Order by the President may save taxation on such inter-State sales till the 31st M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 which in substance reproduced Article 286 of the Constitution, as it then stood, was in these terms- "30. (1) Notwithstanding anything contained in this Act- (a) a tax on sale or purchase of goods shall not be imposed under this Act- (i) where such sale or purchase takes place outside the State of Orissa; or (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of India; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March 1951, be imposed where such sale or purchase takes place in the course of inter-State trade or commerce except in so far as Parliament may by law otherwise provide. (2) The Explanation to clause (1) of Article 286 of the Constitution shall apply for the interpretation of sub-clause (i) of clause (a) of sub- section (1)." We are of the view that The Bengal Immunity decision(1) does not really help the learned Solicitor-General to establish his contention that the assessments for the post-Constitution period were valid. The admitted position was that the goods sold were delivered for consumption at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the present occasion we are definitely of the opinion that the Explanation in clause (1)(a) cannot be legitimately extended to clause (2) either as an exception or as a proviso thereto or read as curtailing or limiting the ambit of clause (2)." As to the President's Order, it was stated at page 656: "It will be noticed that under that proviso the President's Order was to take effect 'notwithstanding that the imposition of such tax is contrary to the provisions of this clause'. This non obstante clause does not, in terms, supersede clause (1) at all and, therefore, prima facie, the President's Order was subject to the prohibition of clause (1)(a) read with the Explanation." Obviously, therefore, even on The Bengal Immunity decision [1955] 2 S.C.R. 603; 6 S.T.C. 446. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Gazette, appoint. Section 2. In this Act, unless there is anything repugnant in the subject or context,- ........................................................................................ (j) "year" means the financial year. Section 4. (1) Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by notification in the Gazette, appoint, being not earlier than thirty days after the date of the said notification, every dealer whose gross turn- over during the year immediately preceding the commencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so notified. Provided that the tax shall not be payable on sale involved in the execution of a contract which is shown to the satisfaction of the Collector to have been entered into by the dealer concerned on or before the date so notified. (2) Every dealer to whom sub-section (1) does not apply shall be liable to pay tax under this Act with effect from the commencement of the year immediately following that during which his gross turnover first exceeded Rs. 5,000. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms: "In exercise of the powers conferred by sub-section (1) of section 4 of the Orissa Sales Tax Act, 1947 (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." So it would appear that in regard to Pallahara area two notifications were issued on March 1, 1949, by one of which under section 1(3) the rest of the Act was applied to, and by the other a day was appointed as required by section 4(1), for this area. The sections under which liability to tax arises under the Act primarily are sub-sections (1) and (2) of section 4. I have said liability arises primarily because unless liability under either of them arises there is no liability under the Act at all. But once liability under either of these sub-sections arises, that liability continues for certain successive years under sub-section (3) and when it has come to an end under that sub-section it can again revive under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whose turn- over in the year 1948-49 exceeded Rs. 5,000 would be liable to pay tax on sales after a date mentioned, the Government cannot now turn round and say that a dealer would be liable to pay tax on such sales under the sub-section though his turnover during the year 1948-49 did not exceed Rs. 5,000. Whether the Government need have specified any year during which the turnover had to exceed Rs. 5,000 to give rise to the liability for the tax or not, is irrelevant. The question is whether the notification has appointed a date as a result of which liability to pay tax under the sub-section arises. That it clearly has not. The notification, therefore, is bad and has no effect at all. The result is that there has been no date appointed under the sub-section and no liability can therefore arise under it at all. It does not, as things stand, operate to fix any liability. It is as it were that the sub-section had not been brought into life. The appellants cannot, therefore, claim to levy any tax on the respondents under sub-section (1) of section 4. The appellants then contend that even if as a result of no date having been fixed under sub-section (1) no liability to pay ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the same words would refer to different classes of people according as a date under sub-section (1) was appoint- ed or not. The scheme is that some might be made liable under sub- section (1) and those that escape liability under it might be made liable under sub-section (2). Sub-section (2) was not intended to have any operation at all till a date was appointed under sub-section (1) and a liability under it might have arisen. It seems to me that if liability under sub-section (2) arose without a date under sub-section (1) having been appointed, the result would be anomalous. It would make a dealer liable under both sub-sections which is plainly something which the Act did not intend to do. An illustration will make this clear. Under sub-section (2) a dealer will be liable to pay tax with effect from the commencement of the year immediately following that during which his gross turnover first exceeds Rs. 5,000. The year from the commencement of which liability to pay tax arises under it must be a year commencing after the Act comes into force, for otherwise the Act will have been given a retrospective operation and this, there is no reason to think, was intended. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... became liable to pay tax also under sub-section (1) on all sales effected after August 1, 1949. The result is that on sales effected after this date, the respondents became liable to pay tax under both the sub-sections at the same time. I cannot conceive that such a result could have been intended. I will now put it from another point of view. Under sub-section (3) once liability to pay tax arises, it will go on for three years and such further time as may be prescribed which we will assume was three months, though the turnover failed to exceed Rs. 5,000 for any of these years and after that the liability will cease. In the present case the respondents were first assessed by an order made on May 31, 1951, on sales in the quarter ending September 30, 1949. I will assume that the liability to pay the tax arose under sub-section (2). Suppose now that for the years 1949-50, 1950-51 and 1951-52 the respondents' turn- over was below Rs. 5,000. On these facts their liability ceased on June 30, 1952. Now suppose, on June 1, 1951, that is, the day after the order of assessment in respect of the liability under sub-section (2) had been made, July 1, 1951, had been appointed the date ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
