TMI Blog1957 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... the validity of these amendments that is in controversy in these petitions. Before the amendment rule 5 of the Madras General Sales Tax Rules provided "that every person who deals in hides or skins whether tanned or untanned....... shall if he desires to avail himself of the exemption provided in sections 5 and 8 or of the concession of taxation only at a single point or of taxation at the rate specified in section 5 submit an application in Form 1 for a licence in respect of each of his places of business to the authority specified in sub-rule (2)......." Rule 16(2) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, which fixed the single point at which tax in respect of hides and skins could be levied enacted "no tax shall be levied on the sale of untanned hides or skins by a licensed dealer in hides or skins except at the stage at which such hides or skins are sold to a tanner in the State or are sold for export outside the State." It is unnecessary to refer to the other sub-clauses of rule 16 but is sufficient to say that this Court held in Noor Mohammed and Co. v. State of Madras[1956] 7 S.T.C. 729. that under rule 16(2) an unlicensed dealer in untanned hid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be so liable. (iii) The burden of proving that a transaction is not liable to taxation under this rule shall be on the dealer." In terms, these rules were made retrospective and to have effect as and from 1st April, 1955. The Deputy Commercial Tax Officer, Coimbatore, issued a notice to the petitioner on 23rd November, 1955, requiring the latter to submit returns as required by the amended rules. The notices went on to state that if the petitioner failed to submit his return he would be assessed to tax on "best judgment basis". Further notices were served on the petitioner and a demand was also made for the payment of tax as provisionally assessed as provided for by the rules. Of course at the end of the year if the turnover (1) [1956] 7 S.T.C. 729. was more or less the tax paid or payable would be adjusted on this basis under rule 15(6) of the Turnover and Assessment Rules. The petitioners thereupon moved this Court for the issue of rules nisi in these two petitions and such rules having been issued further proceedings have stood stayed with the result that the final amount of tax payable by the petitioners has not yet been determined. The main contention strenuously urge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to me has to be judged in the light of these principles. Learned counsel might be right in the etymological connotation of the expression "prescribed". But the use of the word "prescribe" as the normal expression for conferring a power to make a rule is too well known to require detailed explanation. For instance, in this very Act, section 2(f) defines the word "prescribed" thus: "prescribed" means prescribed "by rules made under this Act" and when one turns to section 19 where power is expressly conferred on the State Government to make rules under the Act, it is specifically enacted: "19.(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for (a) all matters expressly required or allowed by this Act to be prescribed." The reference to prescription here, if read in the light of the definition in section 2(f) can only mean "by rules made under the Act." I am, therefore, clearly of the opinion that "prescription" in the Act merely means "by rules made under the Act" and is wholly unconcerned with the content of the rule in relation to the time from which it shall operate which is determined by other considerations. I, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 3rd September, 1955, in other words only to the period as to which the rule was made retrospective by specific provisions therefor. In these circumstances I hold that the objection raised by the learned counsel even if it has any force has to be repelled after the enactment of section 9 of the Madras Act I of 1957. Learned counsel, however, urged that the provisions of Act I of 1957 were obnoxious to Article 14 of the Constitution. This objection was formulated in these terms: The Madras General Sales Tax Act still holds the field. Under it there must be "a prescription of a single point" before tax liability is attracted in respect of dealings in hides and skins. There was factually no such prescription between the period, from 1st April, 1955, to 3rd September, 1955, in respect of sales by unlicensed dealers. The rules framed and notified on 3rd September, 1955, however, made an inroad into this state of affairs and laid a tax on such sales by prescribing a point at which tax could be levied even in regard to licensed dealers. From and after 3rd September, 1955, tax is levied only at prescribed stages or at prescribed points in successive transactions of the commodity. In regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt affirmed that decision. The net result of this was that while licensed dealers paid both licence fees as well as sales tax on their transactions, unlicensed dealers did neither. It was this state of affairs that was brought to an end by the amendment of the rules effected in 1955 which was followed by section 9 of the Madras Act I of 1957. Viewed in the light of this antecedent history I am unable to appreciate the complaint that unlicensed dealers were unjustly discriminated against by section 9. The competence of the State Legislature to enact taxing legislations with retrospective effect is not disputed. If so, a provision which, in terms, rendered unlicensed dealers in hides and skins liable to tax for periods from and after 1st April, 1955, on the same footing as licensed dealers could in no wise be termed a violation of Article 14 of the Constitution. On the other hand, it would be an enactment designed to effect equality between all dealers in that commodity, licensed and unlicensed. Such an enactment, therefore, far from being unequal or discriminatory would be one calculated to remove inequality in the operation of the relevant fiscal system. The learned Advocate-Genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cattle within the State or (2) they might be imported from outside the State as untanned hides and skins. Untanned hides and skins thus obtained from either of these sources might be dealt with in one of two modes: (a) they might be tanned within the State or (b) they might get exported after successive transaction of sale as untanned hides and skins. Rule 16(1) is the provision applicable to untanned hides and skins. In the four cases mentioned above which would be entire number of possible permutation and combination, the tax point is at the stage of the last purchase, that is, the last purchase before tanning or the last purchase before export. If tax has been paid at this point the question next to be determined is whether these hides and skins are or could be subject to tax at any subsequent stage under these rules. After this purchase point the two alternative contingencies that might happen to the goods are-(a) they get tanned within the State or (b) they are exported from the State. In the latter case obviously there could be no further tax levy under the Sales Tax Act. In the case where goods are tanned the tanner who bought raw hides or skins has paid the tax and has con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 957, the petitioner had been deprived of two advantages which he would have enjoyed if the rules had operated prospectively. It was urged that dealers like the petitioners were unable to take advantage of the proviso to rule 16(2)(ii) under which they could obtain rebate on the purchase tax paid by them when they purchased goods which they tanned. I am unable to appreciate this contention because the petitioner is a tanner and if he had purchased goods locally and had paid tax at that point surely he would be able to establish both the fact of his purchase as well as the payment of the tax and if he did so he would certainly be entitled to claim the rebate allowed by the proviso, and if he had paid no tax then, he can have no complaint. The other advantage which the learned counsel contended the petitioner had been unjustly deprived of, by the retrospective operation of the rule, was that if the provision had operated prospectively he could have passed on the tax to purchasers from him. Under rule 16(4) as it stood before the amendment in September, 1955, tax was levied at sale point on dealers in hides and skins, the turnover being computed on the basis of the amount realised at t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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