TMI Blog1979 (11) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... 28 S.T.C. 227. and remanded the case back to the assessing officer for fresh disposal in accordance with the decision of this Court. By his order dated 26th October, 1971, the Joint Commercial Tax Officer cancelled the assessment to the extent made under section 7-A of the Act. The order of the Appellate Assistant Commissioner was examined by the Board in the light of the decision of the Supreme Court in State of Tamil Nadu v. M.K. Kandaswami[1975] 36 S.T.C. 191 (S.C.). It was considered that the order of the Appellate Assistant Commissioner in setting aside the assessment under section 7-A is not correct and it was, therefore, proposed to restore the assessment on the turnover of Rs. 5,00,000. The assessee's objections were called for and by the impugned order, the Commissioner of Commercial Taxes held that the turnover of Rs. 5,00,000 should be restored in the assessment. He, however, directed levy of tax at one per cent as bullion under section 7-A of the Act with reference to the said turnover. This order of the Board of Revenue is the subject-matter of the present appeal. Section 7-A of the Act provides for the levy of purchase tax under certain circumstances, and it runs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at if the purpose of section 7-A was to check evasion, the phraseology has fallen short of achieving that purpose. In this Court's view, the language of section 7-A was far from clear as to its intention and the Joint Commercial Tax Officer was held to be not justified in invoking section 7-A. The judgment of this Court was taken on appeal to the Supreme Court by the State. In the course of its judgment reported in 36 S.T.C. 191, the Supreme Court held that the interpretation placed by the learned Judges of this Court on section 7-A was not correct. At page 197, it was pointed out: "The words 'the sale or purchase of which is liable to tax under the Act' qualify the term 'goods' and exclude by necessary implication goods, the sale or purchase of which is totally exempted from tax at all points under section 8 or section 17(1) of the Act. The goods so exempted-not being 'taxable goods'-cannot be brought to charge under section 7-A." Thus exempted goods would fall outside section 7-A. Further, in the same page, it was pointed out: "Notwithstanding the goods being 'taxable goods', there may be circumstances in a given case, by reason of which the particular sale or purchase does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of first sale in the State and the rate of tax at the relevant time was one per cent. It has since been increased to 2 per cent. The learned counsel for the assessee contended that in so far as the identical goods had already suffered tax at the time of sale by the assessee to the parties, who later on brought the same goods and sold them, it should be held that the goods had already suffered tax and that they cannot be taxed over again in view of the mandate in section 3(2). This contention, for being appreciated, requires mention of a few more facts. Certain typical bills were placed before us in order to show how the assessee effects his transactions. For instance, in a bill dated 18th August, 1969, there is an order received from a party for making a Thirumangalyam of 22 ct. gold, two sets. The order number is 2619. The assessee, after manufacture, prepared a bill as follows: 22 ct. gold 2 sets of Thirumangalyam and 4 gundus, weight 17.250 grams. No. 1852 at Rs. 17.25 a gram Rs. 297.56 Making charges Rs. 30 each set Rs. 60.00 ------ Rs. 357.56 Sales tax at 3 per cent Rs. 10.74 ------ Rs. 368.30 Less advance paid on 25-6-1969 Rs. 200.00 ------ Rs. 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he separate charge effected under section 7-A, it is not possible to accept the submission that it has to be read only subject to section 3(2). Section 7-A contemplates liability to tax on the purchases in cases where the person from whom the assessee purchases the goods is one by whom no tax is payable under section 3, 4 or 5, as the case may be. That is the position here. In the present case, the vendors to the assessee are all persons who are not liable to pay tax because they are not dealers under the Act at all. In the circumstances, the primary condition which attracts the liability under section 7-A is satisfied in the present case. The only other condition that is to be satisfied is, whether the goods were consumed in the manufacture or whether they were disposed of in any manner other than by way of sale in the State or whether they were despatched to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce. In the present case, it is not in dispute that the goods or bullion were consumed in the manufacture of other goods for sale or otherwise as contemplated by clause (a). In the circumstances, it has to be h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court had not rendered its decision. It is the decision of the Supreme Court that should govern the construction of the provision and not any G.O. on an incorrect understanding of the provision and, therefore, the interpretation placed by the executive authorities cannot be applied in the present case. We may, however, point out that in view of the clear words employed in the objects and reasons as well as in the G.O. which was simultaneously issued, which show that the intention was not to tax such goods at more than one point, if they had already suffered tax, it would be for the legislature to take notice of the anomaly that has arisen as a result of the language employed in the provision and rectify the provision in a suitable manner by amending the provision accordingly. We may also make it clear that whatever we have stated does not in any manner govern the case of declared goods, which may have to be considered separately. It was brought to our notice that in a representation to the Board, the assessee had already pointed out that though Rs. 5,00,000 had been taken as an estimate for levying tax under section 7-A, the value of the total purchases during the relevant ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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