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TMI Blog1972 (11) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... then such duty was deductible for arriving at the taxable turnover under the Central sales tax law also. The petitioner contended that as during the relevant years excise duty was deductible under the provisions of the Madras General Sales Tax Act, such a deduction has to be necessarily made even under the Central Sales Tax Act on the basis of the law and the decisions then in force. This contention was not accepted on the ground that section 9(3) of the Central Sales Tax Act, as it stood originally, did not touch upon the question of exemption, but only prescribed a procedure in the matter of making assessments under that Act. The petitioner took up the matter before the Sales Tax Appellate Tribunal, Madras. It is no doubt common ground that under rule 6(f) of the Madras General Sales Tax Rules, 1959, until it was deleted, a deduction could lawfully be made from the taxable turnover of the State Act of the amounts paid by way of excise duty. But by Madras Ordinance No. 5 of 1968, promulgated on 31st December, 1968, this rule was deleted with retrospective effect and in any event it was made clear that the rule should be deemed to have been deleted from 1st April, 1959, to 31st Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate trade was not deductible from the taxable turnover as it was not deductible during the relevant period even under the Madras General Sales Tax Act as amended by Madras Act 3 of 1969. The Appellate Tribunal also held that as the petitioner satisfied only one of the conditions which would entitle him for exemption under the Central Sales Tax Act-which conditions have already been noticed by me in brief-the appeals preferred by the petitioners were dismissed. I may at once state that the Central Sales Tax Ordinance (No. 4 of 1969) has subsequently been replaced by the Central Sales Tax (Amendment) Act, 1969 (Central Act No. 28 of 1969). Mr. V.K. Thiruvenkatachari, the learned counsel who argued for the petitioners, contended that section 10 of Central Act 28 of 1969 should not be construed in the light of the retrospective amendment of the Madras Act. In any event, he said that in the circumstances the Central Act should be deemed to prevail over the Madras Act. Incidentally, the petitioners challenge the vires of Madras Act 3 of 1969 in the sense that it cannot be understood to be a legislation which is within the competence of the legislature. The ultra vires nature of Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower it cannot be said that the local legislature is attempting to encroach upon the powers of the Parliament. As the legislature is competent to make the law with retrospective effect, no question of its validity or its untenability arises. I shall now briefly refer to the law in force before and after the decision in Yaddalam's case[1965] 16 S.T.C. 231 (S.C.). The issue relating to the right of a dealer to deduct the excise duty paid by him to the Central Government from the taxable turnover under the provisions of the Central Sales Tax Act was raised for the first time in the case reported in Mariappa Nadar's case[1962] 13 S.T.C. 371. Previously, excise duty was always included in the taxable turnover of an assessee on his inter-State sales under the Central Sales Tax Act. It may be noted here that so far as the payment of excise duty on goods manufactured and sold locally, i.e., within the State, is concerned, such amount was excluded from the taxable turnover because of the express provision, namely, rule 5(1)(i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, and rule 6(f) of the Madras General Sales Tax Rules, 1959, which directed that while computin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court must be understood in that context. It held further expressly and clearly in the following manner: "'Turnover' is defined (under the Central Sales Tax Act) by clause (j) of section 2 as the aggregate of the sale prices in respect of sales of any goods of inter-State trade or commerce and as determined in the prescribed manner. Section 13 confers rule-making power on the Central as well as the State Governments on specified matters. Power to make rules relating to deductions to be made in the process of determination of turnover has been conferred on the Central Government by clause (1)(b) of that section. In exercise of this power, the Central Government has framed the Central Sales Tax (Registration and Turnover) Rules, 1957. This Rule, both before and after its amendment in 1962, provides for certain deductions which do not include excise duty. Section 6 which is the charging section in the Central Act makes it clear that the charge will be on the turnover and that means turnover as defined in that Act. No rule framed under the Central Act provides for deduction of excise duty. We are of the view, therefore, that it is not possible to uphold the contention for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 957 (date of coming into force of the Central Sales Tax Act) to 31st March, 1959 (end of the operation of the old Act) and from 1st April, 1959, to 31st March, 1966. It may be noted here that by G.O. Ms. No. 1041, Revenue, dated 29th March, 1966, rule 6(f) was deleted with effect from 1st April, 1966. Hence the Ordinance was limited to the period up to 31st March, 1966. The effect and consequence of the Ordinance will be that it must be deemed that at no point of time from 5th January, 1957, to 31st March, 1966, and thereafter too there was any exemption excluding excise duty from the taxable turnover under the State law. The result will be that the dealers cannot claim exemption under the Central Sales Tax Act on the turnover relating to excise duty. This Ordinance was subsequently replaced by Madras Act 3 of 1969 and the provisions of this Act are similar to the Ordinance. In the meanwhile, in view of the consequences that may follow (i.e., refund of large amounts of taxes) as a result of the Supreme Court judgment in State of Kerala v. Pothan Joseph & Sons[1970] 25 S.T.C. 147 (S.C.)., which confirmed State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 873 of 1970, which is directly against the order of the assessing authority, the assessing officer has given a finding that the assessee has complied with the first condition. Now coming to the second condition that the dealer did not collect the tax on the ground that no such tax could have been levied or collected, it must be remembered that the dealers in Madras cannot put forth such ground because right from Mariappa Nadar v. State of Madras[1962] 13 S.T.C. 371. decided on 13th December, 1961, down to M.A. Khader and Co. v. Deputy Commercial Tax Officer[1970] 25 S.T.C. 104. decided on 7th February, 1969, our court has consistently been taking the view in spite of the case in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons(1) that the exemption under the local Act will not automatically apply to the transactions under the Central Sales Tax Act. The periods in question in these writ petitions are 1964-65 and 1965-66. Hence the petitioners should be held not to have complied with the second condition of section 10 of Central Act 28 of 1969. In view of Madras Act 3 of 1969 it is not open to the dealers to contend that no such tax (on excise duty portion) could ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Central Sales Tax (Amendment) Act, 1969, does not violate article 301 of the Constitution and the Madras General Sales Tax (Second Amendment) Act, 1969, is not confiscatory and is not violative of article 19(1)(f) of the Constitution-see Krishnamurthi and Company v. State of Madras[1969] 23 S.T.C. 1. and Mohamed Salam v. Commissioner of Commercial Taxes[1970] 26 S.T.C. 103. I am unable to agree that the State Legislature was incompetent to make the Madras Act and that the Parliament alone had such a power under article 246 of the Constitution. The next limb of the argument is whether such a law could be made with retrospective effect and as it is made so, is it not unreasonable. It is now clear that the mere fact that a legislative provision has been made to operate retrospectively, it does not become unreasonable. I have already said that the Madras Act does not offend article 19. As every presumption has to be raised in favour of the constitutionality of a provision of a statute, the factum of withdrawal of a concession which was in vogue for some time cannot be lightly ignored on the basis of unreasonableness as it is popularly understood. The withdrawal was thought of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. We are not confronted with an ambiguous situation as the language of the amending Act is clear. There is, therefore, no occasion for this court to lean in favour of the assessee because of any doubt in the normal understanding of the text of the amending Act. The usual norm is that legislative wisdom does not produce unjust consequences, nor does it intend to do so; but it is now well-established that if there are words in the enactment which either expressly state or necessarily imply that the statute is to be given retrospective operation, then the Act should have retrospective operation even though the consequences may appear unjust and hard. The complaint is that certain pre-existing rights are being taken away. But as pointed out by Lord Watson in Western Countries Railway Co. v. Windsor, etc., Co.[1882] 7 App. Cas. 178 at 189.: "It is not sufficient to show that the thing sanctioned by the Act, if done, will of sheer physical necessity put an end to the right; it must also be shown that the legislature have authorised the thing to be done at all events, and irrespective of its possible interference with existing rights." The language of the amended provision shows tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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