TMI Blog1980 (10) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... , delivered a judgment and the judgment of SEN and VENKATA- RAMIAH, JJ., was delivered by SEN, J.] BHAGWATI, J.- I have had the advantage of reading the judgment prepared by my learned brother Sen, J., and I entirely agree with the conclusion reached by him, but I would like to state briefly my own reasons for arriving at that conclusion. The facts giving rise to this appeal have been stated with admirable succinctness by my learned brother Sen, J., and I need not repeat them. The facts indeed are not material, because only one single question of law arises for determination in this appeal and it does not depend on any particular facts. The question is a very simple one, namely, whether the expression "registered dealer" in section 8(ii) of the Bombay Sales Tax Act, 1959, as applicable to the State of Gujarat (hereinafter referred to as the Bombay Act), means only a dealer registered under section 22 of that Act or it also comprises a dealer registered under the Central Sales Tax Act, 1956 (hereinafter referred to as the Central Act). Since the decision of this question turns on the true interpretation of the expression "registered dealer" in section 8(ii) of the Bombay Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact re-enforce the view that the expression "registered dealer" in section 8(ii) is used to mean a dealer registered under section 22 of the Bombay Act, and does not include a dealer registered only under the Central Act. If a dealer is registered only under the Central Act and not under the Bombay Act, it would mean that he is not liable to pay tax under the Bombay Act and in that event, even if he has sold the goods specified in Schedule C, to a registered dealer under an intra-State sale, no tax would be payable by him on such sale and if the purchasing dealer is also to be exempt from tax in respect of resale effected by him, the result would be that the goods would escape tax altogether and not suffer even single point tax. That surely could not have been the intendment of the legislature in enacting section 8(ii). It would indeed frustrate the object of section 8(ii) which is to provide for imposition of single point tax on the goods specified in Schedule C. The situation would be the same even where the sale effected by the dealer registered under the Central Act is an inter-State sale. That sale would undoubtedly be taxable under the Central Act, but it is difficult to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of sections 7 to 12 (both inclusive) shall apply to such sales, as they apply to the sales made by a dealer liable to pay tax under section 3. (2) Every dealer who is liable to pay tax under sub-section (1) shall, for the purposes of sections 32, 33, 34, 35, 36, 37, 38, 46, 47 and 48 be deemed to be a registered dealer." It is obvious that if a dealer is not registered under the Bombay Act, it could only be on the basis that he is not liable to pay tax under the Bombay Act, but even so, section 4, sub-section (1), provides that if he is registered under the Central Act, he would be liable to pay tax under the Bombay Act in respect of the transactions of sale set out in that section. This liability arises despite the fact that the dealer, not being liable to pay tax under section 3 of the Bombay Act, is not registered under that Act. The question then would be: if the dealer is not registered under the Bombay Act, how to recover the tax from him? The dealer not being registered under the Bombay Act, the machinery of the Bombay Act would not of itself apply for the recovery of tax from him. Section 4, sub-section (2), therefore enacts that every dealer who is liable to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gopalbhai Patel from whom the goods were purchased was not a registered dealer within the meaning of clause (ii) of section 8 of the Act inasmuch as he was not registered as a dealer under section 22 of the Act. The assessee appealed to the Assistant Commissioner of Sales Tax, the only material ground being that the expression "registered dealer" in clause (ii) of section 8 of the Act was wide enough to include a registered dealer under the Central Sales Tax Act but the Assistant Commissioner affirmed the disallowance of the deduction. On further appeal, the Gujarat Sales Tax Tribunal agreeing with the sales tax authorities, held that in order to claim deduction from the turnover of sales of goods under clause (ii) of section 8 of the Act, what was required to be shown was that the goods were purchased by the dealer on or after the appointed day from a "registered dealer" under the Act, and that in view of the definition of the expression "registered dealer" in sub-section (25) of section 2 of the Act, such dealer had to be a dealer registered under section 22 of the Act. The Tribunal accordingly held that since Motibhai Gopalbhai Patel, the Baroda dealer, from whom the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that having regard to the context, collocation and the object of the expression 'registered dealer' in clause (ii) of section 8 of the Bombay Act and having regard to the policy of the Act, the said expression would also include a dealer registered under the Central Act on whom special liability to pay sales tax has been imposed under section 4 of the Act. A dealer who purchases goods from a dealer registered under the Central Act, who is liable to pay sales tax on the sale of the said goods by virtue of the provisions of section 4 of the Bombay Act, would, therefore, be entitled to deduct from his turnover of sales of goods, resales of goods so purchased by him on or after the appointed day if the goods, at the time of their purchase, were goods specified in Schedule C." This conclusion of the High Court can hardly be supported. The short question that falls for determination in the appeal is whether the expression "registered dealer" in clause (ii) of section 8 of the Act must bear the meaning that is assigned to it in section 2(25) which is the definition section, or the said expression is capable of bearing an enlarged meaning, in view of the subject and context in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sales or purchases of a dealer, there shall be deducted from his total turnover of sales, or as the case may be, of purchases, the sales or purchases of such declared goods as have borne tax at any earlier stage." There is no obscurity in the language of clause (ii) of section 8 of the Act. It is clear from the terms of clause (ii) of section 8 that no deduction is claimable in respect of resales of goods purchased from a dealer registered under the Central Act, who is not a registered dealer within the meaning of section 2(25) of the Act. It follows that the expression "registered dealer" in clause (ii) of section 8 of the Act must bear the meaning of that expression as given in section 2(25) of the Act. If the meaning of the section is plain, it is to be applied whatever the result. It is a well-settled principle that when a word or phrase has been defined in the interpretation clause, Prima facie that definition governs whenever that word or phrase is used in the body of the statute. But where the context makes the definition clause inapplicable, a defined word when used in the body of the statute may have to be given a meaning different from that contained in the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho effects the first sale and that all subsequent sales of such goods should not be subjected to sales tax over again. In the light of this so-called legislative intention and the policy of the Act, the High Court observes that "having regard to the context, collocation and the object of the expression 'registered dealer' in clause (ii) of section 8 of the Act", and "having regard to the legislative intent, namely, to levy a single point tax under sub- section (3) of section 7 of the Act", the expression "registered dealer" in clause (ii) of section 8 would also include a dealer registered under the Central Sales Tax Act, 1956, on whom a special liability to pay sales tax has been imposed under section 4. Upon that view, it held that a dealer who purchased goods from a dealer registered under the Central Act, who was liable to pay sales tax on the sale of such goods by virtue of the provisions of section 4 of the Act, would be entitled to deduct from his turnover of sales of goods, resales of goods so purchased by him on or after the appointed day if the goods at the time of their purchase, were goods specified in Schedule C of the Act. It accordingly held that the meaning of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a dealer registered under section 22 of the Act. In effect, section 8 deals with transactions of sale or purchase taking place within the State. There is a fallacy in the reasoning of the High Court. It seems that the High Court was obsessed with two factors, namely, (1) the concept of a single point tax under sub-section (3) of section 7 of the Act, and (2) the fact that a registered dealer under the Central Act who may not be liable to pay tax under section 3 of the Act may nevertheless in certain contingencies be liable to pay tax. It failed to appreciate that clause (ii) of section 8 which allows for deduction of sales by one registered dealer to another, deals purely with inside sales. The expression "registered dealer" in clause (ii) of section 8 is sought to be given an enlarged meaning by stretching, in effect, the legal fiction contained in sub-section (2) of section 4. After observing that the legal fiction in sub- section (2) of section 4 is created for a limited purpose, it goes on to observe: "It would, therefore, have been inappropriate or at any rate wholly inartistic for the legislature to provide in sub-section (2) of section 4 that every dealer who is liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin its ambit a dealer registered under the Central Sales Tax Act, upon whom liability to pay sales tax is imposed by section 4 of the Bombay Act, it would have said so in clear words. It would have made necessary provision in that behalf in sub-section (2) of section 4 which provides that every dealer liable to pay tax under sub-section (1) shall be deemed to be a registered dealer for purposes of certain sections of the Bombay Act, viz., sections 32, 33, 34, 35, 36, 37, 38, 46, 47 and 48. It is thus apparent that the legal fiction in sub-section (2) of section 4 is created for a limited purpose, namely, to make section 4 a self-contained code which not only imposes a charge of tax and lays down the rate structure, but also provides the machinery for assessment and recovery of tax and penalty. The legal fiction contained in sub-section (2) of section 4 of the Act cannot be stretched any further. For these reasons, the judgment of the High Court answering the reference in favour of the assessee is set aside. The question referred by the Tribunal is answered in the negative and in favour of the revenue. There shall be no order as to costs. Appeal allowed. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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