Full Judgment Text
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PETITIONER:
COMMISSIONER OF SALES TAX, GUJARAT
Vs.
RESPONDENT:
UNION MEDICAL AGENCY
DATE OF JUDGMENT08/10/1980
BENCH:
BHAGWATI, P.N.
BENCH:
BHAGWATI, P.N.
SEN, A.P. (J)
VENKATARAMIAH, E.S. (J)
CITATION:
1981 AIR 1 1981 SCR (1) 870
1981 SCC (1) 51
ACT:
Bombay Sales Tax Act, 1959 as applicable to State of
Gujarat-Interpretation of the expression "Registered dealer"
in section 8(ii)-Whether it means only a dealer registered
under section 22 of the Act or it also comprises a dealer
registered in the Central Sales Tax Act, 1956-Rule in ex
visceribus actus explained.
HEADNOTE:
Allowing the appeal by special leave and answering
against the assessee, the Court.
^
HELD: Per Bhagwati,J. (Concurring with Sen and
Venkataramiah, JJ.)
(1) The expression "Registered dealer" is used in
section 8 (ii) in its definitional sense to mean a dealer
registered under section 22 of the Bombay Sales Tax Act and
it does not include a dealer under the Central Sales Tax
Act. [875A]
(2) The object of section 8 is to prevent a multiple
point taxation on goods specified in Schedule C and for
imposition of single point tax on them under the Act. If a
dealer is registered only under the Central Act and not
under the Bombay Act, it would mean that he is not liable to
pay tax under the Bombay Act and in that event, even if he
has sold goods specified in Schedule ’C’, to a registered
dealer under an intra-State sale, no tax would be payable by
him on such sale and if the purchasing dealer is also to be
exempt from tax in respect of re-sale effected by him, the
result would be that the goods would escape tax altogether
and not suffer even single point tax. That is not the
intendment of the legislature in enacting section 8(ii); on
the contrary it would frustrate the very object of that
section. The situation would be the same even where the sale
effected by the dealer registered under the Central Act is
an inter-State sale. That sale would undoubtedly be taxable
under the Central Act but there is no reason why the Gujarat
State would give exemption to re-sale of goods in respect of
which, at the time of the first sale tax has been levied
under the Central Act of which the benefit has gone to
another State. Moreover, in such a case, the first sale
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being an inter-State sale, would be taxable at a fixed
concessional rate under section 8(1)(a) or at the rate of 7%
or at a rate equal to or twice the rate applicable to the
sale of such goods in the State of the selling dealer, under
clause (a) or (b) of sub-section (2) of section 8 of the
Central Act and if that be so, it is difficult to understand
why the Legislature should have insisted, for attracting the
applicability of section 8(ii), that the goods re-sold by
the dealer should at the time of their first sale be goods
specified in Schedule ’C’. [873F-G, 874C-G]
871
(3) Sections 4 and 8(ii) of the Bombay Act are distinct
and independent provisions operating on totally different
areas. The legal fiction in sub-section (1) of section (4)
is created for a specific purpose and it is limited by the
terms of sub-section (2) of section 4 and it cannot be
projected in section 8(ii). If a dealer is not registered
under the Bombay Act, it could only be on the basis that he
is not liable to pay tax under the Bombay Act, but even so,
section 4 sub-section (1) provides that if he is registered
under the Central Act, he would be liable to pay tax under
the Bombay Act in respect of the transactions of sale set
out in that section. This liability arises despite the fact
that the dealer, not being liable to pay tax under section 3
of the Bombay Act, is not registered under that Act. The
dealer not being registered under the Bombay Act, the
machinery of the Bombay Act would not of itself apply for
the recovery of tax from him. Section 4 sub-section 2,
therefore, enacts that every dealer who is liable to pay tax
under sub-section (1) shall, for the purpose of sections 32
to 38 and 46 to 48 be deemed to be a registered dealer.
Sections 32 to 38 and 46 to 48 are machinery sections and it
is for the purpose of making the machinery of these sections
applicable for recovery of the tax imposed on the dealer
under sub-section (1) of section 4 that an artificial
fiction is created deeming the dealer to be a registered
dealer, that is, a dealer registered under section 22 of the
Bombay Act.
Per Sen, J. (On behalf of himself and Venkataramiah,
J.).
(1) It is a well settled principle that when a word or
phrase has been defined in the interpretation clause, prima
facie that definition governs whenever that word or phrase
is used in the body of the statute. But where the context
makes the definition clause inapplicable, a defined word
when used in the body of the statute may have to be given a
meaning different from that contained in the interpretation
clause; all definitions given in an interpretation clause,
are, therefore, normally, enacted subject to the usual
qualification -"unless there is anything repugnant in the
subject or context", or "unless the context otherwise
requires". Even in the absence of an express qualification
to that effect such a qualification is always implied. The
expression "registered dealer" having been defined in
section 2(25) of the Bombay Act as having a particular
meaning, that is, a dealer registered under section 22 of
the Act, it is that meaning alone which must be given to it
in interpreting clause (ii) of section 8 of the Bombay Act
unless there is anything repugnant to the context [880B-D]
There being no obscurity in the language of clause (ii)
of section 8 of the Bombay Act, it is clear that no
deduction is claimable in respect of re-sales of goods
purchased from a dealer registered under the Central Act,
who is not a registered dealer within the meaning of section
2(25) of the Act. It follows that the expression "registered
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dealer" in clause (ii) of section 8 of the Act must bear the
meaning of that expression as given in section 2(25) of the
Act. If the meaning of the section is plain it is to be
applied whatever the result, [879H-880A]
(2) The meaning of a word or expression defined may
have to be departed from on account of the subject or
context in which the word had been used and that will be
giving effect to the opening sentence in definition section,
namely, "unless the context otherwise requires". In view of
this qualification, the Court has not only to look at the
words but also to look at the context, the collocation and
the object of such words relating to such matter and
interpret the meaning intended to be conveyed by the use of
the words in a particular section. But where there is no
obscurity in the language of the section,
872
there is no scope for the application of the rule ex
visceribus actus. This rule is never allowed to alter the
meaning of what is of itself clear and explicit. [881E-G]
Bywater v. Brandling, (1828) 7 B. & C. 645; Rein v.
Lane, (1867) L.R. 2 Q.B. 144 and Jobbins v. Middlesex County
Council, Craies, (1949) 1 K.B. 142, held inapplicable.
(3) The provisions of section 4, sub-section (3) of
section 7 and clause (ii) of section 8 of the Bombay Act
operate in three different fields. While section 4 of the
Act provides that a registered dealer under the Central Act
who may not be liable to pay tax under section 3 of the Act
may nevertheless in certain contingencies be liable to pay
tax, sub-section (3) of section 7 provides for the levy of a
single point tax on sale in the course of inter-State trade
and commerce of declared goods, to bring the Act in
conformity with clause (a) of section 15 of the Central Act.
The object and purpose of enacting the provisions of section
8 are entirely different, namely, to lay down the mode of
computation of the turnover of sales or purchases of a
registered dealer for the imposition of a tax. Clause (ii)
of section 8 allows for deduction of re-sale from the
turnover of such registered dealer when the goods are
purchased from a registered dealer, that is, a dealer
registered under section 22 of the Act. In effect, section 8
deals with transactions of sale or purchase taking place
within the State. The disallowance of deduction claimed by
the assessee under clause (ii) of section 8 of the Act,
therefore, would not result in double taxation of the same
goods. [881H-882C, 883C]
While it is true that the Baroda dealer being a dealer
registered under section 7 of the Central Sales Tax Act, in
the instant case, was in certain contingencies, liable to
pay tax under section 4 of the Act, but that circumstance by
itself would not make him a "registered dealer" within the
meaning of section 2(25) of the Act. If the legislature
really intended that the expression "registered dealer" in
clause (ii) of section 8 should take within its ambit a
dealer registered under the Central Sales Tax Act, upon whom
liability to pay sales tax is imposed by section 4 of the
Bombay Act, it would have said so in the clear words s. (2)
of s. 4. The legal fiction in sub-s. (2) of s. 4 is created
for a limited purpose, namely, to make section 4 a self-
contained code which not only imposes a charge of tax and
lays down the rate structure, but also provides the
machinery for assessment and recovery of tax and penalty.
The legal fiction contained in sub-s. (2) of s. 4 of the Act
cannot be stretched any further. [883D-E, G]
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JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 631 of
1973.
Appeal by Special Leave from the Judgment and Order
dated 14/16th November, 1970 of the Gujarat High Court in
Sales Tax Reference No. 9/69.
R. P. Bhatt and S. P. Nayar for the Appellant.
Appeal Set-down ex-Parte against respondent.
The following Judgments were delivered.
BHAGWATI, J.-I have had the advantage of reading the
judgment prepared by my learned brother Sen and I entirely
agree with the conclusion reached by him, but I would like
to state briefly my
873
own reasons for arriving at that conclusion. The facts
giving rise to this appeal have been stated with admirable
succinctness by my learned brother Sen and I need not repeat
them. The facts in deed are not material, because only one
single question of law arises for determination in this
appeal and it does not depend on any particular facts. The
question is a very simple one, namely, whether the
expression ’Registered dealer’ in sec.8(ii) of the Bombay
Sales Tax Act, 1959 as applicable to the State of Gujarat
(hereinafter referred to as the Bombay Act) means only a
dealer registered under section 22 of that Act or it also
comprises a dealer registered under the Central Sales Tax
Act, 1956 (hereinafter referred to as the Central Act).
Since the decision of this question turns on the true
interpretation of the expression ’Registered dealer’. in
sec.8(ii) of the Bombay Act, we may reproduce that section
as follows:
"Sec.8: There shall be levied a sales tax on the
turn-over of sales of goods specified in Schedule C at
the rate set out against each of them in column 3
thereof, but after deducting from such turnover-
(i)
(ii) resales of goods purchased by him on or
after the appointed day from a Registered dealer
if the goods at the time of their purchase were
goods specified in Schedule C".
This section has obviously been enacted to prevent multiple
point taxation on goods specified in Schedule C. Where goods
specified in Schedule ’C’ are sold by a dealer and obviously
he must be a dealer registered under section 22 of the
Bombay Act, if he is liable to pay tax under that Act-the
turnover of these sales is liable to be taxed at the rate
specified against each category of goods in that Schedule,
but if the sales in question are re-sales of goods purchased
by the dealer on or after the appointed day from a
’Registered dealer’, they would be liable to be excluded
from the turnover, because the ’Registered dealer’ from whom
they are purchased would have paid tax under the main part
of section 8 and the goods having already borne tax in the
hands of the selling ’Registered dealer’, the legislative
intent is that they should not suffer tax again. Now the
expression ’Registered dealer’ is defined in section 2(15)
of the Bombay Act to mean "a dealer registered under section
22" and therefore, ordinarily, the expression ’Registered
dealer’ as used in section 8(ii) must carry the same
meaning, namely, a dealer registered under section 22 of the
Bombay Act. But, as the opening part of section 2 shows, the
definitional meaning is subject to anything repugnant in the
subject or
874
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context. The context in which the defined word occurs may
clearly indicate that it is used in a sense different from
that given in the definition clause. We must therefore see
whether there is anything in section 8(ii) or in the context
in which it occurs which should compel us to place on the
expression ’Registered dealer’ as used in that section a
meaning different from that given to it in section 2(15). We
are afraid we do not find anything in the subject or context
of sec.8(ii) which would persuade us to depart from the
definitional meaning of the expression ’Registered dealer’.
The subject and context in fact re-enforce the view that the
expression ’Registered dealer’ in sec.8(ii) is used to mean
a dealer registered under sec.22 of the Bombay Act, and does
not include a dealer registered only under the Central Act.
If a dealer is registered only under the Central Act and not
under the Bombay Act, it would mean that he is not liable to
pay tax under the Bombay Act and in that event, even if he
has sold goods specified in Schedule ’C’, to a registered
dealer under an intra-State sale, no tax would be payable by
him on such sale and if the purchasing dealer is also to be
exempt from tax in respect of re-sale effected by him, the
result would be that the goods would escape tax altogether
and not suffer even single point tax. That surely could not
have been the intendment of the legislature in enacting
section 8(ii). It would indeed frustrate the object of
section 8(ii) which is to provide for imposition of single
point tax on the goods specified in Schedule ’C’. The
situation would be the same even where the sale effected by
the dealer registered under the Central Act is an inter-
State sale. That sale would undoubtedly be taxable under the
Central Act, but it is difficult to see why the Gujarat
State should give exemption to re-sale of goods in respect
of which, at the time of the first sale, tax has been levied
under the Central Act of which the benefit has gone to
another State. Moreover, in such a case, the first sale
being an inter-State sale, would be taxable at a fixed
concessional rate under section 8(1)(a) or at the rate of 7%
or at a rate equal to or twice the rate applicable to the
sale of such goods in the State of the selling dealer, under
clause (a) or (b) of sub-section (2) of sec. 8 of the
Central Act and if that be so, it is impossible to
understand why the Legislature should have insisted, for
attracting the applicability of section 8(ii), that the
goods resold by the dealer should at the time of their first
sale be goods specified in Schedule ’C’. The requirement
that the goods at the time of their first sale by the
’Registered dealer’ should be of one of the categories
specified in Schedule ’C’, is a clear pointer that the
’Registered dealer’ contemplated in this provision is a
dealer registered under section 22 of the Bombay Act,
because it is only with reference to such a dealer liable to
pay tax under the Bombay Act that this
875
requirement of the goods sold by him being goods specified
in Schedule ’C’ can have any meaning and significance. We
are, therefore, clearly of the view that the expression
’Registered dealer’ is used in section 8(ii) in its
definitional sense to mean a dealer registered under section
22 of the Bombay Act and it does not include a dealer
registered under the Central Act.
The Revenue, however, relied on section 4 of the Bombay
Act and tried to project it in the interpretation of the
expression ’Registered dealer’ in section 8(ii). We fail to
see how section 4 can at all help in throwing light on the
true interpretation of the expression ’Registered dealer’.
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That section provides:
"Sec. 4(1): Notwithstanding anything in section 3,
a dealer who is registered under the Central Sales Tax
Act, 1956, but who is not liable to pay tax under the
said section 3, shall nevertheless be liable to pay
tax-
(a) on Sales of goods is respect of the
purchase of which he has furnished a declaration
under sub-sec. (4) of section 8 of the Central
Sales Tax Act, 1956, and
(b) on sales of goods in the manufacture of
which the goods so purchased have been used;
and accordingly, the provisions of sections 7 to 12
(both inclusive) shall apply to such sales, as they
apply to the sales made by a dealer liable to pay tax
under section 3.
(2) Every dealer who is liable to pay tax under
sub-section (1) shall, for the purposes of sections 32,
33, 35, 36, 37, 38, 46, 47 and 48 be deemed to be a
Registered dealer."
It is obvious that if a dealer is not registered under the
Bombay Act, it could only be on the basis that he is not
liable to pay tax under the Bombay Act, but even so, section
4, sub-section (1) provides that if he is registered under
the Central Act, he would be liable to pay tax under the
Bombay Act in respect of the transactions of sale set out in
that section. This liability arises despite the fact that
the dealer, not being liable to pay tax under section 3 of
the Bombay Act, is not registered under that Act. The
question then would be: if the dealer is not registered
under the Bombay Act, how to recover the tax from him? The
dealer not being registered under the Bombay Act, the
machinery of the Bombay Act would not of itself apply for
recovery of tax from him. Section 4, sub-section (2)
therefore enacts that every dealer who is liable to pay tax
under sub-section (1) shall, for the purposes of sections 32
to 38 and 46
876
to 48 be deemed to be a Registered dealer. Sections 32 to 38
and 46 to 48 are machinery sections and it is for the
purpose of making the machinery of these sections applicable
for recovery of the tax imposed on the dealer under sub-
section (1) of section 4 that an artificial fiction is
created deeming the dealer to be a Registered dealer, that
is, a dealer registered under section 22 of the Bombay Act.
This legal fiction is created for a specific purpose and it
is limited by the terms of sub-section 2 of section 4 and it
cannot be projected in section 8(ii). Section 4 has, in
fact, nothing to do with section 8(ii). They are distinct
and independent provisions operating on totally different
areas, and it is difficult to see how section 4 can be
availed of for the purpose of interpreting the expression
"Registered dealer" in section 8(ii).
I would therefore set aside the judgment of the High
Court under appeal and answer the question referred by the
Tribunal in favour of the Revenue and against the assessee.
There will be no order as to costs of the appeal.
SEN, J.-This appeal, by special leave, is from a
judgment of the Gujarat High Court, upon a question of law
referred to it under sub-s.(1) of s.61 of the Bombay Sales
Tax Act, 1959 (hereinafter referred to as ’the Act’). By
that judgment the High Court answered the question referred
in the affirmative and in favour of the assessee. The point
involved is of considerable importance.
The facts giving rise to the reference were these:
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Messrs Union Medical Agency, Ahmedabad was, at all material
times, carrying on business in spirit and alcohol, and was a
dealer registered under s.22 of the Act (hereinafter
referred to as ’the assessee’). In the assessment year 1964-
65, the corresponding accounting year of which was the year
ending March 31, 1965, the assessee claimed deduction from
its turnover in respect of resales of certain goods
purchased from one Motibhai Gopalbhai Patel of Baroda who,
at the relevant time, was a dealer registered under s.7 of
the Central Sales Tax Act, 1956 (hereinafter referred to as
’the Central Act’), but was not a dealer registered under s.
22 of the Act. The Sales Tax Officer rejected the claim of
the assessee for such deduction on the ground that the said
Motibhai Gopalbhai Patel from whom the goods were purchased
was not a registered dealer within the meaning of cl.(ii) of
s.8 of the Act inasmuch as he was not registered as a dealer
under s.22 of the Act. The assessee appealed to the
Assistant Commissioner of Sales Tax, the only material
ground being that the expression ’registered dealer’ in cl.
(ii) of s. 8 of the Act was wide enough to
877
include a registered dealer under the Central Sales Tax Act
but the Assistant Commissioner affirmed the disallowance of
the deduction. On further appeal, the Gujarat Sales Tax
Tribunal agreeing with the Sales Tax Authorities, held that
in order to claim deduction from the turnover of sales of
goods under cl. (ii) of s. 8 of the Act, what was required
to be shown was that the goods were purchased by the dealer
on or after the appointed day from a ’registered dealer’
under the Act, and that in view of the definition of the
expression ’registered dealer’ in sub-s.(25) of s.2 of the
Act, such dealer had to be a dealer registered under s.22 of
the Act. The Tribunal accordingly held that since Motibhai
Gopalbhai Patel, the Baroda dealer, from whom the assessee
had purchased the goods, was not a registered dealer under
the Act, therefore the requirements of cl.(ii) of s.8 of the
Act were not fulfilled, and the claim for deduction made by
the assessee had been rightly disallowed. On the application
of the assessee, the Tribunal referred the following
question of law to the High Court under sub-s. (1) of s. 61
of the Act, for its opinion, namely:
"Whether for the purpose of allowing deduction
from the turnover of sales under clause (ii) of section
8 of the Bombay Sales Tax Act, 1959, purchases of goods
made by a dealer registered under the Bombay Sales Tax
Act, 1959 from a dealer registered under the Central
Sales Tax Act, 1956 but not registered under the Bombay
Sales Tax Act. 1959 can be said to be purchases of
goods made from a registered dealer within the meaning
of clause (ii) of section 8 of the Bombay Sales Tax
Act, 1959."
It appears that the High Court was not satisfied at
this formulation as it felt that the statement of the case
as made by the Tribunal did not bring out the real question
of law arising out of its order. At the instance of the
assessee, it re-framed the question in the following terms:
"Whether for the purpose of allowing deduction
from the turnover of sales under clause (ii) of section
8 of the Bombay Sales Tax Act, 1959, purchases of goods
made by a dealer registered under the Bombay Sales Tax
Act, 1959 from a dealer who is registered under the
Central Sales Tax Act, 1956 and who is liable to pay
tax under section 4 of the Bombay Sales Tax Act, 1959
though not registered under the Bombay Sales Tax Act,
1959 can be said to be purchases of goods made from a
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registered dealer within the meaning of clause (ii) of
section 8 of the Bombay Sales Tax Act, 1959."
878
We feel that the High Court was not justified in re-framing
the question as referred. It is nobody’s case that Motibhai
Gopalbhai Patel, the Baroda dealer from whom the assessee
had purchased the goods, had ever paid any tax on the sales
effected by him under s.4 of the Act. Nor is there any
material on record to suggest that any proceedings were
started against the Baroda dealer for subjecting the
transactions to tax.
In answering the reference in the affirmative, in
favour of the assessee and against the Commissioner of Sales
Tax, the High Court observes:
"The result of the foregoing discussion is that
having regard to the context, collocation and the
object of the expression ’registered dealer’ in clause
(ii) of section 8 of the Bombay Act, and having regard
to the policy of the Act, the said expression would
also include a dealer registered under the Central Act
on whom special liability to pay sales tax has been
imposed under section 4 of the Act. A dealer who
purchases goods from a dealer registered under the
Central Act, who is liable to pay sales tax on the sale
of the said goods by virtue of the provisions of
section 4 of the Bombay Act, would, therefore, be
entitled to deduct from his turnover of sales of goods,
resales of goods so purchased by him on or after the
appointed day if the goods, at the time of their
purchase, were goods specified in Schedule C."
This conclusion of the High Court can hardly be supported.
The short question that falls for determination in the
appeal is whether the expression ’registered dealer’ in
cl.(ii) of s.8 of the Act must bear the meaning that is
assigned to it in s. 2(25) which is the definition section,
or the said expression is capable of bearing an enlarged
meaning, in view of the subject and context in which it is
used in cl.(ii) of s.8 of the Act.
The decision of the appeal must turn on the
construction of cl.(ii) of s.8 of the Act, which provides:
"8. There shall be levied a sales tax on the
turnover of sales of goods specified in Schedule C at
the rate set out against each of them in column 3
thereof, but after deducting from such turnover:-
(i) *
(ii) resales of goods purchased by him on or
after the appointed day from a Registered dealer
if the goods at the time of their purchase were
goods specified in Schedule C."
879
In the Act, the expression ’registered dealer’ is
defined in s. 2(25) in these terms:
"2. In this Act, unless the context otherwise
requires,-
(25) "Registered dealer" means a dealer
registered under section 22."
The error in the decision of the High Court lies in its
misunderstanding of the scope and effect of s. 4 of the Act,
which it has tried to project into cl. (ii) of s. 8 and it
reads as follows:
"4. (1) Notwithstanding anything in section 3, a
dealer who is registered under the Central Sales Tax
Act, 1956, but who is not liable to pay tax under the
said section 3, shall nevertheless be liable to pay
tax-
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(a) on sales of goods in respect of the
purchase of which he has furnished a declaration
under sub section (4) of section 8 of the Central
Sales Tax Act, 1956, and
(b) on sales of goods in the manufacture of
which the goods so purchased have been used,
and accordingly, the provisions of sections 7 to 12
(both inclusive) shall apply to such sales, as they
apply to the sales made by a dealer liable to pay tax
under section 3.
(2) Every dealer who is liable to pay tax under
sub-section (1) shall, for the purposes of sections 32,
33, 34, 35, 36, 37, 38, 46, 47 and 48 be deemed to be a
Registered dealer."
Sub-section (3) of s. 7 reads:
"7.(3) In order to ensure that after the date of
the coming into force of section 15 of the Central
Sales Tax Act, 1956, tax shall not be levied on the
sales or purchases of Declared goods at more than one
stage, it is hereby provided that if under this Act or
any earlier law, any tax has been levied or is leviable
on the sale or purchase of such goods then no further
tax shall be levied under this Act on any subsequent
sale or purchase thereof; and accordingly, for the
purpose of arriving at the taxable turn over of sales
or purchases of a dealer, there shall be deducted from
his total turnover of sales, or as the case may be, of
purchases, the sales or purchases of such declared
goods as have borne tax at any earlier stage."
There is no obscurity in the language of cl. (ii) of s.
8 of the Act. It is clear from the terms of cl. (ii) of s. 8
that no deduction is claimable in respect of resales of
goods purchased from a dealer registered under the Central
Act, who is not a registered dealer within the meaning of s.
2(25) of the Act. It follows that the
880
expression ’registered dealer’ in cl. (ii) of s. 8 of the
Act must bear the meaning of that expression as given in s.
2(25) of the Act. If the meaning of the section is plain, it
is to be applied whatever the result.
It is a well settled principle that when a word or
phrase has been defined in the interpretation clause, prima
facie that definition governs whenever that word or phrase
is used in the body of the statute. But where the context
makes the definition clause inapplicable, a defined word
when used in the body of the statute may have to be given a
meaning different from that contained in the interpretation
clause; all definitions given in an interpretation clause
are, therefore, normally enacted subject to the usual
qualification-’unless there is anything repugnant in the
subject or context’, or ’unless the context otherwise
requires’. Even in the absence of an express qualification
to that effect such a qualification is always implied.
The expression ’registered dealer’ having been defined
in s.2(25) of the Act as having a particular meaning, i.e.,
a dealer registered under s. 22 of the Act, it is that
meaning alone which must be given to it in interpreting cl.
(ii) of s.8 of the Act, unless there is anything repugnant
to the context. It was not permissible for the High Court to
ignore a statutory definition and give to the expression a
wider meaning independent of it. There is nothing to suggest
that the expression ’registered dealer’ is used in cl. (ii)
of s.8 of the Act in any different sense from that in’ which
it is defined. It is significant to notice that whenever the
legislature wanted that the expression ’registered dealer’
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should have a different meaning, it has expressly said so.
Thus in sub-s.(1) of s.4 it mentions of ’a dealer who is
registered under the Central Sales Tax Act, 1956’. The
distinction between the two classes of dealers is,
therefore, clearly maintained.
The High Court was obviously wrong in not interpreting
the expression ’registered dealer’ in the context of cl.
(ii) of s.8 but with reference to the other provisions of
the Act, particularly in the light of s. 4 of the Act, to
give effect to the so-called legislative intent for the levy
of a single point tax. It was in error in making an
exposition ex visceribus actus and in relying upon the
leading cases of Bywater v. Brandling, Rein v. Lane, Jobbins
v. Middlesex Country Council Craies on Statute Law, 6th ed.,
99, and Maxwell on Interpretation of Statutes, 8th ed., 30.
The High Court expresses the view that the legislative
intent in enacting cl. (ii) of s.8 of the Act is two-fold
(1) to restrict the levy
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of sales tax to a single point and to avoid multiple levy of
sales tax on goods, and (2) that sales tax should be levied
at the stage of the first sale and should be recovered from
the registered dealer who effects the first sale and that
all subsequent sales of such goods should not be subjected
to sales tax over again. In the light of this so-called
legislative intention and the policy of the Act, the High
Court observes that ’having regard to the context,
collocation and the object of the expression ’registered
dealer’ in cl.(ii) of s.8 of the Act’, and ’having regard to
the legislative intent, namely, to levy a single point tax
under sub-s.(3) of s.7 of the Act’, the expression
’registered dealer’ in cl. (ii) of s.8 would also include a
dealer registered under the Central Sales Tax Act, 1956, on
whom a special liability to pay sales tax has been imposed
under s.4. Upon that view, it held that a dealer who
purchased goods from a dealer registered under the Central
Act, who was liable to pay sales tax on the sale of such
goods by virtue of the provisions of s.4 of the Act, would
be entitled to deduct from his turnover of sales of goods,
resales of goods so purchased by him on or after the
appointed day if the goods at the time of their purchase,
were goods specified in Schedule C of the Act. It
accordingly held that the meaning of the expression
’registered dealer’ in cl.(ii) of s.8 was not limited only
to a dealer registered under the Act but it was wide enough
to also include a dealer registered under the Central Act.
There is no dispute with the proposition that the
meaning of a word or expression defined may have to be
departed from on account of the subject or context in which
the word had been used and that will be giving effect to the
opening sentence in definition section, namely ’unless the
context otherwise requires’. In view of this qualification,
the Court has not only to look at the words but also to look
at the context, the collocation and the object of such words
relating to such matter and interpret the meaning intended
to be conveyed by the use of the words in a particular
section, there is no scope for the application of the rule
ex visceribus actus. This rule is never allowed to alter the
meaning of what is of itself clear and explicit. The
authorities relied upon by the High Court are, therefore,
not applicable.
While accepting that sub-s.(3) of s.7 of the Act was to
give effect to cl.(a) of s.15 of the Central Act, and
therefore cannot control the interpretation of cl.(ii) of
s.8, the High Court commits the mistake of interpreting the
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expression ’registered dealer’ appearing therein, in the
context of s.4 of the Act. The provisions of s.4, sub-s.(3)
of s.7 and cl.(ii) of s.8 of the Act operate in three
different fields.
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While s.4 of the Act provides that a registered dealer under
the Central Act who may not be liable to pay tax under s.3
of the Act may nevertheless in certain contingencies be
liable to pay tax, sub-s. (3) of s.7 provides for the levy
of single point tax on sales in the course of inter-state
trade and commerce of declared goods, to bring the Act in
conformity with cl.(a) of s.15 of the Central Act. The
object and purpose of enacting the provisions of s.8 are
entirely different, namely, to lay down the mode of
computation of the turnover of sales or purchases of a
registered dealer for the imposition of a tax. Clause (ii)
of s.8 allows for deduction of resales from the turnover of
such registered dealer when the goods are purchased from a
registered dealer, i.e., a dealer registered under s.22 of
the Act. In effect, s.8 deals with transactions of sale or
purchase taking place within the State.
There is a fallacy in the reasoning of the High Court.
It seems that the High Court was obsessed with two factors,
namely (1) the concept of a single point tax under sub-s.(3)
of s.7 of the Act, and (2) the fact that a registered dealer
under the Central Act who may not be liable to pay tax under
s.3 of the Act may nevertheless in certain contingencies be
liable to pay tax. It failed to appreciate that cl.(ii) of
s.8 which allows for deduction of sales by one registered
dealer to another, deals purely with inside sales. The
expression ’registered dealer’ in cl.(ii) of s.8 is sought
to be given an enlarged meaning by stretching, in effect,
the legal fiction contained in sub-s.(2) of s.4. After
observing that the legal fiction in sub-s.(2) of s.4 is
created for a limited purpose, it goes on to observe:
"It would, therefore, have been inappropriate or
at any rate wholly inartistic for the legislature to
provide in sub-section (2) of section 4 that every
dealer who is liable to pay tax under sub-section (1)
shall be deemed to be a registered dealer for the
purpose of clause (ii) of section 8 since the latter
section provides for the levy of sales tax on sales of
goods of an altogether different dealer after making
certain deduction from the turnover of sales of goods
of such dealer. The legislature could have made a
specific provision, if any, in this behalf only in
clause (ii) of section 8 and not in sub-section (2) of
section 4."
The High Court proceeds on the hypothesis that the
transactions in question must have been brought to tax in
the hands of the Baroda dealer and, therefore, it became
necessary to avoid multiple levy of sales tax. On that
assumption, it felt that it was necessary to give to the
assessee the benefit of s.8(ii) of the Act although the
Baroda dealer was not a registered dealer within the meaning
of
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s. 2(25) i.e., registered as a dealer under s. 22 of the
Act. We regret to say that in reaching that conclusion, the
High Court has proceeded on mere conjectures and surmises.
For aught we know, the Baroda dealer at the relevant time,
might not be engaged in the business of selling goods in the
State of Gujarat and was, therefore, not a dealer liable to
pay tax at all. Perhaps he was primarily engaged in
effecting sales in the course of inter-State trade and
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commerce, or it may be that the inside sales effected by him
did not exceed the taxable limits. Both the parties
proceeded upon the basis that the purchases effected by the
assessee were not subjected to tax. It was, therefore, not
right for the High Court to hold that the disallowance of
deduction claimed by the assessee under cl.(ii) of s.8 of
the Act would result in double taxation of the same goods.
It is evident that the High Court has completely
misdirected itself. The transactions of sales effected by
the Baroda dealer to the assessee who was a dealer at
Ahmedabad, were clearly inside sales. While it is true that
the Baroda dealer being a dealer registered under s.7 of the
Central Sales Tax Act was, in certain contingencies, liable
to pay tax under s.4 of the Act, but that circumstance by
itself would not make him a ’registered dealer’ within the
meaning of s. 2(25) of the Act.
If the legislature really intended that the expression
’registered dealer’ in cl.(ii) of s.8 should take within its
ambit a dealer registered under the Central Sales Tax Act,
upon whom liability to pay sales tax is imposed by s.4 of
the Bombay Act, it would have said so in clear words. It
would have made necessary provision in that behalf in sub-
s.(2) of s.4 which provides that every dealer liable to pay
tax under sub-s.(1) shall be deemed to be a registered
dealer for purposes of certain sections of the Bombay Act
viz., ss. 32, 33, 34, 35, 36, 37, 38, 46, 47 and 48.
It is thus apparent that the legal fiction in sub-s.(2)
of s.4 is created for a limited purpose, namely, to make
section 4 a self-contained code which not only imposes a
charge of tax and lays down the rate structure, but also
provides the machinery for assessment and recovery of tax
and penalty. The legal fiction contained in sub-s.(2) of s.4
of the Act cannot be stretched any further.
For these reasons, the judgment of the High Court
answering the reference in favour of the assessee is set
aside. The question referred by the Tribunal is answered in
the negative and in favour of the Revenue. There shall be no
order as to costs.
S.R. Appeal allowed.
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