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TMI Blog1964 (11) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... tate trade or commerce during any year. Section 7 provides for registration of dealers. Section 8 deals with the rates of tax on sales in the course of inter-State trade or commerce. By sub-section (2), as it stood at the relevant time, it was provided: "The tax payable by any dealer in any case not falling within sub-section (1) in respect of the sale by him of any goods in the course of inter-State trade or commerce shall be calculated at the same rates and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State, and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law." Section 9 provided for levy and collection of tax. It provided: "(1) The tax payable by any dealer under this Act shall be levied and collected in the appropriate State by the Government of India in the manner provided in sub-section (2). (2) The authorities for the time being empowered to assess, collect and enforce payment of any tax under the general sales tax law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Sales Tax Act. The Legislature has not said so in express terms, and there is no implication to that effect in the scheme of the Act. Section 9(1) invests the appropriate State Government with authority to levy and collect tax, in the manner provided by sub- section (2). By sub-section (2) of section 9 the Legislature has expressly provided that the tax has to be assessed, collected and payment has to be enforced under the general sales tax law of the appropriate State on behalf of the Government of India. The scheme devised by the Legislature is fairly clear. Section 6 charges inter- State transaction to tax. The function of section 8(2) is to prescribe the rate and the manner of calculation of tax; it is not intended to incorporate the entire procedural and substantive State law relating to tax. By sub-section (2) of section 9 the machinery for assessment, collection and enforcement of liability to pay tax is set up. Neither section 8(2) nor section 9(2) cuts down the plenary charge imposed by section 6. It is true that section 9(1) directs that the tax payable by a dealer shall be levied and collected in the manner provided in that sub-section. The sub-section, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct only to a single point levy under the local sales tax law) is of no consequence. The principle of Mariappa's case [1962] 13 S.T.C. 371., was applied by the Kerala High Court in Parvathi Mills (Private) Ltd. v. The State of Kerala [1962] 13 S.T.C. 927. , in which excise duty paid to the Central Government by a dealer and collected from his customers was not permitted to be excluded from the turn- over by the application of rule 7(1) of the General Sales Tax Rules, 1950, framed under the local Sales Tax Act. It was observed in that case that the expression "in the same manner" in section 9(2) of the Central Sales Tax Act did not attract the application of the rule which justified the exemption. The Andhra Pradesh High Court in Sri Surya Trading Firm and Others v. The State of Andhra Pradesh [1963] 14 S.T.C. 720., held that an assessee dealing in handloom cloth and whose inter-State sales fell under section 8(2) of the Central Sales Tax Act, 1956, was not entitled to the benefit of the exemption granted to handloom cloth under the notification issued by the State Government on December 13, 1957, in exercise of the powers conferred under section 9(1) of the Andhra Pradesh General ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Central Sales Tax (Second Amendment) Act, 1958 (31 of 1958). This was upheld by the Deputy Commissioner of Commercial Taxes. The Mysore Sales Tax Appellate Tribunal also affirmed the order. The High Court, in revision, accepted the plea of the assessee that its turnover consisting of sales of textiles manufactured by means of powerlooms in the course of inter-State trade is liable to be taxed at the same rate and exactly in the same manner as they would have been taxed if they had been intra-State transactions. The High Court arrived at this conclusion because, according to it, the true construction of section 8(2) of the Central Act is that any exemption given by a State Sales Tax Act or the point determined by it at which a sale is to be taxed applies to assessments under the Central Act. The assessee's plea, in brief, is that he is not the first or earliest of the successive dealers of the disputed turnover, and, therefore, if he had sold the goods intra-State, no tax would have been levied on him. The reply of the department is that this is true but under the Central Act he is liable to be taxed because of section 6, and the point at which a turnover is taxed has nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to any rules made under this Act, assess, collect and enforce payment of any tax payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, appeals, reviews, revisions, references, penalties and compounding of offences, shall apply accordingly. (3) The proceeds (reduced by the cost of collection) in any financial year of any tax levied and collected under this Act in any State on behalf of the Government of India shall, except in so far as those proceeds represent proceeds attributable to Union territories, be assigned to that State and shall be retained by it; and the proceeds attributable to Union territories shall form part of the Consolidated Fund of India." Section 6 of the Central Act is the charging section. Subject to the other provisions contained in the Act, every dealer is liable to pay tax under the Act on all sales effected by him. It will be noticed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid and collected, it is reasonable to hold that the expression "levied" in section 9(1) of the Central Act refers to the expression "levied" in section 5(3)(a) of the State Act. There is no reason why the Central Act made a departure in the manner of levy of tax on the specified goods which are taxed only at a single point under the State Act; if any such radical departure was intended, the Central Act would have expressly stated so. The Central Act was passed to levy and collect sales tax on inter-State sales to avoid con- fusion and conflict of jurisdictions; the tax is also collected only for the benefit of the States. Therefore, the construction we accept avoids the anomaly of the State collecting tax on powerloom textiles only at a single point and the Centre, through the agency of the State authorities, collecting the said tax for and on behalf of the State at multi- points. There has been considerable difference of opinion among the High Courts about the true construction of section 8(2), but none of them has relied on section 9 of the Central Act. Therefore, it is not necessary to refer to the cases cited before us. For the foregoing reasons we hold, though for differen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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