TMI Blog1964 (3) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... RI S.M. JJ. S.K. Kapur, Senior Advocate (S.K. Mehta and K.L. Mehta with him), for the respondent. C.B. Agarwala, Senior Advocate (C.P. Lal with him), for the appellant. -------------------------------------------------- The Judgment of the Court was delivered by SHAH, J.- Bijli Cotton Mills-respondent in this appeal-is a manufacturer of cotton yarn and is registered as a dealer under the U.P. Sales Tax Act (15 of 1948). Under the U.P. Sales Tax Act (15 of 1948) which came into force on April 1, 1948, sales tax became payable on sales of diverse commodities including cotton yarn at a uniform rate of three pies in a rupee. By Act 25 of 1948, section 3-A was incorporated in Act 15 of 1948 conferring upon the Provincial Government power to declare by notification that the proceeds of sale of any goods or class of goods shall not be included in the turnover of any dealer except at such single point in the series of sales by successive dealers as the State Government may specify. By section 7 as amended by Act 25 of 1948, a dealer had the option to submit his return on the basis of the turnover of the sales in the previous year or on the basis of turnover of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following its judgment in Modi Food Products Ltd. v. Commissioner of Sales Tax, U.P., answered the question as follows: "all sales of the assessee during the previous year which corresponded with the calendar year 1947 have to be taxed at the flat rate of 3 pies per rupee when making the assessment for the assessment year 1948-49". With special leave, the Commissioner of Sales Tax, U.P., has appealed to this Court against the order of the High Court. It may be observed that the judgment of the Allahabad High Court in Modi Food Products Ltd.'s case A.I.R. 1956 All. 35; 6 S.T.C. 287. was confirmed by this Court: Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. [1961] 2 S.C. R. 189; 12 S.T.C. 182. But the Legislature of the State of Uttar Pradesh has, since that judgment was pronounced, enacted validating legislation by Act III of 1963 which has provided by section 7 of the Amending Act that: "After section 30 of the Principal Act, the following shall be added and be deemed to have been so added with effect from the first day of April, 1948, as a new section 31: '31. (1) Where any dealer has, in accordance with the provisions of section 7, as it stood prior to its ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 of 1948 as amended by Act 25 of 1948 he was liable to be assessed to sales tax at the rate in force on the first day of the year of assessment, because the liability arises on that date and any subsequent enhancement of the rate by virtue of a notification under section 3-A does not alter that liability. The view expressed by the Court has been modified by express legislation operative retrospectively. The liability to tax of the turnover of the previous year which is regarded as the fictional turnover of the year of assessment has to be determined on the basis that the rates applicable in the year of assessment were fictionally projected on the taxable turnover. Mr. Kapur appearing on behalf of the respondent-company submitted that in answering the question referred by the Judge (Revisions) this Court was bound to give its opinion in the light of the law applicable to the transaction as it prevailed at the date on which the reference was made and not of any subsequent amendment of the Act. Counsel submits that as the High Court exercises an advisory jurisdiction, so does this Court in appeal against the order of the High Court, and its advice can only be tendered on the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed to have been in operation at all material times in supersession of the previous rule declared by this Court. This Court is, therefore, not seeking to apply any law to the question posed before the High Court which was not in force on the date of the transaction which is the subject-matter of the reference. The following observation was made by Jagannadhadas, J., in Chatturam Horilram Ltd. v. Commissioner of Income-tax, Bihar and Orissa [1955] 2 S.C.R. 290; 27 I.T.R. 709., on which reliance was placed by counsel for the respondent- company: "The High Court's jurisdiction was only to answer the particular question that was referred to it by the Income-tax Appellate Tribunal and it is extremely doubtful whether they could have taken notice of a subsequent legislation and answered a different question", does not suggest a different rule. In Chatturam Horilram Ltd.'s case [1955] 2 S.C.R. 290; 27 I.T.R. 709., a previous assessment to income-tax of the assessee fell through because the Indian Finance Act of 1939 was not in force in Chota Nagpur area where the assessee was carrying on business during the relevant assessment year. Thereafter Bihar Regulation IV of 1942 was prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t law appli- cable at the date of the transaction. The observation relied upon has to be read in the context of the finding of the High Court as to the character of the amending legislation. The observation therefore does not assist the contention that even in cases where the relevant statute has been amended with retroactive operation, so as to apply to the transaction which forms the subject-matter of the reference, and the High Court or this Court is bound in recording its opinion on the question referred to ignore the amended law. If what counsel con- tends is true, the answer given by the High Court or by this Court would have no value whatever in cases where by retroactive amendment of the law, the old law has been superseded and is substituted by a new statutory provision. Undoubtedly the Tribunal called upon to decide a taxing dispute must apply the relevant law applicable to a particular transaction to which the problem relates, and that law normally is the law applicable as on the date on which the transaction in dispute has taken place. If the law which the Tribunal seeks to apply to the dispute is amended, so as to make the law applicable to the transaction in dispute, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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