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TMI Blog1969 (12) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons [1965]2SCR129 , the petitioners moved the Commercial Tax Officer under rule 38 of the State Rules seeking for the rectification of the mistake as regards assessment to tax of the inter-State sales of cotton made by the petitioners. Accordingly, such sales were exempted from liability to tax under the Mysore Sales Tax Act, 1957, and the necessary refund was also made. The Central Act was amended by the Central Sales Tax (Second Amendment) Act, 1958 (Act 31 of 1958), with effect from 1st October, 1958. One of the amendments was in regard to section 8 of the Central Act, whose sub-sections (1) to (4) were completely substituted by virtue of section 5 of that amending Act. We need refer to only one more amendment to the Central Act by the Central Sales Tax (Amendment) Ordinance, 1969 (No. 4 of 1969) hereinafter referred to as the Ordinance. It may, however, be mentioned that this Ordinance was later replaced by the Central Sales Tax (Amendment) Act, 1969, hereinafter referred to as the amending Act. By virtue of the Ordinance section 6 of the Central Act was amended, among others, by the additional of a clause (1A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 2(i) of the Central Act. (2) In view of clause 9 of the Ordinance, all assessments made prior to 9th June, 1969, stood validated and therefore should be deemed to have been made in accordance with law. That being so, the rectification of assessment made on 26th June, 1967, at the instance of the petitioners under rule 38 of the State Rules also stood validated. It is not, therefore, open to the Commercial Tax Officer to institute proceedings for rectification of such a valid assessment. (3) The present proceeding under rule 38 of the State Rules is barred by limitation, as it is beyond 5 years of the date of the assessment order. Since, every rectification of an order of assessment gets merged in the original assessment order, the period of limitation prescribed under rule 38 ought to be reckoned from the date of assessment order and not from the date of the passing of the order of rectification. In other words, rectification of the assessment order can be made more than once, but every such rectification should be within 5 years from the date of the assessment order. (4) Under the Central Act, cotton is taxable at the point of purchase and, therefore, such goods are uncon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quot;'Sales tax law' means any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf, and 'general sales tax law' means the law for the time being in force in any State or part thereof which provides for the levy of tax on the sale or purchase of goods generally." 6. Section 8(2A) of the Central Act, as amended by Act 31 of 1958, reads thus : "Notwithstanding anything contained in sub-section (1) or sub-section (2), if under the sales tax law of the appropriate State the sale or purchase, as the case may be, of any goods by a dealer is exempt from tax generally or is subject to tax generally at a rate which is lower than one per cent (whether called a tax or fee or by any other name), the tax payable under this Act on his turnover in so far as the turnover or any part thereof relates to the sale of such goods shall be nil or, as the case may be, shall be calculated at the lower rate. Explanation. - For the purposes of this sub-section a sale or purchase of goods shall not be deemed to be exempt from tax gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) Subject to the other provisions of this Act and the Rules made thereunder, the authorities for the time being empowered to assess, reassess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, reassess, collect and enforce payment of tax, including any penalty, payable by a dealer under this Act is a tax or penalty payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm of Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, refunds, penalties, compounding of offences and treatment of documents furnished by a dealer as c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant cases will be necessary in order to clear the ground. In Yaddalam Lakshminarasimhiah Setty's case [1965] 13 S.T.C. 583 the turnover related to a period prior to the amendment by Act 31 of 1958. This court held that the liability of the petitioner under section 8(2) of the Central Act on his inter-State sales could not be more than what it would have been had they been intra-State sales and liable to be taxed under the State law. Further while dealing with an argument based on the proviso to section 8(1) of the Central Act prior to its amendment in 1958 that the said proviso was concerned with categories of goods and not transactions of sales and purchases, the court did not decide the question as it was unnecessary for the decision in that case. This decision was subsequently affirmed by the Supreme Court in State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons [1965]2SCR129 . The Supreme Court while referring to section 8(2) of the Central Act has observed that that section could be interpreted in two ways thus giving rise to an ambiguity. The court, in order to dispel that ambiguity, interpreted section 9(1) of the Central Act and affirmed the decision under appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11th August, 1969 (Deputy Commissioner of Agricultural Income Tax and Sales Tax v. Aluminium Industries Ltd. [1970] 25 S.T.C. 476), their Lordships clearly observed that the effect of the amendments to the Central Act effected by the Ordinance was to supersede the majority decision of that court in Yaddalam Lakshminarasimhiah Setty's case [1965]2SCR129 . 16. The above decisions of the Supreme Court were rendered in connection with the Ordinance of 1969. We have observed earlier that it was subsequently replaced by an Act of Parliament. The Supreme Court in dealing with this Act also in Civil Appeals Nos. 1688 and 1689 of 1969 (State of Kerala v. Anglo Indian Direct Tea Trading Co.), in a judgment rendered on 1st December, 1969, have stated thus : "The High Court has, following the judgment of this court in the State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons [1965]2SCR129 , decided the tax cases against the State of Kerala. Since that judgment was delivered the Parliament has enacted the Central Sales Tax (Amendment) Act (28 of 1969). Thereby several changes have been made in the scheme of the levy of Central sales tax, and the judgment in Yaddalam Lakshmin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted the procedure under the general sales tax law of the appropriate State. In adopting the procedural law of the State, the Parliament cannot be said to have abdicated its essential legislative functions.........." 19. Again in dealing with the contention based on the definition of the expression "sales tax law" in section 2(i) of the Central Act, it is observed thus : "....The Legislature's intention is quite clear that it is not only the law in force when the Central Act was enacted but the State law in force from time to time. With respect, we are unable to agree with the decision in Shah & Co. v. State of Madras [1967] 20 S.T.C. 146, that what has been adopted is only the law as it stood when the Act was enacted, since in our opinion, the Parliament was competent to adopt the State law not only as it existed at the time of the enactment of the Act but also as it may exist in future including amendments made from time to time, where the adoption of law is with respect to the rate of taxation and the procedural law for assessment and collection of tax. The Parliament, in our opinion, has not abdicated any of its essential legislative functions......&qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate. This court in disposing of that ground of attack observed thus : "As observed by the Supreme Court in State of Bombay v. P. V. Chapalkar, 'when a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical conclusion. The purpose of the amending Act 9 of 1964 was to ensure that tax payable on the sale of cloth held in stock on 14th December, 1957, was realised and for that purpose sub-section (5-A) of section 5 was amended with retrospective effect. Section 34 further validated the invalid assessment orders made on the assumption that sub-section (5-A) of section 5 of the Act as it stood before the amendment empowered the levy of tax. When this court held in W.P. No. 368 of 1961 that sub-section (5-A) of section 5 did not levy a charge on the sale of cloth held in stock on 14th December, 1957, there were many assessment orders made levying tax on the sale of such cloth. As a result of the validation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of the amending Act that a clarification has been made, preserving the rights of a person to question in accordance with the provisions of the Central Act any assessment, reassessment, levy or collection of tax referred to in sub-section (1) of that section. It also preserves the right of a person to claim a refund of any tax paid by him in excess of the amount due from him by way of tax. In the instant case, it is clear that refund was ordered by virtue of a rectification sought by the assessee on the basis of Yaddalam Lakshminarasimhiah Setty's case [1965]2SCR129 . It is also now settled that the effect of the amendments made in the Central Act is to supersede the majority decision of the Supreme Court in Yaddalam Lakshminarasimhiah Setty's case [1965]2SCR129. These provisions were made expressly retrospective by the amending Act. Such being the position, the transaction with which the petitioners were concerned, became exigible to tax under the Central Act. To say that the refund made earlier stood validated cannot be accepted in view of the enumeration of this court reproduced above. 23. The next question relates to the plea of limitation. The arguments before us is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Sri Srinivasan is this : According to him, the conclusion of the Supreme Court that Yaddalam Lakshminarasimhiah Setty's case [1965]2SCR129 stood superseded by the amending Act of 1969 would not have the effect of unsettling the ratio of the decisions of this court in the interpretation placed on section 8(2A) of the Central Act. The decisions referred to by him were Yaddalam Lakshminarasimhiah Setty & Sons v. State of Mysore [1962] 13 S.T.C. 583, Mysore Silk House v. State of Mysore [1962] 13 S.T.C. 597 and Peirce Leslie & Co. v. State of Mysore (S.T.R.P. Nos. 63 and 64 of 1963). He proceeded to argue that the decision of the Supreme Court in Yaddalam Lakshminarasimhiah Setty's case [1965]2SCR129 , did not interpret the provision of section 8 of the Central Act and the decision thereunder turned on the interpretation of section 9. We are unable to accept this argument of Sri Srinivasan, in view of the decision of the Supreme Court in Civil Appeals Nos. 1228 and 1229 of 1969 decided on 14th August, 1969 (State of Kerala v. P. P. Joseph & Co. [1970] 25 S.T.C. 483 (S.C.)). Furthermore, such an argument cannot be accepted in view of section 6(1A) of the amending Act of 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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