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TMI Blog1972 (7) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of the court was delivered by GOPAL RAO EKBOTE, C.J.-This case has come to us on a reference made by a Bench on 17th June, 1971. The facts in outline are that the petitioner-firm was doing groundnut business in 1962-63. The firm was purchasing groundnuts and after decorticating the same into kernel was selling the kernel to the dealers inside as well as outside the State. For the assessment year 1962-63, the Commercial Tax Officer, Cuddapah, determined the petitioner's net assessable turnover at Rs. 8,20,683.90 after allowing the exemption of turnover of Rs. 4,35,214.32 on the ground that the goods have suffered tax at the hands of subsequent dealers. The petitioner was still dissatisfied with the assessment order. He preferred an appeal to the Assistant Commissioner, Nellore, disputing the turnover of Rs. 3,70,714.65 which was subjected to tax. The disputed turnover comprised, inter alia, one of Rs. 97,200.51 and the other comprised of the rest of the turnover which was subjected to tax. The Assistant Commissioner allowed the appeal relating to the turnover of Rs. 97,200.51. He, however, disallowed the appeal in respect of the other item. He reduced the tax thus by Rs. 1,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the like, in lubrication, and volatile oils used chiefly in medicines, perfumes, cosmetics and the like as goods of special importance in inter-State trade or commerce. The result of it is that according to section 15, sales tax law of a State shall be subject to certain restrictions and conditions when it imposes a tax on the sale or purchase of declared goods. The first restriction is that the tax payable under such law in respect of any sales or purchases of such declared goods inside the State shall not exceed 3 per cent of the sale or purchase price thereof. The second restriction is that such tax shall not be levied at more than one stage. Section 6 of the State Act is enacted to give effect to those restrictions. Keeping in view these restrictions, we have to consider the implication of the provision in item 3-C. Before we consider it, it is useful to remember the antecedents of the provision as well as the subsequent amendment made therein. Under the Madras General Sales Tax Act, groundnuts were taxed at multiple points. Every purchaser was liable to pay the tax. The Andhra Pradesh General Sales Tax Act, 1957, however, provided the point of levy to be the point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation which is not permissible. 2.. The words 'when purchased by a miller' can only mean that as soon as a miller makes a purchase the transaction in his hands becomes exigible to tax and the point of levy is at once fixed. Once the point of levy is fixed with reference to the first purchases, there is then no possibility of multiple tax. The first miller alone will be taxed irrespective of his conducting the milling operations with respect to the stocks. The Legislature never contemplated a miller taking the role of a mere dealer. 3.. The High Court rejected the assessee's contention that the words 'purchased by a miller' means the last miller who crushes the groundnut into oil. The contention was that 'miller' means only the crushing miller and not a dealer-miller and, therefore, the point of levy should be fixed at the stage when the groundnut loses its character by being converted into oil in the hands of a miller. 4.. Another argument that section 15 of the Central Sales Tax Act does not contemplate the imposition of a tax on the same type of goods at different stages and, therefore, item 6 of the Third Schedule of the Andhra Pradesh General Sales Tax Act should be so co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequent miller, who crushed the groundnut into oil, had paid the tax, he can claim refund as it was wrongly collected from him. This argument was negatived. It was observed that "it is significant to note that the 1957 Act regarded the the first purchase as the point of tax whereas the amending Act of 1959 shifted the point to the last purchase and when we came to the Amendment Act of 1961, no point of taxation is fixed at all. Hence, it logically follows that if the taxing authority levied the tax from any miller at any particular point of purchase, whether first, second or last, the power to tax comes to an end". Their Lordships went on to observe that "it is not disputed that if the tax is collected from the petitioner, it is not open to the authority to collect the same from the subsequent purchasing miller. It equally follows that when the tax is collected from the crushing miller, who purchased the groundnut from the petitioner, the tax can no longer be levied against the petitioner who represented the first purchaser of the groundnut". Their Lordships, therefore, held that since there is no scope for any distinction between the first purchaser or the last purchaser among the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the learned Judges who decided that case, we find it impossible to agree either with their reasoning or with their conclusion. We are clear in our view that it is the first miller, be he a decorticating miller or an oil miller who alone can be taxed under the first limb of the entry. In our view State of Andhra Pradesh v. Lakshmi Oil Mills[1967] 20 S.T.C. 489. correctly laid down the law to which we have already made reference. We then come to Madar Khan & Co. v. Assistant Commissioner (Commercial Taxes)[1971] 27 S.T.C. 18. That was also a case to which item 3-C as it stood under the 1961 Amendment Act was applicable. It was argued on behalf of the assessee who was only a decorticating miller that if a person who merely decorticates groundnuts and sells kernel is subjected to sales tax on the ground that he is a miller and if after the sale by such a person the groundnuts again pass from dealer to dealer by sale, the last dealer purchasing in the State would again be subjected to tax under the second limb of item 3-C of Schedule IV. That would be contrary to section 15 of the the Central Sales Tax Act. But the Government Pleader contended that once sales tax had been pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, did not construe the word 'miller' as occurring in the Fourth Schedule with reference to the Central Sales Tax Act to which the schedule and section 6 of the Act were subject". With due respect to the learned Judges, we would like to point out that the learned Judges in Aswathanarayana v. Deputy Commercial Tax Officer[1964] 15 S.T.C. 795. were fully conscious of these provisions as is evident from the judgment. And in any case that hardly can be a ground for distinguishing a case in contrariety to which a decision was being given. After observing that "the second limb refers to a miller who purchases groundnut", which observation perhaps refers to the first limb, the learned Judges said: "The scheme of item 3 appears to be to make groundnuts exigible to tax at the point when they cease to be taxable commodities either when groundnuts cease to be groundnuts by being crushed into oil or when groundnuts pass from the State. In our opinion, item 3 makes groundnuts exigible to tax at the point of purchase by a person who destroys the identity of groundnuts within the State." It is difficult to agree with this understanding of item 3. It is firmly settled that sales tax becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found support from State of Andhra Pradesh v. Lakshmi Oil Mills[1967] 20 S.T.C. 489. and was accepted in Jowli Sunkiah & Co. v. Commercial Tax Officer[1968] 21 S.T.C. 300., as stated above. We find it therefore difficult to agree with the view of the learned Judges that the word "miller" in entry 3 does not include a person who merely decorticates groundnut. We so fully agree with the reasoning and conclusion of Aswathanarayana v. Deputy Commercial Tax Officer[1964] 15 S.T.C. 795. that we find it unnecessary to repeat what all is said therein. The learned Judges in Madar Khan & Co. v. Assistant Commissioner (Commercial Taxes)[1971] 27 S.T.C. 18. not only declined to agree with the conclusion of Aswathanarayana v. Deputy Commercial Tax Officer[1964] 15 S.T.C. 795. but they also did not agree with the several of the observations and conclusions of the learned Judges in State of Andhra Pradesh v. Lakshmi Oil Mills [1967] 20 S.T.C. 489.as well as Radhakrishna & Co. v. State of Andhra Pradesh[1969] 24 S.T.C. 320. Both these cases took the view that it is the first miller who alone will be liable to tax irrespective of the fact whether the first purchaser-miller purchased the goods eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is quite important to note that Madar Khan & Co. v. Assistant Commissioner (Commercial Taxes)[1971] 27 S.T.C. 18. has thus been overruled by the abovesaid decision of the Supreme Court, in any case, in so far as the reasoning and conclusion which go against the reasoning and conclusion of State of Andhra Pradesh v. Lakshmi Oil Mills[1967] 20 S.T.C. 489. are concerned. In spite of what has been stated in the last paragraph of the judgment in Madar Khan & Co. v. Assistant Commissioner (Commercial Taxes)(1), the Supreme Court clearly stated that "our approach to the question before us is similar to that adopted by the High Court in the decision under appeal (State of Andhra Pradesh v. Lakshmi Oil Mills(2)). We are in entire agreement with the reasoning of the High Court". The Supreme Court went on to say that "our attention was invited to a later decision of the same High Court in M. Madar Khan & Co. v. Assistant Commissioner (Commercial Taxes), Anantapur[1971] 27 S.T.C. 18 at 23. , which took a view contrary to that taken in the decision under appeal", and then made certain observations with which we are not concerned here. What is clear is that the Supreme Court expressly approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actment. Is there anything then in entry 3-C as amended in 1963 to suggest that it should be read as if it was originally enacted in 1961? We cannot find any language of the amendment which may even remotely indicate that the Legislature intended to interpret the original entry so as to disagree with the construction put upon it by the courts. We can see nothing in the surrounding circumstances of the enactment to suggest anything of that kind. The Legislature was, it is presumed to be, aware of the decisions interpreting the word "miller" to include also a decorticating miller. If the Legislature had thought at the time of amendment in 1963 that the interpretation so put by the courts was quite contrary to their original intention nothing could have been easier and nothing could have prevented them from expressly giving retrospective effect to the amendment they made. They could have declared their intention by adding an explanatory note. On the other hand, the way in which the entry is amended clearly shows that the Legislature accepted the prior construction of entry 3-C and that is why without allowing the prior transactions to be affected, for the purpose of future transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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