Full Judgment Text
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PETITIONER:
AMRIT BANASPATI CO. LTD. & ANR.
Vs.
RESPONDENT:
STATE OF UTTAR PRADESH AND ORS.
DATE OF JUDGMENT:
27/07/1964
BENCH:
DAYAL, RAGHUBAR
BENCH:
DAYAL, RAGHUBAR
GAJENDRAGADKAR, P.B. (CJ)
HIDAYATULLAH, M.
GUPTA, K.C. DAS
SHAH, J.C.
CITATION:
1965 AIR 560 1964 SCR (8) 313
ACT:
Sales Tax-Sales tax levied at the rate of one anna per
rupee-New decimal coinage introduced by Act No. 31 of 1955-
Effect on calculation of sales tax-Sales tax to be levied at
the rate of one
314
anna or six Naya Paisa-Indian Coinage Act, 1906 as amended
by Act No. 31 of 1955. s. 14(3), (2).
HEADNOTE:
For the assessment years 1956-57 and 1957-58, the appellant
was, assessed to sales tax in respect of Vanaspati and oil
under the U.P. Sales Tax Act, 1948. By a notification
issued on March 31, 1956 under s. 3-A(2), the rate of tax
on Vanaspati was fixed at one anna per rupee at the point
of sale by the manufacturer.
The appellant and S. P. Bhasin, a shareholder of the
company, filed a writ petition in the High Court challenging
the validity of the U.P. Sales Tax Validation Act, 1958 and
also prayed for the quashing of the assessment order dated
October 15, 1960 and the order dated February 1, 1961, of
the Sales Tax Judge (Appeals), Meerut, in connection with
the assessment of tax on the sale of Vanaspati and other
articles both on the ground that the sale tax was assessed
at a higher rate than was permissible under a valid law and
that the tax had been assessed at the rate of one anna and
not at 6 Naya Paisa per rupee. The writ petition was
dismissed by a single Judge of the High Court and the
Letters Patent Appeal was also dismissed by High Court. The
appellant came to this Court by special leave.
The only point urged before this Court was that the tax
should have been calculated at the rate of 6 Naya Paisa per
rupee and not at the rate of one anna per rupee as laid down
in the relevant provisions of the U.P. Sales Tax Act and the
notice issued under its provisions. Dismissing the appeal,
Held (per P, B. Gajendragadkar, C.J., M. Hidayatullah, K.
C. Das Gupta and Raghubar Dayal, JJ.): The High Court was
right in construing the provisions of sub-s. (3) of s. 14 of
Indian Coinage Act to mean that references to values in any
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enactment, notification, rule or order under any enactment
or in any contract, deed or instrument, expressed in old
coins should be construed to be references to values
expressed in new coins by converting the old values at the
rate of16 annas, 64 pice and 192 pies to 100 Naya Paisa.
The values expressed in new coins must be absolutely
equivalent to the value of the, old coins. Per Shah, J.-
The liability for sales tax after the amendment of the
Coinage Act will be at the rate of 6 new coins for every
rupee of sale price and not one anna. By the notification
issued on March 31, 1956, the liability for payment of sales
tax was to be computed at the rate of one anna in a rupee of
the turnover. By virtue of s. 14(3), for an anna mentioned
in the notification, 6 1/4 new coins are to be substituted.
As the substituted rate involves a fraction, by the process
of rounding off at the rate specified in s. 14(2), the
fraction of new coins has to be omitted and the nearest new
coins, i.e., 6 new coins are to be deemed to be substituted
in the statute.
J. K. Jute Mills Co. Ltd. v. State of Uttar Pradesh,
[1962] 2 S.C.R. 1, Ram Kishan Sunder Lal v. State of Uttar
Pradesh, 13 S.T.C. 923,
315
M/s. Mangalore Ganesh Beedi Works v. State of Mysore,
[1963] Supp. 1 S.C.R. 275, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 887 and 888
of 1963.
Appeals by special leave from the judgment and order dated
October 23, 1961, of the Allahabad High Court in Special
Appeals Nos. 483 and 484 of 1961.
S. K. Kapur, B. L. Khanna, S. Murty and K. K. Jain, for
the appellants.
C. B. Agarwala and C. P. Lal, for the respondent.
July 27, 1964. The Judgment of the Court was delivered by :
RAGHUBAR DAYAL, J.The appellant, Amrit Banaspati Co. Ltd.,
hereinafter called the company, a joint-stock company, and
S. P. Bhasin. a shareholder of the company, filed writ
petition no. 1003 of 1961 in the High Court of Judicature at
Allahabad, challenging the validity of the U.P. Sales Tax
Validation Act, 1958 (Act XV of 1958), hereinafter called
the Validation Act, and praying for the quashing of the
assessment order dated October 15, 1960 and the order dated
February 1, 1961, of the Sales Tax Judge (Appeals), Meerut,
in connection with the assessment of tax on the sale of
vanaspati and other articles both on the ground that the
sales-tax was assessed at a higher rate than was permissible
under a valid law and that the tax had been assessed at the
rate of 1 anna and not at 6 naye paise per rupee. The
learned Single Judge of the High Court dismissed the writ
petition as the Validation Act validating the relevant
provision of the U. P. Sales Tax Act and the notification
enhancing the rate of tax had been held valid by this Court
in J. K. Jute Mills Co. Ltd. v. State of Uttar Pradesh(-)
and as the contention about the calculation of tax to be at
the rate of 6 naye paise per rupee and not at the rate of 1
anna had been repelled in earlier decisions of the Allahabad
High Court, one such decision being Ram Kishan Sunder Lal v.
State of Uttar Pradesh(1). A special appeal to a Division
Bench of the High Court was dismissed
(1) [1962] 2 S.C.R. 1.
(2) 13 S.T. C. 92
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316
in view of the decision of this Court in the Jute Mills’
Case(1). It appears that the second question about the
alleged error in calculating the tax at the rate of I anna
instead of 6 naye paise per rupee, was not raised before the
Division Bench. Civil Appeal No. 887 of 1963 has been filed
by special leave against this order of the High Court.
The other appeal no. 888 of 1963 is filed against the order
of the Division Bench confirming the order of the Single
Judge dismissing the writ petition by the appellant company
against the assessment order for the years 1955-56, 1956-57
and 1957-58. The only point urged for the appellant in this
writ petition had been that the Validation Act was invalid.
The orders of the two Courts below repelled the contention,
in view of the decision of this Court. in the Jute Mills
Case(1).
We did not allow the apellant to urge the grounds attacking
the validity of the Validation Act in view of the decision
of this Court in the lute Mills’ Case(1). The ,only point
which is urged before us now is that the tax should have
been calculated at the rate of 6 naye paise per rupee and
not at the rate of 1 anna per rupee, as laid down in the
relevant provisions of the U.P. Sales Tax Act and the
notification issued under its provisions. The contention is
based on the provisions of the Indian Coinage Act. 1906
(Act III of 1906), hereinafter called the Coinage Act. as
amended by Act XXXI of 1955. It is urged that in view of
the provisions of sub-ss. (2) and (3) of s. 14 of the Coin-
age Act, as amended reference to 1 anna in the relevant Act
and notification issued thereunder should be construed to be
reference to 6 naye paise and that the wrong calculation by
the Sales Tax Authority has resulted in over-assessment of
tax. To appreciate the real contention urged. it is neces-
sary to refer to the relevant provisions of the Coinage Act.
Section 13’ provides the extent up to which the tender ,of
the various coins would be considered legal tender. Its
relevant portions read:
"13. (1) The coins issued under the authority
of section 6 shall be a legal tender in
payment or
(1) [1962] 2 S.C.R. 1.
317
on account.-
(a) in the case of a rupee coin, for any
sum.
(b) in the case of a half-rupee coin, for
any sum not exceeding ten rupees:
(c) in the case of any other coin, for any
sum R not exceeding one rupee:
Porvided that the coin has not been defaced and has not lost
weight so as to be less than such weight as may be pres-
cribed in its case.
(3) All nickel, copper and bronze coins which may have been
issued under this Act before the 24th day of January, 1942
shall continue as before to be a legal tender in payment or
on account for any sum not exceeding one rupee."
Section 14, after the amendment introducing the decimal
system of coinage, reads:
"14. (1) The rupee shall be divided into one
hundred units and the new coin representing
such unit may be designated by the Central
Government, by notification in the Official
Gazette, under such name as it thinks fit, and
the rupee, half-rupee and quarter-rupee shall
be respectively equivalent to one hundred,
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fifty and twenty-five such new coins and
shall, subject to, the provisions of sub-
section (1 ) andsub- section (2) of
section 13 and to theextent specified
therein. be a legal tender inpayment or on
account accordingly.
(2) All coins issued under the authority of
this Act in denominations of annas, pice and
pies shall, to the extent specified in section
13, be a legal tender in payment or on account
at the rate of sixteen annas, sixty-four pice
or one hundred and ninety-two pies to one
hundred new coins. referred to in sub-section
(1), calculated in respect of any
such single coin or number of such coins,
tendered at one transaction, to the
318
nearest new coin, or where the new coin above
and the new coin below are equally near, to
the new coin below.
(3) All references in any enactment or in
any notification, rule or order under any
enactment or in any contract, deed or other
instrument to any value expressed in annas,
pice and pies shall be construed as references
to that value expressed in new coins referred
to in sub-section (1) converted theret
o at the
rate specified in subsection (2)."
The various factors determining the application of the
provisions of sub-s. (2) for the purposes of calculating the
equivalent value of annas, pice and pies tendered at one
transaction are several. The first requisite is that the
amount taken into consideration is the amount which is ten-
dered at one transaction. The other is that the amount
tendered in any of those coins should be within the extent
of legal tender mentioned in s. 13. When these two condi-
tions are present, those coins would be legal tender in pay-
ment or on account at the rate of 16 annas, 64 pice or 192
pies to 100 naye paise which is the new coin referred to in
sub-s. (1) of s. 14. This means that the number of annas,
or pice or pies tendered have to be multiplied by 100/,
100/64 and 100/192 respectively, to get the equivalent
number of new coins. In such arithmetical calculation there
is the possibility that the equivalent number of naye paise
be not an exact number and be a mixed number consisting of a
whole number and a fraction. There is no coin of the
equivalent to a fraction of a naya paisa in value. In such
cases, there is not going to be payment of the amount due in
full, if for the amount tendered in payment or on account
there is no full equivalent of naye paises at the rate
specified in sub-s. (2). It is for such contingency of a
payment being not a full payment that sub-s. (2) further
provides that the coins tendered will be legal payment at
the specified rate calculated to the nearest new coin or
where the new coin above or new coin below are equally near,
to the new coin below. The significance of this specified
mode of calculation would be apparent from a concrete
example.
319
7 annas, 6 annas and 5 annas, calculated at the specified
rate, would be equal to 43 3/4, 37 1/2 and 31 1/2 naye
paise. According to the artificial calculation, they will
however be ,,deemed to be legal tender for 44, 37 and 31
naye paise s respectively, as 44 and 31 naye paise are
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nearest to the calculated equivalent of 7 annas and 5 annas
and 37 naye paise is the next coin below 37 1/2 naye paise
which are equally ’below 38 naye paise and above 37 naye
paise and the artificial mode of calculation directs the
equivalents to be fixed, in such circumstances, to the new
coins below. It is to be noted that each coin of one kind,
tendered, is not considered as a unit for the purposes of
calculation, but all the Coins of the denomination are to be
treated as one unit for this purpose. This is to ensure
payment of the amounts due as fully as possible. This will
again be clear on a concrete example. Seven one-anna pieces
are tendered, say, at one payment. If each separate piece
be taken to be valid payment for 6 naye paise, the seven
one-anna pieces will be good payment for 42 naye paise only,
but if taken as a whole, they would be good payment for 44
naye paise. Similarly, five one-pice pieces will be good
payment for 8 naye paise only and not for 10 naye paise
which would be the case if each one-pice piece was treated
as good payment for 2 naye paise, its equivalent, if it be
converted singly to naye poise.
It is therefore clear that the provisions of sub-s.(2)
provide for the conversion of old coins into new at the time
of payment or of accounting, and then too for the conversion
of the old coins within the limit of the extent to which
they are legal tender, which means that one cannot insist on
paying a total sum of several rupees in naye paise calcula-
ted in the manner laid down in sub-s. (2) of s. 14 and that
two factors affect the determination of the number of nave
paise equivalent in value to the value of the old coin of
annas, pice or pies tendered, the two factors being the rate
specified and the artificial way of calculation. The result
of the artificial way of calculation is that sometimes
equivalent number of naye paise is less than the actual
value of the old coins at the specified rate and sometimes
it is higher, the difference being, however, very small.
320
Sub-section (3), however, deals with a different matter. It
has nothing to do with the actual payment of any amount. It
provides a rule for construing values expressed in old coins
as values expressed in new coins or naye paise, and to
achieve this object, the only factor necessary to specify is
the rate at which the value of the old coins is to be
converted into the value of the new coins. The object of
the provision is to provide a measure for arriving at the
equivalent value in terms of new coins and not to provide
how any amount due in terms of old coins is to be paid in
terms. of new coins. Sub-section (3) therefore simply
provide& that references, in any of the documents referred
to in that sub-section, to any value expressed in annas,
pice and pies shall be construed as references to that value
expressed in new coins converted thereto at the rate
specified in sub-s. (2). Sub-s. (2) specifies the rate.
The rate specified in sub-s. (2) is 16 annas, 64 pice or
192 pies to 100 new coins or naye paise. It is this rate
which is referred to in sub-s. (3). There is nothing in
sub-s. (3) which can be taken to refer o that part of sub-
s.(2) which relates to the actual calculation for arriving
at the number of new coins deemed equivalent in value to a
certain number of annas, pice or pies, coins tendered within
the limits of legal tender. The provisions of sub-s. (3) of
s. 14 provide for the conversion of the value of old coins
into that of new coins at the rate specified in sub-s. (2)
and do not provide for conversion to be in accordance with
the provisions of sub-s. (2). The other expression would
have been preferable if the legislature had intended that
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the references of values expressed in old coins be construed
as references to values in new coins according to the mode
of artificial calculation mentioned in sub-s.(2). The
provisions deal with the method of construction of the
expression of the value in documents, be the private
documents or be they enactments or notifications, or rules
or orders. The object was to determine the equivalent value
which may be taken to replace the value as expressed in old
coins. If the contention urged for the appellant be
accepted, the values expressed in annas, pice or pies will
not, on conversion, be precisely equivalent but could be
very much divergent and would adversely, affect
321
the interests of the persons to whom money be due or in
certain circumstances, the interests of the person from whom
it be due. This could not have been contemplated by the
legislature. The futility of the appellants’ contention
that the provisions of sub-s. (3) not only refer to the rate
specified in sub-s. (2) but also to the method of
calculation mentioned in that sub-section, is apparent from
the anomalies which would arise if it be accepted. This can
be illustrated from the various facts of these appeals.
It is the appellants’ contention in writ petition no. 1003
of 1961 that the sales tax calculated at the rate of 6 naye
paise and not at I anna per rupee on the whole turnover of
Rs. 1,40,18,170.84 would reduce the tax demanded by the
Sales Tax Officer by Rs. 34,355. This means that if the tax
is calculated at the rate of 1 anna per rupee, as expressed
in the relevant provision of law or at 6.25 naye paise per
rupee, the amount of tax due from the appellant would be Rs.
34,355 more than the amount of of the same tax on the same
turnover calculated at an equivalent value of 6 naye paise
per rupee. In the other writ petition, no reference was
made by the appellants to the manner of calculating the tax,
the manner of calculation adopted by the taxing authority
being the same as in the other writ petition, as the
appellants’ claim for refund, if determined at the values of
one anna and nine pies calculated in accordance with sub-
section (2) of s. 14, would have been much reduced. It will
be sufficient to state that in clause (e) of para 16 of the
writ petition, the figures for the years 1956-57 for the
amount paid at one anna per -rupee and the amount payable at
9 pies per rupee would then vary the amount refundable to
the appellant in a way as to make it much less. The figures
would stand thus :
------------------------------------------------------------
RS.a. P.
Total amount paid at I anna per rupee 8,05,726106
Amount payable at 9 pies 6,03,16753
----------------------
Amount refundable, and therefore which
the petitioner company could detain 2,00,559 53
-------------------------------------------------------------
If the amount payable be calculated at the rate of five naye
poise in place of 9 pies, the amount refundable would be
51 S.C.-21.
322
--------------------------------------------------------------
much less as shown below Rs.UP.
Total amount paid at anna per rupee 8,05,726 65
Amount payable at 5 naya paise 6,44,661 32
Amount refundable 1,61,065 33
The appellant stood to lose by calculating the tax payable
in terms of naye paise and therefore made up an account at
the old coin rates.
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The legislature could not have intended, by the provisions
of sub-section (3), that a mere provision for working out
the value in old coins into values in new coins should
provide scope for such huge variations in the actual amounts
to be paid or received. The process of conversion is not
meant or designed to be a process for gaining more or less
than what is rightfully due under a provision of law or
under any contractual term. The conversion is a simple
process necessitated by the exigency of payment to be in
currency different from the one in which the payment was to
be.
We are therefore of opinion that what sub-section (2) of s.
14 requires is that references to any value expressed in
annas, pice and pies will be construed to such values
,expressed in new coins which would be absolutely equivalent
to the value of the old coins when their value is converted
at the rate of 16 annas, 64 pice and 192 pies to 100 naye
paise.
Great reliance is placed for the appellants on the decisions
of this Court in M. G. Beedi Works v. State of Mysore(1).
Apparently some observations of this Court in that case
support the appellants’ contention. But, when they are
considered in the context of that case, they do not support
the contention as the Court had not to deal in that case
with the actual contention now raised before us.
In the Beedi Works Case the sales tax was to be levied at
the rate of 3 pies for every rupee of turnover. The
(1) [1963] Supp. 1 S.C.R., 275.
323
amount of tax calculated at 3 pies per rupee worked out to
Rs. 91,690 and, calculated at the rate of two naye paise the
equivalent value of 3 pies, when calculated in the manner
laid down in sub-section (2) of s. 14, worked out to a
figure higher by Rs. 25,038. The tax was assessed at two
naye paise per rupee in view of the provisions of., the
Mysore Existing Laws (Construction of References to Values)
Act, 1957 (Mysore Act XII of 1957). Section 3 of that Act
said :
"3. Construction of references to certain
values in existing laws.
In every existing law, all references to any
value expressed in annas, pice and pies, shall
be construed at references to that value ex-
pressed in new coins referred to in subsection
(1) of section 14 of the Indian Coinage Act,
1906 (Central Act III of 1906), converted
thereto at the rate specified in sub-section
(2) of section 14 of the said Act."
The assessee, by his writ petition, questioned the validity
of the enactment which led to such a result in the amount of
tax assessed. The contention raised was not that the rate
of calculation was wrong, but was that the law providing for
the assessing of tax at the rate of 2 naye paise instead of
3 pies per rupee was invalid as it amounted to enhancing the
tax by an Act which was not enacted in accordance with the
procedure laid down in the Constitution. This is clear from
what was stated at p. 277, it being-
"The grievance of the appellant was that
according to the Mysore Sales Tax Act he was
liable to sales tax at the rate of 3 pies for
every rupee on the turnover and calculated on
that basis the amount of tax would be Rs.
91,690, but after the amendment of the Indian
Coinage Act (Act 3 of 1906) by the Amending
Act 31 of 1955 the rate of sales tax which was
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levied on the appellant’s Bee" was -02 nPs.
per rupee
324
and thus the appellant was called upon to pay
Rs. 25,038, more than he would have paid if he
had been charged at the rate, of 3 pi-Is per
rupee. It was contended on behalf of the
appellant in the High Court and before us that
this amounted to enhancement of tax which was
illegal because the tax had not been increased
in the manner provided under the Constitution
and thus it was a breach of Article 265 of the
Constitution and was therefore void and ille-
gal."
This Court further said, at p. 279:
"Two objections were, taken to the validity of
the tax : Firstly it was argued that by the
substitution of 2 naye paise in place 3 pies
there was a change in the tax exigible by the
Mysore Sales Tax Act and this could only be
done if that enactment had been passed
according to the procedure for Money Bills in
the manner provided by Articles 198, 199 and
207 of the Constitution and as no such Money
Bill was introduced or passed for the
enhancement of the tax, the tax was illegal
and invalid.".
It is clear that the contention was not that the tax should
be calculated at a rate equivalent to 300/192 naye paise
i.e., 19/16 naye paise and not at 2 naye paise. It was not
urged that the assessment could not have been at 2 naye
paise in view of the provisions of s. 3 of the Mysore Act of
1957. What was contended was that the assessment at the
rate of 2 naye paise per rupee, instead of 3 pies per rupee,
amounted to assessment of tax at an enhanced rate and that
the Mysore Act, due to procedural defect, was not valid law.
This Court dealt with these two objections and simply said
with respect to the contention about the provision of law
amounting to a provision enhancing the rate to tax (p. 279)
:
"In our opinion by substitution of new coinage
i.e., naye paise in place of annas, pice and
pies no enhancement of tax was enacted but it
was
325
merely a substitution of one coinage by
another of equivalent value."
This Court expressed the opinion that a law providing for
substitution of new coinage in place of old coinage in the
expression of values does not amount to a provision of
enhancing the tax. The pith and substance of the Act was
substitution in terms of new coinage and not varying the
rate of tax.
On p. 278, however, this Court, after referring to the
provisions of sub-sections (1) and (2) of s. 14 of the
Indian Coinage Act about the division of a rupee into 100
naye paise and the old legal tender in annas, Vice and pies
remaining legal tender in naye paise and referring to the
mode of calculation specified in sub-section (2) of s. 14,
said:
"Sub-section (3) provides that all references
under any enactment to annas, pice or pies
have to be construed as references to the new
coin referred to in sub-section (1). In other
wards wherever the old legal tender, i.e.,
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annas, pice and pies is mentioned in an
enactment it is to be converted into naya
paisas and the naya paisas are to be
substituted in place of the old legal tender
calculated in the manner laid down in sub-
section (2)."
Stress is placed on the last sentence but this cannot be
taken as the decision of the Court on the question that sub-
section (3) of s. 14 made reference not only to the rate of
conversion but also to the mode of calculation, as that
question had not been considered in any manner. The last
sentence was a sort of a paraphrase of what had been said
earlier in the quotation with respect to the provisions of
sub-section (3). This is clear from the facts that the
provisions of subsection (3) have not been stated in full,
and have been referred to upto the stage of reference-- to
the new coin referred to in subsection (1) and that the last
portion of the provisions of sub-section (3), i.e.,
’converted thereto at the rate specified in sub-section (2)
has not been mentioned. It is thus that the latter part of
the observa-
326
tions happened to refer to the method of calculation and not
to the rate specified in subsection (2). The Court was, at
the time, thinking of the value of 3 pies in terms of naye
paise as calculated according to the provisions of sub-
section (2), there being no contest before it that the value
substituted to the equivalent of 3 pies for assessing the
tax was not a correct value for substitution in place of 3
pies. We therefore do not construe the expression relied
upon by learned counsel for the appellant to be a decision
of the Court on the construction of the provisions of sub
section (3) of s. 14 and are therefore of opinion that the
observations in that case cannot be taken to be a decision
of this Court on the actual point for determination now
before us.
We therefore hold that the High Court is right in construing
the provisions of sub-section (13) of s. 14 of the Indian
Coinage Act to mean that references to values in any
enactment, notification, rule or order under any enactment
or in any contract, deed or instrument, expressed in old
coins should be construed to be references to values expres-
sed in new coins by converting, the old values at the rate
of 16 annas, 64 pice and 192 pies to 1 00 naye paise. We
accordingly dismiss the appeals with costs.
SHAH, J.I am unable to agree with the view expressed by my
learned brother Raghubar Dayal, J., about the interpretation
of s. 14 which was incorporated by Act 31 of 1955 in the
Coinage Act III of 1906.
For the assessment years 1956-57 and 1957-58 the appellant
was assessed to sales tax in respect of "Vanaspati" and
"oil" under the U.P. Sales Tax Act XV of 1948, as amended by
the U.P. Act XXV of 1948. By a notification issued on March
31, 1956 under s. 3-A(2) the rate of tax an "Vanaspati" was
fixed at one anna per rupee, at the point of sale by the
manufacturer. Validity of that imposition was challenged by
the appellant, but the question is not now open to be
canvassed in view of the decision of this Court in J. K.
Jute Mills Co. Ltd. v. State of Uttar Pradesh(1). The only
question which survives is about the
(1) [1962] 2 S.C.R. 1
327
quantum of liability of the appellant under the
notification, in terms of the new decimal coinage introduced
by Act 31 of 1955. The appellant has claimed that its
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liability computed in the light of s. 14(3) of the Coinage
Act would be Rs. 34,385, less than the amount demanded by
the Taxing Authorities. Section 13 of the Coinage Act III
of 1906 (which was substituted by Act 28 of 1947 for the
original sections 13 and 14) in so far as it is material
provides:
"(1) The coins issued under the authority of
section 6 shall be a legal tender in payment
or on account,-
(a) in the case of a rupee coin, for any
sum;
(b) in the case of a half-rupee coin, for
any sum
not exceeding ten rupees;
(c) in the case of any other coin, for any
sum not exceeding one rupee:
(2) *"
Section 14 which added by Act 31 of 1955
provides:
"(1) The rupee shall be divided into one
hundred units and the new coin representing
such unit may be designated by the Central
Government, by notification in the Official
Gazette, under such name as it thinks fit, and
the rupee, halfrupee and quarter-rupee shall
be respectively equivalent to one hundred,
fifty and twenty-five such new coins and
shall, subject to the provisions of sub-
section (1) and sub-section (2) of section 13
and to the extent specified the-rein, be a
legal tender in payment or on account
accordingly.
(2) All coins issued under the authority of
the Act in any denominations of annas, pice
and pies shall to the "tent specified in
section 13, be
328
a legal tender in payment or on account at the
rate of sixteen annas, sixty-four pice or one
hundred and ninety-two pies to one hundred new
coins referred to in sub-section (1) cal-
culated in respect of any such single coin or
number of such coins, tendered at one transac-
tion, to the nearest new coin, or where the
new coin above and the new coin below are
equally near to the new coin below.
(3) All references in any enactment or in
any notification, rule or order under any
enactment or in any contract, deed or other
instrument to any value expressed in annas,
pice and pies shall be construed as references
to that value expressed in new coins referred
to in sub-section (1) converted thereto at the
rate specified in sub-section (2)."
Sub-section (1) of s. 14 declares a rupee as equivalent to a
hundred new coins, and a half-rupee and a quarterrupee as
equivalent to fifty new coins and twenty-five new coins
respectively. These new coins are made legal tender in
payment or on account as provided in s. 13 of the Act. By
sub-section (2) all coins issued under the authority of the
Act in denominations of annas, pice and pies also remain
legal tender in payment or oil account at the rate of
sixteen annas, sixty-four pice or one hundred and ninetytwo
pies to one hundred new coins. An anna is therefore made
legal tender for 2514, a pice for 25116, and a pie for 25148
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new coins. But this involves adjustment of fractions of new
coins, and the Legislature has, instead of issuing fractions
of new coins a step which would have involved the issue of
coins of insignificant value--provided for rounding off
fractions of new coins, when to discharge an ascertained
liability in a single transaction payment is made in annas,
pice or pies. This table of equivalence prescribed by sub-
section (2), however, applies only when payment is made in
old coins to discharge liability under a single transaction.
Sub-section (3) is an interpretation clause. Where under
any law, contract or instrument, reference is made
329
to annas, pice or pies, liability arising in any transaction
governed thereby will be construed in terms of new coins
converted at the rate specified in sub-section (2). This
conversion involves two steps: substitution of the value in
terms of new coins by the application of rates mentioned in
sub-section (2), and rounding off the fractions, if any,
resulting from such application. When there is in any law,
,contract or instrument a reference to any value expressed
in terms of annas, pice or pies, by sub-section (3) the
reference has to be construed as if the value is expressed
in terms of new coins at the rates specified in sub-section
(2).
Liability to pay an amount in one transaction ascertained in
terms of new coins may be discharged under subsection (2) by
tender of annas, pice or pies according to the table of
equivalence and the fractions may be rounded off. But in
the ascertainment of liability under a transaction, sub-
section (2) does not come into play. Liability under a
transaction is ascertained under the general law, and sub-
section (3) comes in aid as an interpretation clause when
the value is expressed in some law, contract or instrument
governing a transaction not in terms of new coins, but of
annas, pice or pies. Sub-section (3) does not attract the
rule of rounding off at the stage of discharge of liability
under any concrete transaction: it merely prescribes the
value which shall be deemed to be substituted in any law,
contract or instrument when the value is specified therein
in terms of annas, pice or pies. It is attracted when
liability declared in annas, pice or pies is to be
ascertained in terms of new coins whereas sub-section (2)
operates in considering whether a certain payment in annas,
pice or pices discharges an ascertained liability.
There is nothing in the statute which supports the view that
what the Legislature intended by enacting sub-section (3)
was computation of liability in terms of old coins and then
conversion and rounding off of the total liability in terms
of new coins. To interpret clause (3) in that manner would
be to denude it of its true purpose as an interpretation
clause, and to render it practically nugatory. If sub
section (3) is merely intended to serve as determinative of
330
total liability under a transaction, the purpose is amply
served by sub-section (2).
The view I have expressed also finds support from a judgment
of this Court in M/s. Mangalore Ganesh Beedi Works v. The
State of Mysore and another(1). In that case, sales-tax was
imposed under the Mysore Sales Tax Act 6 of 1948 at the
-rate of three pies for every rupee of the turnover’ On the
application of s. 14 of the Indian Coinage (Amendment) Act,
1955, sales-tax leviable under the Mysore Sales Tax Act was
computed at the rate of two new coins per rupee of the
turnover, and a demand for RS. 1,16,72-44 was made. The
tax-payer contended that he was liable to pay Rs. 91,690
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only being the amount of total tax liability computed at the
rate of 3 pies per rupee of turnover. He challenged the
additional demand by a petition in the High Court of Mysore
on the plea that the Act which altered the incidence was a
taxing measure and could only be enacted after complying
with the provisions of Arts. 198, 199 and 207 of the
Constitution relating to money bills, and the Mysore
Existing Laws (Construction of Reference to Values) Act 12
of 1957 which gave effect to the amendment made by Act 31 of
1955. dealt with "coinage and legal tender", and was not
within the competence of the State Legislature. In dealing
with these contentions, this Court summarised the scheme of
clauses (1),(2) and (3) of s. 14 and observed:
"Sub-section (3) provides that all references
under any enactment to annas, pice or pies
have to be construed as reference to the new
coin referred to in sub-section (1). In other
words, wherever the old legal tender, i.e.,
annas, pice and pies is mentioned in an
enactment it is to be converted into naya
Paisas and the naya Paisas are to be
substituted in place of the old legal tender
calculated in the manner laid down in sub-
section (2)."
The Court rejected the claim of the tax-payer that he was
liable to pay tax computed at the rate of three pies per
(1) [1963] Supp. 1 S.C.R 275.
331
rupee only. If sub-section (3) of s. 14 was susceptible of
the interpretation submitted on behalf of the State of Uttar
Pradesh, it was wholly unnecessary to enter upon the
question of the vires of the provisions, because between the
computation of sales-tax on a total turnover of Rs.
58,36,422.25 nPs at 2 naye Paise, and at the rate of 3 pies
per rupee in the manner suggested, there would have resulted
no discrepancy at all, and the contention of the tax-payer
that he was liable to pay Rs. 91,690 had to be accepted.
But this Court upheld the claim of the Sales Tax Department
that the computation had to be made by substituting two naye
Paise in the section of the Mysore Sales Tax Act, which
imposed liability for payment of tax, and the total demand
for tax computed on the footing of that substitution was
properly made. If the interpretation which is now suggested
on behalf of the State be accepted, the assessee in
Mangalore Ganesh Beddi Works’ Case(1) was bound to succeed.
In the present case by the notification issued on March 31,
1956, the liability for payment of sales-tax was to be
computed at the rate of one anna in a rupee of the turnover.
By virtue of s. 14(3) of the Indian Coinage Act, for an anna
mentioned in the notification 61 now coins will be
substituted. But as the substituted rate involved a frac-
tion by the process of rounding off at the rate specified in
sub-section (2), the fraction of new coins will be omitted
and the nearest new coins i.e., six new coins will be deemed
to be substituted in the statute. Liability for sales-tax
after the amendment of the Coinage Act will, therefore, be
at the rate of 6 new coins for every rupee of sale price.
ORDER BY COURT
In view of the judgment of the majority, the appeals we
dismissed with costs.
(1) [1963] SUPP. 1 S.C.R. 275.
332