TMI Blog1970 (11) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Act, 1956 (hereinafter referred to as the "Central Act"). The said Motibhai Patel was, however, not registered as a dealer under the Bombay Act. During the course of proceedings for assessment to sales tax under the Bombay Act, the assessees claimed deduction from their turnover in respect of resales of goods purchased by them from the said Motibhai Patel. The claim for deduction was found on the provisions of clause (ii) of section 8 of the Bombay Act which in substance provides that resales of goods purchased by an assessee from a registered dealer shall be deducted from the turnover of sales of goods on which sales tax is leviable if certain conditions are fulfilled. The Sales Tax Officer rejected the claim of the assessees for such deduction on the ground that the said Motibhai Patel from whom the goods were purchased was not a registered dealer within the meaning of clause (ii) of section 8 in that he was not a dealer registered under the Bombay Act at the relevant time. The assessees carried the matter in appeal before the Assistant Commissioner of Sales Tax but the appeal was dismissed. The assessees thereupon preferred a second appeal before the Gujarat Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er for the purpose of allowing deduction from the turnover of sales under clause (ii) of section 8 of the Bombay Sales Tax Act, 1959, purchases of goods made by a dealer registered under the Bombay Sales Tax Act, 1959, from a dealer who is registered under the Central Sales Tax Act, 1956, and who is liable to pay tax under section 4 of the Bombay Sales Tax Act, 1959, though not registered under the Bombay Sales Tax Act, 1959, can be said to be purchases of goods made from a registered dealer within the meaning of clause (ii) of section 8 of the Bombay Sales Tax Act, 1959?" The question which arises for our decision turns upon the true construction of clause (ii) of section 8 of the Bombay Act in the light of the definition of the expression "registered dealer" found in subsection (25) of section 2 of the said Act. In order to appreciate the rival contentions which were strenuously urged before us, it would be necessary first to refer to the relevant provisions of the Central Act as well as of the Bombay Act. We shall first turn to the Central Act and briefly refer to the relevant provisions of the said Act. The Central Act was enacted to formulate principles for determining as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased, containing the prescribed particulars." Sub-section (1) of section 7 provides that every dealer liable to pay the tax under the Central Act shall make an application for registration under the Act to such authority in the appropriate State as the Central Government may, by general or special order, specify, within such time as may be prescribed for the purpose and every such application shall contain such particulars as may be prescribed. Sub-section (2) of the said section provides that any dealer liable to pay tax under the sales tax law of the appropriate State, or where there is no such law in force in the appropriate State or any part thereof, any dealer having a place of business in that State or part, as the case may be, may, notwithstanding that he is not liable to pay tax under the Central Act, apply for registration under the said Act to the authority referred to in sub-section (1) and every such application shall contain such particulars as may be prescribed. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of section 8 inter alia provides that the provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce, unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority. The rate of tax prescribed by section 8(2)(a) for inter-State sales of declared goods is the rate applicable to the sale or purchase of such goods inside the appropriate State. The rate applicable to the sale or purchase of declared goods inside the appropriate State could not, however, exceed two per cent. prior to 1st July, 1966, and, since then, three per cent. by reason of section 15 of the Central Act. So far as transactions of sale falling within section 8(2) are concerned, the rate of tax prescribed is 10 per cent. or the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. Sub-sections (2-A) and (5) of section 8, broadly speaking, provide that in certain circumstances no tax shall be payable or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and sub-section (1) thereof, in so far as it is material, provides that every dealer whose turnover either of all sales or of all purchases made during the year ending on the 31st day of March, 1959, or the year commencing on the 1st day of April, 1959, has exceeded or exceeds the prescribed limit specified in sub-section (4) shall, until such liability ceases under sub-section (3), be liable to pay tax under the Act on his turnover of sales and on his turnover of purchases made, on or after the appointed day. There is a proviso to the said sub-section, which is not material for the present case. The rest of the sub-sections of section 3 also do not require to be referred to. Section 6 enacts that subject to the provisions of the Act and to any Rules made thereunder, there shall be paid by every dealer, who is liable to pay tax under the Act, the tax or taxes leviable in accordance with the provisions of Chapter II. Section 6 is followed by a group of sections, which deal with the levy of sales tax or general sales tax, as the case may be, on turnover of sales of different classes of goods at prescribed rates. These sections are sections 7 to 10. It is not necessary to set out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect of the said provision is that if the concerned dealer, upon whom sales tax is sought to be levied, shows that in his turnover of sales of goods are included resales of goods purchased by him on or after the appointed day from a registered dealer, such resales would be deducted from his total turnover provided the goods at the time of their purchase were goods specified in Schedule C and he would be assessed to sales tax accordingly. We may at this stage point out that the obvious intention of the Legislature in enacting this and similar provisions is to restrict the levy of sales tax to a single point and to avoid multiple levy of sales tax on goods. The intention of the Legislature is that sales tax should be levied at the stage of first sale and should be recovered from the registered dealer who effects the first sale and all subsequent sales of such goods should not be subjected to sales tax over again. We find that this thread runs throughout sections 7 to 10 and, the legislative intention is clearly manifested in this group of sections which, in substance and effect, provide that the levy of sales tax should be at a single point and that too at the point of first sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bay Act and such dealer is deemed to be a registered dealer for certain purposes under the Bombay Act. These are the relevant provisions of the Bombay Act, which are required to be noted for the purposes of this Act. Mr. S L. Modi, learned Advocate appearing on behalf of the assessees, urged that in the present case, the dealer from whom the assessees had purchased the goods was liable to be assessed to sales tax under section 4 of the Bombay Act on the sales made to the assessees and in order to avoid multiple levy of sales tax, it was necessary to give to the assessees the benefit of section 8(ii) of the Bombay Act, although the dealer from whom the assessees purchased the goods was not a registered dealer under the Bombay Act. The submission was that the expression "registered dealer" appearing in clause (ii) of section 8 of the Bombay Act was required to be given a meaning different than that which is ascribed to it in the definition section in order to carry out the intention of the Legislature and the object of clause (ii) of section 8 of the Bombay Act. According to Mr. Modi, clause (ii) of section 8 was obviously enacted to ensure a single point levy of sales tax when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, sub-section (25) of section 2. However, it is well-settled that it is possible for a defined expression to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. The point for determination is: does that rule apply in the case of the expression under consideration? We may, in this connection, first refer to the decision of the Supreme Court in V.F. G. Insurance Co. v. M/s. Fraser and Ross'. The Supreme Court was in that case concerned with the meaning of the word "insurer" which was used in sections 33 and 2D of the Insurance Act, 1938. The word was defined by sub-section (9) of section 2 of the said Act, inter alia, as meaning any body corporate [not being a person specified in sub-clause (c) of the said clause], carrying on the business of insurance which is a body corporate incorporated under any law for the time being in force in India or stands to any such body corporate in the relation of a subsidiary company within the meaning of the Indian Companies Act. The appellant-company in that case had closed down its business of insurance and still by virtue of the authority conferred upon it by section 33 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the meaning of the word 'insurer' in various sections of the Act, the meaning to be ordinarily given to it is that given in the definition clause. But this is not inflexible and there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the word has been used and that will be giving effect to the opening sentence in the definition section, namely, unless there is anything repugnant in the subject or context. In view of this qualification, the court has not only to look at the words, but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances. Therefore, though ordinarily the word 'insurer' as used in the Act would mean a person or body corporate actually carrying on the business of insurance it may be that in certain sections the word may have a somewhat different meaning." Having considered the matter in the light of these principles, the Supreme Court in fact found in that case that the word "insurer " in section 33 not only refers to a person who is actually carrying o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as possible nothing can be read and nothing can be implied in a taxing statute. One can only look fairly at the language used. The indispensable starting point and the first step in case of any provision of the nature before us is to examine the words of the particular provision under consideration, of course, bearing in mind that it is not a detached enactment but one forming a connected scheme." In Craies on Statute Law, Sixth Edition, the following observations are found at page 99, which are also pertinent: "This rule of construction (namely exposition ex visceribus actus) has frequently been recognised and acted upon by courts of law from Coke's time down to the present day. In Brett v. Brett (1826) 3 Add. 210, 216., Sir John Nicholl, M. R., said as follows: 'The key to the opening of every law is the reason and spirit of the law; it is the animus imponentis, the intention of the law-maker expressed in the law itself, taken as a whole. Hence, to arrive at the true meaning of any particular phrase in a statute, the particular phrase is not to be viewed detached from its context in the statute; it is to be viewed in connection with its whole context, meaning by this as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4 along with the provisions of section 8 and also give effect to the intention of the Legislature in providing for deductions in section 8. The context in which the words "registered dealer" appear in clause (ii) of section 8 of the Act suggests that the meaning given to the said expression in the definition section of the Bombay Act must be departed from and to do so would only give effect to the policy of the Act and the object behind enacting the relevant provisions. Mr. B. R. Shah, the learned Assistant Government Pleader, appearing on behalf of the department strenuously urged that there was no warrant for departing from the meaning given to the expression "registered dealer" in the definition section while construing the said expression in the context of section 8. He contended in the first place that if the Legislature really intended that the expression "registered dealer" in section 8(ii) should take within its ambit a dealer registered under the Central Act upon whom liability to pay sales tax is imposed under section 4 of the Bombay Act, the Legislature would have said so in clear words and it would have made the necessary provision in subsection (2) of section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 8 and not in sub-section (2) of section 4. Mr. Shah next contended that the effect of giving to the expression "registered dealer" in clause (ii) of section 8 a meaning different from that found in the definition section would in fact be to extend the legal fiction created by sub-section (2) of section 4 beyond its legitimate field. Mr. Shah urged that when a legal fiction is created it should be confined to the purpose for which it was created and should not be extended to an altogether different or alien field. The argument, in our opinion, is wholly misconceived. The expression "registered dealer" in clause (ii) of section 8 is construed as taking within its ambit a dealer registered under the Central Act who is made liable to pay sales tax under section 4 of the Bombay Act not on account of the legal fiction created by subsection (2) of section 4 of the Bombay Act, but having regard to the context, collocation, object and policy of the Act. The legal fiction created by sub-section (2) of section 4 does not at all enter into consideration in giving an extended or different meaning to the expression "registered dealer" in section 8(ii). Mr. Shah then advanced an argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orce of section 15 of the Central Act, the mandate contained in the said section is in no case violated and if any tax has been levied or is leviable on the sale or purchase of declared goods either under the provisions of the Bombay Act (1959) or under any earlier sales tax law of the State, no further tax shall be levied on any subsequent sale or purchase of such goods. This provision was obviously enacted to meet a special situation, namely, to give complete effect to the provisions of section 15 of the Central Act and to ensure that there is no multiple levy of tax even in cases inadvertently left out or not specifically covered by the provisions of sub-sections (1) and (2) of section 7, so that there is no conflict with section 15 of the Central Act. Sub-section (3) of section 7 cannot, therefore, help us in construing clause (ii) of section 8 of the Bombay Act. Mr. Shah next contended that the legislative history clearly indicated that the Legislature did not intend to exempt from the levy of tax subsequent sales of goods, which might have borne the levy of tax at the stage of earlier sale under section 4 of the Act. In this connection, Mr. Shah invited our attention to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e part of the Legislature, we should proceed on an assumption that the Legislature did not intend that no tax shall be levied on subsequent sales of goods which might have been subject to levy of sales tax under the provisions of section 5 at the stage of earlier sale. The submission made by Mr. Shah cannot be accepted for two reasons. In the first instance, mere omission in a later statute of a provision contained in an earlier one cannot by itself be said to be an indication of the legislative intent. The Legislature may have omitted to make a similar provision in the later Act if it found it unnecessary to make such a provision having regard to the other provisions of the Act which might bring about the same effect or it may have made the relevant provision in the earlier Act ex abundanti cautela. The circumstance that in a later Act a provision which found place in an earlier Act has been deleted cannot, therefore, by itself and conclusively determine the question. Secondly, we find that the scheme of the Act of 1953 is materially different from the scheme of the Act of 1959. Section 5A of the 1953 Act contemplated the levy of a single point tax at the stage when the second sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would only include a dealer registered under the Central Act who is liable to pay tax on the sales of goods under section 4 and the deduction under clause (ii) of section 8 would be allowable only if the goods resold are goods on the sale of which the dealer registered under the Central Act is liable to pay tax under section 4 of the Act. If the dealer registered under the Central Act has sold to the dealer registered under the Bombay Act goods other than those specified in section 4 of the Bombay Act and such goods have been later resold by the dealer registered under the Bombay Act, no deduction from turnover of sales would be permissible in respect of resales of such goods and such sales would be includible in the total turnover of sales of the dealer registered under the Bombay Act. The apprehension voiced on behalf of the department is, therefore, misconceived. The result of the foregoing discussion is that having regard to the context, collocation and the object of the expression "registered dealer" in clause (ii) of section 8 of the Bombay Act and having regard to the policy of the Act, the said expression would also include a dealer registered under the Central Act on w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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