TMI Blog1972 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of the Central Act as it stood originally only attracted the procedure for assessment under the Madras General Sales Tax Act, hereinafter called the State Act, for making the assessments under the Central Act and that as such the exemptions provided under the State Act will not be available in respect of assessments made under the Central Act. Aggrieved against that decision, the assessee went on appeal before the Appellate Assistant Commissioner who held that the petitioners claim for deduction towards excise duty paid by him in respect of the assessments under the Central Act was not tenable in view of the decisions in Mariappa Nadar v. State of Madras[1962] 13 S.T.C. 371., State of Mysore v. Mysore Paper Mills[1964] 15 S.T.C. 176., Khader and Co. v. State of Madras[1966] 17 S.T.C. 396. and Tirukoilur Oil Mills Ltd. v. State of Madras[1967] 20 S.T.C. 388. There was a further appeal to the Sales Tax Appellate Tribunal. Before the Tribunal considerable reliance was placed by the petitioner on the decision of the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty and Sons[1965] 16 S.T.C. 231 (S.C.)., in support of its case that if the excise duty was deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in each of the above cases are set out below: Case No. Assessment year Disputed turnover (Excise duty) T.C. 197 of 70 1964-65 Rs. 1,91,400.00 T.C. 196 of 70 1965-66 8,64,637.00 T.C. 225 of 70 1965-66 45,900.00 T.C. 226 of 70 1964-65 45,900.00 T.C. 227 of 70 1965-66 1,85,197.00 T.C. 228 of 70 1965-66 2,63,199.50 T.C. 307 of 70 and 1965-66 2,21,318.00 W.P. 303 of 70 Except the difference in the disputed turnover, the facts in all these cases are the same. The common question involved in all these cases is as to the true scope of section 10 of Central Act 28 of 1969, which has replaced clause 10 of Central Ordinance 4 of 1969. Before proceeding to consider that question, it is necessary to refer to the changes brought about in the provisions of the State Act as well as the Central Act. We will first refer to the changes brought about in the State Act so far as excise duty is concerned. Under rule 5(1)(i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, excise duty paid to the Central Government by a dealer in respect of goods manufactured by him is an allowable deduction in the computation of the taxable turnover. The said Rules were replaced by the Madr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Act, 1957, if the sale had taken place in that State and, therefore, he could not also be taxed on his inter-State sale under the Central Act. The Supreme Court expressed the view that by virtue of sub-sections (1) and (2) of section 9 of the Central Act, the power conferred upon the authority competent is to assess the tax in the same manner as the tax on the sale or purchase of goods under the general sales tax law of a State is levied and that it is not intended to make a departure in the manner of levy of tax on specified goods which are taxed only at a single point under the State Act. The purport of the above decision is that section 9 of the Central Act not only attracts the machinery provisions under the local sales tax laws but also the substantive provisions relating to the levy and collection of tax. In a subsequent decision in State of Kerala v. Pothan Joseph Sons[1970] 26 S.T.C. 147 (S.C.)., their Lordships of the Supreme Court specifically considered the question whether the excise duty which is an allowable deduction under the local sales tax law would also be a deduction under the Central Act by virtue of section 9 of that Act. The Supreme Court followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am's case[1965] 16 S.T.C. 231 (S.C.). and Pothan Joseph's case[1970] 25 S.T.C. 147 (S.C.). This Ordinance has been replaced by Central Act 28 of 1969. Section 9 as amended only attracts the machinery provisions of the local sales tax laws and not the substantive provisions such as the point or stage of levy, exemption, deduction, etc. The result is a claim for deduction towards excise duty based on a provision under the local sales tax law, in respect of the Central sales tax assessment, cannot be sustained as at present and that excise duty becomes taxable under the Central Sales Tax Act from 1st October, 1958. But as a new liability has been created by a retrospective amendment of section 9, the Parliament has enacted section 10 of Central Act 28 of 1969 providing for exemption from sales tax liability in case the dealer effecting inter-State sale has not collected any tax under the Central Act before its amendment on the ground that no such tax could be levied or collected in respect of such sale or any portion of the turnover relating to such sale and no such tax could be levied or collected under the Central Act before its amendment. The petitioners do not dispute that under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the tax under section 9 of the Central Act could not be levied on the turnover of excise duty on the dates of the assessments, the effect of the subsequent deletion of the provision for deduction under the State law with retrospective effect from 5th January, 1957, is that the provision for exemption should be deemed not to have existed on the dates of the assessments. The deeming clause in Madras Act 3 of 1969 results in the turnover relating to excise duty being taxable from 5th January, 1957, under the State law and, consequently, the turnover relating to excise duty is also taxable under the Central Act. The contention of the learned counsel that the amendments brought about in the local sales tax law in relation to the deduction of excise duty should not be construed in such a way as to affect the charge under the Central Act is not possible of acceptance. Section 9 of the Central Act in the form it was at the relevant time attracted the provisions of the local sales tax law in general. The section does not refer to the provisions of the local Sales Tax Act as they existed on the date when the Central Sales Tax Act was enacted. Therefore, the scope of the charge und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amended, that a retrospective amendment cannot be resorted to impose a fresh levy of tax only for an anterior period without any import on future transactions, and that, therefore, Madras Act 3 of 1969 more or less bringing to charge the turnover relating to excise duty for an anterior period between 5th January, 1957, to 31st March, 1966, is invalid in law. According to the learned counsel, the object of bringing in this amending legislation by the Madras Legislature was only to disable the dealers from getting the benefit of exemption under section 10 of Central Act 28 of 1969, and such an object clearly shows that the Madras Legislature has in substance and effect legislated with respect to inter-State sales which are admittedly outside its legislative powers and, in any event, Madras Act 3 of 1969 in so far as it withdraws the provision for deduction for an anterior period should be taken to be unreasonable and violative of article 19(1)(f) of the Constitution. As regards the contention that the Madras Legislature in enacting Madras Act 3 of 1969 has attempted to legislate in a way on inter-State sales is not tenable at all. Madras Act 3 of 1969 is well within the power of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vely will not make it unreasonable as offending article 19(1)(f) of the Constitution. In this case it is true the concession which was in vogue practically from 1st April, 1939, had been withdrawn for the period from 1st April, 1957, to 31st March, 1966, by a retrospective legislation made in the year 1969. But that fact alone cannot make the amending Act unreasonable. There is always a presumption in favour of the constitutionality of a statutory provision and to strike it down as being unreasonable and as offending article 19(1)(f) of the Constitution, it must be shown that the operation of the retrospective legislation will result in taking away the right guaranteed under article 19(1)(f) and that it is not a reasonable restriction coming under article 19(5). The withdrawal of the concession might have been thought of as being necessary in view of the Supreme Court judgment in Yaddalam's case[1965] 16 S.T.C. 231 (S.C.). If the power of the legislature to enact a law with retrospective effect cannot be questioned, the mere fact that the withdrawal of the concession with retrospective effect will result in certain dealers being exposed to an additional burden will not make the leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch Works, Sivakasi v. Deputy Commercial Tax Officer and Others[1974] 34 S.T.C. 266.. Ramaprasada Rao, J., has also considered the tenability of the identical contentions as have been put forward before us, and the learned Judge, if we may say so with respect, has considered the matter in some detail and has ultimately rejected the contentions. Construing the scope of section 10 of Central Act 28 of 1969, the learned judge has expressed: "To claim or to qualify to claim that concession, the section prescribes three conditions, namely: (1) the dealer should not have collected tax, (2) such non-collection must be on the belief that no such tax could have been levied or collected in respect of such sale or any portion of the turnover relating to such sale; and (3) no such tax could have been levied or collected if the amendments made in the principal Act by Central Act 28 of 1969 had not been made." Ultimately, it was held that the petitioner in T.C. No. 197 of 1970, who was also the petitioner before the learned judge in the writ petition, is not entitled to claim exemption under section 10 as a conjoint reading of section 9 of the Central Act and the provisions of the State Act as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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