TMI Blog1992 (10) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... erit. - Writ Petition (Civil) No. 9925-9933 of 1983, - - - Dated:- 14-10-1992 - RANGANATHAN S. AND RAMASWAMI V. AND JEEVAN REDDY B.P. JJ. Writ Petition (Civil) No. 9925-9933 of 1983, W.P. (Civil) No. 10726, W.P. (Civil) No. 13452, W.P. (Civil) No. 13453, W.P. (Civil) No. 13379, W.P. (Civil) No. 13380, W.P. (Civil) No. 13381, W.P. (Civil) No. 13382, W.P. (Civil) No. 13383, W.P. (Civil) No. 13384 of 1983, W.P. (Civil) No. 207, W.P. (Civil) No. 208, W.P. (Civil) No. 209, W.P. (Civil) No. 210, W.P. (Civil) No. 211 of 1984, W.P. (Civil) No. 1302 of 1986, Civil Appeal No. 4596 of 1990, W.P. (Civil) No. 13454, W.P. (Civil) No. 13455, W.P. (Civil) No. 13456, W.P. (Civil) No. 13457, W.P. (Civil) No. 13458, W.P. (Civil) No. 13459, W.P. (Civil) No. 13460, W.P. (Civil) No. 13461, W.P. (Civil) No. 13462, W.P. (Civil) No. 13463 decided on October 14, 1992 M.L. Verma, Senior Advocate (P.N. Misra, P.K. Jena and Vinoo Bhagat, Advocates, with him), for the petitioners and appellant. G.L. Sanghi, Senior Advocate (B.A. Mohanty and R.K. Mehta, Advocates, with him), for the respondents. -------------------------------------------------- The judgment of the Court was deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the contrary in the Act the State Government may subject to such conditions "or restrictions " by notification exempt in whole or in part any class of dealers from the payment of tax or allow any class of dealers to defer from payment of tax. Section 8 which is relevant for the purpose of this decision may be quoted and that reads as follows: "8. Power of the State Government to prescribe points at which goods may be taxed or exempted.- Notwithstanding anything to the contrary, in this Act, the State Government may prescribe the points in the series of sales or purchases by successive dealers at which any goods or classes or descriptions of goods may be taxed or exempted from taxation and in doing so may direct that sales to or purchases by a person other than a registered dealer shall be exempted from taxation: Provided that the same goods shall not be taxed at more than one point in the same series of sales or purchases by successive dealers. Explanation .-Where in a series of sales, tax is prescribed to be levied at the first point, such point in respect of goods despatched from outside the State of Orissa shall mean and shall always be deemed to have meant th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified, from time to time, under clause (a) of section 15 of the Central Sales Tax Act, 1956, the rate of additional tax in respect of such goods shall be reduced to such an extent that the tax and the additional tax together shall not exceed such maximum percentage of the sale or purchase price of such goods. Explanation .-'Declared goods' shall have reference to declared goods as defined in the Central Sales Tax Act, 1956. (2) The provisions of the said Act shall, mutatis mutandis apply in relation to the said additional tax as they apply in relation to the tax payable under the said Act. (3) Notwithstanding anything contained in the said Act, no dealer referred to in sub-section (1) shall be entitled to collect the additional tax payable under this Act. 3.. (1) Any dealer who collects the additional tax payable under this Act, in contravention of the provisions of subsection (3) of section 2 shall be punishable with fine which may extend to one thousand rupees. (2) No court inferior to that of a Judicial Magistrate of the first class shall try an offence under this Act. 4.. (1) The State Government may make rules for carrying out the purposes of this Act. (2) Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Act, 1956; (b) words and expressions used but not defined shall have the same meanings as are respectively assigned to them in the Orissa Sales Tax Act, 1947 (hereinafter referred to as the 'said Act'). 3.. (1) Every dealer shall, in addition to the tax payable by him for a year under the said Act, be liable to pay additional tax at such rate not exceeding one per cent of his gross turnover for that year, as may be notified, from time to time by the State Government: Provided that no additional tax as aforesaid shall be payable on that part of the gross turnover which relates to sale and purchase of declared goods: Provided further that the State Government may, by notification, subject to such conditions and restrictions, if any, exempt any class of dealers or the turnover relating to any goods or class of goods from the levy of the additional tax and likewise withdraw any such exemption. (2) The provisions of the said Act shall, mutatis mutandis apply in relation to the said additional tax as they apply in relation to the tax payable under the said Act. " By a Notification dated March 23, 1979, the State Government notified, in exercise of the powers und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taxable under the principal Act: (iii) by reasons of the sub-section (2) of section 3 of the amending Act section 8 of the principal Act which is given an overriding effect by the use of non obstante clause, is applicable to the levy of additional tax also; (iv) if the object of the amending Act was to make the additional tax a multi-point levy nothing was easier than using the appropriate words in the Act by excluding the application of section 8 of the principal Act expressly in section 3(2) of the amending Act. In that view this Court ultimately summarised the resultant position as follows: "In view of the foregoing, we hold that any dealer who is not liable to pay tax under the principal Act either by reason of his not having sufficient gross turnover or by reason of exemption given under section 7 of the principal Act is not liable to pay additional tax under the Act. If a dealer is exempted by the State Government under the second proviso to section 3(1) of the Act he is also not liable to pay the additional tax under the Act. If the turnover of a dealer relating to any sales or purchases of goods is exempted under section 6 of the principal Act, such turnover can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t part of the gross turnover which relates to sale and purchase of declared goods. (2) Every dealer who has become liable to pay tax under this Act, shall continue to be so liable until the expiry of three consecutive years during each of which his gross turnover has failed to exceed fifty thousand rupees and such further period after the date of the said expiry as may be prescribed and his liability to pay tax under this Act, shall cease on the expiry of the prescribed period: Provided that in calculating the period of three consecutive years, the part of a year during which a dealer became first or again liable shall be excluded. (3) Where a dealer liable to pay tax under this Act, starts a new business, partnership, firm or concern, whether by changing the constitution, style or the name of the previous business, partnership, firm or concern or otherwise, either singly or jointly with any other person, such newly started business, partnership, firm or concern shall, notwithstanding anything contained in this section but always subject to the other provisions of this Act, be liable to pay tax on his gross turnover from the date of commencement of the said business, partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of single point taxation as envisaged in the principal Act. However, under the present validation enactment, section 3 of the Additional Sales Tax Act seeks to override even the charging sections under the principal Act by making section 3 of the Additional Sales Tax Act operate notwithstanding anything contained in sections 4, 5 and 8 of the principal Act. The additional tax is now levied on the gross turnover and not on the taxable turnover which will amount to a multi-point tax going against the very scheme of the principal Act, and it is no longer possible to treat the Additional Sales Tax Act as supplement or ancillary to the principal Act. In the circumstances, therefore, it may not be possible to read both the principal Act and the Additional Sales Tax Act together and the effect of it is that both the Acts taxed the same transaction and that would be an unreasonable restriction affecting their fundamental right to carry on business. Before considering this argument of the learned counsel let us consider what was the defect in the earlier Act which the Validation Act seeks to remove or remedy and whether the Validating Act has achieved that purpose. The Statement of Obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x leviable on the taxable turnover alone. As assessments under the Act were made on the basis that additional tax is leviable on the gross turnover and the provisions of section 8 of the principal Act did not apply to the levy of additional tax, the State Legislature has stated in the Statement of Objects and Reasons that as the reason for enacting the Validation Act and also that it was intended to cure the defects pointed out in the earlier judgment. Under section 3 of the Act the dealer is liable to pay additional sales tax at such rate not exceeding one per cent of his gross turnover. The words and expressions used in the Additional Sales Tax Act but not defined therein shall have the same meaning as defined in the principal Act. "Gross turnover" is defined in the principal Act as meaning the total of turnover of sales and turnover of purchases. Excluding the turnover relating to sale and purchase of declared goods under the Central Act the gross turnover on which additional sales tax is payable would thus include within it turnover taxable under the principal Act, the second or subsequent sales which are not taxable under the principal Act and goods or class of goods exempte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be passed on to the purchaser at more than one point in the same series of sales or purchases by successive dealers to which the people of the State of Orissa had become accustomed. If the object of the amendment was to make the additional tax a multi-point levy, nothing was easier than using the appropriate words in the Act by excluding the application of section 8 of the principal Act expressly in section 3(2) of the Act. In the absence of any such words in the Act, by reason of section 3(2) of the Act, we have to construe that section 8 of the principal Act which is given an overriding effect by the use of the non obstante clause is applicable to the levy of additional tax also." By use of non obstante clause in section 3(1) and expressly excluding the operation of the provisions of sections 4, 5, 8, 29 and 29-A of the principal Act in section 3(5) also the State Legislature has achieved its twin objectives of levying additional tax on gross turnover and at multi-points, de hors the scheme of single point sales tax on taxable turnover under the principal Act. The further argument of the learned counsel was the Additional Sales Tax Act as now amended is not a supplement to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in order that it might be a tax on sales of goods. There being no legal or constitutional bar for a combination of single point levy and a multi-point levy and levying of additional tax, there is no infirmity or constitutional inhibition which would invalidate the impugned Validation Act. It was then contended by the learned counsel for the assessees that during the pendency of the civil appeals filed against the judgment of the High Court of Orissa holding the provisions of the amending Act, 1979 as intra vires, when the assessees sought an interim stay of realisation of tax sought to be recovered, this Court passed the following order on October 4, 1982: "In the circumstances of this case, the stay is vacated. The respondents will file an undertaking within a month from today that in case they fail in these appeals and the appeals are allowed, then the entire money realised shall be refunded to the appellants with interest at the rate of 12 per cent per annum within three months from the disposal of these appeals." The respondents in those appeals, namely, the State of Orissa, filed an undertaking through the Special Officer-cum-Deputy Secretary, Finance Department of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation, the fiction operates and it was not necessary to specifically provide that all assessments made or actions taken or notifications issued under the Act before amendment shall be deemed to be made, taken or issued under the new provision though the Legislatures as in this case often resort to such practice. As observed by Lord Asquith in East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] AC 109 which was quoted and followed by this Court in M.K. Venthatachalam, Income-tax Officer v. Bombay Dyeing and Manufacturing Co. Ltd. [1958] 34 ITR 143 (SC); AIR 1958 SC 875: "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidences which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of those in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs." Thus the effect of retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a corporation can retain any amount collected as property tax there must be an assessment according to law. The situation in our case is different. Not only the earlier assessments were not cancelled but also this Court held that it was valid to the extent it taxed the taxable turnovers. The Validating Act was given retrospective operation and section 3 which has been extracted above also provided that the assessments shall be deemed to have been made in furtherance of the Additional Sales Tax Act as amended by the Amending and Validation Act. In the circumstances it could not be stated that there was any violation of the undertaking by the Government. We do not find also any substance in the submissions of the learned counsel for the petitioners that either the Validation Act was not applicable to their case in view of the undertaking or that there was any violation of the undertaking given by the Government in the earlier cases. Mr. Vinoo Bhagat, the learned counsel appearing for the appellant in Civil Appeal No. 4596 of 1990 while supporting the arguments of the learned counsel for the petitioners in the other cases further contended that no machinery has been created under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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