TMI Blog1975 (2) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... four quarters ending 31st March, 1971. The petitioner claimed that no sales tax was payable in respect of the said inter-State sales of jute goods manufactured out of jute upon which it had paid jute tax at the time of purchase of raw jute. The petitioner in its said returns had also shown the amounts of its sale of jute goods in the course of export. Further it had claimed deductions from its gross turnover of sales allegedly covered by declarations furnished by other dealers. The Commercial Tax Officer, Esplanade Charge, had served notices in form VI under section 11(1) of the State Sales Tax Act and also in form 3 under section 9 of the Central Sales Tax Act, 1956, for assessment of sales tax in respect of the aforesaid period. The petitioner has prayed in these rules for writs in the nature of prohibition or prohibiting the respondents from proceeding with the aforesaid notices of assessments under the State and Central Sales Tax Acts for the four quarters ending March, 1971. The petitioner has also prayed that writs in the nature of mandamus be issued directing the respondents to complete pending jute tax assessments and for directing the respondents to refund sales taxes al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rictions on imposition of tax on the sale or purchase of goods. Under clause (1), no State can enact any law imposing or authorising the imposition of tax on sales or purchases taking place outside the State or in the course of import of goods into, or export of goods out of, India. The Parliament has been empowered under clause (2) to make laws formulating principles for determination when the above two kinds of sales or purchases of goods take place. In these rules, we are concerned with the scope of clause (3) of article 286, which provides that the Parliament may by law declare goods to be of special importance in inter-State trade or commerce. Secondly, all State laws imposing tax on sale or purchase of goods declared to be of special importance are subject to such restrictions and conditions regarding system of levy, rate or incidence as may be specified by parliamentary legislation. The Parliament of India has enacted the Central Sales Tax Act, 1956, to give effect to the above provisions contained in article 286 of the Constitution. The preamble of the said Act states: "An Act to formulate principles for determining when a sale or purchase of goods takes place in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the State laws cannot impose tax in respect of sale or purchase of jute goods of special importance at a rate exceeding two per cent. Accordingly, section 3 of the Bengal Raw Jute Taxation Act, 1941, was ultra vires. On the same ground, the learned Advocate for the petitioner has challenged the vires of section 5(1)(c) of the Bengal Finance (Sales Tax) Act and other consequential provisions in the said Act relating to imposition of sales tax on jute goods. The learned Advocate for the petitioner has also contended that the Bengal Raw Jute Taxation Act imposes tax at one stage of jute. Therefore, the imposition of tax on finished jute goods under the Bengal Finance (Sales Tax) Act is in contravention of the restrictions in section 15 that tax payable under the State law on sale or purchase of declared commodities cannot be at more than one stage. I am unable to accept the submission of the learned Advocate for the petitioner that the substitution of the words "three per cent" in place of "two per cent" in section 15 made by section 51 of the Finance Act (Act 13 of 1966) was valid only for the financial year 1966-67, and that the said amendment has expired. The Finance Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich they solely relate. There may, however, be and often are provisions of a general character which are of permanent operation and which are available for application, whenever circumstances are found to which they are, by their terms, applicable. It is not unoften that the Income-tax Act or some other Act is amended by a Finance Act or that some principle of taxation or computations of income is laid down in a Finance Act, which is intended to form part of the general law of the country. Section 11, sub-section (14), of the Finance Act of 1946 is a provision of that character and it is not intended to be limited to the accounting year 1946-47 alone." I respectfully agree with the above views of the Division Bench in McGregor and Balfour Ltd. v. Commissioner of Income-tax, West Bengal[1955] 27 I.T.R. 389., and hold that the provisions of section 51(b) of the Finance Act, 1966, were intended to form part of the general law of this country. Neither expressly nor by necessary intendment the substitution of the words "three per cent" in place of "two per cent" in section 15 of the Central Sales Tax Act, 1956, was limited to the year 1966-67, but the same was permanent in nature subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish Dictionary, Volume 11, gives the meaning of the word "otherwise" as "in other manner". Thus in the context of clause (v) "otherwise" means the jute fibre carried or transported in any other way distinct or different from bale. The word "otherwise" in juxtaposition with "baled" is referable to the state or conditions of package. Therefore, the expression "baled" or "otherwise" is referable to the different manner in which jute fibres may be packed for carriage. I am unable to accept the submission of the learned Advocate for the petitioner that the word "otherwise" means not only jute fibre, but also things manufactured out of jute fibre. Clause (v) of section 14 only refers to fibres extracted from the plants mentioned therein. "Fibre" is commonly understood as "one of the thread-like bodies or filaments, that in part compose animal and vegetable tissue" (vide The Shorter Oxford English Dictionary, Volume 1). Such thread-like filaments by manufacturing process may be made into yarns which in their turn when woven become the finished materials. It is true that the words "that is to say" are not words of restriction, but are words of illustration (see Bhola Prosad v. EmperorA.I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than one stage would be in contravention of section 15. I am unable to accept the meaning of the words "more than one stage" suggested by the learned Advocate for the petitioner. The "stage" in section 15 refers to the stages of successive sales and purchases. In my view, the word "stage" in section 15 means that tax on internal sale on declared goods should be single point and not multi-point, and the said expression is not at all referable to stages which raw materials may undergo resulting in the manufacture of different commercial commodities. The prohibition in section 15 is against imposition of sales tax on internal sale of the same commodity which is declared as goods of special importance. In this case, the averments made in the petition and the affidavit-in-reply on behalf of the petitioner themselves show that the goods manufactured in the petitioner's mill out of jute fibre are different commodities having special traits and attributes not possessed by raw jute. Such attributes and traits are imparted to raw jute so as to produce a new commodity or material. Section 15 of the Central Sales Tax Act, 1956, has been twice amended. The cause and necessity of the amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he only condition sought to be imposed being that if, under the local sales tax law, a tax is collected, provision is made in the law for the refund of such tax if the goods are sold in the course of inter-State trade or commerce. In such cases, Central sales tax alone should be leviable. The State Governments are left free to lay down their own procedure for the making of such refunds." The Taxation Enquiry Commission, 1954, in their Report, Volume III, at page 50, which was cited by the learned Advocate for the petitioner stated: "To give effect to our recommendations regarding the Central regulation of States' sales taxes on goods of special importance in inter-State trade, the Central legislation will have, firstly, to specify such goods and, secondly, to impose conditions and restrictions subject to which the State Governments can impose their tax on the internal trade in those goods. The main condition will be that no State shall have a system of levy other than a single point levy on such specified goods. The tax may either be on sales or on purchases, but it will be recoverable only at the last stage of sale or purchase by a registered dealer. The condition is necessa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Sales Tax Act by observing: "While section 15 of the Central Sales Tax Act before the amendment described the stage at which the purchase tax can be levied, section 15 after the amendment only declared that it cannot be levied at more than one stage." Recently, the Supreme Court in B.G. Somanna Sons v. State of Andhra Pradesh(1), upheld the vires of the Andhra Pradesh General Sales Tax Act, 1957, in the context of section 15(a) of the Central Sales Tax Act, 1956, on the ground that the liability to pay tax on groundnut fell only at one point. The Supreme Court rejected the contention that "groundnuts" purchased by the appellants would be taxed at the point of purchase by them and also again in the hands of "last dealers" to whom they might sell by observing: "The short answer to this argument could be that the validity of the levy of a tax upon a purchase by a last dealer could be questioned by one of the appellants only if he was being taxed as a last dealer and not as a miller. It is apparent that they are being taxed at the point of purchase by them as millers only. When they purchase groundnuts as millers they do so presumably in order to convert the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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