Full Judgment Text
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PETITIONER:
ASHOK SERVICE CENTRE & ANOTHER ETC.
Vs.
RESPONDENT:
STATE OF ORISSA
DATE OF JUDGMENT18/02/1983
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
VENKATARAMIAH, E.S. (J)
SEN, A.P. (J)
MISRA, R.B. (J)
CITATION:
1983 AIR 394 1983 SCR (2) 363
1983 SCC (2) 82 1983 SCALE (1)123
CITATOR INFO :
R 1985 SC1211 (5)
ACT:
Orissa Sales Tax Act, 1947-Section 8-Orissa Additional
Sales Tax Act, 1975 as amended in 1979-Section 3(2)-Levy of
tax under the amending Act of 1979 subject to section 8 of
the 1947 Act-Section 3(2) provided that provisions of 1947
Act apply mutatis mutandis in relation to additional tax as
if they apply in relation to the tax payable under the
Principal Act-The two Acts, if should be read together.
Interpretation-mutatis mutandis-Meaning of-Words fn an
Act are clear-If open to court to go fn search of the
intention of the Legislature-Later of two Acts provides that
the two are to be read- together-Whether every part of each
Act must be construed as if the two Acts had been one.
Words and phrases: Mutatis mutandis-Meaning of.
HEADNOTE:
The proviso to section 8 of the Orissa Sales Tax Act,
1947 (Principal Act) lays down that the same goods cannot be
taxed under it at more than one point in the same series of
sales or purchases by successive dealers. In 1975 the State
Legislature enacted the Orissa Additional Sales Tax Act (the
Act) levying additional sales tax on certain classes of
dealers. In 1979 the State Legislature amended the Act by
the Orissa Additional Sales Tax (Amendment) Act, 1979 by
which sections 2 and 3 of the Act were substituted by new
sub-sections 2 and 3. After the amendment section 3 of the
Act provided that every dealer shall, in p addition to the
sales tax payable by him for 3 year under the said Act be
liable to pay additional tax at such rate not exceeding one
per cent of his gross turnover (excluding the gross turnover
which relates to sale and purchase of declared goods) for
that year as may be notified from time to time by the State
Government. By a notification the State Government notified
the rates of additional tax payable under section 3 of the
Act as amended in 1979 at one half per cent of the annual
gross turnover. Sub-section (2) of section 3 made it clear
that the provisions of the Principal Act would mutatis
mutandis apply in relation to the additional tax as if they
apply in relation to the tax payable under the Principal
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Act.
Construing section 3 of the Act-after its amendment,
the State Government took the view that the new levy was in
the nature of a multi point tax and that every dealer was
liable to pay additional tax on his annual gross turnover
irrespective of its taxability. under the Principal Act.
364
In a number of writ petitions filled before the High
Court by dealers it was A contended that section 8 of the
Principal Act which prohibited the levy of tax at more than
one point in the same series of sales or purchases by
successive dealers was applicable to the additional tax
leviable under the Act as amended in 1979.
Without referring to the effect of the provisions of
section 3 of the Act the High Court held that since the
Principal Act and the Act as amended in 1979 had been passed
by a competent legislature providing for a different base
and for a different scheme it was not open to the assessee
to rely upon any of the provisions of the Principal Act
relating to incidence and levy of tax.
In appeal to this Court it was contended on behalf of
the appellants that wherever there was no express provision
to the contrary in the Act the provisions of the Principal
Act, including those relating to the incidence and levy of
tax should apply to the additional tax also.
The Department on the other hand contended that section
3(2) of the Act was intended only to make those provisions
of the Principal Act relating to assessment and collection
of tax applicable to proceedings under the Act and no part
of section 33 to section 8 of the Principal Act would be
applicable to the levy of additional tax.
Allowing the appeals,
^
HELD: If the contention of the Department that only the
machinery provisions of the Principal Act become applicable
to the proceedings under the Act is accepted it would lead
to many anomalies. [377 F]
Section 8 of the Principal Act which begins with a non-
obstante clause is given an over-riding effect over the rest
of the provisions of the Principal Act. Levy of tax at a
single prescribed point and prohibition against levy of tax
at more than one point is an important characteristic of the
scheme of the Principal Act. [370 C-D]
The Act was virtually in the nature of an amendment of
the Principal Act. The additional sales tax payable by
dealers specified in section 2(a), (b) and (c) as originally
enacted was in the nature of an enhancement of their
liability to pay tax under the Principal Act by specified
percentages but they were prohibited from passing on the
incidence of additional tax to the purchasers. [372 E-F]
Although the provisions of the Act could have been
incorporated in the Principal Act itself, by the
introduction of sections 2 and 3 in the Principal Act, the
State Legislature passed a separate Act. But it was made
clear by section 3(2) of the Act that the provisions of the
Principal Act would mutatis mutantis apply in relation to
the additional tax as they apply in relation to the tax
payable - under the Principal Act. The two Acts, i.e., the
Principal Act and the Act as originally enacted had to be
read together in order to make the provisions contained in
the Act effective. This position continued up to the coming
into force of the Amending Act on April 1, 1979 by which
sections 2 and. 3 of the Act wore substituted by new
sections 2 and 3. [373 G-H, 374 A-C]
365
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With the substitution of section 3(2) in 1979 the
prohibition of passing of the additional tax, which existed
formerly was removed. Secondly the additional tax, instead
of being an enhancement of the tax payable by a dealer by a
certain percentage, became a percentage of the annual turn
over of a dealer. Both the statement of objects and reasons
and tho Amending Act were silent on the question whether the
additional tax payable after the amendment was a multi point
levy or a single point levy as also on the classes of
dealers liable to pay additional tax. [375 F-H]
2. The view of the High Court that the two Acts were
independent of each other was not correct. It is necessary
to read and to construe the Principal Act and the Act
together as if the two wore one, and while doing so to give
effect to the provisions of the Act which is a later one in
preference to the provisions of the Principal Act wherever
the Act has manifested an intention to modify the Principal
Act. [377 B-C]
The definition of mutatis mutandis given in legal
dictionaries is "with the necessary changes in points of
detail meaning that matters or things are generally the
same, but to be altered when necessary" as to names, offices
and the like. [378 E-F]
Extension of an earlier Act mutatis mutandis to a later
Act brings in the idea of adaptation, but so far only as it
is necessary for the purpose, making a change without
altering the essential nature of the thing changed, subject
to express provisions made in the later Act. [378 H, 379 A]
In the instant case section 3(2) of the Act shows that
the State Legislature intended not to depart substantially
from the Principal Act except with regard to matters in
respect of which express provision had been made in the Act.
Though the Act had the usual features of a state, it could
not be considered as an independent statute but must be read
together with the Principal Act to be effective. [379 A-C]
Earl Jowitt’s The Dictionary of English Law (1959);
Black’s Law Dictionary (revised 4th edn. (1968) Bouvier’s
Law Dictionary (3rd Revision) Vol. II, referred to
The additional tax levied under the Act could be passed
on to consumer after the amendment. The object of the
amendment made in 1979 as set out in the statement of
objects and reasons was to rationalise the scheme of
additional sales-tax and to introduce flexibility in The
implementation of the Act. If the object of the amendment
was to make the additional tax a multi-point levy, nothing
was easier than using the appropriate words in the Act by
excluding the application of section 8 of the Principal Act
expressly in section 3(2) of the Act. In the absence of any
such words in the Act, by reason of section 3(2) of the Act
section 8 of the Principal Act must be construed as being
applicable to the levy of an additional tax also. The gross
turnover referred to in section 3(1) should, therefore, be
understood as that part of the gross turnover which is
taxable under the Principal Act. [380 A-G]
If section 3(1) is read as "every dealer (who is liable
to pay tax under the Principal Act) shall in addition to the
tax payable by him for a year under the
366
said Act, be liable to pay additional tax at such rate not
exceeding one per cent of his gross turnover which is
taxable under the Principal Act) for that year as may be
notified from time to time by the State Govt.. " there would
not be any anomaly. On the other hand it would effectuate
the intention of the legislature. [381 A-B]
It is true that if the words used in a statute are
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clear it is not open to the Court to go in search of the
intention of the legislature and to arrive at a meaning
different from what the words of the statute convey. When
the Act is read as a whole it becomes inevitable that it has
to be read together with the Principal Act. It is a well
settled principle of construction that where the later of
the two Acts provides that the two are to be read together
every part of each Act must be construed as if the two Acts
had been one, unless there is some manifest discrepancy
making it necessary to hold that the later Act has, to some
extent, modified the provisions of the earlier Act. When
section 3(1) of the Act is read in the light of sub-section
2 thereof, section 8 of The Principal Act which prescribes a
single point levy becomes immediately attracts. [381 C-f]
The argument that since section 8 of the Principal Act
opens with the words "notwithstanding anything to the
contrary in ’this Act" the operation of that section should
be confined to the tax payable under the Principal Act and
could not be extended to the additional tax payable under
the Act has no force. When the Principal Act was enacted,
section 8 could apply only to the liability under the
Principal Act, but by reason of section 3(2) of the Act,
section 8 has been made applicable to the levy, assessment
and collection of additional tax under the Act. If this
argument is accepted many provisions of the Principal Act
which are necessary for making the levy under the Act
effective would become inapplicable, as for example section
13 relating to the machinery for recovery of tax and
penalty. [381 F-H, 382 A]
The second proviso to section 3(1) of the Act does not
in any way curtail the effect of section 3(2) of the Act
which forms an integral part of the charming section.
Consequently any exemption granted under sections 6 and 7 of
the Principal Act would also be applicable in the case of
levy of additional tax under the Act. [382 C-D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1408-
16, 2650-67, 2498-2524, 2640-47, 1874-79, 2127-38 and 3255
of 1982.
Appeals by special leave from the Judgements and orders
dated the 4th and 5th February, 1982 of the Orissa High
Court in original Jurisdiction Case Nos. 1391 of 1979, 218,
320/1981, 2060, 2051/80, 35/81,525/80, 1567 and 1569/80,
1196,319, 1194, 1162, 1658 337, 2044, 1905, 1168, 1766,
1165, 1166, 336, 1659, 1662, 1884, 1161, and 1159 of 1981,
694, 1031, 945, 944, 400, 617, 375, 697, 616/81, 2015 and
2016/80, 118, 1935, 2803, 1646, 1647, 2831, 2167, 59, 1637,
602, 603, 695, 1224, 1195, 1230, 60, 1360, 1359, 1393, 1394,
604, 2152 of 1981, 846/80, 57/81, 1464/80, 595, 797, 1538,
1537 of 1981,
367
1584/80, 676, 677 of 1981, 1008/80, 1009/80, 2379/ 81,
915/80, A 235/81,236/81, 1837/80, 1839/80, 1533/79, 1649/81
and 535 of 1981.
A.B.Divan, A.K. Sen, Shankar Ghose, P.R. Mridul and
S.T. Desai, Talat Ansarl, Ashok Sagar, Sandeep Thakore, Ms.
Rainu Walia, D.N. Mishra, D.P. Mukherjee, J. R. Das M.C.
Dhingra, Laxmi Rant Pandey, B.R. Agarwala, Miss Vijaya-
lakshmi Menon, U.P. Singh, B.B. Singh, B.S. Chauhan, Anil
Kumar Sharma, Praveen Kumar, A.T. Patra, Vineet Kumar, A.R.
Jha, M.P. Jha, R.S Sodhi, Hardev Singh, A. Minocha, Mrs.
Indu Goswamy S.R. Sinha, Vinoo Bhagat, P.N. Mishra, R.R.
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Jain and Pramod Dayal, for the Appearing Appellants.
K. Parasaran, Sol. Genl. C. Rath, Advocate General for
the State of Orissa, S. Rangarajan and M.C. Bhandari, F.S.
Nariman, CSS Rao, Pramod Swarup, R.B. Mahto, U.S. Prasad,
A.R Panda and R.K. Mehta for the appearing Respondents.
The Judgment of the Court was delivered by -
VENKATARAMIAH, J. The usual complaint against some of
tho modern fiscal statutes is that they are unduly long and
therefore complex. But here we have an orissa Act which is
very short but clarity is not certainly its virtue.
The only point for determination in these’appeals by
special leave is whether the levy of additional tax under
the Orissa Additional Sales Tax Act, 1975 (Orissa Act 24 of
1975) (hereinafter referred to as ’the Act’) as amended by
the orissa Additional Sales Tax (Amendment) Act, 1979
(hereinafter referred to as ’the Amending Act’) is a single
point levy or a multi point levy.
In order to understand the contentions of the parties
it is necessary to give briefly the legislative history of
the sales tax law of the State of orissa and to refer to
some of its salient points.
The orissa Sates Tax Act, 1947 (orissa Act XIV of 1947)
(hereinafter referred to as the Principal Act’) was enacted
and brought into force in the year 1947. It has continued to
remain in force even now, although a number of changes have
been introduced into it by successive legislative amendments
It is a law intended for levying taxes on the sale or
purchase of goods other than newspapers subject to the
provisions of Entry 92-A, of List I of the Seventh Schedule
to the
368
Constitution. Section 3-B, 4, 4-A, 5, 6, 7 and 8 of the
Principal Act together lay down the extent of the charge
Section 4 (1) of the Principal Act read:
"4 (1) Subject to the provisions of sections 3-B,
S, 6, 7 and 8 and with effect from such date as the
State Government may, by notification, in the Gazette,
appoint, being not earlier than 30 days after the date
of the said notification, every dealer whose gross
turnover during the year immediately preceding the date
of commencement of the Orissa Sales Tax (Amendment)
Act, 1981 exceeding Rs. 50,000 shall be liable to pay
tax under this Act on sales and purchases effected
after the date so notified."
This provision imposes the liability to pay tax in
accordance with the provisions of the Principal Act on every
dealer whose gross turnover during a fiscal year exceeds Rs
50,000 According to section 2(dd) of the Principal Act
’gross turnover’ means the total of D, ’turnover OF sales’
and ’turnover of purchases’, ’ turnover of sales is defined
in section 2 (i) of the Principal Act a, the aggregate of
the amounts of sale prices and tax. if any, received and
receivable b, a dealer in respect of sale or supply of goods
other than those declared under section 3-B of the Principal
Act and ’turnover of purchases’ is defined in section 2 (j)
of the Principal Act as the aggregate of the amounts of
purchase prices paid and payable by a dealer in respect of
the purchase or supply of goods or classes of goods declared
under section 3-B of the Principal Act. Sub-sections (2) to
(5) of section 4 of the Principal Act deal with the point of
time at which such dealer would become liable to pay tax,
the period during which he would remain liable to pay the
tax and the time at which he would cease to be liable to pay
tax after his annual gross turnover has failed to exceed Rs.
50,000. Unless he is a casual dealer as defined in section
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2(bb) of the Principal Act who is liable to pay tax
irrespective of his gross turnover as provided in section 4-
A of the Principal Act, every dealer would become liable to
pay tax under the Principal Act only wh n his gross turnover
exceeds Rs. 50,000, otherwise not. The expression ’dealer is
defined in section 2 (c) of the Principal Act as a person
who carries on the business of purchasing, selling,
supplying or distributing, goods, directly or otherwise,
whether for cash, or for deferred payment or for commission,
remuneration or other valuable consideration and includes
others mentioned in that clause It may be noted that this
definition does not specify the extent of the gross turnover
of such person as a
369
qualification for being treated as a dealer. every person
who carries A on the activities specified in section 2 (c)
of the Principal Act is a dealer for purposes of the
Principal Act. Section 2(f) of the Principal Act defines the
expression ’registered dealer’ as a dealer registered under
it. Section 9 of the Principal Act imposes the obligation on
every dealer who is liable to pay tax under section 4 of
that Act to register himself and to obtain a registration
certificate. On such of registration he becomes a registered
dealer. Section 9-B (l) (a) of the Principal Act lays down
That no person who is not a registered dealer shall collect
in respect of any sale by him any amount by way of tax under
the Principal Act and a registered dealer can collect such
tax only in accordance with the said Act and Rules made
thereunder. Section 9-A of the Principal Act, however,
provides for voluntary registration of a dealer whose annual
gross turnover exceeds Rs 10,000 even though he is not
liable to pay tax under section 4 of that Act and every such
dealer on such registration is entitled to collect tax under
that Act and to pay it to Government as long as such
registration remains in force. There are corresponding
provisions made in section 9-C of the Principal Act for
provisional registration of certain other kinds of dealers
Section IO of the Principal Act provides for the publication
of the list of registered dealers Any other dealer cannot
collect tax from his customers. There are other provisions
in the Principal Act providing for the machinery for
assessment and recovery of the tax due under it. Before
proceeding further it is necessary to quote section 8 of the
Principal Act. It reads:
"8. Power of the State Government to prescribe
points at which goods may be taxed or exempted.
Notwithstanding anything to the contrary in this
Act, the State Government may prescribe the points in
the series of sales or purchases by successive dealers
at which any goods or classes or descriptions of goods
may be taxed or exempted from taxation and in doing so
may direct that sales to or purchases by a person other
than a registered dealer shall be exempted from
taxation:
Provided that the same goods shall not be taxed at
more than one point in the same series of sales or
purchases by successive dealers.
Explanation-Where in a series of sales, tax is
prescribed tc be levied at the first point, such point,
in respect of
370
goods despatched from outside the State of Orissa shall
mean and shall always be deemed to have meant the first
of such sales effected by a dealer liable under the Act
after the goods are actually taken delivery of by him
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inside the State of orissa."
The proviso to section 8 of the Principal Act which is
of considerable significance in these cases clearly lays
down that the same goods cannot be taxed under the Principal
Act at more than one point in the same series of sales (or
purchases) by successive dealers. Section 8 of the Principal
Act which begins with a non-obstante clause is given an
over-riding effect over the rest of the provisions of the
Principal Act and the proviso found in it also naturally has
a similar over-riding effect. Levy of tax at a single
prescribed point and prohibition against levy of tax at more
than one point is an important characteristic of The scheme
of the Principal Act and such prescription was introduced
deliberately by the State Legislature to prevent hardship to
consumers which would be caused by the gradual increase of
prices as the goods pass from dealer to dealer before they
reach the consumer which would be the natural result of a
multi-point levy of sales tax and also to make collection of
sales tax more convenient. Even though the language of
section 8 of the Principal Act by itself was sufficient to
prevent a multi-point levy and to prescribe a single point
levy in order to emphasis the principle of single point levy
of tax, section 4 (1) of the Principal Act was expressly
made subject to section 8.
When such was the position, with a view to augmenting
the resources of the State Government the Orissa Legislature
enacted the Act in the year 1975 levying additional sales
tax on certain classes of dealers The Act as it was
originally passed read thus:
"ORISSA ACT 24 OF 1975 THE ORISSA ADDITIONAL SALES TAX
ACT, 1975
AN ACT TO PROVIDE FOR LEVY OF ADDITIONAL TAX ON SALE OR
PURCHASE OF GOODS IN ORISSA
Be it enacted by the Legislature of the State of
Orissa in the Twenty-sixth Year of the Republic of
India, as follows:
371
1. (1) This Act may be called the Orissa
Additional A Sales Tax Act. 1975.
(2) It shall extend to the whole of the State of
orissa.
(3) It shall be deemed to have come into force on
the Ist day of April, 1975.
2. (1) The tax payable by a dealer for a year
under the orissa Sales Tax Act, 1947 (hereinafter
referred to as the said Act) shall be increased by an
additional tax at the rate of - C
(a) two percent of the tax, if his gross turnover
for that year does not exceed one lakh of
rupees;
(b) three percent of the tax, if his gross
turnover for that year exceeds one lakh of
rupees but does not exceed five lakhs of
rupees; D
(c) five percent of the tax, if his gross
turnover for that year exceeds five lakhs of
rupees -
Provided that where in respect of declared goods
the tax payable by such dealer under the said Act
together with the additional tax payable under this
sub-section exceeds the maximum percentage of the sale
or purchase price thereof specified, from time to time,
under clause (a) of section 15 of the Central Sales Tax
Act, 1956, the rate of additional tax in respect of
such goods shall be reduced to such an extent that the
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tax and the additional tax together shall not exceed
such maximum percentage of the sale or purchase price
of such goods.
Explanation-"Declared goods" shall have reference
to declared goods as defined in the Central Sales Tax
Act, 1956.
(2) The provisions of the said Act shall, mutatis
mutandis apply in relation to the said additional tax
as they apply in relation to the tax payable under the
said Act.
(3) Notwithstanding anything contained in the said
Act, no dealer referred to in sub-section (I) shall be
entitled to collect the additional tax Payable under
this Act.
372
3. (1) Any dealer who collects the additional tax
pay able under this Act, in contravention of the
provisions of sub-section (3) of section 2 shall be
punishable with fine which may extend to one thousand
rupees.
(2) No Court inferior to that of a Judicial
Magistrate of the first class shall try an offence
under this Act.
4. (1) The State Government may make rules for
carrying out the purposes of this Act.
(2) All rules made under this Act shall, as soon
as may be after they are made, be laid before the State
Legislature for a total period of fourteen days which
may be comprised in one session or in two or more
successive sessions and if during the said period the
State Legislature makes modifications, if any, therein,
the rules shall thereafter have effect only in such
modified form; so, however, that such modifications
shall be without prejudice to the validity of any thing
previously done under the rules."
A reading of the Act shows that it was virtually in the
nature of an amendment of the Principal Act. It, however,
followed the pattern of the Tamil Nadu Additional Sales Tax
Act. 1970, the validity of which arose for consideration in
S. Kodar v. State of Kerala(’). The additional sales tax
payable by the dealers specified in clauses (a), (b) and (c)
of section 2 of the Act as it was originally enacted was in
the nature of an enhancement of their liability to pay tax
under the Principal Act by the specified percentages but
they were prohibited from passing on the incidence of
addition tax to the purchasers. The Statement of objects and
Reasons attached to the Bill which was latter on enacted as
the Act read thus:
"STATEMENT OF OBJECTS AND REASONS
To mobilise additional resources for the Plan, it
has been proposed to impose an additional sales tax in
addition to the sales tax payable by dealers under the
general sales tax law of the State. This additional
sales tax may be said to be in the nature of surcharge
on the State sales tax payable by dealers.
373
2. The proposed legislative measure contains a pro
vision that the incidence of the tax cannot be passed
on to consumers. Perhaps, a view may be taken that the
proposed additional tax would be added to the price of
goods sold and thereby jack up prices. But as this
additional sales tax would be on a graded scale and a
specific provision is proposed to be made in the Act
debarring dealers to pass on the incidence to consumer,
it will be difficult for dealers to pass on the
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incidence of this tax to consumers. It may not be
possible to increase the price of goods by an amount
equivalent to the amount of additional sales tax as
there is statutory price control in respect of certain
goods and where there is no statutory price control,
there is keen competition between dealers for sale of
goods. Moreover, the rate of the additional sales tax
on big dealers will be more than that in the case of
small dealers. To meet the competition from the small
dealers, the big dealers cannot increase the price cf
goods so as to recoup themselves, of the amount of
additional sales tax paid by them. Moreover, if dealers
increase the price of goods so as to recoup themselves,
they will be liable to pay more sales tax under the
general sales tax law of the State and their turnover
will also increase as a result of which the rate of
additional sales tax may be more. Besides, if they
increase the price exceeding the amount of additional
sales, their profit will increase as a result of which
they will be liable to pay more income tax. It may not,
therefore, be a pragmatic step to pass on the incidence
of this new tax to consumers.
3. The Bill seeks to achieve the above objective." F
The contents of the above Statement of objects and
Reasons chow the concern of the mover of the Bill regarding
the likely increase in the burden on the consumers by reason
of the probable escalation in the prices of Bonds as a
result of the new levy.
The provisions of the Act set out above could have very
well been incorporated in the Principal Act itself by the
introduction of sections 2 and 3 set out above in the
Principal Act. But the State Legislature following the
pattern of the Tamil Nadu Act referred to above passed a
separate Act. It was, however, made clear by section 2 (2)
thereof that the provisions of the Principal Act would
mutatis
374
mutandis apply in relation to the additional tax as they
apply in relation to the tax payable under the Principal
Act. The additional tax thus levied being only an
enhancement of the tax payable under the Principal Act by a
specified percentage, it did not affect the general scheme
of the Principal Act including the principle of single point
levy contained in section 8 of the Principal Act. The two
Acts i.e. the Principal Act and the Act as it was originally
enacted had to be read together in order to make the
provisions contained in the Act effective. This position
continued up to the corning into force of the Amending Act
on April 1 1979 by which sections 2 and 3 of the Act were
substituted by new sections 2 and 3. After such Amendment,
sections 2 and 3 of the Act read thus -
"2. In this Act, unless the context otherwise
requires-
(a) "declared goods" shall have the same meaning as in
clause (c) of section 2 of the Central Sales Tax
Act, 1956;
(b) words and expressions used but not defined shall
have the same. meanings as are respectively
assigned to then in the Orissa Sales Tax Act, 1947
(hereinafter referred to as the said Act).
3. (1) Every dealer shall, in addition to the tax
payable by him for a year under the said Act, be liable
to pay additional tax at such rate not exceeding one
percent of his gross turnover for that year, as may be
notified, from time to time, by the State Government;
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Provided that no additional tax as aforesaid shall
be payable on that part of the gross turnover which
relates to sale and purchase of declared goods:
Provided further that the State Government may, by
notification, subject to such conditions and
restriction, if any, exempt any class of dealers or the
turnover relating to any goods or class of goods from
the levy of the additional tax and likewise withdraw
any such exemption.
(2) The provisions of the said Act shall, mutatis
mutandis apply in relation to the said additional tax
as they apply in relation to the tax payable under the
said Act."
375
Sections 1 and 4 of the Act however remained as before.
After the above amendment, section 2 took the form of the
interpretation clause of the Act. Clause (a) of section 2
defined the expression ’declared goods’ and clause (b)
provided that the words and expressions used but not defined
shall have the same meanings-as are respectively assigned to
them in the Principal Act. Section 3, however, altered the
pattern of levy of additional sales tax from what it was
when the Act was passed in 1975. The object of the
alteration is set out in the statement of objects and
Reasons attached to the Bill which later became the Amending
Act. It read thus:
’STATEMENT OF OBJECT AND REASONS
With a view to rationalising the scheme of
additional sales tax it is proposed to amend the Orissa
Additional Sales Tax Act, 1975 to facilitate wider
application of first point levy and introduction of
flexibility in the implementation of the Act.
2.The Bill seeks to achieve the above objectives".
Section 3 of the Act after the amendment provided that
every dealer shall, in addition to the tax payable by him
for a year under the said Act, be liable to pay additional
tax at such rate not exceeding one percent of his gross
turnover (excluding the gross turnover which relates to sale
and purchase of declared goods) for that year as may be
notified from time to time by the State Government. By a
notification dated March 23, 1979, the State Government
notified the rate of additional tax payable under section 3
of the Act as amended in 1979 at one-half percent of the
annual gross turnover. The prohibition of the passing of the
additional, tax which existed formerly was removed. One
significant change which was brought about by the amendment
was that the additional tax instead of being an enhancement
of the tax payable by a dealer by a certain percentage
became a percentage of the annual turnover of a dealer. Both
the Statement of objects and Reasons and the Amending Act
were however, silent on the question whether the additional
tax payable after the amendment was a multi-point levy or
single point levy. They were also silent on the class of
dealers who were liable to pay additional tax. Controversies
arose between the Department and many of the assesssees on
the construction of section 3 of the Act after its
amendment. The stand of the State Government was that every
dealer was liable to pay additional tax on his annual gross
376
turnover irrespective of its taxability under the Principal
Act. The State Government claims that the new levy was in
the nature of a multi point tax. A number of writ petitions
were filed before the High Court of Orissa raising a number
of contentions including some relating to the constitution-
ality of the amended Act. All the petitions were dismissed
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by the High Court. The main judgment was delivered in O.J.
Case No. 1391 of 1979, filed by M/s. Ashok Service Centre.
Following that judgment, the other writ petitions were
dismissed. These appeals are filed against the decision of
the High Court with the special leave of this Court.
In these appeals, the only contention pressed before us
relates to the applicability of section 8 of the Principal
Act which prohibits the levy of tax at more than one point
in the same series of sales or purchases by successive
dealers in the State of Orissa to the additional tax
leviable under the Act as amended in 1979. The High Court
negatived the said contention on the ground that since both
the Principal Act and the Act as amended in 1979 had been
passed by a competent legislature providing for a different
base and for a different scheme and because they happened to
be two independent Acts, it was not open to the assessees to
rely upon any of the provisions of the Principal Act
relating to incident and levy of tax in support of their
contention. The High Court observed in para 8 of the
judgment thus:
"8. On an analysis of Section 3 (1) of the Act it
is also clear that the legislative intention is to
raise a tax in addition to the liability under the 1947
Act. If the liability under the 1947 Act in respect of
a dealer is taken as ‘X’. Section 3 (1) of the 1975 Act
creates an additional liability which has to be within
one percent of the gross turnover for that year (the
State Government at present has prescribed half percent
which may be taken as ’Y’). ’Y’ is an additional
liability and, therefore, has been nomenclatured as
additional tax. Under the 1947 Act, the dealer’s
liability to sales tax is on the basis of his taxable
turnover which is determined in the manner prescribed
by that Act. Under the 1975 Act, the liability of the
dealer is with reference to his gross turnover of the
year. It was competent for the sovereign Legislature to
adopt either of the methods for raising sales tax.
While sustaining the scheme under the 1947 Act, it
could also raise an additional tax on the gross
377
turnover and combine the two for the purposes of
computation as also recovery. In the premises, the
submission of Mr. Agarwala on this score has also no
force."
The High Court was of opinion that the Act being an
independent Act it could not be read subject to the
provisions of the Principal Act. It may, however, be noticed
that there is no reference in the judgment of the High Court
to the effect of the provisions of section 3 (2) of the Act
which forms part of the charging section and provides that
the provisions of the. Principal Act shall mutatis mutandis
apply in relation to the additional tax levied under the Act
as they apply in relation to the tax payable under the
Principal Act. There is also no reference in the judgment of
the High Court to section 8 of the Principal Act.
It is urged on behalf of the appellants before us
depending upon section 3 (2) of the Act that wherever there
is no express provision to the contrary in the Act, the
provisions of the Principal Act including those relating to
incidence and levy of tax should apply to the additional tax
also. On behalf of the State Government, it is urged that
section 3 (2) of the Act is intended only to make those
provisions of the Principal Act relating to the assessment
and collection of tax applicable to the proceedings under
the Act and no part of sections 3-B, 4, 4-A, 5, 6, 7 and 8
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of the Principal Act would be applicable to the levy of
additional tax.
We may straight away say that the contention of the
Department leads to some anomalies. Section 3 (1) of the Act
states that every dealer shall, in addition to the tax
payable by him for a year under the Principal Act liable to
pay additional tax at such rate not P exceeding one percent
of his gross turnover for that year as may be notified from
time to time by the State Government. If as stated in
section 2 (b) of the Act, we define the expression ’dealer’
in section 3 (1) of the Act as provided in section 3 (c) of
the Principal Act, and we do not apply the qualification of
the minimum annual gross turnover of Rs. 50,000 stipulated
in section 4 (1) of the Principal Act, then irrespective of
his annual gross turnover every person who carries on the
business of purchasing, selling, supplying or distributing
goods directly or otherwise would become liable to pay
additional tax even though he may not be liable to pay any
tax under the Principal Act. If he is not registered as a
dealer on account of his annual gross turnover being less
than the prescribed
378
minimum, he would not be able to collect the additional tax
in view of section 9-B of the Principal Act which says that
no person other than a registered dealer shall realise any
amount by way of tax under the provisions of the Principal
Act. That could never have been the intention of the State
Legislature. The ’dealer’ referred to in section 3 (1) of
the Act should be understood as a ’dealer’ who is liable to
pay tax under the Principal Act as provided in section 4 (1)
of the Principal Act. Next ’gross turnover means the total
of ’turnover of sales’ and ’turnover of purchase’. If under
section 3 (1) of the Act, liability to pay additional tax
just on the ’gross turnover’ a dealer has to pay additional
tax on the aggregate of the purchases of goods declared
under section 3-B of the Principal Act and also on the
turnover of sales of other goods. To determine the gross
turn over it becomes necessary to read section 3-B of the
Principal Act into the Act although the said section deals
with the liability of certain class of goods to tax under
the Principal Act. These anomalies show that the contention
of the Department that only machinery provisions of the
Principal Act become applicable to the proceedings under the
Act cannot be accepted.
Section 3 (2) of the Act which makes the provisions of
the principal Act mutatis mutandis applicable to the levy of
additional tax is a part of the charging provision of the
Act and it does not say that only those provisions of the
Principal Act which relate to assessment and collection of
tax will be applicable to the proceedings under the Act.
Before considering what provisions of the Principal Act
should be read as part of the Act, we have to understand the
meaning of the expression ’mutatis mutandis’. Earl Jowitt’s
’The Dictionary of English Law (1959)’ defines ’mutatis
mutandis’ as ’with the necessary changes in points of
detail’. Black’s Law Dictionary (Revised 4th Edn. 1968)
defines ’mutatis mutandis’ as ’with the necessary changes in
point of detail, meaning that matters or things are
generally the same, but to be altered when necessary as to
names, offices, and the like. Houseman v. Waterhouse, 191
App. Div. 850, 112 N.Y.S 249, 251.’ In Bouvier’s Law
Dictionary (3rd Revision, Vol. II), the expression ’mutatis
mutandis’ in defined as ’(T)he necessary changes. This is a
phrase of frequent practical occurrence, meaning that
matters or things are generally the same, but to be altered
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when necessary, as to names, offices, and the like.
Extension of an ’earlier Act mutatis mutandis to a later Act
brings in the idea of adaptation, but so far only as it is
necessary for the purpose, making a change without altering
the essential nature of the
379
thing changed, subject of course to express provisions made
in the later Act. Section 3 (2) of the Act shows that the
State Legislature intended not to depart substantially from
the Principal Act except with regard in matters in respect
of which express provision had been made in the Act. The
assumption made by the High Court that the Act was an
independent Act having nothing to do with the Principal Act
is not correct. The Act only levied some extra sales tax in
addition to what had been levied by the Principal Act. The
nature of the taxes levied under the Act and under the
Principal Act was the same and the Legislature expressly
made the provisions of the Principal Act mutatis mutandis
applicable to the levy under the Act. The additional sales
tax was in the nature of a surcharge over and above what was
due and payable by assessee under the Principal Act. The
Act, though it had a long title, a short title and other
usual features of every statute, could not be, considered as
an independent statute. It had to be read together with the
Principal Act to be effective. In the circumstances the
conclusion reached by the High Court that the two Acts were
independent of each other was wrong. We are of the view that
it is necessary to read and to construe the two Acts
together as if the two Acts are one, and while doing so to
give effect to the provision, of the Act which is a later
one in preference to the provisions of the Principal Act
wherever the Act has manifested an intention to modify the
Principal Act. The following Observations of Lord Simonds in
Fendoch Investment Trust Co. v. Inland Revenue
Commissioners(1) made in connection with the construction of
certain fiscal statutes are relevant here. He said at page
144:
"My Lords, I do not doubt that in construing the
latest of a series of Acts dealing with a specific
subject matter, particularly where all such Acts are to
be read as one, great weight should be attached to any
scheme which can be seen in clear outline and
amendments in later Acts should if possible be
construed consistently with that scheme".
Originally when the Act was passed in 1975, the Act
levied an additional tax on dealers whose annual gross
turnover did not exceed rupees one lakh as two percent of
the tax payable by them under the Principal Act, on dealers
those gross turnover exceeded rupees one lakh but did not
exceed rupees file lakhs at three percent
380
of the tax payable under the Principal Act and on dealers
whose gross turnover exceeded rupees five lakhs at five
percent of the tax payable under the Principal Act. Such
additional tax levied under the Act could not be passed on
to consumers. The object of the amendment made in 1979 was,
as can be seen from the Statement of Objects and Reasons, to
rationalise the scheme of additional sales tax and to
facilitate ’wider application of first point levy’ and to
introduce flexibility in the implementation of the Act. What
the words ’wider application of first point levy’ mean is
not very clear the words ’first point levy’ is no doubt a
single point levy. Even a last point levy in the same series
of sales is a single point levy which is distinguishable
from a multi point levy. If the State Legislature wanted
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that the new levy i.e. the additional tax should be a multi
point tax which had to be paid by every dealer irrespective
of the fact that the entire annual gross turnover in his
hands may not be liable to bear the tax under the Principal
Act, it would have expressly said so as it would have
amounted to a substantial departure from the general scheme
of the Principal Act as set out in the proviso to section 8
of thereof which stipulated that no goods should suffer tax
which could be passed on to the purchaser at more than one
point in the same series of sales or purchases by successive
dealers to which the people of the State of Orissa had
become accustomed. If the object of the amendment was to
make the additional tax a multi point levy, nothing was
easier than using the appropriate words in the Act by
excluding the application of section 8 of the Principal Act
expressly in section 3 (2) of the Act. In the absence of any
such words in the Act, by reason of section 3 (2) of the
Act, we have to construe that section 8 of the Principal Act
which is given an overriding effect by the use of the non-
obstante clause is applicable to the levy of additional tax
also. This construction receives support from the use of the
word ’additional’ in section 3 (1) which involves the idea
of joining or uniting one thing to another so as thereby to
form one aggregate (see Black’s Law Dictionary). The gross
turnover referred to therein should, therefore, be
understood as that part of the gross turnover which is
taxable under the Principal Act. The definition of the
expression ’gross turnover’ in section 2 (dd) of the
Principal Act does not present any insurmountable difficulty
as the words defined in section 2 of the Principal Act have
to be given the meaning as indicated in that section unless
there is anything repugnant in the subject or context. In
view of the foregoing, section 3 (1) of the Act has to be
read as:
381
"Every dealer (who is liable to pay tax under the
Principal Act) shall, in addition to the tax payable by him
for a year under the said Act, be liable to pay additional
tax at such rate not exceeding one percent of his gross
turnover (which is taxable under the Principal Act) for that
year, as may be notified from time to time by the State
Government.
Provided .........................................
Provided .........................................
If section 3 (1) is so read there would not be any
anomaly but on the other hand it would effectuate the
intention of the State Legislature. We are aware of the
principal that a statute has to be interpreted according to
the words used therein and if the word used therein are
clear it is not open to the Court to go in search of the
intention of the Legislature and to arrive at a meaning
different from what the words of the statute convey. When
the Act is read as a whole it becomes inevitable that it bas
to be read together with the Principal Act. Craieson Statute
Law (7th Edn ) says at page 223 that ’where the later of two
Acts provides that the Who are to be read together every
part of each Act must be construed as if the two Acts had
been one, unless their is some manifest discrepancy making
it necessary to hold that the later Act has to some extent
modified the provisions of the earlier Act’. When section 3
(1) of the Act read in the light of subsection (2) thereof,
section 8 of the Principal Act which prescribes a single
point levy becomes immediately attracted. It was, however,
argued on behalf of the Department that since section 8 of
the Principal Act opened with The words ’notwithstanding
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anything to the contrary in this Act’, the operation of
section 8 should be confined to the tax payable under the
Principal Act and could not be extended to the additional
tax payable under the Act. We do not find any merit in this
submission, since the words ’this Act’ were used in section
8 because when the Principal Act was enacted section 8 could
apply only to the liability under the Principal Act. Now by
reason of section 3 (2) of the Act, section 8 has been made
also applicable to the levy, assessment and collection of
the additional tax under the Act. If we accept the argument
of the Department even section 13 of the Principal Act which
provides for the machinery for ff recovery of tax and
penalty would become unavailable for collecting the
additional tax under the Act as section 13 also uses the
words
382
’tax payable under this Act’. Likewise, many other
provisions of the Principal Act which are necessary for
making the levy under the Act effective will become
inapplicable. The above contention has therefore to be
rejected.
Lastly it was contended on behalf of the State
Government that section 3 (1) of the Act should be construed
as a complete and self-contained code on the charge created
by the Act in view of the second proviso contained in it
which conferred powers of exemption OD the State Government.
That proviso only empowers the State Government to exempt
certain dealers or transactions pertaining to certain goods
from the levy of additional tax. It does not in any way
curtail the effect of sub-section (2) of section 3 of the
Act which forms an integral part of the charging section.
Consequently any exemption granted under section 6 and
section 7 of the Principal Act will also be applicable in
the case of levy of additional tax under the Act.
In view of the foregoing, we hold that any dealer is
not liable to pay tax under the Principal Act either by
reason of his not having sufficient gross turnover or by
reason of exemption given under section 7 of the Principal
Act, is not liable to pay additional tax under the Act. If a
dealer is exempted by the State Government under the second
proviso to section 3(1) of the Act he is also not liable to
pay the additional tax under the Act. If the turnover of a
dealer relating to any sales or purchases of goods is
exempted under section 6 of the principal Act, such turnover
cannot be subjected to any levy of additional tax under the
Act by virtue of section 3 (2) of the Act. The Government
Notifications S.R.O.. No. 410/79 dated March 23, 1979 issued
under the second proviso to section 3 (1) of the Act
exempting the turnover relating to goods whose turnover is
exempted from payment of tax under section 6 of the
Principal Act from payment of additional tax under the Act
is, therefore, redundant. The turnover in respect of goods
whose sales or purchases are not taxable under the Principal
Act in the hands of any dealer by reason of section 8 of the
Principal Act is not liable to the payment of additional
sales tax under the Act. The turnover in respect of sales
and purchases of declared goods is not taxable under the Act
by reason of the first proviso to section 3 (1) of the Act.
Any other turnover which is exempted by the State Government
under the second proviso to section 3 (1) of the Act is also
not taxable under
383
the Act. The levy of the additional tax on the gross
turnover of a dealer under section 3 of the Act is subject
to these conclusions.
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In the result the appeals succeed. The judgment of the
High Court in each of these cases is set aside. lt is hereby
declared that the additional tax under the Act can be levied
and collected under section 3 of the Act in accordance with
our conclusions set out in the previous paragraph
There shall, however, be no order as to costs.
P.B.R. Appeals allowed.
384