Full Judgment Text
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PETITIONER:
INTERNATIONAL COTTON CORPN. (P) LTD.
Vs.
RESPONDENT:
COMMERCIAL TAX OFFICER, HUBLI & ORS.
DATE OF JUDGMENT04/10/1974
BENCH:
ALAGIRISWAMI, A.
BENCH:
ALAGIRISWAMI, A.
RAY, A.N. (CJ)
CHANDRACHUD, Y.V.
GUPTA, A.C.
CITATION:
1975 AIR 1604 1975 SCR (2) 345
1975 SCC (3) 585
CITATOR INFO :
F 1977 SC 870 (10)
RF 1987 SC 793 (7)
RF 1989 SC 222 (4)
ACT:
Central Sales Tax Act, 1956-S. 8(2)(a)-Constitutional
validity of-Whether s. 8(2A) had the effect of repealing s.
6(1-A) of the Act-Error apparent on the face of the record-
If Sales Tax Officer entitled to rectify earlier
rectification.
HEADNOTE:
Certain inter-state sales of the appellants were assessed by
the Sales Tax Officer to central sales-tax before 10th
November, 1964. On that date this Court in Yaddalam Lakshmi
Narsimhaiah Setty & Sons held that where a certain
transaction was not liable to sales tax if it were an
intrastate sales under the sales-tax law of the appropriate
State it would not be liable to sales-tax if it were inter-
state sale. Giving effect to this decision the assessment
orders of the appellants were rectified, To set aside the
effect of this decision, sub-s. (1-A) was inserted in s. 6
and a consequential amendment was made in sub-s. (2-A) of s.
8 of the Central Sales-Tax Act on 9-6-1969. Thereupon the
assessing authority again brought to tax the inter-state
sales.
Section 8(2)(a) after its amendment enacted that the tax
payable by any dealer on his turnover relating to the sale
of goods in the course of inter-state trade or commerce not
falling within sub-s. (1) in the case of declared goods,
shall be calculated at the rate applicable to the sale or
purchase of such goods inside the appropriate State.
It was contended (1) that the clause is unconstitutional in
that Parliament has abdicated its legislative function by
adopting the rate applicable to the sale or purchase of
goods inside the appropriate State; (2) under s. 8(2)(a) it
is the rate of tax that was prevalent when that section
was enacted and not any subsequent variations in the rate of
tax that was applicable; (3) that while transactions between
10th November, 1964 and 9th June, 1969 were exempted from
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liability to pay tax, if in fact the tax in respect of these
transactions had not been collected by the dealer, a similar
concession had not been granted to dealers who were
similarly situated, that is, those who had not collected any
tax on their sales prior to 10th November, 1964 and that
such concession should be available to assessees who had not
made any collection after 23rd January, 1962, that is the
date of the judgment of High Court;(4) that Section 8(2A)
which was amended at the same time as sub-s. 6(1-A) was
inserted had the effect of impliedly repealing sub-s. 6(1
-A); (5) that the Sales-tax Officer had no power to rectify
the assessment orders after coming into force of the Central
Sales Tax (Amendment) Act, 1969 since there was no error
apparent on the face of the record; and (6) that the
rectification order was beyond the point of time under rule
38 of the Mysore Sales Tax Rules.
Dismissing the appeals,
HELD : (1)(a) The adoption of the rate of local sales tax
for the purpose of the Central Sales Tax in a particular
State does not show that the Parliament has in any way
abdicated its legislative function. Where a law of
Parliament provides that the rate of Central sales-tax
should be calculated at the rate applicable to the sale or
purchase of such goods inside the appropriate State, a
definite legislative policy can be discerned in such a law,
the policy being that the rate of Central sales-fax should,
in no event, be less than the rate of local sales-tax. A
law made by Parliament containing the above provisions
cannot be said to be suffering from the vice of excessive
delegation of legislative function. On the contrary. the
above law incorporates within itself the necessary
provisions to carry out the objective of the legislature,
namely, to prevent evasion of payment of Central sales-tax
and to plug possible loopholes. [350D-F]
G. Rayon silk Mfg. (Wvg.) Co. Ltd. v. Asst. Commr. 33
S.T.C. 219, followed.
346
(b)The legislative policy laid down by Parliament in s.
8(2)(a) is that interstate trade should not be discriminated
against. If the argument of the appellant is accepted there
will have to be unending series of amendments to this
section every time oneState or the other alters its rate
of tax. [351-D]
(2)"Rate applicable" merely means the rate applicable at the
relevant point of timeand not the rate applicable when
section 8(2)(a) was enacted. The whole scheme of the
Central Sales-Tax Act is to adopt the machinery of the law
relating to sales-tax Acts of the various states in cases
where those states happen to be the appropriate states as
also the rates prescribed by those Acts. [352-D; 351-G]
(3)(a) The fact that transactions of sales during the period
between 23rd January, 1962 and 10th November, 1964 were not
given the same concession as the transactions between 10th
November, 1964 and 9th June, 1969 did not mean that the
latter concession was unconstitutional. A concession is not
a matter of right. Where the legislature, taking into
consideration the hardships caused to a certain set of tax
payers gives them a certain concession, it does not mean
that action is bad as another set of tax payers similarly
situated may not have been given a similar concession.
[353C-D]
(b)There can be no question of discrimination in this
case. Section 6(1-A) read with s. 10 of the Amendment Act
is not unconstitutional in so far as it relates to the
Period between 23rd January, 1962 and 10th November, 1964.
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[353E-F]
(4)(a) Such an intention cannot be imputed to Parliament
which enacted both the provisions at the same time. Both
the provisions should be so read as not to nullify the
effect of the one or the other. The fact s. 6(1A) is also
included in the non-obstante clause of s. 8(2A) did not mean
by itself that the effect of s. 6(1A) was obliterated.
[353G-H]
(b)Section 6(1A) and s.8 (2A) can stand together. The
legislature might. for the sake of convenience or from other
considerations of policy, make either sale or a purchase
taxable in respect of the sale of any particular goods.
That does not mean that the sale and purchase in respect of
the same transaction are two different transactions. They
are two facets of the same transaction. When sub-s. (2A) of
s. 8 uses the words "the sale or, as the case may be, the
purchase" it is merely referring to the fact that State
Sales-tax Acts make either the sale or purchase taxable and
not that where the, sale is taxable the purchase is exempt
from tax and where the Purchase is taxable the sale is
exempt from tax and, therefore, where one of them is exempt
from tax in respect of an intra-state sale the inter-state
sale is completely exempt from tax. [354C-D]
(c)Reading section 6(1A) and section 8(2A) together along
with the "placation the conclusion deducible would be that
where the intrastate sales of certain goods are liable to
tax even though only at one point, whether of purchase or of
sale a subsequent inter-State sale of the same commodity Is
liable to tax; but where that commodity is not liable to tax
at all if it were an intra-state sale, the interState sale
of that commodity is also exempt, from tax. Where an intra-
state sale of a particular commodity is taxable at a lower
rate than 3 per cent then the tax on the inter-State sale of
that commodity will be at that lower rate. As sale or
purchase of any goods shall not be exempt from tax in
respect of inter-State sales of those commodities if as an
intra-State sale the purchase or sale of those commodities
is exempt only in specific circumstances or under specified
conditions or is leviable on the sale or purchase at
specified stages. [354F-H]
(5)It is incorrect to say that because this Court had not
in Joseph’s case considered the arguments regarding conflict
between s. 6(1A) and s. 8(2A) there was no error apparent on
the face of the record. Clearly when the Court said that
the effect of the Central Sales-tax (Amendment) Act, 1969
was to supersede the judgment of this Court in Yaddalam’s
case the Sales-tax authorities were undoubtedly entitled to
rectify their earlier rectification order which was made
consequent on the decision in Yaddalam’s case. After the
Central Sales Tax (Amendment) Act, 1969 the decision of
this Court in Joseph’s case there was no question about the
error not being apparent on the face of the record. [355C-D]
347
(6)What was sought to be rectified was the assessment
order rectified as a consequence of this Court’s decision in
Yaddalam’s case, After such rectification the original
assessment order was no longer in force and that was not the
order sought to be rectified. It is admitted that all the
rectification orders would be within time calculated from
the original rectification order. Rule 38 itself speaks of
"any order" and there is no doubt that the rectified order
is also "any order" which @an be rectified under Rule 38.
[354E-F]
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JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 514 of 1970
Appeal from the judgment and order dated the 22nd December,
1969 of the Mysore High Court in W.Ps. No. 5361 of 1969.
CIVIL APPEAL Nos. 166 to 173 of 1973.
From the judgment and order dated the 15th October, 1970 of
the Mysore High Court in W.Ps. Nos. 893/70, 5367/69, 2031-
2035/70 and 5734 of 1969 respectively.
AND
CIVIL APPEALs Nos. 181 to 243 of 1973.
From the judgment and order dated the 15th October, 1970 of
the Mysore High Court in W.Ps. Nos. 2534, 2529, 2532, 2530-
31, 253536/70, 3560-3562/67, 7124-7129, 7131/69, 2476-78,
2480 & 2486/70, 2479170, 1211/70, 1081/70, 4690/69, 3846/70,
5634-35, 5638-39/69, 5632/69, 3040, 3039/70, 3147-48, 2772,
2775, 2777, 2773/70, 5426, 6770, 5503/69, 3033-36, 3037-
38/70, 6087, 6089, 6086, 6088/89, 2062, 2820/70, 470, 1749,
2833 and 2834 of 1970 respectively.
Civil Appeal No. 2078 of 1970.
From the Judgment and order dated the 25th May, 1970 of the
Mysore High Court in W. P. No. 5179 of 1969.
K.Srinivasan and Vineet Kumar, for the appellants (in
C.As. Nos. 514 and 2078/70).
K.Srinivasan and J. Ramamurthy, for the appellants (in
C.As. Nos. 166-173 & 181-243/73)
A.K. Sen, (in C.A. No. 166/73), H. B. Datar (in C.A. No.
2078) and M. Veerappa, for respondents nos. 1 & 2 (in C.As.
Nos. 514 & 2078/70 and 166/73, 181-203, 205-216, 218-236,
242-243/73) and respondents (in C.As. Nos. 204, 217 and 237-
241/73).
B.Sen (in C.A. No. 514/70 and 166/73) and Girish Chandra,
for respondent No. 3 (in C.As. Nos. 514 & 2078/70, 166-
173/73, 181-203, 205-216, 218-236 and 242-243/73).
K. M. K. Nair the intervener (in C.A. No. 514170).
The Judgment of the Court was delivered by
ALAGIRISWAMI, J.-These appeals arise out of the judgment of
the High Court of Mysore dismissing a batch of writ
petitions filed by a number of dealers in the State of
Mysore (now Karnataka) questioning the levy of sales tax
under the Central Sales Tax Act on certain interState sales.
The goods dealt with were all declared goods and under
348
the Mysore Sales Tax Act they were taxable at the point of
purchase at a single point. The assessment periods are
prior to 10th November, 1964. The importance of this date
will become clear when we proceed to deal with the matter
subsequently. The assessing authorities assessed all these
transactions of inter-State sales to tax. This Court
delivered its judgment in what is known as Yaddalam’s Case
(16 STC 231) holding that where a certain transaction was
not liable to sales tax if it were an intra-state sale under
the Sales Tax Law of the appropriate State, it would not be
liable to sales tax if it were an inter-State sale.
Following this decision the assessment orders were rectified
giving effect to the judgment. To set aside the effect of
this decision sub-S (1A) was inserted in section 6 and a
consequential amendment was made in sub-s. (2A) of section 8
of the Central Sales Tax Act. After this the assessing
authorities again rectified the assessment orders and
brought to tax the inter-State sales.
Before this Court the validity of section 8(2)(a) as well as
section 6 (IA) of the Central Sales Tax Act read with
section 10 of the Central Salex Tax (Amendment) Act, 1969 is
questioned. In the alternative it is argued that even after
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the amendment these transactions are not liable to sales
tax. The rectification orders are also impugned on the
ground :
1. that there was no mistake apparent on
the face of the record to ,justify the
rectification under Rule 38 of the Mysore
Sales Tax Rules, and
2. that in any case such rectification is
beyond the permitted period.
The first contention regarding the unconstitutionality of
section 8(2) (a) is sought to be based on the decision of
this Court in G. Rayon Silk Mfg. (Wvg.) Co. Ltd. v. Asst.
Commr.(1) dealing with the constitutionality of S. 8(2)(b).
We consider that far from supporting the appellants that
decision actually is against the contention put forward on
behalf of the appellants. It is only necessary to Set out
what this Court said in that decision. It is hardly
necessary to add any thing more. In that case the majority
while upholding the validity of section 8(2)(b) observed :
" It has been argued on behalf of the
appellants that the fixation of rate of tax is
a legislative function and as the Parliament
has. under section 8(2)(b) of the Act, not
fixed the rate of Central sales tax but has
adopted the rate applicable to the sale or
purchase of goods inside the appropriate State
in case such rate exceeds 10 per cent, the
parliament has abdicated its legislative
function. The above provision is consequently
stated to be constitutionally invalid because
of excessive delegation of legislative power.
This contention, in our opinion, is not well-
founded. Section 8(2)(b) of the Act has
plainly been enacted with a view to prevent
evasion of the payment of the Central sales
(1)33 S. T. C. 219.
349
tax. The Act prescribes a low rate of tax of
3 per cent in the case of inter-State sales
only if the goods are sold to the Government
or to a registered dealer other than the
Government. In the case of such a
registered dealer, it is essential that the
goods should be of the description mentioned
in sub-section (3) of section 8 of the Act. in
order, however, to avail of the benefit of
such a low rate of tax under section 8(1) of
the Act, it is also essential that the dealer
selling the goods should furnish to the
prescribed authority in the prescribed manner
a declaration duly filled and signed by the
registered dealer, to whom the goods. are
sold, containing the pro-scribed particulars
in the prescribed form obtained from the
prescribed authority, or if the goods are sold
to the Government not being a registered
dealer, a certificate in the prescribed form
duly filled and signed by a duly authorised
officer of the Government. in cases not
falling under subsection (1), the tax payable
by any dealer in respect of inter-State sale
of declared goods is the rate applicable to
the sale or purchase of such goods inside the
appropriate State : vide section 8(2)(a) of
the Act. As regards goods other than the
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declared goods, section 8(2)(b) provides that
the tax pay able by any dealer on the sale of
such goods in the course of interState trade
or commerce shall be calculated at the rate of
10 per cent or at the rate applicable to the
sale or purchase of such goods inside the
appropriate State, whichever is higher.
The question with which we are concerned is
whether the Parliament in not fixing the rate
itself and in adopting the rate applicable to
the sale or purchase of goods inside the
appropriate State has not laid down any
legislative policy and has abdicated its
legislative function in this connection we
are, of the view that a clear legislative
policy can be found in the provisions of
section 8(2)(b) of the Act. The policy of the
law in this respect is that in case the rate
of local sales tax. be less than 10 per cent,
in such an event the dealer, if the case does
not fall within section 8(1) of the Act,
should pay Central sales tax at the rate of 10
per cent. If, however, the rate of local
sales tax for the goods concerned be more than
10 per cent, in that event the policy is that
the rate of Central sales tax shall also be
the same as that of the local sales tax for
the said goods. The, object of law thus is
that the rate of Central sales tax shall in no
event be less than the rate of local sales tax
for the goods in question though it may exceed
the local rate in case that rate be less than
16 per cent. For example, if the local rate
of tax in the appropriate State for the non-
declared goods be 6 per cent, in such an event
a dealer, whose case not covered by section
8(1) of the Act, would have to pay Central
sales tax at the rate of 10 per cent. In
case, however, the rate of local sales tax for
such goods be 12 per cent, the, rate of
Central sales tax would also be 12 per cent
because otherwise, if the rate of Central
sales tax were only 10 per cent, the
unregistered dealer who purchases goods in the
course of inter-State trade would be in a
better position than an intrastate purchaser
and there would be no,
350
disincentive to the dealers to desist from selling goods to
unregistered purchasers in the course of inter-State trade.
The object of the law apparently is to deter inter-State
sales to unregistered dealers as such inter-State sales
would facilitate evasion of tax. It is also not possible to
fix the maximum rate under section 8(2)(b) because the rate
of local sales tax varies from State to State. The rate of
local sales tax can also be changed by the State
Legislatures from time to time. It is not within the
competence of the Parliament to fix the maximum rate of
local sales tax. The fixation of the rate of local sales
tax is essentially a matter for the State Legislatures and
the Parliament does not have any control in the matter. The
Parliament has therefore necessarily, if it wants to prevent
evasion of payment of Central sales tax, to tack the rate of
such tax with that of local sales tax, in case the rate of
such local sales tax exceeds a particular limit."
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"The adoption of the rate of local sales tax
for the purpose of the Central Sales tax as
applicable in a particular State does not show
that the Parliament has in any way abdicated
its legislative function. Where a law of
Parliament provides that the rate of Central
sales tax should be 10 per cent or that of the
local sales tax, whichever be higher, a
definite legislative policy can be discerned
in such law, the policy being that the rate of
Central sales tax should in no event be less
than the rate of local sales tax. In such a
case, it is, as already stated above, not
possible to mention the precise figure of the
maximum rate of Central sales tax in the law
made by the Parliament because such a rate is
linked with the rate of local sales tax which
is prescribed by the State Legislatures. The
Parliament in making such a law cannot be said
to have indulged in self-effacement. On the
contrary, the Parliament by making such a law
effectuates its legislative policy, according
to which the rate of Central sales tax should
in certain contingencies be not less than the
rate of local sales tax in the appropriate
State. A law made by Parliament containing
the above provision cannot be said to be
suffering from the vice of excessive
delegation of legislative function. On the
contrary, the above law incorporates within
itself the necessary provisions to carry out
the objective of the Legislative, namely to
prevent evasion of payment of Central sales
tax and to plug possible loopholes".
Mathew, J. speaking for himself and the
learned Chief Justice held
"We think that Parliament fixed the rate of
tax on inter-State sales of the description
specified in section 8(2)(b) of the Act at the
rate fixed by the appropriate State
Legislature in respect of intra-state sales
with a purpose, namely, to check evasion of
tax on inter-State sales , and to prevent
discrimination between residents in one State
and those in other States. Parliament thought
that unless the rate fixed by the States from
time to time is adopted as the rate of tax for
inter-State sales of the
351
kind specified in the sub-clause, there will
be evasion of tax in inter-State sales as well
as discrimination. We have already pointed
out in our judgment in State of Tamil Nadu
and, Another v. Sitalaksh ni Mills Ltd. and
Others, Civil Appeals Nos. 25472549 of 1969
and 105-106 of 1970 (since reported in 33 STC
200 SC) the objectives which Parliament wanted
to achieve by adopting the rate of tax in the
appropriate State for taxing the local sales.
And for attaining these objectives Parliament
could not have fixed the rate otherwise than
by incorporating the rate to be fixed from
time to time by the appropriate State Legis-
lature in respect of local sales. It may be
noted that in so far as inter-State sales are
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concerned, the Central Sales Tax Act. by
section 9(2) has adopted the law of the
appropriate State as regards the procedure for
levy and collection of the tax as also for
impositon of penalties".
It is only necessary to add that the legislative policy laid
down by. Parliament in section 8(2)(a) is that inter-state
trade should not be discriminated against. If the argument
of the appellants is accepted there will have to be unending
series of amendments to this section every time one State or
other alters its rate of tax.
it is next contended that as section 8(2)(a) states that the
tax payable shall be calculated at the rate applicable to
the sale or purchase of such goods inside the appropriate
State it is the rate that was prevalent when section 8(2)(a)
was enacted that would be applicable and not any subsequent
variation in this rate of tax. If this argument is accepted
no question of unconstitutional delegation of the
Parliament’s Legislative powers in favour of the State
Legislatures would. arise at all. It would be remembered
that the ground for attacking the constitutionality of
section 8(2)(a) is that Parliament if it is deemed to have
permitted the application of rate of sales tax enacted by a
State Legislature in respect of intra-state sales to inter-
State sales also that would be impermissible delegation by
Parliament of its legislative powers. We have already dealt
with that question. All that is necessary new to add is
that the rate applicable merely means the rate applicable at
the relevant point of time and not the rate applicable when
sect-on 8(2)(a) was enacted. The whole scheme of the
Central Sales Tax Act is to adopt the machinery of the law
relating to Sales Tax Acts of the various., States, in cases
where those States happen to be the appropriate States as
also the rates prescribed by those Acts. Under section 9 of
the Act the tax payable by any dealer under the Central
Sales Tax Act is to be levied and collected by the
Government of India in accordance with the provisions of
sub-section (2) of that section. Under subsection
(2)subject to the provisions of that Act and the rules made
thereunder the authorities for the time being empowered to
assess, reassess, collect and enforce payment of any tax
under the general sales tax law of the appropriate State
shall, on behalf of the Government of India, assess, re-
assess collect and enforce payment of tax, including any.
penalty, payable by a dealer under this Act as if the tax or
penalty payable by such a dealer under this Act is a tax or
penalty payable under the general sales tax law of the
State; and for this purpose they may,
35 2
exercise All or any of the powers they have under the
’general sales tax law of the State; and the provisions of
such law including provisions relating to returns,
provisional assessment, advance payment of tax, registration
of the transferee of an)- business, imposition of the tax
liability of a person carrying on business on the transferee
of, or successor to, such business, transfer of liability of
any firm or Hindu undivided family to pay tax in the event
of the dissolution of such firm or partition of such family,
recovery of tax from third parties, appeals, reviews,
revisions, references, refunds, rebates, penalties,
compounding of offences and treatment of documents furnished
by a dealer as confidential, shall apply accordingly".
Though the tax is levied and collected by the Government of
India it is intended for the benefit of and is paid to the
State whose officers assess and collect the tax. The
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adoption of the machinery of and the rate of tax prevalent
in the State is for the convenience of assessment as well as
for the convenience of the parties so that they will not
have to deal with two sets of officers and two sets of laws
in addition to avoiding discrimination between intra-state
and inter-State sales. The very purpose of the Act and its
scheme would be defeated or at least considerably impeded if
the rates of tax applicable in any State in respect of
intrastate sales were not applicable to inter-State sales
where that State is the ’appropriate State. We are
satisfied that the rate applicable is the rate applicable
at the relevant point of time. Only that interpretation is
consistent with the legislative policy that inter-State
trade should not be discriminated against.
It was also urged that sub-section (IA)of section 6 violates
Article 14 in view of section 10 of the Central Sales Tax
(Amendment) Act, 1969 which by section 3 intserted sub-
section (IA) in section 6. Section 10 reads as follows :
"10. Exemption from liability to pay tax in
certain cases:(1) where any sale of goods in
the course of inter-State trade or commerce
has been effcted during the period between the
10th day of November, 1964 and the 9th day of
June, 1969, and the dealer effecting such sale
has not collected any tax under the principal
Act on the ground that no such tax could have
been levied or collected in respect of such
sale or any portion, of the turnover relating
to such sale and no such tax could have been
levied or collected if the amendments made in
the principal Act by this Act had not been
made, then, notwithstanding anything contained
in section 9 or the said amendments, the
dealers shall not be liable to pay any tax
under the principal Act, as amended by this
Act, in respect of such sale or such part of
the turnover relating to such sale.
(2)For the purposes of sub-section (1), the
burden of proving that no tax was collected
under the principal Act in respect of any sale
referred to in sub-section (1) or in respect
of any portion of the turnover relating to
such sale shall be on the,dealer effecting
such sale."
353
The argument is that while transactions between the 10th day
of November, 1964, that is the date of judgment of this
Court in Yaddalam’s case and the 9th day of June, 1969, that
is the date on which the Central Sales Tax (Amendment)
Ordinance, 1969, which preceded and was subsequently
replaced by the Central Sales Tax (Amendment) Act, 1969, was
promulgated, were exempted from the liability to pay tax, if
in fact the tax in respect of these transactions had not
been collected by the dealer, a similar concession had not
been granted to dealers who were similarly situated, that
is, who has not collected any tax on their sales prior to
10-11-1964 and that such concession should be available at
least in the case of assessees who had not made any collec-
tion after the judgment of the Mysore High Court in
Yaddalam’s case, that is, 23rd January, 1962. There are two
answers to this submission. Firstly, the fact that
transactions of sale prior to the period before 10th
November 1964 or at least the period between 23-1-1962 and
10-1 1-64 were not given the same concession as the
transactions between 10-1 1-64 and 9-6-1969 does not mean
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that the latter concession is unconstitutional. A
concession is not a matter of right. Where the Legislature
taking into consideration the hardships caused to a certain
set of taxpayers gives them a certain concession it does not
mean that action is bad as another set of tax-payers
similarly situated may not have been given a similar
concession. it would not be proper to strike down the
provision of law giving Concession to the former on the
ground that the latter are not given such concession. Nor
is it possible for this Court to direct that the latter set
should be given a similar concession. That would mean
legislation by this Court and this Court has no legislative
powers.
We are not able to appreciate the suggestion on behalf of
the appellants that section 6(1A) read with section 10 of
the Amendment Act should be declared unconstitutional in so
far as it relates to the period between 23-1-62 and 10-11-64
or how that is permissible. That means that the tax
leviable under section 6(1A) cannot be levied during that
period. That means even those who have collected the tax
would escape. Secondly in respect of that period also the
dealers concerned might very often be the same set of
persons and there can therefore be no question of
discrimination.
The next submission on behalf of the appellants was that
sub-section (2A) of section 8, which was amended at the same
time as sub-section (1A) was inserted in section 6, has the
effect of impliedly repealing sub-section (1A) of section 6.
We are unable to accept this contention. Firstly, such an
intention cannot be imputed to Parliament which enacted both
the provisions at the same time. Both the provisions
should, therefore be so read as not to nullify the effect of
the one or the other, indisputably, sub-s. (A) of section 6
was inserted in order to get over the decision of this Court
in Yaddalam’s case. Its effect is to bring to tax inter-
State sales which would not be liable to tax if they were
intra-state sales. The fact that this subsection is also
included in the non-obstante clause of sub-section (2A) of
section 8 does not mean by itself that the effect of sub-
section (1A,) of section 6
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is obliterated. We will, therefore, have to look into the
amended subs. (2A) of section 8 and see what it means. The
contention of the appellants primarily depends upon the
words "the sale or, as the case may be, the purchase of
which is, under the sales tax law of the appropriate State,
exempt from tax". What is urged is that transactions of
purchase are generally exempt from the tax whenever the
goods are taxable at the point of sale and similarly the
transactions of sale are exempt from tax generally whenever
the goods are taxable at the point of purchase. The
untenability of this argument would be apparent from the
fact that this means that all sales and purchases are
generally exempt from tax. This argument proceeds on the
basis that the sale and purchase are different transactions.
The Legislature might for the sake of convenience or from
other considerations of policy make either a sale or a
purchase taxable in respect of the sale of any particular
goods. That does not mean that the sale and purchase in
respect of the same transactions are two different
transactions. They are two facets of the same transactions,
Therefore when sub-section (2A) of section 8 uses the words
"the sale or, as the case may be, the purchase" it is mere
referring to the fact that State Sales Tax Acts make either
the Sale or purchase taxable and not that where the sale is
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taxable the purchase is exempt from tax and where the
purchase is taxable the sale is exempt from tax and
therefore where one of them is exempt from tax in respect of
an intra-state sale the inter-State sale is completely
exempt from tax. We agree with the view of the Mysore High
Court that the object of sub-section (2A) of section 8 is to
exempt transaction of sale of any goods if they are wholly
exempt from the tax under the sales tax law of the
appropriate State and make the said sale chargeable at lower
rates where under the Sales Tax Act of the State the sale
transactions are chargeable to tax at lower a rate and it is
not correct to say that where goods are taxable at the point
of purchase or sale the transaction is exempt from tax
generally. A sales tax has necessarily to be levied on a
sale or purchase and ibis argument implies that all sales
are exempt from tax. The plain meaning of the said sub-
section is that if under the sales tax law of the
appropriate State no tax is levied either at the point of
sale or at the point of purchase at any stage the tax under
the Act shall be nil. Reading section 6(1A) and section
8(2A) together along with the Explanation the conclusion
deducible would be this : where the intra-state sales of
certain goods are liable to tax, even though only at one
point, whether of purchase or of sale, a subsequent inter-
State sale of the same commodity is liable to tax, but where
that commodity is not liable to tax at all if it were an
intrastate sale the inter-State sale of that commodity is
also exempt from tax. Where an intrastate sale of a
particular commodity is taxable at a lower rate than 3 per
cent then the tax on the interState sale of that commodity
will be at that lower- rate. A sale or purchase of any
goods shall not be exempt from tax in respect of interState
sales of those commodities if as an intra-state sale the
purchase or sale of those commodities is exempt only in
specific circumstances or under specified conditions or is
leviable on the sale or purchase at specified stages. On
this interpretation section 6(1A) as well as section 8(2A)
can stand together.
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Nor are we able to accept the contention that the Sales Tax
officers had no power to rectify the assessment orders after
the coming into force of the Central Sales Tax (Amendment)
Act 1969 on the ground that there was no error apparent on
the face of the record. This argument is based on the fact
that in two decisions in Mysore Silk House v. State of
Mysore (1) and in Pierce Leslie & Co. v. State of Mysore
(SRTP No. 63-64 of 1963) the Mysore High Court had taken the
view that the inter-State transactions were not liable to
tax and that view had been upheld by Yaddalam’s case and
this Court in its decision in Joseph’s, case (2) did not
consider the effect of sub-s. (2A) of section 8 and
therefore when there is such difference of opinion it cannot
be said to, be a case of an error on the face of the record.
It is incorrect to say that because this Court had not, in
Joseph’s case, considered the argument now put forward
regarding the conflict between section 6(1A) and section
8(2A) there was no error apparent on the face of the record.
Clearly when it said that the effect of the Central Sales
Tax (Amendment) Act, 1969 is to supersede the judgment of
this Court in Yaddalam’s case the Sales Tax Authorities were
undoubtedly entitled to rectify their earlier rectification
order which was made consequent on the decision in
Yaddalam’s case. After the Central Sales Tax (Amendment)
Act. 1969 and the decision of this Courting Joseph’s case
there was no question about the error not being apparent on
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the face: of the record. This attack on the rectification
order, therefore. fails.
The other attack that the rectification order is beyond the
point of time provided in Rule 38 of the Mysore Sales Tax
Rules is also without substance. What was sought to be
rectified was the assessment order rectified as a
consequence of this Court’s decision in Yaddalam’s case.
After such rectification the original assessment order was
no,longer in force and that was not the order sought to be
rectified.. It is admitted that all the rectification orders
would be within time calculated from the original
rectification order. Rule 38 itself speaks of "any order"
and there is no doubt that the rectified order is also "any
order" which can be rectified under Rule 38.
The appeals are dismissed with costs. Costs one set.
P.B.R.
Appeals dismissed.
(1) 13 S.T.C. 597.
(2) 25 S.T.C. 483.
8-M255 Sup. CI/75
356