TMI Blog1955 (4) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... V of 1948) which came into force in the month of June, 1948. By this amendment, a proviso was added to section 7, permitting the State Government to .give an option to a dealer to file returns of sales of the assessment year itself in lieu of the returns of the turnover of the previous year under certain circumstances. The mode of assessment was also laid down but, for purposes of this reference, it is not necessary to give the details of that procedure. The dealer had the option of electing whether he would like his assessment to be made on the basis of the turnover of the previous year, or, on the basis of the return of sales for the current assessment year. The applicant, the Modi Food Products Limited, Modinagar, chose to be assessed on the basis of the turnover of the previous year and, consequently, in the assessment year 1948-49, it filed its returns for the turnover of the previous year which, according to the system of accounting adopted by the applicant company, covered the period from 1st June, 1946, to 31st May, 1947. Under section 3-A of the U.P. Sales Tax Act, as amended by the U.P. Amendment Act No. XXV of 1948, power was granted to the State Government to lay down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of 6 pies per rupee. Not satisfied with this decision of the Sales Tax Officer, the applicant company filed an appeal before the Judge (Appeals) who disagreed with the Sales Tax Officer and held that the rate laid down in this notification could not be applied, when assessing the tax on the turnover of the previous year in the assessment year 1948-49 and the tax had to be calculated at the uniform rate of 3 pies per rupee. The Commissioner of Sales Tax filed a revision against this judgment of the Judge (Appeals). The Judge (Revisions), dealing with the revision filed by the Sales Tax Commis- sioner, agreed with the view that had been taken by the Sales Tax Officer and held that even though the applicant company was being assessed to sales tax on the basis of the turnover of the previous year, the new rate applicable to sales of non-edible oils by a manu- facturer laid down in the notification of 8th June, 1948, must be applied to this assessment. When actually applying this new rate, the learned Judge held that, for the period between 1st April, 1947, and 8th June, 1947, the rate applicable was 3 pies per rupee and, for the remaining period from 9th June, 1947, to 31st Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to correspond to the actual previous year which was accepted by the Sales Tax Officer whose assessment was restored and confirmed by the learned Judge (Revisions). The question can be put in proper form as follows: "Whether the assessee, who is a manufacturer and a dealer of non-edible oils and who elected the previous year as the basis of his assessment in the assessment year 1948-49, is liable to be assessed at the flat rate of 3 pies per rupee on the whole of the turnover of the previous year, or, whether he is liable to be assessed at the rates of 3 pies per rupee and 6 pies per rupee on the turnover of the previous year in proportion to the two periods from 1st April to 8th June, 1948, and from 9th June, 1948, to the 31st of March, 1949?" In dealing with this question, we have first to take notice of the fact that the provisions of sections 3, 3-A and 7 of the U.P. Sales Tax Act, as they stand now, are considerably different from what they were in the assessment year 1948-49. The U.P. Sales Tax Act, 1948 (U.P. Act No. XV of 1948), as originally passed and as it came into force on 1st April, 1948, laid down only one method of assessment of tax. Sec- tion 3 of the Act, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 3, the Provincial Government may, by notification in the official Gazette, declare 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 may be prescribed. (2) If the Provincial Government makes a declaration under sub- section (1) of this section, it may further declare that the turnover of the dealer, in whose turnover the sale of such goods is included, shall, in respect of such sale, be taxed at such rate as may be specified not exceeding one anna per rupee if the sale relates to goods specified below." This provision is followed by a list of goods on which the maximum rate of one anna could be prescribed. Lastly, there is a clause that if the turnover related to goods other than those specified goods, the maximum rate, which could be prescribed by the Provincial Govern- ment, was 9 pies per rupee. Non-edible oils, with which we are concerned, are governed by this last clause and, obviously, it was in exercise of these powers under section 3-A that the Provincial Government issued the notification dated 8th June, 1948, with which we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that, if the dealer happened not to be a manufacturer or an importer, they were not to be included in his turnover of the previous year. It appears to us that the language of section 3-A itself gives an indication that the power of the Provincial Government is to be exercised only with respect to actual sales that may be carried out by any dealer subsequent to the date on which the State Government, in exercise of its powers, issues a notification under that section. Under sub-section (1) of section 3-A, the declaration is to be 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 may be prescribed. This sub-section thus empowers the State Government to lay down a prin- ciple by which the proceeds of sale are not to be included in the turn- over. Obviously, the question of including sales in the turnover would only arise in the case of those sales which would be effected after this direction had been made by the Provincial Government. There could be no intention that the Provincial Government could, under this pro- vision of law, regulate calculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 3-A cannot, there- fore, be exercised until the Government first exercises its power of declaring that the tax is to be a single point tax only. When that power of declaration that the tax is to be a single point tax was itself prospective and not retrospective, the Provincial Government could not bring about any increase in the rate of tax with retrospective effect so as to affect sales that had been carried out prior to the exercise of powers by the Provincial Government. Secondly, the clause "in res- pect of such sales" in this sub-section seems to indicate that the higher rate is to be calculated in respect of the proceeds of each individual sale and is not to be applied to the turnover as a whole. Obviously, if each individual sale is to be taken into consideration, it must be those sales only which are effected after the enhanced rate is brought into effect by the notification. If the intention had been that, irrespective of the date of each sale, the turnover was to be taxed at a higher rate, whether it included sales prior or subsequent to the enforcement of the new rate, there was no need of laying down that the declaration by the Provincial Government of the new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have included information as to the goods imported or manufactured during the previous year by those dealers. The requirement of the statement relating to the posi- tion on 8th June, 1948, is, therefore, a clear indication that these new rates were to be applied only in respect of actual sales carried out on or after the 9th of June, 1948. The notification was, therefore, a notifi- cation laying down prospective rates which were to affect the sales after the notification came into effect and not the earlier sales. There is no indication in the notification that the sales, included in the previous year's turnovers, were also to be governed by these new rates and, in fact, if there had been any such indication, the notification to that extent might have been challenged as being beyond the scope of the powers conferred on the Provincial Government. A legislature can certainly give retrospective effect to pieces of legislation passed by it but an executive Government exercising subordinate and delegated legislative powers, cannot make legislation retrospective in effect unless that power is expressly conferred. We, of course, express no opinion on the question whether, if such expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nforcement of the enhanced rates would come for assessment in that very year; whereas a dealer, who chooses the previous year's turnover as the basis of assessment, would escape the liability to that enhanced rate in that assessment year. Firstly, it cannot be said that this is a discrimination which is brought about by law. Law provides for a choice by the assessee himself of the manner in which he is going to be assessed; if one manner is more advantageous to the assessee than the other one, it is for him to choose the more advantageous one. If he voluntarily gives up that choice, he cannot subsequently complain that he is being discriminated against and is being taxed more heavily than others who chose the other alternative. Secondly, even on the interpretation which we have given, it does not appear that any assessee can evade any taxa- tion at the higher rate. The assessee, who chooses to be assessed on the basis of the current year's turnover in the assessment year itself, would become liable to tax at the enhanced rate on all sales subsequent to the date of the enforcement of the enhanced rate in that assessment year itself and would continue to be so assessed in future asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicating a direction that the dealer is to pay the tax in the assessment year. It, however, appears that, though this was the language used, this provision of law was intended only for the purpose of indicating what the liability to tax was to be. The actual mode of payment is dealt with in subsequent provisions of the Act. The ques- tion of payment only arises after the assessment has been made. The words "shall pay on turnover" in section 3 must, therefore, be inter- preted as indicating that he is liable to pay the tax on turnover in each assessment year. It is not to be interpreted to mean that actual pay- ment of the tax to the Government has to be made before the expiry of the assessment year. The liability to tax being fixed by section 3, the method of assessment adopted required immediate proceedings to be taken inasmuch as the assessee was directed to file his returns with- in 60 days of the commencement of the assessment year. All these provisions thus indicate that the liability to tax arises on the first day of an assessment year and is not a liability in respect of each day of that year. In the present case, if we take into consideration this point of view, we have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicates that it will only apply when there is any variation in the rate subsequent to the date on which that provision of law was introduced and came into force. The words are "if the rate of tax in respect of the turnover of any goods or class of goods is varied during the course of an assessment year.............." and not "is or has been varied". The latter form of language would have been used if the intention had been that the varia- tions in rate prior to the enactment of this provision of law were also to be taken into account when applying this provision so as to re-open assessment previously made. Absence of the words "has been" and the use of the word "is" are indications that this sub-section is to be applied when a variation is brought about subsequent to this provision of law. Consequently, in our opinion, section 7-B(2) is not applicable to the case before us and must be ignored. For the reasons given above, our answer to the question, that was referred to us and which has been re-framed by us, is that the appli- cant company is liable to pay tax for the assessment year 1948-49 on the turnover of the previous year in respect of sales of non-edible oils at the flate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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