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Hindustan Petroleum Corporation Ltd. Vs. State of Maharashtra - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMumbai High Court
Decided On
Case NumberSales Tax Reference No. 15 of 1971
Judge
Reported in[1976]37STC432a(Bom)
ActsBombay Sales Tax Act, 1959 - Sections 7(1) and 34; Central Sales Tax Act, 1956 - Sections 2, 8(1) and 9(2)
AppellantHindustan Petroleum Corporation Ltd.
RespondentState of Maharashtra
Appellant AdvocateR.V. Patel and ;H. Patil, Advs.
Respondent AdvocateK.H. Bhab and ;R.A. Dada, Advs.
Excerpt:
sales tax - exemption - bombay sales of motor spirit taxation act, 1946, bombay sales tax act, 1953, sections 7 (1) and 34 of bombay sales tax act, 1959 and sections 2, 8 (1) and 9 (2) of central sales tax act, 1956 - whether tribunal justified in holding that impugned inter-state sales of motor spirit were not exempt from tax under act of 1956 - sale and purchase of motor spirits liable to tax at relevant time under act of 1946 - it cannot be said that they were exempted from tax under all laws levying sales tax in state of bombay - benefit of exemption granted under proviso to section 8 (1) not allowed to assessee -exemption given under act of 1946 also continued after enactment of act of 1953 - exemption was granted from levy under act of 1953 merely on account of item being taxed..........202 of 1967 decided on 7th november, 1967, is correct in law in holding that the impugned inter-state sales of motor spirit amounting to rs. 9,39,342 were not exempt from tax under the central sales tax act, 1956 ?' 2. the fact giving rise to this question are as follows : 3. the assessees have been carrying on business in the state of maharashtra and in the former state of bombay in petrol and petroleum products. in respect of the period from 1st july, 1957, to 31st march, 1958, the sales tax officer assessing the assessees determined the turnover representing the inter-state sales of motor spirit by the assessees at rs. 9,39,342 and taxed this turnover at the appropriate rates on the footing that the exemption granted under the proviso to section 8(1) of the said act did not apply.....
Judgment:

Kania, J.

1. This is a reference under section 9(2) of the Central Sales Tax Act, 1956 (hereinafter referred to as 'the said Act'), read with section 34 of the Bombay Sales Tax Act, 1953, made at the instance of the assessees. The question, which has been referred to us for our determination, is as follows :

'Whether, on a true and proper interpretation of the proviso to sub-section (1) of section 8 and section 2(i) of the Central Sales Tax Act, 1956, as it stood prior to 1st October, 1958, and having regard to the facts and circumstances of the case, the Tribunal in its judgment in Revision Application No. 202 of 1967 decided on 7th November, 1967, is correct in law in holding that the impugned inter-State sales of motor spirit amounting to Rs. 9,39,342 were not exempt from tax under the Central Sales Tax Act, 1956 ?'

2. The fact giving rise to this question are as follows :

3. The assessees have been carrying on business in the State of Maharashtra and in the former State of Bombay in petrol and petroleum products. In respect of the period from 1st July, 1957, to 31st March, 1958, the Sales Tax Officer assessing the assessees determined the turnover representing the inter-State sales of motor spirit by the assessees at Rs. 9,39,342 and taxed this turnover at the appropriate rates on the footing that the exemption granted under the proviso to section 8(1) of the said Act did not apply to the facts of the case. The amount levied as the Central sales tax on this turnover came to Rs. 61,542. Being aggrieved by this decision, the assessees approached the Assistant Commissioner of Sales Tax in appeal and thereafter the Deputy Commissioner of Sales Tax in revision, but failed to get any relief. The assessees then filed a revision application before the Sales Tax Tribunal, which was also rejected by the Tribunal. The Tribunal took the view that the definition of the expression 'sales tax law' in section 2(i) of the said Act was wide enough to include the Bombay Sales of Motor Spirit Taxation Act, 1946, and overruled the submission of the assessees that they were entitled to exemption under the aforesaid proviso on the ground that the sales of motor spirit were exempted from tax under the Bombay Sales Tax Act, 1953. The assessees have now approached this court by way of this reference.

4. Before going to the arguments advanced before us, it will be useful to set out some of the relevant provisions of the said Act, as they stood at the relevant time. Section 8(1) of the said Act runs as follows :

'Rates of tax on sales in the course of inter-State trade or commerce. - (1) Every dealer who, in the course of inter-State trade or commerce, sells to a registered dealer goods of the description referred to in sub-section (3) shall be liable to pay tax under this Act, which shall be one per cent of his turnover :

Provided that, if under the sales tax law of the appropriate State, the sale or purchase of any goods by a dealer is exempt from tax generally and not in specified cases or in specified circumstances or is subject to tax (by whatever name called) at a rate or rates which is or are lower than the rate specified in sub-section (1), the tax payable under this Act on the turnover in relation to the sale of such goods in the course of inter-State trade or commerce shall be nil or shall be calculated at the lower rate, as the case may be.'

Section 2(i) of the said Act runs as follows :

''sales tax law' means any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf, and 'general sales tax law' means the law for the time being in force in any State or part thereof which provides for the levy of tax on the sale or purchase of goods generally.'

Sub-section (1) of section 7 of the Bombay Sales Tax Act, 1953, ran as follows :

'No tax under this Act shall be payable on the sales or purchases of goods specified in column 1 of Schedule A, subject to the conditions or exceptions, if any, set out in the corresponding entry in column 2 thereof.'

5. Mr. Patel, the learned counsel for the assessees, submitted that the sales of motor spirits are exempted from tax under the proviso to section 8(1) of the said Act, as under section 7(1) of the Bombay Sales Tax Act, 1953, read with entry 35 of Schedule A to that Act, as it stood at the relevant time, such sales were exempted generally from the payment of sales tax under that Act, viz., the Bombay Sales Tax Act, 1953. It was urged by him that the Bombay Sales Tax Act, 1953, at the relevant time, was the sales tax law for the appropriate State, viz., the State of Bombay, as it then was, and as the sales and purchases of motor spirit by a dealer were exempted from tax generally under that law, the proviso to section 8(1) of the said Act was applicable and the assessees were entitled to the exemption granted thereunder. It was further urged by him that the expression 'the sales tax law' used in the said proviso to section 8(1) must be interpreted as meaning only the general sales tax law, which levied tax on sale of goods generally, and that the Bombay Sales of Motor Spirit Taxation Act, 1946, could not be said to be covered by that expression. In our view, it is not possible to accept the submission of Mr. Patel that the expression 'the sales tax law' in the proviso to section 8(1) of the said Act is confined in its operation or ambit to the general sales tax law. The definition of the expression 'sales tax law' in section 2(i) of the said Act, which we have already set out above, shows that by that expression is meant any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf. On a plain reading of the said provision, it is clear that the expression 'sales tax law' includes a general sales tax laws as well as law providing for the levy of taxes on the sale or purchase of specified goods, which are expressly mentioned in that behalf. The expression 'general sales tax law', which is also defined in the said sub-section, is an expression of narrower ambit and is covered in the expression 'sales tax law'. In view of this, it appears to us that to attract the proviso to section 8(1) of the said Act, it is not enough that the sale or purchase of the goods in question is exempted from tax under the general sales tax law of the appropriate State, but it is further necessary that the sale or purchase of the said goods should not be liable to tax under any sales tax law relating to specified goods. In the present case, there is no dispute that the sale and purchase of motor spirits were liable to tax at the relevant time under the Bombay Sales of Motor Spirit Taxation Act, 1946, and hence it cannot be said that they were exempted from tax under all laws levying sales tax in the then State of Bombay. In view of this, in our opinion, the exemption granted under the proviso to section 8(1) of the said Act is not attracted and the assessees cannot claim the benefit thereof.

6. It was next submitted by Mr. Patel that the assessees were entitled to the benefit of the exemption given under the proviso to section 8(1) of the said Act, because under section 7(1) of the Bombay Sales Tax Act, 1953, read with entry 35 of Schedule A, as it then stood, there was a general exemption and not a conditional exemption granted to the sales and purchases of motor spirits from the levy of sales tax. In our view, even if the exemption under section 7(1) read with entry 35 of Schedule A to the Bombay Sales Tax Act, 1953, is general, as contended by Mr. Patel, the assessees are still not entitled to the benefit of the exemption granted under the proviso to section 8(1) of the said Act, because the sales of motor spirits were taxable under another sales tax law, viz., the Bombay Sales of Motor Spirit Taxation Act, 1946. Moreover, it is quite clear that the exemption granted under the aforesaid provisions of the Bombay Sales Tax Act, 1953, was only relating to the levy of sales tax under that Act and did not prevent such a levy being imposed by another law levying sales tax.

7. We feel that it would not be out of place to consider at this stage the reason why the sale and purchase of motor spirits were exempted from the levy of sales tax under the Bombay Sales Tax Act, 1953. It is settled law that it is permissible to refer to the legislative history and to the statement of objects and reasons appended to a Bill which eventually becomes an Act, for the limited purpose of ascertaining the conditions prevailing at the time which actuated the sponsor of the Bill to introduce the same and the extent and urgency of the evil which he sought to remedy (see Commissioner of Sales Tax, Bombay v. Lala Lajpatrai Hotel [1975] 35 S.T.C. 368 . Under the Bombay Sales Tax Act, 1939, a tax on the sale of motor spirit and certain type of textile mentioned in the schedule thereto was levied in the then Province of Bombay. In 1946 there appeared a need to augment the provincial revenue in order to meet the expenditure, recurring and non-recurring, on post-war reconstruction, and it was felt necessary to enact a law for the imposition of sales tax on a wide range of commodities. This appears from the statement of objects and reasons appended to the Bill, which ultimately became the Bombay Sales Tax Act, 1946 (Bombay Act No. 5 of 1946). This Act was the General Sales Tax Act applicable to the then Province of Bombay. The aforesaid statement of objects and reasons, to which we have already referred, further shows that it was proposed to exempt certain essential articles such as foodgrains and cheap cloth, as also articles which were already subject to a separate Central or Provincial tax such as matches, sugar, liquor, opium and electricity. These exempted items have been set out in the schedule to the Bombay Sales Tax Act, 1946. In consonance with the statement of objects and reasons, entry 11 of the said schedule exempted gur, sugar and molasses, entry 22 exempted matches and entry 24 exempted goods on which duty was or might have been levied under the Bombay Abkari Act, 1878, or the Opium Act, 1878. Entry 26 of the said schedule ran thus :

'Motor spirit, meaning any liquid or admixture of liquids which is capable of providing reasonably efficient motive power for any form of motor vehicle and which has a flashing point below 76 Degree F.'

8. Under the Bombay Sales of Motor Spirit Taxation Act, 1946 (Bombay Act No. 6 of 1946), which was passed immediately after the Bombay Sales Tax Act, 1946, a tax was levied on the sales of motor spirit of the identical description as the one contained in the aforesaid entry 26. In 1953 when the Bombay Sales Tax Act, 1946, was repealed, and the Bombay Sales Tax Act, 1953, being the then general sales tax law was enacted, the sales of motor spirit of the aforesaid description continued to remain subject to the levy of tax under the Bombay Sales of Motor Spirit Taxation Act, 1946. It was in view of this and in consonance with the scheme followed in 1946 that this exemption given under the Bombay Sales Tax Act, 1946, was continued under the Bombay Sales Tax Act, 1953. This legislative history makes it quite clear that it was never the legislative intention that the sales of motor spirit should be exempted from the levy of sales tax, but the exemption was granted from such levy under the general sales tax law, namely, the Bombay Sales Tax Act, 1953, merely on account of the item being taxed under a separate sales tax law dealing in particular with that item.

9. In the result, in our view, the question referred to us must be answered in the affirmative. The assessees to pay the costs of the reference fixed at Rs. 250. The fee of Rs. 100 paid by the assessees to be appropriated towards the amount of the costs awarded by us to the department.

Reference answered in the affirmative.


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