TMI Blog1964 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... na, S. Murty and K.K. Jain with him), for the appellants. C.B. Agarwala, Senior Advocate, (C.P. Lal with him), for the respondents. ----------------------------------- The judgment of GAJENDRAGADKAR, C.J., HIDAYATULLAH, DAS GUPTA and RAGHUBAR DAYAL, JJ., was delivered by RAGHUBAR DAYAL, J. SHAH, J., delivered a separate judgment. Page No: 94 RAGHUBAR DAYAL, J.- The appellant, Amrit Banaspati Co., Ltd., hereinafter called the company, a joint-stock company, and S.P. Bhasin, a shareholder of the company, filed Writ Petition No. 1003 of 1961 in the High Court of Judicature at Allahabad challenging the validity of the U.P. Sales Tax Validation Act, 1958 (Act XV of 1958), hereinafter called the Validation Act, and praying for the quashing of the assessment order dated October 15, 1960, and the order dated February 1, 1961, of the Sales Tax, Judge (Appeals), Meerut, in connection with the assessment of tax on the sale of vanaspati and other articles both on the ground that the sales tax was assessed at a higher rate than was permissible under a valid law and that the tax had been assessed at the rate of 1 anna and not at 6 naye paise per rupee. The learned single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reference to 6 naye paise and that the wrong calculation by the Sales Tax Authority has resulted in over-assessment of tax. To appreciate the real contention urged, it is necessary to refer to the relevant provisions of the Coinage Act. Section 13 provides the extent up to which the tender of the various coins would be considered legal tender. Its relevant portions read: "13. (1) The coins issued under the authority of section 6 shall be a legal tender in payment or on account,- (a) in the case of a rupee coin, for any sum; (b) in the case of a half-rupee coin, for any sum not exceeding ten rupees; (c) in the case of any other coin, for any sum not exceeding one rupees; Provided that the coin has not been defaced and has not lost weight so as to be less than such weight as may be prescribed in its case. * * * * (3) All nickel, copper and bronze coins which may have been issued under this Act before the 24th day of January, 1942, shall continue as before to be a legal tender in payment or on account for any sum not exceeding one rupee." Section 14, after the amendment introducing the decimal system of coinage, reads: "14. (1) The rupee shall be divided into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole number and a fraction. There is no coin of the equivalent to a fraction of a naya paisa in value. In such cases, there is not going to be payment of the amount due in full, if for the amount tendered in payment or on account there is no full equivalent of naye paise at the rate specified in sub-section (2). It is for such contingency of a payment being not a full payment that sub-section (2) further provides that the coins tendered will be legal payment at the specified rate calculated to the nearest new coin or where the new coin above or new coin below are equally near, to the new coin below. The significance of this specified mode of calculation would be apparent from a concrete example. 7 annas, 6 annas and 5 annas, calculated at the specified rate, would be equal to 43 3/4, 37 1/2 and 31 1/4 naye paise. According to the artificial calculation, they will however be deemed to be legal tender for 44, 37 and 31 naye paise respectively, as 44 and 31 naye paise are nearest to the calculated equivalent of 7 annas and 5 annas and 37 naye paise is the next coin below 37 1/2 naye paise which are equally below 38 naye paise and above 37 naye paise and the artificial mode of calculati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id in terms of new coins. Sub-section (3) therefore simply provides that references in any of the document referred to in that sub-section, to any value expressed in annas, pic and pices shall be construed as references to that value expressed in new coins converted thereto at the rate specified in sub-section (2). Sub-section (2) specifies the rate. The rate specified in sub-section (2) is 16 annas, 64 pice or 192 pies to 100 new coins or naye paise. It is this rate which is referred to in sub-section (3). There is nothing in sub-section (3) which can be taken to refer to that part of sub- section (2) which relates to the actual calculation for arriving at the number of new coins deemed equivalent in value to a certain number of annas, pice or pies, coins tendered within the limits of legal tender. The provisions of sub-section (3) of section 14 provide for the conversion of the value of old coins into that of new coins at the rate specified in sub-section (2) and do not provide for conversion to be in accordance with the provisions of sub-section (2). The other expression would have been preferable if the Legislature had intended that the reference of values expressed in old co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the appellant in a way as to make it much less. The figures would stand thus: Rs. a. p. Total amount paid at 1 anna per rupee 8,05,726 10 6 Amount payable at 9 pies 6,05,167 5 3 Amount refundable, and therefore which the petitioner company could detain 2,00,559 5 3 If the amount payable be calculated at the rate of 5 naye paise in place of 9 pies, the amount refundable would be much less as shown below: Rs. NP. Total amount paid at 1 anna per rupee 8,05,726 65 Amount payable at 5 naye paise 6,44,661 32 Amount refundable 1,61,065 33 The appellant stood to lose by calculating the tax payable in terms of naye paise and therefore made up an account at the old coin rates. The Legislature could not have intended, by the provisions of sub- section (3), that a mere provision for working out the values in old coins into values in new coins should provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rate of calculation was wrong, but was that the law providing for the assessing of tax at the rate of 2 naye paise instead of 3 pies per rupee was invalid as it amounted to enhancing the tax by an Act which was not enacted in accordance with the procedure laid down in the Constitution. This is clear from what was stated in para. 2 at page 589, it being; "The grievance of the appellant was that according to the Mysore Sales Tax Act he was liable to sales tax at the rate of 3 pies for every rupee on the turnover and calculated on that basis the amount of tax would be Rs. 91,690, but after the amendment of the Indian Coinage Act (Act 3 of 1906) by the Amending Act 31 of 1955 the rate of sales tax which was levied on the appellant's beedis was 02 nPs. per rupee and thus the appellant was called upon to pay Rs. 25,038 more than he would have paid if he had been charged at the rate of 3 pies per rupee. It was contended on behalf of the appellant in the High Court and before us that this amounted to enhancement of tax which was illegal because the tax had not been increased in the manner provided under the Constitution and thus it was a breach of Article 265 of the Constitution and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the old legal tender, i.e., annas, pice and pies is mentioned in an enactment it is be converted into naye paise and the naye paise are to be substituted in place of the old legal tender calculated in the manner laid down in sub-section (2)." Stress is placed on the last sentence but this cannot be taken as the decision of the Court on the question that sub-section (3) of section 14 made reference not only to the rate of conversion but also to the mode of calculation, as that question had not been considered in any manner. The last sentence was a sort of a paraphrase of what had been said earlier in the quotation with respect to the provisions of sub-section (3). This is clear from the facts that the provisions of sub-section (3) have not been stated in full, and have been referred to up to the stage of references to the new coin referred to in sub-section (1) and that the last portion of the provisions of sub-sec- tion (3), i.e., "converted thereto at the rate specified in sub-section (2)" has not been mentioned. It is thus that the latter part of the observations happened to refer to the method of calculation and not to the rate specified in sub-section (2). The Court was, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tituted by Act 28 of 1947 for the original sections 13 and 14) in so far as it is material provides: "(1) The coins issued under the authority of section 6 shall be a legal tender in payment or on account,- (a) in the case of a rupee coin, for any sum; (b) in the case of a half-rupee coin, for any sum not exceeding ten rupees; (c) in the case of any other coin, for any sum not exceeding one rupee: (2) * * * * Section 14 which was added by Act 31 of 1955 provides: "(1) The rupees shall be divided into one hundred units and the new coin representing such unit may be designated by the Central Government, by notification in the Official Gazettee, under such name as it thinks fit, and the rupee, half-rupee and quarter-rupee shall be respectively equivalent to one hundred, fifty and twenty-five such new coins and shall, subject to the provisions of sub-section (1) and sub- section (2) of section 13 and to the extent specified therein, be a legal tender in payment or on account accordingly. (2) All coins issued under the authority of this Act in any denominations of annas, pice and pies shall, to the extent specified in section 13, be a legal tender in payment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is any law, contract or instrument a reference to any value expressed in terms of annas, pice or pies, by sub-section (3) the reference has to be construed as if the value is expressed in terms of new coins at the rates specified in sub-section (2). Liability to pay an amount in one transaction ascertained in terms of new coins may be discharged under sub-section (2) by tender of annas, pice or pies according to the table of equivalence and the fractions may be rounded off. But in the ascertainment of liability under a transaction, sub-section (2) does not come into play. Liability under a transaction is ascertained under the general law, and sub-section (3) comes in aid as an interpretation clause when the value is expressed in some law, contract or instrument governing a transaction not in terms of new coins, but of annas, pice or pies. Sub-section (3) does not attract the rule of rounding off at the stage of discharge of liability under any concrete transaction: it merely prescribes the value which shall be deemed to be substituted in any law, contract or instrument when the value is specified therein in terms of annas, pice or pies. It is attracted when liability declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctment it is to be converted into naye paise and the naye paise are to be substituted in place of the old legal tender calculated in the manner laid down in sub-section (2)." The Court rejected the claim of the taxpayer that he was liable to pay tax computed at the rate of three pies per rupee only. If sub- section (3) of section 14 was susceptible of the interpretation submitted on behalf of the State of Uttar Pradesh, it was wholly unnecessary to enter upon the question of the vires of the provisions, because between the computation of sales tax on a total turnover of Rs. 58,36,422-25 nPs. at 2 naye paise, and at the rate of 3 pies per rupee in the manner suggested, there would have resulted no discrepancy at all, and the contention of the taxpayer that he was liable to pay Rs. 91,690 had to be accepted. But this Court upheld the claim of the sales tax department that the computation had to be made by substituting two naye paise in the section of the Mysore Sales Tax Act, which imposed liability for payment of tax, and the total demand for tax computed on the footing of that substitution was properly made. If the interpretation which is now suggested on behalf of the State be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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