TMI Blog1958 (4) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessments for the quarters ending on June 30, 1950, September 30, 1950, and December 31, 1950, is upheld, but the decree, in so far as it sets aside the assessments for the quarters ending on September 30, 1949, and December 31, 1949, is reversed and the orders of assessment of the Sales Tax Authorities are restored. - 230 of 1956 - - - Dated:- 15-4-1958 - DAS S.R. C.J. AND VENKATARAMA AIYAR T.L. AND DAS S.K. AND SARKAR A.K. AND VIVIAN BOSE , JJ. The Judgment of S.R. Das, C.J., and T.L. Venkatarama Aiyar, J., was delivered by S.R. Das, C.J. The Judgment of S.K. Das and Vivian Bose, JJ., was delivered by S.K. Das, J. Sarkar, J., delivered a separate Judgment. DAS, C.J.-We agree that this appeal must be allowed in part but we prefer to rest our judgment on one of the material points on a ground which is different from that adopted by our learned Brother S.K. Das, J., in the judgment which has just been delivered by him and which we have had the advantage of perusing. The Orissa Sales Tax Act, (Orissa XIV of 1947), hereinafter referred to as the said Act, received the assent of the Governor-General on April 26, 1947, when section 1 of the Act came into force. On Augus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, extending the Orissa Sales Tax Act to the territories of the erstwhile feudatory States, including Pallahara which had merged into the Province of Orissa. On March 1, 1949, a notification under section 1(3) was issued by the Government of Orissa bringing section 2 to 29 of the said Act into force in the added territories. On the same day another notification was issued under section 4(1) of the Act, which was in the following terms: "In exercise of the powers conferred by sub-section (1) of section 4 of the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947) as applied to Orissa State, the Government of Orissa are pleased to appoint the 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales effected after the said date." It was after this notification had been issued that the respondents were sought to be made liable to tax. The respondents were assessed under the said Act for five quarters ending respectively on September 30, 1949, December 31, 1949, June 30, 1950, September 30, 1950, and December 31, 1950. It will be noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We proceed to state our reasons. The impugned notification, as hereinbefore stated, was issued on March 1, 1949, under section 4(1) of the said Act. Under that sub-section every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded Rs. 5,000 would be liable to pay the tax under the Act on sales effected after the date "so notified", that is to say, the date which the Provincial Government might by notification in the Gazette appoint. It is clear, therefore, that section 4(1) by its own terms determined the persons on whom the tax liability would fall but left it to the Provincial Government only to appoint the date with effect from which the tax liability would commence. It follows, therefore, that the only power conferred by section 4(1) on the Government was to appoint, by a notification in the Official Gazette, a date with effect from which the tax liability would attach to the dealers described and specified in the sub-section itself as the persons on whom that liability would fall. The Government of Orissa issued the notification, hereinbefore quoted, "in exercise of the powers conferred by sub-section (1) of section 4" and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... powers conferred by the sub-section to the Government of Orissa should be rejected. Immediately the question of severability arises. Are the two portions severable? We find no difficulty in holding that the portion of the notification which went beyond the powers conferred on the Government of Orissa is quite clearly and easily severable from that which was within its powers. It cannot possibly be said that had the Government of Orissa known that it had no power to determine the persons on whom the tax liability would fall it would not have appointed a date at all. In our view there is no question of the two parts being inextricably wound up. We, therefore, hold that the notification, in so far as it appointed March 31, 1949, as the date with effect from which liability to pay tax would commence was valid and the rest of the notification was invalid and must be treated as surplus without any legal efficacy. The result, therefore, is that the charging section was effectively brought into force and the entire charging section became operative and dealers could be properly brought to charge under the appropriate part of the charging section. It is true that the notification having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se three post-Constitution quarters, should be dismissed. We further hold that the assessments for the two pre-Constitution quarters were valid for reasons stated above and accordingly we agree in allowing this appeal in so far as it is against that part of the order of the High Court which cancelled the assessment orders for the two pre-Constitution quarters on the ground that the notification issued under section 4(1) of the Act was wholly invalid. Under the circumstances of this case we also agree that the parties should bear their own costs in the High Court as well as in this Court. S.K. DAS, J.-This appeal on behalf of the assessing authorities, Cuttack, has been brought pursuant to an order made on January 17, 1956, granting them special leave to appeal to this Court from the judgment and order of the High Court of Orissa dated April 12, 1955, by which the High Court quashed certain orders of assessment of sales tax made against the respondent. The short facts are these. The respondent, Messrs. B.C. Patel and Co., is a partnership firm carrying on the business of collection and sales of kendu leaves. The firm has its headquarters at Pallahara, which was formerly one of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the aforesaid judgment and order of the High Court of Orissa dated April 12, 1955. Though before the Sales Tax Authorities and in the High Court, an attempt was made on behalf of the respondent-assessee to show that there were no completed sales in Orissa and what took place in Orissa was a mere agreement to sell, that question is no longer at large before us. The Sales Tax Authorities found against the respondent on that question and the High Court did not consider it necessary to decide it on the petition filed by the respondent. The High Court proceeded on certain other grounds pressed before it by the respondent, and we proceed now to consider the validity of those grounds. The grounds are different in respect of the two periods, pre-Constitution and postConstitution, and it will be convenient to take these two periods separately. But before we do so, it is necessary to state some facts with regard to the enactment and enforcement of the Orissa Sales Tax Act, (Orissa XIV of 1947) hereinafter referred to as the Act, in the old Province of Orissa and the ex-Feudatory State of Pallahara. The Act received the assent of the Governor-General on April 26, 1947, and was first p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 30, 1947, was fixed as the date with effect from which every dealer whose gross turnover during the year ending March 31, 1947, exceeded Rs. 5,000 was made liable to pay tax under the Act on sales effected after the said date. This was the position in the old Province of Orissa. We have already stated that the ex-Feudatory State of Pallahara was merged into the old Province of Orissa by a merger agreement dated January 1, 1948. After the merger of Pallahara in the old Province of Orissa, the Government of Orissa under the delegated authority of the Central Government and exercising the powers under section 4 of the Extra Provincial Jurisdiction Act, (XLVII of 1947) (as it was then called) applied the Act to the former Orissa States including Pallahara by a notification dated December 14, 1948. The only modification made in applying the Act to the Orissa States was to substitute the words "Orissa States" for the words "Province of Orissa", wherever they occurred in the Act. By merely applying the Act to the Orissa States on December 14, 1948, all sections of the Act did not come into force in that area at once, since a notification under sub-section (3) of section 1 was necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notification in question was invalid must now be stated. The scheme of sub-section (1) of section 4 is, firstly, to fix a date, not earlier than thirty days after the date of the notification, from which the liability is to commence; and, secondly, to impose a liability on every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded Rs. 5,000. The tax liability is on transactions of sale which take place after the notified date (which must necessarily be after the commencement of the Act); but in determining on which class of dealers the incidence of taxation will fall, the crucial period as mentioned in the sub-section itself is the year immediately preceding the commencement of the Act. Therefore, the sub-section contemplates two matters, one of which may be called the "relevant date" and the other "relevant period". So far as the old Province of Orissa was concerned, there was no difficulty. The notification fixed September 30, 1947, as the relevant date, and the year immediately preceding the commencement of the Act in the old Province of Orissa was the relevant period, viz., the financial year 1946-47 i.e., April 1, 1946, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it can be severed in the way suggested by the learned Solicitor-General. Now, we come to the second argument-whether the pre-Constitution assessment orders are justified under sub-section (2) of section 4. The High Court held that they were not, and gave two reasons for its view: one was that sub-sections (1) and (2) were mutually exclusive and the other was based on the opening words of sub-section (2), which says that "every dealer to whom sub-section (1) does not apply etc." The High Court expressed the view that if the notification under subsection (1) were correctly drawn up, the sub-section would have applied to the respondent; therefore, the opening words of sub-section (2) barred the application of the sub-section to the respondent. At first sight, there appears to be some force in this view. But on a closer examination we do not think that the view expressed by the High Court is correct. Sub-sections (1) and (2) are mutually exclusive only in the sense that they do not operate in the same field; that is, the relevant periods for their application are different. The relevant period for the application of sub-section (1) is "the year immediately preceding the commencement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the word "first" in sub-section (2) means "first" after the commencement of the Act. Assuming this to be correct, the respondent still comes under sub-section (2); because even if the Act came into force on March 1, 1949, the respondent's gross turnover first exceeded Rs. 5,000 in the year ending March 31, 1949-which was after the commencement of the Act. We are, therefore, of the view that all the requirements of subsection (2) are fulfilled in this case, and the two assessment orders made against the respondent for the pre-Constitution period were validly made under sub-section (2) of section 4 of the Act. The effect of the invalid notification under sub-section (1) was that there was no liability thereunder, and no dealers were liable to pay tax under that sub-section. But that did not mean that any dealer who properly came under sub-section (2) was free to escape his liability to pay tax. Surely, the position cannot be worse than what it would have been if the Provincial Government had failed to issue a notification under sub-section (1). We now turn to the post-Constitution period. The short ground on which the High Court held the assessment orders for this period to be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned Solicitor-General, therefore, contends that on the basis of the later decision, the assessments made should be held to be valid under the Sales Tax Continuance Order, 1950, made by the President, even though the sales took place in the course of inter-State trade or commerce. It is necessary to state here that by the Adaptation of Laws (Third Amendment) Order, 1951, made by the President in exercise of the power given by clause (2) of Article 372 of the Constitution, section 30 was inserted in the Act to bring it into accord with the Constitution, from January 26, 1950. Section 30 which in substance reproduced Article 286 of the Constitution, as it then stood, was in these terms"30. (1) Notwithstanding anything contained in this Act(a) a tax on sale or purchase of goods shall not be imposed under this Act(i) where such sale or purchase takes place outside the State of Orissa; or (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of India; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March 1951, be imposed where such sale or purchase takes place in the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to us to be the general scheme of that article." (see pages 638-639 of the report). At page 647 of the report, it was further observed"The operative provisions of the several parts of Article 286, namely, clause (1)(a), clause (1)(b), clause (2) and clause (3) are manifestly intended to deal with different topics and, therefore, one cannot be projected or read into another. On a careful and anxious consideration of the matter in the light of the fresh arguments advanced and discussions held on the present occasion we are definitely of the opinion that the Explanation in clause (1)(a) cannot be legitimately extended to clause (2) either as an exception or as a proviso thereto or read as curtailing or limiting the ambit of clause (2)." As to the President's Order, it was stated at page 656: "It will be noticed that under that proviso the President's Order was to take effect 'notwithstanding that the imposition of such tax is contrary to the provisions of this clause'. This non obstante clause does not, in terms, supersede clause (1) at all and, therefore, prima facie, the President's Order was subject to the prohibition of clause (1)(a) read with the Explanation." Obviously, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in this case and to which I shall refer a little later. The sections of the Act under which the tax is sought to be levied are set out below: "Section 1. (1) This Act may be called the Orissa Sales Tax Act, 1947. (2) It extends to the whole of the Province of Orissa. (3) This section shall come into force at once and the rest of this Act shall come into force on such date as the Provincial Government may, by notification in the Gazette, appoint. Section 2. In this Act, unless there is anything repugnant in the subject or context,(j) "year" means the financial year. Section 4. (1) Subject to the provisions of sections 5, 6, 7 and 8 and with effect from such date as the Provincial Government may, by notification in the Gazette, appoint, being not earlier than thirty days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded Rs. 5,000 shall be liable to pay tax under the Act on sales effected after the date so notified. Provided that the tax shall not be payable on sale involved in the execution of a contract which is shown to the satisfaction of the Collector to have been entered into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssa had on March 1, 1949, issued a Notification No. 2269/F, purporting to appoint a date under section 4(1) for the areas previously covered by the feudatory States including the Pallahara State, then merged in Orissa. That Notification is in these terms: "In exercise of the powers conferred by sub-section (1) of section 4 of the Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947) as applied to Orissa States, the Government of Orissa are pleased to appoint the 31st March, 1949, as the date with effect from which every dealer whose gross turnover during the year ending the 31st March, 1949, exceeded Rs. 5,000 shall be liable to pay tax under the said Act on sales effected after the said date." So it would appear that in regard to Pallahara area two notifications were issued on March 1, 1949, by one of which under section 1(3) the rest of the Act was applied to, and by the other a day was appointed as required by section 4(1), for this area. The sections under which liability to tax arises under the Act primarily are sub-sections (1) and (2) of section 4. I have said liability arises primarily because unless liability under either of them arises there is no liability under the Act at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese words has one meaning and without them a different one. The Government having issued the notification cannot now be permitted to say that it has a meaning other than that which its words bear. Having said that a dealer whose turnover in the year 1948-49 exceeded Rs. 5,000 would be liable to pay tax on sales after a date mentioned, the Government cannot now turn round and say that a dealer would be liable to pay tax on such sales under the sub-section though his turnover during the year 1948-49 did not exceed Rs. 5,000. Whether the Government need have specified any year during which the turnover had to exceed Rs. 5,000 to give rise to the liability for the tax or not, is irrelevant. The question is whether the notification has appointed a date as a result of which liability to pay tax under the sub-section arises. That it clearly has not. The notification, therefore, is bad and has no effect at all. The result is that there has been no date appointed under the sub-section and no liability can therefore arise under it at all. It does not, as things stand, operate to fix any liability. It is as it were that the sub-section had not been brought into life. The appellants cannot, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h dealers whose turnover in 1947-48 does not exceed Rs. 5,000. I am quite clear in my mind that the words were intended to refer to a definite class of people. It could not have been intended that the same words would refer to different classes of people according as a date under sub-section (1) was appointed or not. The scheme is that some might be made liable under subsection (1) and those that escape liability under it might be made liable under sub-section (2). Sub-section (2) was not intended to have any operation at all till a date was appointed under sub-section (1) and a liability under it might have arisen. It seems to me that if liability under sub-section (2) arose without a date under sub-section (1) having been appointed, the result would be anomalous. It would make a dealer liable under both sub-sections which is plainly something which the Act did not intend to do. An illustration will make this clear. Under sub-section (2) a dealer will be liable to pay tax with effect from the commencement of the year immediately following that during which his gross turnover first exceeds Rs. 5,000. The year from the commencement of which liability to pay tax arises under it mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to pay tax under that sub-section on sales effected after August 1, 1949. Assume that the respondents' turnover for 1947-48 was in excess of Rs. 5,000. They then became liable to pay tax also under sub-section (1) on all sales effected after August 1, 1949. The result is that on sales effected after this date, the respondents became liable to pay tax under both the sub-sections at the same time. I cannot conceive that such a result could have been intended. I will now put it from another point of view. Under sub-section (3) once liability to pay tax arises, it will go on for three years and such further time as may be prescribed which we will assume was three months, though the turnover failed to exceed Rs. 5,000 for any of these years and after that the liability will cease. In the present case the respondents were first assessed by an order made on May 31, 1951, on sales in the quarter ending September 30, 1949. I will assume that the liability to pay the tax arose under sub-section (2). Suppose now that for the years 1949-50, 1950-51 and 1951-52 the respondents' turnover was below Rs. 5,000. On these facts their liability ceased on June 30, 1952. Now suppose, on June 1, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
