TMI Blog1955 (4) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... quantity of untanned hides and skins under rule 16 (2). He however held that when these goods were tanned in the assessees' tannery and were sold by them as tanned hides and skins, the assessees were bound to pay sales tax on their sale turnover on the ground that they had not paid sales tax at the stage of their purchase. On the basis of the figures furnished and the price realised at the sales, the officer worked out the sale value of the hides tanned out of the 17,097 raw hides which had been purchased by the assessees, at Rs. 2,77,006-1-0 and levied assessment accordingly. In doing so he overruled the objection raised by the assessees that on the language of rule 16 (3) of the Turnover and Assessment Rules they were exempt from payment of any tax on their sale turnover. There was an appeal against this order of assessment to the Commercial Tax Officer but this was dismissed. A further appeal to the Sales Tax Appellate Tribunal was also dismissed. Hence this revision. To start with, it might be mentioned that under section 5(vi) of the Act, hides and skins-whether tanned or untanned-are liable to taxa- tion only "at such single point in the series of sales by successive dealers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d without a receipt or crossed cheque for the full amount of the tax or if the return submitted appears to be incorrect or incomplete, the assessing authority shall, after making such inquiry as he considers necessary, and after giving the tanner or other dealer an opportunity as prescribed in rule 9 of proving the correctness and completeness of his return where one has been submitted, determine the turnover, to the best of his judgment and assess the tax payable for the month and shall serve upon the tanner or other dealer a notice in Form B-I and the tanner or other dealer shall pay the sum demanded at the time and in the manner specified in the notice. (5) If at the time of the receipt of the return referred to in sub-rule (3) or of the issue of the notice in Form B-I, referred to in sub-rule (4) or subsequently, it is found that the amount paid by the tanner or other dealer is in excess of the correct tax payable, such excess shall, at the option of the tanner or other dealer, be credited towards the tax, if any, payable by him for succeeding months or be refunded to him." "16. (1) In the case of hides and skins the tax payable under section 3(1) shall be levied in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over and Assessment Rules. In the case of licensed tanners brought within rule 4(2) they could not also be brought within rule 4(1) in respect of any of their transactions. The only provision in the Act for the fixation of a single point in dealings in tanned hides and skins by licensed tanners is to be found in rule i6(3) under which all sales of tanned hides and skins are ex- empted from tax provided the tax payable by the tanners is paid and the tanner is not exempted under section 3(3) of the Act by having an annual turnover of less than Rs. 10,000. The term "tannery" in the first sentence of sub-rule (3) of rule 16 must be understood as a "tanner" since under the Madras General Sales Tax Act no tax is payable by a tannery as such but only by tanners on their dealings. Further the words which follow in that sentence "which has paid the tax leviable under the Act" have to be understood in the normal sense as meaning "the tax if payable has been paid". Where no tax is payable under the Act on the purchase made by a tanner either because the sale tran- saction takes place outside the State and so a tax on it is not within the legislative competence under the Government of India Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lling under sold to tanneries in sold to other dealers sold on export column (3) were the State. in the State. outside the State. purchased by the dealer(s). (1) (2) (3) (4) (b) For dealers in tanned hides or skins: Amount for which hides or skins Amount for which hides or skins tanned in the State were sold. tanned outside the State were sold. (1) (2) (i) (ii) Hides or skins Hides or skins bought from bought from dealers in the dealers outside the State. State." In column No. 1 the dealer sets out the amount for which goods have been sold to the tanneries in the State. This will be taxed in the hands of the tanner on his purchase price [vide rule 4(2) (c)] and this is the stage at which tax is leviable under rule 16(2). Where goods have been sold to other dealers in the State no tax will be levied either on the buyer or on the seller but this will form part of the stock-in-trade of another dealer and will be subjected to tax only when in the series of sales it is sold to a tanner in the State when it would be included in column I of the return of such dealer. When the goods purchased have been sold for being exported outside the State the tax is levied upon the dealer but on his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Advocate-General may now be briefly stated. Under rule 4(2) (C) of the Turnover and Assess- ment Rules the purchase of untanned hides and skins by a licensed tanner is made liable to sales tax but the terms of rule 4(2)(c) confine this to purchases made within the State. So where licensed tanners purchase these goods outside the State, their purchases are not within rule 4(2) (c) and consequently they cannot claim to be taxed on their purchase turnover. Every dealing which is not specifically covered by sub-rule (2) of rule 4 is governed by the general residuary provisions in rule 4(1) under which a dealer is liable to tax on his sale turnover. If rule 4 were the sole governing provision, every sale by a tanner of tanned goods would be liable to sales tax. It is in the light of this fundamental taxation pattern that the terms of rule 16 have to be understood. If the purchase is chargeable with duty as it would be in the case of what might be termed inside purchases the tanner is entitled to deduct this purchase price from the sale turnover of the tanned hides and skins under rule 16(3). If his purchase turnover has not been taxed for the reason that such sales are not comprehe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d within the items enumerated in paragraphs (ii), (iv) and (vi) of section 5, the prescription by rules under section 3 (5) would automatically impose tax liability upon the transactions of sale under section 3 (1) of the Act subject to any exemptions that might have been provided by the Act or the rules. But in the case of com- modities like hides and skins in respect of which a tax can be levied only at a single point to be fixed by the rules, there can be no tax liability accruing until and unless the rules prescribe a single point for taxation. Therefore apart from other grounds there can be no tax liability imposed on hides and skins by rule 4(1) of the Turnover and Assessment Rules. The effect of that rule would be that, as and when the single point is fixed in respect of commodities or transactions falling within the Act, the seller would be liable on the turnover and not the buyer. It is not therefore correct to regard rule 4(1) as by itself imposing a tax on every seller of tanned hides and skins and on every dealing in untanned hides and skins not falling within rule 4(2)(c) or (d). This much is conceded by the learned Advocate-General that in the case of dealings in tann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression "paid the tax leviable under the Act". The normal and the grammatical meaning of the words would be "paid such tax if any as has been levied under the Act." As this is a taxing enactment if must be construed strictly. As Lord Cairns stated in Cox v. Rabbits(1) "a taxing Act must be construed strictly; you must find words to impose the tax, and if words are not found which imposed the tax, it is not to be imposed". If a licensed tanner has paid such tax as was payable by him on his purchase turnover, the words of sub-rule (3) would confer upon him exemption from payment of tax on his sale turnover. There is another and more formidable objection raised against the construction sought to be put upon this sub-rule by the State and this is that if the sub-rule were so read as to impose a tax liability on the sales of assessees as the present, there is no single point at all fixed to exempt from tax the series of sales which might take place within the State subsequent to the purchase from this tanner assessee and that as the rules have not fixed a single point for fixing tax liability in respect of such series of transactions, the imposition of the tax by sub-rule (3) would ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
