Full Judgment Text
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PETITIONER:
COMMISSIONER OF SALES TAX,UTTAR PRADESH
Vs.
RESPONDENT:
THE MODI SUGAR MILLS LTD.
DATE OF JUDGMENT:
31/10/1960
BENCH:
SHAH, J.C.
BENCH:
SHAH, J.C.
DAS, S.K.
HIDAYATULLAH, M.
GUPTA, K.C. DAS
AYYANGAR, N. RAJAGOPALA
CITATION:
1961 AIR 1047 1961 SCR (2) 189
CITATOR INFO :
D 1962 SC 745 (5)
R 1964 SC1594 (4,5,6)
R 1966 SC1385 (11)
RF 1977 SC 513 (4,5,10)
R 1979 SC1495 (10)
RF 1986 SC1518 (8)
R 1989 SC2227 (37)
F 1990 SC 781 (26)
ACT:
Sales Tax Previous year turnover opted for
assessment--Change of law and tax rates during assessment
year-If applicable to previous year turnover-Modification in
the tax levied-If Permissible-United Provinces Sales Tax
Act, 1948 (XV of 1948), ss. 3, 3A, 7, 10 and 22-U. P. Sales
Tax Rules, Yule 39-U. P Government Notification dated June
8, 1948.
HEADNOTE:
The respondent company was a manufacturer of edible and non-
edible oils and was registered as a " dealer " under the
United Provinces Sales Tax Act, 1948. Its year of account
commenced on June 1, and ended on May 31 of the next year.
Under S. 7(1) of the Act read. with rule 39 of the rules
framed thereunder the respondent exercised the option of
being assessed on the turnover of the previous year and
submitted its return for the assessment year 1948-49 on its
taxable turnover of the previous year ending May 31, 1947.
The Sales Tax Officer assessed the turnover in respect of
edible oil at 3 pies per rupee under S. 3, but in respect of
non-edible oil he held that since a notification dated June
8, 1948, issued under S. 3(A) had come into force from June
9, of the assessment year providing for the levy of tax at 6
pies per rupee, the assessee was liable to be assessed at 3
pies per rupee on the turnover during the first 69 days of
the year and at 6 pies per rupee for the remaining days of
the year. On appeal by the assessee the appellate authority
modified the order and directed that the tax be levied at a
flat rate of 3 Pies on both edible and non-edible oils.
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This order was set aside by the revising authority and the
order of the Sales Tax Officer was restored. On a direction
made by the High Court the revising authority submitted a
question for opinion. The High Court held that the assessee
was liable to pay the tax at a flat rate of 3 pies per
rupee. On appeal by the Commissioner of Sales Tax by
special leave,
Held (per Hidayatullah, Das Gupta and Sliah, jj.), affirming
the view of the High Court, that the assessee who elected to
submit his return on the turnover of the previous year, is
liable to be assessed to sales-tax at the rate in force on
the first day of the year of assessment because the
liability arises on that date, and any subsequent
enhancement of the rate by virtue of a notification under S.
3(A) does not alter that liability.
A taxing statute must be interpreted in the light of what
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is clearly expressed therein and nothing can be implied nor
can provisions be imported into them so as to supply an
assumed deficiency.
Per S. K. Das and Ayyangar, JJ.-The rate of tax as applied
by the sales tax officer was in accordance with law.
Having regard to the scheme underlying the option to elect
for a previous year turnover conferred by s. 7(1) of the Act
the change in the law and in the rate of tax effected during
the assessment year must apply to the turnover of the
previous year which is deemed to be the turnover of the
assessment year and sales effected during that period have
to be assessed at the rate prevailing in that year.
Although the notification was prospective and was made with
the object of changing the rate of taxation during the
assessment year, the date mentioned therein did not prevent
the application of the assessment year rate to the opted
previous year turnover.
It is not correct to say that there is absence of machinery
for reassessment and refund of tax to justify the conclusion
that the basis of the tax liablity for an assessment year is
that which prevailed on the first day of that year since
there are provisions in the Act such as for instance ss. 10
and 22 which provide for reductions, refunds and
rectification of errors regarding taxation and even for
enhancement of the tax already levied.
There was no ambiguity in the notification and the principle
of resolving ambiguities in favour of the assessee could not
be applied in this case.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 443 of 1957.
Appeal by special leave from the judgment and order dated
April 25, 1955, of the Allahabad High Court in Civil Misc.
Case No. 26/1951.
C. B. Aggarwala, C. P. Lal for G. Ar. Dikshit, for the
appellant.
S. K. Kapur and Mohan Behari Lal, for the respondent.
1960. October 31. The Judgment of Hidayatullah, Das Gupta
and Shah, JJ., was delivered by Shah, J., and the judgment
of Das and Ayyangar, JJ., was delivered by Ayyangar, J.
SHAH J.-Judge (Revisions) exercising authority under s. 11
of the United Provinces Sales Tax Act XV of 1948 drew up a
statement of case and referred to
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the High Court of Judicature at Allahabad the follow-
question :
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" Whether the assessee, who is a manufacturer and a dealer
of non-edible oils and who elected the previous year as the
basis of his assessment in the assessment year 1948-49, is
liable to be assessed at the flat rate of 3 pies per rupee
on the whole of the turnover of the previous year, or
whether he is liable to be assessed at the rates of 3 pies
per rupee and 6 pies per rupee on the turnover of the
previous year in proportion to the two periods from 1st
April to 8th June, 1948, and from 9th June, 1948 to the 31st
March, 1949 ?"
The High Court answered the question as follows:
" The applicant company is liable to pay tax for the
assessment year 1948-49 on the turnover of the previous year
in respect of sales of non-edible oils at the flat rate of 3
pies per rupee."
Against the order of the High Court recording its answer,
this appeal with special leave is preferred.
The facts which give rise to the appeal are briefly
these :
The Modi Food Products Co., Ltd.-hereinafter referred to as
" the assessee ", manufactures oils edible and non-edible in
its factory at Modinagar, District Meerut, State of Uttar
Pradesh. The assessee is registered as a "dealer" under the
United Provinces Sales Tax Act XV of 1948. The assessee’s
year of account commences on June 1, and ends on May 31,
next year. For the year of account 1946-47, the assessee’s
sales of edible and non-edible oils amounted to Rs.
63,02,849-7-7. The U. P. Legislature enacted with effect
from April 1, 1948, the United Provinces Sales Tax Act XV of
1948 providing for the levy of a tax on sales of certain
commodities. This act was amended by Act XXV of 1948 with
retrospective operation from April 1, 1948. By the Act, "
assessment year " was defined as meaning the twelve months
ending on March 31 and " previous year " was defined as
meaning the twelve months ending on the 31st March next
preceding the assessment year, or, if the accounts of the
dealer had been
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made up to a date within the said twelve months in respect
of a year ending on any date other than the said 31st March
then, at the option of the dealer, the year ending on the
day to which his accounts had so been made up. ,Turnover "
was defined as meaning the aggregate of the proceeds of sale
by a dealer. By s. 3, a tax at the rate of 3 pies per rupee
of turnover was, subject to certain exceptions, made payable
by every dealer in each assessment year whose turn. over in
the previous year exceeded Rs. 12,000 or such larger amount
as may be prescribed; the Provincial Government was however
authorised to reduce the rate of tax on any dealer or class
of dealers on the turnover in respect of any goods or class
of goods. By s. 3-A, the Government of U. P. was authorised
to introduce instead of the multiple point scheme of
taxation provided by s. 3 a single point system of taxation
and by notification to declare that the proceeds of sale of
any goods or class of goods shall not be included in the
turnover of any dealer except to such single point in the
series of sales by successive dealers as may be prescribed;
and if the Government made such a declaration, the turnover
of the dealer in whose turnover the sale of such goods was
included was in respect of such sale to be taxed at such
rate as may be specified not exceeding one anna per rupee.
By s. 7, every dealer whose turnover in the previous year
was Rs. 12,000 or more was directed to submit such return or
returns of his turnover of the previous year within sixty
days of the commencement of the assessment year in such form
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and verified in such manner as may be prescribed. By the
proviso, the Government was authorised to prescribe that any
dealer or class of dealers may submit in lieu of the return
or returns specified in that section, a return or returns of
his turnover of the assessment year at such intervals as may
be prescribed. Provision was made by the Act for appeals
against the order of assessment and revision against the
order of the appellate authority. By s. 11, the High Court
of Judicature at Allahabad was authorised to decide
questions of law raised in any case in the course of
assessment and
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referred to it on a statement of the case drawn up by the
Revising Authority. By s. 24. the Provincial, Government
was invested with power to make rules to carry out the
purposes of the Act and in particular in respect of certain
specified matters.
In exercise of the powers conferred by s. 24 of the Act, the
Government of U. P. framed rules. Rule 39 of the U. P.
Sales Tax Rules gave to every dealer an option to submit his
return of the turnover of the assessment year in lieu of the
return of the turnover of the previous year. A dealer who
did not carry on business during the whole of the previous
year had no option, but was bound to submit his return of
the turnover of the assessment year. By r. 40, it was
provided that every dealer who elected to submit a return of
the turnover of his previous year shall within sixty days of
the commencement of the assessment year, submit to the Sales
Tax Officer a return showing his turnover of the previous
year. By r. 41, it was provided that every dealer whose
estimated turnover during the assessment year was not less
than Rs. 15,000 and who elected to submit his return of such
year shall before the last day of July, October, January and
April submit to the Sales Tax Officer, a return of his gross
turnover for the quarters ending June 30, September 30,
December 31 and March 31.
In exercise of the authority conferred by s. 3-A which was
incorporated in the Act by Act XXV of 1948, the Government
of U. P. issed the following notification :
" In exercise of the powers conferred by s. 3-A of the
United Provinces Sales Tax Act, 1941, as amended by the
United Provinces Sales Tax (Amendment) Act, 1948, the
Governor is hereby pleased to declare that with effect from
June 9, 1948, the proceeds of sale of goods entered in
column 2 of the schedule hereto shall not be included in the
turnover of any dealer except at the point in the series of
sales by successive dealers mentioned in column 4 thereof
under the circumstances shown in column 3 thereof.
(2) The Governor is further pleased to order that
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as from June 9, 1948, the rate of tax in respect of the
column 5 of the schedule hereto.
(3) Every dealer by or on whose behalf goods mentioned in
the schedule aforesaid are held at the close of the 8th day
of June, 1948, shall submit a statement showing the
quantity and price of such stock and of the stock of such
goods held on the 24th day of May, 1948, to the appropriate
assessing authority by the 30th day of June, 1948."
To this notification was appended a schedule which set out
the descriptions of diverse commodities, the "circumstances
under Which the turnover was to be calculated " the point of
tax and the rate of tax. Item 14 of the schedule was " oils
of all kinds excluding edible oils but including Vanaspati "
and sales thereof by manufacturers in the U. P. were liable
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to tax at the rate of 6 pies per rupee. By virtue of this
notification, non-edible oils became liable to a single
point tax as from June 9, 1948, at the time of sale by an
importer or manufacturer in the United Provinces.
The assessee submitted its return for the assessment year
1948-49 on its taxable turnover of the previous year ending
on May 31, 1947, to the Sales Tax Officer, Meerut Range. On
the assessee’s return, the Sales Tax Officer assessed the
tax at Rs. 1,16,238-12-0, holding that sales of non-edible
oils for the first 69 days out of the year of the turnover
were to be taxed at the rate of 3 pies, and sales for the
remaining 296 days were to be taxed at the rate of 6 pies
per rupee. Against the order passed by the Sales Tax
Officer, Meerut Range, an appeal was preferred to the Judge
(Appeals), Sales Tax, under s. 9 of the Act. The appellate
authority modified the order and directed the assessee to
pay tax on non-edible oils on the turnover of the previous
year at the flat rate of 3 pies per rupee and reduced the
tax liability-to Rs. 1,08,477-0-3. This order of the Judge
(Appeals) was set aside by the revising authority and the
order of the Sales Tax Officer was restored. On, a
direction made by the High Court, the revising authority
drew up a statement of the case and submitted for opinion a
question
195
which in his opinion arose out of the assessment. The High
Court re-framed the question as set out hereinbefore, and
answered it in favour of the assessee.
By s. 3 and s. 3-A, which are the charging sections, the
liability to pay sales tax in each assessment year is
charged on the total turnover of a dealer. By s. 7, read
with r. 39, the assessee has the option to adopt the
turnover of the previous year as the taxable turnover for
the year of assessment: and if he does so, he has to submit
within sixty days of the commencement of the assessment year
returns showing his turnover for that previous year. If,
however, the assessee adopts the turnover in the year of
assessment as his taxable turnover, he has to submit returns
before the last day of July, October, January and April his
gross turnover for each of the four quarters ending 30th
June, 30th September, 31st December and 31st March. The tax
is evidently levied in respect of the year of assessment :
it is not levied in respect of the business carried on in
the previous year. Again, the rate applicable in assessing
the tax is the rate in force in the year of assessment.
That is clear from the terms of ss. 3 and 3-A. But the
taxable turnover for the year of assessment may, except in
certain cases not material for the purpose of this appeal,
at the option of the tax payer be either the turnover of the
previous year or of the year of assessment. If the assessee
adopts the turnover of the previous year, by the provisions
contained in s. 3 and s. 7 and rr. 39 and 40, the liability
to pay tax arises on the 1st of April and the rate
applicable is the rate in force on that date. The liability
of the assessee adopting the turnover of the year of
assessment arises by virtue of ss. 3 and 7 and r. 41 at the
end of each quarter. When the taxable turnover is based on
the turnover of the previous year, the tax is assessed on an
artificial turnover not related to the actual sales of the
year of assessment: whereas the levy of tax on a return made
on the turnover of the year of assessment is made on actual
sales of that year. The tax paid on the turnover of the
previous year is not related to the actual sales
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provision for making adjustments in the liability to tax on
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ascertainment of the actual turnover at the end of the year
of assessment.
The Government of the United Provinces had by notification
dated June 8,1948, altered the rate of tax in the matter of
various commodities including nonedible oils with effect
from June 9, 1948. The Sales Tax Officer was right in his
view that the levy of tax at the altered rate was not to
operate on sales effected before June 9, 1948. Initially,
when the liability of the assessee to pay tax on edible oils
for the assessment year arose, the rate was undoubtedly 3
pies per rupee on the turnover, and the question which falls
to be determined is whether by reason of the alteration of
the rate and its incidence in the course of the year, the
assessee became liable to pay tax at the higher rate on a
part of the turnover of the previous year and if so, on what
basis. A tax payer who adopted the previous year’s turnover
bad under s. 7 and r. 40 to submit his return within sixty
days of the commencement of the assessment year, and no
provision for submission of any supplementary returns in the
case of alteration of rates in the course of the year was
made in the Act or the Rules: nor was any method provided
for retrospective modification of an assessment once made.
There were under the Act and the Rules two distinct and
clear-cut schemes to assess sales tax, (1) where the tax
payer elected to submit his return based on the turnover of
the previous year and (2) where he elected to or was bound
by law to submit his return on the turnover of the year of
assessment. Under these two schemes the points of time at
which liability arose and the turnover on which liability
was to be assessed were in their nature not identical. The
tax payers paying tax under the first scheme paid it on the
turnover of the previous year and at the rate in force after
the end of the period and applicable to it. The tax payer
paying tax under the second scheme paid tax in quarterly
installments based on the previous quarter’s actual turnover
and at the rate or rates prevalent in the quarter or
applicable to it. Was it intended, when alteration was made
in the rate of tax
197
or its incidence during the course of the year, to
assimilate these two schemes of taxation so as to, permit of
a departure from the one to the other ? There is no express
provision in the Act or in the Rules in that behalf. Nor
does the notification suggest that it was so intended. In
the case of a dealer who adopts the turnover of the year of
assessment for purposes of taxation, the application of the
notification altering the rate of tax and the incidence of
tax does not present any difficulty. The notification
enjoins levy of the tax at the altered rate only in respect
of sales taking place after the fixed date, and all sales
which preceded that date are to be taxed at the original
rate. In the face of the language employed sales anterior
to the date specified could not be affected. The question
next arises: Is any machinery provided in the Act or the
Rules for projecting this division of the year of
assessment, into the previous year, and for apportioning the
turnover of that year ? Express provision in that behalf
there is none : and it is difficult to imply such a
provision in the Act. The dates of commencement and closure
of the previous year of a tax payer may vary according to
the system of accounting adopted by the assessee. The year
may commence from any day of any recognised calendar year,
and the year may not consist of 365 days. The method of
antedating by one year the date on which the alteration is
made in the rate or incidence will be manifestly
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inappropriate. The method of division of the turnover
proportionate to the period of the assessment year before
the alteration of the rate and after such alteration though
prospective, must be deemed to have been made
retrospectively in the previous year, and on a day which is
removed from the commencement of the year of account by the
number of days by which the date of alteration of rate is
removed from the commencement of the year of assessment.
But the adoption of the turnover of the previous year as the
taxable turnover for the year of assessment is itself based
on a fiction and, in the absence of any express provision
either in the Act or the Rules or even in the notification
setting out machinery for such
198
a division of the year, we are unable to hold that this
scheme of a fictional division may be projected into the
previous year to make an artificial division of the turnover
for imprinting thereon the altered rate of assessment as
from the date of the division. Counsel for the State of
Uttar Pradesh submitted several hypothetical cases
suggesting that by refusing to adopt this method of division
of the previous year of assessment for the application of
the altered rate, several anomalies may arise in working out
the liability to tax. He submitted that a person who was
not a manufacturer or an importer of goods included in the
schedule to the notification under s. 3-A may, if he has
adopted the turnover of the previous year as his taxable
turnover be liable even though it was the intention of the
Government to absolve him from liability to pay tax. But a
tax payer adopting the turnover of the previous year for
payment of tax makes his choice ’voluntarily and subject to
the advantages and disadvantages which that step involves.
The fact that he may have to pay tax from which persons
choosing the alternative method of submitting of return may
partially be exempted, because of an exemption granted in
the course of the year, may not, in our judgment, be a
ground for not giving full effect to the provisions of the
Act as they stand. In interpreting a taxing statute,
equitable considerations are entirely out of place. Nor can
taxing statutes be interpreted on any presumptions or
assumptions’. The court must look squarely at the words of
the statute and interpret them. It must interpret a taxing
statute in the light of what is clearly expressed it Cannot
imply anything which is not expressed it cannot import
provisions in the statutes so as to supply any assumed
deficiency.
Section 18 el. (c) of the Act which provides for
proportionate reduction of tax when in the case of a change
or discontinuance taking place in the course of the
assessment year of a firm which has been assessed for such
year on the turnover of the previous year does not support
the contention that an artificial divisions of the turnover
of the previous year is intended
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in cases of alteration of circumstances during the course of
the assessment year. It may be noticed that, the provision
is limited to changes in or discontinuance of the business
of a firm, in terms it does not apply to individuals. It is
not for us to consider why the Legislature has not chosen to
make a similar provision in respect of individuals. But the
fact that the Legislature has made an express provision
dealing with changes or discontinuance of business of firms
in the course of the assessment year enabling a reduction
proportionately to the tax already paid would be a ground
indicating that in cases not governed by that provision, no
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alteration in the liability was permissible when the taxable
turnover was based on the previous year’s turnover.
It is not provided that in giving effect to the alteration
of the rate during the course of the year of assessment an
artificial division of the turnover of the previous year
should, in applying the altered rate be made. The
Legislature having failed to provide machinery for working
out the liability, the attempted projection becomes
unworkable. A legal fiction must be limited to the purposes
for which it has been created and cannot be extended beyond
its legitimate field. The turnover of the previous year is
fictionally made the turnover of the year of assessment: it
is not the actual or the real turnover of the year of
assessment. By the imposition of a different tariff in the
course of the year, the incidence of tax liability may
competently be altered by the Legislature, but for
effectuating that alteration, the Legislature must devise
machinery for enforcing it against the tax payer and if the
Legislature has failed to do so, the court cannot resort to
a fiction which is not prescribed by the Legislature and
seek to effectuate that alteration by devising machinery not
found in the statute.
We are therefore of the view that the conclusion of the High
Court is correct. The appeal therefore fails and is
dismissed with costs.
AYYANGAR J.-We regret we are unable to agree with the
judgment just now pronounced.
The facts giving rise to this appeal are briefly
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these:A company called The Modi Food Products Ltd.’
(amalgamated with the respondent) which will be referred to
hereinafter as the assessee, was during the years 1946 &
1947 a manufacturer of and dealer in vegetable oils-both
edible and non-edible. During that year there was no
legislation imposing any tax on sales. The U. P.
legislature enacted the U. P. Sales Tax Act in 1948 and the
statute received the assent of the Governor and was
published in the official Gazette on June 5, 1948. Section
1 (2) of the Act enacted that it shall be deemed to have
come into force on April 1, 1948. The appeal is concerned
with the liability to sales-tax under the Act of the
assessee company in respect of the sale of oil effected by
the assessee during the period June 1, 1946 to May 31, 1947,
which was the account-year of the assessee previous to the
first assessment year under the Act1948-49. Section 3 of
the Act, to quote only the relevant words, as it stood at
the material time, enacted :
" Section 3. Liability to tax under the Act. Subject to the
provisions of this Act, every dealer shall pay on turnover
in each assessment year a tax at the rate of 3 pies a rupee
Provided that-
(i) the Provincial Government may, by notification in the
official Gazette, reduce the rate of tax on the turnover of
any dealer or class of dealers or on the turnover in respect
of any goods or class of goods;
(ii) a dealer whose turnover in the previous year is less
than Rs. 12,000 or such larger amount as may be prescribed
shall not be liable to pay the tax under this Act for the
assessment year."
By the U. P. Sales Tax Amendment Act, 1948 (Act XXV of 1948)
this proviso was slightly modified and s. 3(A) was
inserted in the Act reading as follows:
" Section 3-A. Single point taxation. (1) Notwithstanding
anything contained in Section 3, the Provincial Government
may, by notification in the official Gazette, declare that
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the proceeds of sale of any goods or class of goods shall
not be included in the turnover of any dealer except at such
single point
201
in the series of sales by successive dealers as may be
prescribed.
(2)If the Provincial Government makes a declaration under
sub-section (1) of this Section, it may further declare that
the turnover of the dealer, in whose turnover the sale of
such goods is included, shall, in respect of such sale, be
taxed at such rate as’ may be specified not exceeding one
anna per rupee if the sale relates to goods specified below.
(A list of goods was then set out)
and nine pies per rupee if it relates to any other goods."
Non-edible oil which is the commodity with the sale of which
the assessment in the present appeal is concerned is not in
the list of goods set out in s. 3(A) and would therefore be
covered by the residuary clause of the section. The U. P.
Government issued the following notification dated June 8,
1948, under s. 3(A) of the Act:
" In exercise of the powers conferred by Section 3-A of the
United Provinces Sales-Tax Act, 1948, as amended by the
United Provinces Sales-Tax (Amendment) Act, 1948, the
Governor is hereby pleased to declare that with effect from
June 9, 1948, the proceeds of sale of goods entered in
column 2 of the Schedule hereto shall not be included in the
turnover of any dealer except at the point in the series of
sales by successive dealers mentioned in column 4 thereof
under the circumstances shown in column 3 thereof.
2. The Governor is further pleased to order that as from
June 9, 1948, the rate of tax in respect of the turnover of
the aforesaid goods shall be as entered in column 3 of the
Schedule hereto.
3. Every dealer, by or on whose behalf goods mentioned in
the schedule aforesaid are held at the close of the 8th day
of June, 1948, shall submit a statement showing the quantity
and price of such stock and of the stock of such goods held
on the 24th day of May, 1948, to the appropriate assessing
authority by the 30th day of June, 1948 ".
In the Schedule annexed to this notification, nonedible oil
of the type dealt with by the assessee was
202
subject to a tax @ 6 pies per rupee if the same was
manufactured in U. P.
Section 7 of the Act, as it stood at the date relevant to
this appeal, enacted :
" Section 7. Determination of turnover and assessment of
tax.--(1) Subject to the provisions of Section 18, every
dealer whose turnover in the previous year is Rs. 12,000 or
more in a year shall submit such return or returns of his
turnover of the previous year within sixty days of the
commencement of the assessment year in such form and
verified in such manner as may be prescribed:
Provided that the Provincial Government may prescribe that
any dealer or class of dealers may submit, in lieu of the
return or returns specified in this section, a return or
returns of his turnover of the assessment year at such
intervals, in such form and verified in such manner as may
be prescribed, and thereupon all the provisions of this Act
shall apply as if such return or returns had been duly
submitted under this section.
Provided further that the assessing authority may in his
discretion extend the date for the submission of the return
by any person or class of persons ".
Rules were framed by Government inter alia under the power
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conferred by the 1st proviso just now set out and by rule 39
of the said rules an option was given to dealers to submit
returns of their turnover of the assessment year in lieu of
the turnover of the previous year.
The assessee exercised the option of being assessed on the
basis of the turnover of the previous year under s. 7(1) of
the Act and in respect of first assessment year after the
Act came to force-assessment year 1948-49, it filed a return
in respect of the turnover of its previous year June 1, 1946
to May 31, 1947. The total turnover of the assessee during
this period was Rs. 63,02,849-7-7. The Sales Tax Officer by
his order dated March 12, 1949, assessed the turnover in
respect of edible oil at 3 pies per rupee. As regards the
sale of non-edible oil, the sales-tax officer hold that
since the notification set out above under
203
s. 3(A) had come into force as and from June 9 of the
assessment year, the assessee was liable to be assessed @ 3
pies per rupee on the turnover during the first 69 days of
the year and @ 6 pies per rupee in respect of the remaining
days of the year and he computed the’ tax accordingly. The
assessee preferred an appeal to the Judge (Appeals), Meerut
Range, Meerut, against the order of the Sales-Tax Officer.
This officer allowed the appeal of the assessee and held
that the entire turnover was liable to be taxed only at a
flat rate of 3 pies per rupee under s. 3(1) of the Act on
all oil sold by the assessee---edible or non-edible. The
reason assigned for the order was that on the terms of the
notification the new rate of tax could not be applied to
sales effected in the previous year which had been opted for
the purposes of assessment by the assessee and that so to
apply it would be tantamount to giving retrospective effect
to the notification which was contraindicated by the terms
of the notification itself. The department thereupon moved
the Judge (Revision) who accepted its contention and
restored the order of the Sales-tax Officer applying the
provisions of the notification to the turnover of the
assessee. There. after the assessee made an application to
the Judge (Revision) to state a case for the opinion of the
High Court under s. 11 of the Act as to whether the rate of
tax fixed by the notification could be applied to the sales
of the commodity which factually took place on or before
June 8, 1948. This petition having been dismissed, an
application was filed before the High Court for directing
the reference and on this being ordered the following
question (as reframed by the High Court) was referred to it
for determination :
" Whether the assessee who is a manufacturer and a dealer of
non-edible oils and who elected the previous year as the
basis of his assessment in the assessment year 1948-49 is
liable to be assessed at the flat rate of 3 pies per rupee
on the whole of the turnover of the previous year or whether
he is liable to be assessed at the rates of 3 pies per rupee
and 6 pies per rupee on the turnover of the previous year in
proportion to the two periods from April 1 to June 8, 1948
and from to March 31 1949."
204
The learned Judges answered the question in favour of the
assessee and held that the notification under s. 3(A) could
not apply to determine the rate of tax payable by the
assessee on his turnover of the previous year. The present
appeal is against this answer by the High Court.
As the arguments before us proceeded on practically the same
lines as before the High Court, it will be convenient if we
set out the reasoning by which the learned Judges upheld the
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asssessee’s contention that the notification under s. 3(A)
was inapplicable to determine the rate of tax payable by it.
The grounds were mainly five: (1) The assessee could not be
charged at the rates prescribed by the notification unless
the new rates operated retrospectively; (2) that s. 3(A)
which was introduced into the parent Act (Act XV of 1948) by
the Amending Act XXV of 1948 was not enacted with
retrospective effect. Though the charge imposed by s. 3(1)
of the Act read with s. 7(1) imposed tax retrospectively as
and from April 1, 1948, s. 3(A) did not on its terms so
operate as and from that date. Hence the liability of the
assessee which had become fixed under Act XV of 1948, as it
originally stood, could not be and ’Was not varied by s.
3(A) and would not therefore be affected by any notification
issued under the last mentioned provision ; (3) that a
notification under s. 3(A) could not have retrospective
effect since s. 3(A) itself did not operate of its own force
and merely empowered the Government, ’by a notification, to
effect changes in the law and hence such changes when
notified could not operate as from any date prior to the
date of the notification ; (4) Section 3(A) which used the
words " in respect of such sales " contemplated particular
sales taking place after the notification issued under it
and hence the notification issued under that section could
not alter the rate of levy in respect of sales anterior to
the date of the notification ; (5) that the terms of the
notification carried out the general scheme of the Act and
negatived retrospective operation and that as on its langu-
age it applied only to sales which took place on or
205
admittedly effected long prior thereto in the previous year
the same could not be affected by the enhanced rate of duty.
Before proceeding further it must be pointed out that the
learned Judges of the High Court were not right in thinking
that s. 3(A) was not enacted to operate retrospectively from
the commencement of the’ parent Act. Section 1(2) of the
Sales-tax Amending Act XXV of 1948 which introduced s. 3(A)
enacted:
" It (this Act) shall be deemed to have come into force on
the 1st April, 1948."
and as s. 3(A) was one of the sections of this enactment,
it would have effect from the earlier date. This
inadvertent error, however, would not affect the central
point of the reasoning of the learned Judges.
Besides elaborating the other points in the judgment of the
High Court, learned Counsel for the respondent further
pressed upon us that there was no specific provision in the
Act for refund or reassessment which would have been present
if the levy of a rate with retrospective effect were
contemplated by the Act as applicable to the assessees who
bad opted for the " previous-year-turnover " basis of
assessment. He pointed out that in the case of those
assessees who opted for their being assessed in respect of
their turn. over during the assessment year, quarterly
returns were submitted along with the payment provisionally
of the tax due on the basis of that return, the final
assessment being completed only after the close of the year
when the amount due for the year was ascertained and a
demand made for the balance due after adjustment of the
amounts already paid during the course of the year (Rule
41). Obviously in their case no difficulty could arise by
reason of any change in the law either in the rate or basis
of taxation effected during the year, as these would
automatically be given effect to in the final assessment.
If, however, changes made in the rate of tax payable during
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the year were held applicable to those assessees who had
opted for the previous-year-turnover basis, necessary
adjustments could not be made in their assessment for lack
of specific machinery to achieve the same. From this
206
he argued that the scheme of the Act was that in the case of
the previous-year-turnover assessees, to use a convenient
phrase, the tax liability had to be determined on the state
of the law as it prevailed on the 1st day of the assessment
year and that it got fixed and crystallised on that date and
remained unaffected by any changes in the law effected
during the course of the assessment year.
In view of these additional submissions, we consider that it
would be convenient to examine the entire argument of
learned Counsel for the respondent under three heads into
which they naturally fall:
(1) Does the Act, read in conjunction with the Rules framed
to give effect to its provisions, contemplate any difference
being drawn between the basis of the tax liability (as
distinct from the quantum of the turnover) of those
assessees who have opted for the previous year turnover and
" the assessment-year turnover " assessees.
(2) Is there any sound basis for the contention that the
tax liability of the "previous-year-turnover" assessees gets
crystallised on the 1st of April of the assessment year,
with the result that such assessees are unaffected by any
changes of the law which operate from beyond that date.
(3) If the above two questions are answered in the
affirmative the construction of the notification dated June
8, 1948, would not fall for consideration, for even if on
its language it can apply to the turnover of a period
anterior to its issue, the notification cannot be given such
effect since the same would be against the basic scheme of
the Act. If, however, the answer to the above two questions
were in the negative, a further point would arise as to
whether on the terms of the notification now under
consideration the same could on its language apply so as to
affect the tax-liability of the " previous-year-turnover
assessees.
We shall now proceed to examine these submissions. On the
scheme of U. P. Sales-tax Act, as of every other sales-tax
legislation in the other Indian States, the total tax
liability of an assessee is the resultant
207
product of two factors: (1) the total of the proceeds of
sales effected during a given period, universally a year,
from which are deducted the turnover of the sales of
commodities which are exempt from tax; for instance under s.
4 of the Act whose provisions will be referred to later; (2)
multiplied by the rate of tax applicable either to the
entire turnover or where’ different rates are prescribed on
sales of different articles, such rates in respect of such
turnover. The best way to appreciate the scheme underlying
the Act would be to ascertain the position at the time the
Act was enacted. It received the assent of the Governor and
was published in the Gazette on June 5, 1948. Section 1(2)
of the Act further enacted that " It shall be deemed to have
come into force on April 1, 1948 ". Except to that limited
extent, the Act is prospective. The tax is on the "
turnover ", i.e., on the total of the sales proceeds of
taxable sales and therefore unless there were a taxable
sale, its proceeds would not enter the pool which goes by
the name of " turnover ". As the Act is not retrospective,
the taxable turnover would normally be the total of the
sales effected after the enactment became operative, i. e.,
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from and after April 1, 1948, but for the sake of
convenience of assessment, it enacts by s. 7(1), we have
extracted earlier, a provision providing an option to
dealers who have been in business in the year previous to
the taxing enactment, to be assessed either on the turnover
of the previous year, when owing to the absence of the Act
their sales were not subject to tax or on the turnover of
the current year. But whichever be the turnover adopted,
the rate of tax or the determination of the particular sale
proceeds whose total constitutes the taxable turnover, i.e.,
after the exclusion of the sale proceeds of the commodities
listed in s. 4, does not vary. In other words, though the
figure of turnover might vary between those who have opted
for the one or the other mode of assessment due to the
volume of the sales, no difference is maintained in the Act
as regards the incidence of the tax, i.e., either in the
principle underlying the computation of the total turnover
or in
208
the rate or rates applicable to the sales of particular
goods or on the total turnover. This can only be on the
premise or implicit assumption that the sales of the
previous year are treated by the Act for the purpose of
computing tax-liability as the sales of the current year a
projection forward in point of time. In other words, the
entire basis underlying the charging provision s. 3(1) read
with the option provided by s. 7(1) is that the sales of the
previous year are fictionally treated as the sales of the
current year for the purpose of the computation of the tax
liability. It has to be remembered that in cases like the
present, during the time when the sales were effected, the
Act was not in operation and hence the sales were not
taxable. But for the purpose of the imposition of the tax-
liability, it is assumed that the sales are taxable and the
goods whose sales become taxable are determined on the basis
of the provisions of the Act. Thus, if in the current year
commodities A, B and C are exempt from tax, they are not to
be included in the turnover of the dealer in respect of the
previous year in the case of those who have opted for the "
previous-year-turnover " under s. 7(1), and the turnover
thus computed is charged at the same rate of tax applicable
to transactions of the current year.
So far, therefore, as the express provisions of the Act go,
no difference is made between the basis of the tax liability
of the " previous-year-turnover " and the " assessment-year-
turnover " assessees; and though by reason of the terms of
s. 7(1) the quantum of the turnover varies no other
variation in the law applicable to the two types of
assessees is contemplated. We must therefore start from the
premise that the Act does not contemplate any difference in
the incidence of the tax and the quantum of tax liability
flowing from the choice of either the " previous-year " or
the " assessment-year " as the basis of the determination of
the turnover. We should add that learned Counsel for the
respondent has not been able to point out any provision in
the Act or in the Rules pointing to any such
differentiation.
It was, however, submitted that though the statute
209
might not say so in express terms, still by reason of the
provisions of the Act and the Rules under, which the "
previous-year-turnover " assessee had to’ or could submit
his return within sixty days from the commencement of the
assessment year and have his assessment completed
immediately thereafter-as compared to the " assessment-year-
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assessee " whose assessment was completed after the end of
the year, coupled with the absence of any machinery for re-
assessment or refunds in the event of any change in the law
effected after the commencement of the financial year, it
had necessarily to be held that the liability of the "
previous year turnover " assessee got crystallised as on the
1st of April of the assessment year and that the Act did not
contemplate this being disturbed by any subsequent changes
in the substantive law relating to assessment during the
assessment year. It was said that the tax liability of the
dealer who had opted for the " previous-year " basis had to
be determined on foot of two factors and only two: (1) the
turnover of the sales of the previous year which is a
definite and known figure by the 31st of March of the
previous year and (2) the rate of tax on the turnover as it
prevailed on the 1st of April of the assessment year when it
was said that there was a "crystallisation" of the liability
to tax. It was pointed out that it was possible for an
assessee to submit his return on the basis of the "
previous-year-turnover " even on the 1st of April of the
assessment year and there being no legal impediment in the
way of the figures returned by the dealer being accepted the
assessment might conceivably be completed and the tax due
demanded and even paid on the 1st of April, it sell If this
were done, it was urged, there being no machinery for
reassessment or refunds such completed assessment would
become final for the year and could not be disturbed
thereafter. If this were possible or were actually done in
the case of one dealer who had so opted, it was urged that
it would obviously be anomalous if another dealer who
happened to submit his return later and whose assessment was
in
27
210
consequence delayed, should be subjected to a different law
or a different rate of levy.
In our opinion, this argument breaks on critical
examination. Learned Counsel for the respondent, to start
with, asserted that the crystallisation of the tax-liability
as on the 1st of April of the assessment year was with
reference to the law as it factually was on that date and
that changes made subsequently even if with retrospective
effect to date from the commencement of the year, would not
affect that liability. This was obviously an untenable
contention because if the later enactment or rule was
retrospective it must be deemed in the eye of the law to
have been in existence and in operation on the earlier
date. Though learned Counsel withdrew this extreme
argument, still the concession that changes effected with
retrospective effect to date from the commencement of the
assessment year would apply to determine the tax-liability
even of the " previous-year-turnover " assessee serves to
emphasize that little importance could be attached to the
two bases on which " the crystallisation " argument was
rested, viz. : (1) the obligation or freedom of the
previous-year-turnover assessee to submit his return and
have his assessment completed within sixty days of the
commencement of the assessment year and (2) the absence of a
specific provision for reassessment and refund.
Under the proviso (1) to s. 3 which reads:
" the Provincial Government may, by notification in the
official Gazette, reduce the rate of tax on the turnover of
any dealer or class of dealers or on the turnover in respect
of any goods or class of goods." the State Government could
reduce the rate of tax on the turnover of dealers from the
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standard rate of 3 pies in the rupee under the main part of
s. 3. It is also not denied that there is nothing in the
terms of the proviso to confine the power to effect
reductions only prospectively as distinguished from
reductions having retrospective effect. If a reduction were
effected say in January or February of the year, having
effect as and from the 1st April preceding, on the very
argument advanced, Counsel for the respondent would
211
have to concede, that the reduced rate would govern the
liability of even those dealers who were assessed on the
basis of their turnover of the previous year.
Let us first take a case where such a reduction in the rate
is notified to be effective before an assessee submits his
return. In such a case, the benefit in the reduction of the
rate could not be withheld from the previous year-turnover
dealers even on the theory of " crystallisation " just now
referred to. Let us next take the case of a dealer who has
submitted his return of the turnover of the previous year on
a date anterior to the notification regarding the alteration
of the rate. It might be mentioned that in the return
submitted by dealers which has to be in Form IV of Appendix
F to the rules, only the total of the sale proceeds of the
sales of the classified items of goods have to beset out,
but the return does not concern itself with the rate of the
tax levied. This latter is a matter with which the
assessing authority is concerned when determining the amount
of tax payable. If the rates are altered subsequent to the
submission of the return but before the assessment is
completed, on the terms of the charging section which draws
no distinction in the incidence of the tax as between the "
previous year-turnover " group and the " assessment-year-
turnover " dealers, the Sales-Tax Officer would have to
afford every assessee, whatever be the basis of this
turnover-the benefit of the tax reduction. The position
reached therefore is that if the change in the rate (we
have assumed it to be by way of reduction, but the argument
would equally apply to variation in any kind), were effected
before the actual assessment, it should be given effect to
in the case of every assessee for not merely is there no
procedural complication in the shape of a need for refund-
but it would be in accordance with the, law and in fact one
might go further and say that any other mode of proceeding
would not be countenanced by the Act, because the statute
homologises the basis of the tax-whether the turnover is
computed on the previous year’s or the current year’s sales.
Next in regard to cases where the change in the law
212
is effected after the completion of the assessment we
consider that the submission regarding the absence of
machinery for reassessment and refund is not well founded.
It is true that there are no provisions specially so
designated to meet this contingency here referred to, but
that is not the same thing as saying that there is a
complete absence of machinery. In the first place, s. 22 of
the Act empowers authorities including the assessing officer
to rectify any mistake apparent on the face of the record
and by such rectification even to enhance the tax liability.
If on the premises assumed, the variation in the rate of tax
would on a proper construction of the Act be applicable to
the turnover of the dealer who has opted for the " previous-
year rule " but the assessment order does not give effect to
it, it would certainly be a case of an error apparent on the
face of the record, which would bring the case within the
power of rectification. On the analogy of the cases under
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s. 35 of the Income Tax Act, 1922, the assessment officer
could order rectification in such cases.
Even apart from this, under a. 10(2) of the Act the dealer
or the department as the case may be may apply to the
Revising authority for revision of the assessment on the
ground that the same is not legal, proper or regular. This
section enacts:
" The Revising Authority may in its discretion at any time
suo motu or on being moved by the Commissioner of Sales Tax
or on the application of any person aggrieved, call for and
examine the record of any order or proceedings recorded by
any appellate or assessing authority under this Act for the
purpose of satisfying itself as to the legality or
propriety, of such order or as to the regularity of such
proceedings and may pass such order as he thinks fit."
The orders which the Revising Authority could pass might
either be by way of enhancement or reduction, and the
subsequent sub-sections provide: .
"10 (4). The Revising Authority shall not pass any order
under sub-section (3) adversely affecting any person unless
an opportunity has been given to such person to be heard.
213
(5) If the amount of assessment is reduced by the Revising
Authority under sub-section (3) it shall order the excess
amount of tax if already realised to be refunded."
It is, therefore, not correct to say that there is no
machinery for rectifying errors and for making consequential
orders for payment of further tax, or for directing refunds,
and this argument cannot therefore justify the construction
contended for by the respondent.
In the entire discussion up to now we have proceeded on the
assumption that the turnover of " the previous-year " of the
dealer was a fixed quantity which was finally determined
once and for ever on the 31st March of that year and that
the problem was merely to find the rate of tax to be applied
to this predetermined factor. It will be seen from an
examination of the Act that even the factor of the turnover
is subject to variation. For instance, the first part of s.
4 enacts:
" The provisions of section 3 of this Act shall not apply
to (1) the sale of water, salt, foodgrains, milk, gur,
electrical energy for industrial purposes, books, magazines,
newspapers and motor spirit as defined in the United
Provinces Sales of Motor Spirit Act, 1939, and any other
goods which the Provincial Government may, by a notification
in the official Gazette exempt from time to time."
Under this power besides the specified goods, the State
Government might from time to time exempt other goods from
among those whose sale proceeds have to be included in the
turnover. If an exemption of that type were granted say in
1948-49, it cannot be contended that the turnover of the
dealer who had opted for the " previous year " has to
include these sales in the return which he submits in Form
IV, If by the date of the submission of the return, the
exemption has been notified, and has effect for the entire
year of course he need not include these sale proceeds in
his return. The computation, therefore, of the quantum of
turnover of the previous year on which tax has to be levied
is one which is subject to the law
214
in relation to it in the assessment year, and any change in
that law presents the same problems, as the variation in the
rate of tax.
Up to now the discussion has proceeded on the basis that a
change in the law made in the assessment year whether as
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regards the computation of the turnover or as to the rate of
levy, is effective throughout that year, i.e., from the 1st
April to the 31st March, and it is found that the fact that
the returns of the previous year turnover dealers are
required to or are submitted within the early part of the
year, or the contention based on the absence of specific
machinery for reassessment or refund are an insufficient
basis for holding that a change in the law affecting the
basis of tax-liability would not affect the previous-year
turnover assessees and that the machinery provided by ss. 10
and 22 are adequate to meet the contingencies arising out of
the changes being retrospectively effected after the
assessments were completed.
We shall next proceed to consider whether the change in the
law either as regards the computation of the taxable
turnover or as regards the rate of tax becoming operative
sometime after the year has commenced makes any difference.
In the case of the "assessment-year-turnover " dealers,
there is no problem because the sales effected during the
course of the year would be governed by the law applicable
from time to time. The entire basis or theory of the tax
being levied on foot of the previous year’s turnover is that
notwithstanding that factually the sales took place in the
previous year they are to be deemed by fiction to have taken
place in the year of assessment. If that theory be
discarded there could be no legal foundation for the tax
being levied by the Act even as originally enacted on a sale
which factually took place before it was operative. The
only question therefore is the precise scope of that fiction
and its logical implication. If the sale in the previous
year is treated by the Act as a sale in the present year,
then no principle is contravened, if it were held that sales
during a portion of the previous year are held to be sales
during a corresponding portion of the current
215
year. If we reject the argument that it is only the law as
prevailed on the 1st April of a year that forms,, the basis
for the computation of the turnover and for the
ascertainment of the tax-liability-as not flowing from the
provisions of the Act, and indeed as contrary to the very
scheme underlying the enactment, the changes in the law
effected during the course of the assessment year must
operate even in respect of the turnover of the previous
year, which are deemed to be the turnover of the assessment
year.
It now remains to deal with the question as to whether the
language employed in the notification by which only sales
effected after a date specified in the assessment year are
to be governed by the new levy, precludes the application of
the notified change to those dealers whose sales were
actually effected in the previous year, but who had opted
for the " previous-year-turnover " basis of assessment.
The argument of learned Counsel, which found favour with the
learned Judges of the High Court was briefly this. The
notification expressly states that only sales effected from
and after June 9, 1948, were to be charged with the new
rates. In terms therefore, the change in the law is wholly
prospective. If so, one cannot by any line of reasoning
reach the conclusion that the new rates of levy applied to
sales, as by the present respondent, more than a year
earlier. So stated the reasoning appears impressive and it
is true that a taxing enactment cannot be construed as
levying a charge unless the words clearly do so. But the
words have always to be understood and more than that
applied with reference to the underlying basis of the scheme
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of taxation. So applied, it does not appear to us to
support the contention of the respondent. The change in the
rate of tax, was no doubt prospective. The phraseology
employed merely means that in the case of the " assessment-
year-turnover " dealers only the sale proceeds of sales
effected after the specified date would be governed by the
new rates. In the case of the " previous-year-turnover "
dealers, the change operates to determine the amount of tax
during their assessment year-just in the same manner as
216
the original charge under the Act, of a flat rate of three
pies determined the tax payable notwithstanding that none of
the sales whose proceeds were included in their turnover
were effected during the assessment year. We have already
pointed out that the basic idea underlying the provision
contained in s. 7(1) of the Act ’is that it projects the
turnover of the previous year into the assessment year.
Admittedly the Act itself is not retrospective, or designed
to levy the charge under s. 3(1), on sales effected before
April 1, 1948. If sales of the previous year are brought
within the taxing provision, it is not because the sales
when they took place were subject to tax, but because either
(a) the previous year’s sales are deemed in law-when the
assessee so opts-as the sales of the current year or (b) the
previous year’s turnover being opted, the provisions of the
charging sections operate on that turnover. Whichever of
these be the more accurate method of expressing the result,
the fact is that there is no element of retrospectivity at
all involved in the application of the tax law which
prevails in the year of assessment to the turnover of the
previous year when due to the choice of the assessee of
being assessed under s. 7(1), the previous years’ turnover
basis is rendered applicable. Possibly the matter may be
tested in this manner. Section 3(1) of the Act the charging
section-imposes in effect a tax of three pies per rupee on
all sales effected after the commencement of the Act, i.e.,
after April 1, 1948. Sup. pose that section itself, had by
a proviso imposed a tax @ six pies per rupee on all sales of
edible oil effected on and after June 9, 1948. Could it
then be open to argument, that in respect of the previous
year’s sales, only a three pies tax was payable and that the
result of the charging provision could be ignored. If,
therefore, we are right so far, the respondent derives no
advantage from the notification specifying the dates of
sales effected from and after which they would be subject to
the varied rate. The notification had necessarily to be
worded as it was, in order to fulfil its primary purpose of
effecting a change in the rate during the assessment year.
The date
217
mentioned in the notification as the date from and after
which sales would be charged at the new rates would
therefore not militate against the new rates being applied
to the turnover of the previous year, since the turnover of
the previous year has to be assessed on the rates prevailing
in the assessment year.
The next question is how on the terms of the notification
which came into operation after the commencement of the
assessment year and during the course of it, the proportion
of the turnover on the basis of which the tax-liability of a
previous-year’s turnover dealer could be computed. Learned
Counsel for the respondent urged that no intelligible basis
could be suggested for distinguishing the two periods in the
previous year when the original rates and the altered
notified rates would operate. Learned Counsel urged that it
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would be impossible to distinguish these two periods either
on any theory of retrospectivity of the notification or on
any theory regarding the sales of the previous year being
attributed to the corresponding dates of the current year.
There is no doubt that this mode of computing the
proportion, viz., to treat the sales which were effected on
various dates of the previous year, as if they were sales on
the corresponding dates of the current year and thus to
compute the two totals of turnover which would be subject to
different rates of duty would not be proper. The
impropriety would arise from the fact that the fiction
enacted by s. 7(1) is not that each day’s sale in the
previous year is deemed to be a sale on the corresponding
date in the current year, but only that the total taxable
turnover of the previous year is deemed to be that of the
current year. The method to which objection is taken is
however not the manner in which the Sales-tax Officer
computed the proportion which was affirmed by the Judge
(Revision). If the total of the sale proceeds of the
previous year is deemed to be the total of the current year,
there is no illogicality or impropriety in dividing that
total in accordance with the number of days in the year in
which the different rates prevailed and that is precisely
what the Sales-tax Officer did.
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If as we hold both the computation of the turnover of the
previous year, as well as the incidence of the tax leviable
on it, are to be determined not merely by the law as it
stood on the first day of the assessment year, but by the
law applicable to assessments during the entire assessment
year, the method by which the tax-liability of the
respondent was computed by the Sales-tax Officer is not open
to any objection.
In connection with the interpretation of the notification a
minor point was suggested to which brief reference might be
made. It was submitted that as the notification in effect
levied a tax, if it was ambiguous, it should be resolved in
favour of the subject-the tax-payer. We see no ambiguity in
the notification to justify an appeal to this rule. Besides
the notification in effect frees dealers other than
importers and manufacturers of all tax-liability in respect
of the sale-turnover of oil, though in the case of two
specified classes of dealers. a single point tax at an
enhanced rate is levied. In such a situation, the rule of
construction invoked could hardly be applied, even if the
condition as to ambiguity were present.
We, therefore, hold that the assessment to sales-tax of the
respondent company by applying to its turnover of the year
1947-48, the rate of tax specified in the notification of
June 8, 1948, as determined by the Sales-tax Officer was in
accordance with the law. We would accordingly allow the
appeal, set aside the decree of the High Court and restore
the assessment order of the Sales-tax Officer with costs
here and in the High Court.
BY COURT.-In accordance with the opinion of the majority,
the appeal is dismissed with costs.
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