1. Under these two references under the Sales Tax Act the following two questions are referred to this Court for determination, viz., (1) whether on a true interpretation of item 68 of the Second Schedule to the Goa, Daman and Diu Sales Tax Act, 1964, and on the facts and circumstances of this case, the applicant is entitled to exemption from payment of sales tax in respect of its turnover for the periods from 16th November, 1972, to 31st March, 1973, and onwards (2) whether under the Goa, Daman and Diu Sales Tax Act, 1964, sales of goods by one registered dealer to another registered dealer are exigible to tax.
2. The second question is reframed by us by adding thereto after the word 'under' and before the words 'Goa Daman and Diu' the words 'section 8' so as to read 'whether under section 8 of the Goa, Daman and Diu Sales Tax Act'.
3. A few facts leading to these references may be stated : One Anand Distillery who was the first appellant before the Sales Tax Tribunal was the manufacturer of Indian-made foreign liquor. Initially their concern was at Medusa having sales tax registration No. P/73 dated 1st november, 1964. Thereafter sometime in 1971 they shifted to Margao, when their earlier sales tax registration number was cancelled and they against registered under the Sales Tax Act which registration No. P/1865 dated 15th April, 1971. It is not disputed that the first sales of this concern, after it was registered under the Sales Tax Act, was on 9th November, 1964. Thereafter on 27th February, 1971, the concern registered itself as a small-scale industry under the relevant Act prevailing in Goa.
4. During the course of the sales tax assessment, the said concern claimed exemption from sales tax for a period from 16th November, 1972, to 31st March, 1973, which was the subject-matter of appeal No. 7 of 1976 before the Tribunal and for a period from 1st April, 1973, to 31st March, 1974, which was the subject-matter of Appeal No. 8 of 1976 before the Tribunal. The Sales Tax Officer, with regard to the period 1st April, 1973, to 31st March, 1974, granted exemption upto 15th November, 1972, to the extent of the turnover of Rs. 1,51,047.84 and refused exemption thereafter being the turnover of Rs. 89,463.80 during 1972-73 and of Rs. 2,15,372.25 during 1973-74. The sales tax on the said turnover from 16th November, 1972, to 31st March, 1973, came to Rs. 10,037.50 and for the period from 1st April, 1973, to 31st March, 1974, came to Rs. 23,883.65.
5. The Sales Tax Officer also negatived the contention of the said concern that under section 8 of the said Act the sales by a registered dealer to another registered dealer, which was M/s. Anand Agency, Margao, appellant No. 2 before the Tribunal, were exempted.
6. In appeal against the said orders the Sales Tax Tribunal took the view that under item 68 of the Second Schedule to the Act as substituted by the notification of 1972, which came into force on 16th November, 1972, the period of 5 years of exemption was to be computed from the first sales made by appellant No. 1 since the first commencement of the manufacture, which was on 9th November, 1964 under bill No. 117. According to the Tribunal the period of 5 year prescribed under item 68 expired on 8th November, 1969, and therefore in the result sales made on or after 16th November, 1972 beyond the period of exemption were liable to tax.
7. The Tribunal also confirmed the finding of the Sales Tax Officer that under section 8 of the Act sales by the first appellant as a registered dealer to the second appellant as another registered dealer were not exempted from sales tax.
8. The answer to the first question mentioned above referred to this Court depends purely on the interpretation of the said item 68 in the Second Schedule to the Act.
9. Before dealing with the said item 68 it would be proper to mention certain other things as a background to the understanding of item 68.
10. Section 4 of the Sales Tax Act which is a charging section lays down the incidence of tax. Section 8 provides for the point at which the tax was levied. Section 10 which deals with exemption of certain goods from payment of sales tax provides, inter alia : 'No tax shall be payable under this Act on the sale of goods specified in the Second Schedule, subject to the conditions and exceptions, if any, set out therein. The Government may by notification in the Official Gazette, add to, omit from, or otherwise amend the entries in the Second Schedule'.
11. We are here concerned with exemption under item 68. The said item provides, so far as relevant, as under :
'68. Any goods manufactured, processed or assembled in this territory by any small-scale industry, at the point of sale made by such industry, for a period of five years from the date of first sale of the goods manufactured, processed or assembled, effected by the said small-scale industry on or after the date of validity of its registration under the Goa, Daman and Diu Sales Tax Act, 1964, as amended from time to time.'
12. At the outset it may be pointed out that unlike the other items in the said schedule which provides for exemption from sales tax in respect of specified foods the object of the said item 68 was to give exemption to sales of any goods by a small-scale industry in order to encourage the growth of such industry.
13. A reading of the said item shows that for its application the concern claiming exemption must be both, viz., (1) it must be registered as a small-scale industry and (2) it must, at the same time time, be registered as a dealer under the Sales Tax Act. Secondly, it was also clear from the wording of the said item that the sales that were exemption, were sales by such small-scale industry. Thirdly, the period of exemption was for five years. Fourthly, the said period of exemption was to start from the date of first sale effected by the small scale industry at or after the date of validity which could only mean during the validity of its registration under the Sales Tax Act.
14. On the plain reading of the said item, therefore, it is clear that the period of five years of exemption from sales tax granted to the small-scale industry was to commence from the first sale effected by such industry (which can only be after the industry was registered as a small-scale industry) during the validity of its registration under the Sales Tax Act. In our view the words of the said item were too clear and unambiguous to admit any other interpretation.
15. In our view, therefore, on the said interpretation of item 68, the said concern would be entitled to exemption from the date of first sale effected by it after the registration as a small-scale industry during the validity of its registration under the Sales Tax Act which was on 27th February, 1971.
16. Answer to question No. (2) depends upon the interpretation of section 8 of the Sales Tax Act. Section 8 of the Sales Tax Act provides thus :
'8. Point at which sales may be taxed. - The tax payable under this Act shall be levied on the taxable turnover at the point of sale to the consumer or to a person other than a registered dealer :
Provided that the Government may, by notification in the Official Gazette, specify the first or any other point of sale in the series of sales of successive dealers, as the point at which any goods or class of goods may be taxed.'
17. A notification dated 23rd October, 1964, under the said proviso provided :
'In exercise of the powers conferred by the proviso to the above-referred to section 8 by Notification No. FS/F.III/2-36/64 dated 23-10-64 it has been specified that the sale of the following goods shall be liable to tax at the first point only :
(d) liquor and other alcoholic beverages except country liquor.
18. It was contended by the learned counsel for the first appellant that section 8 which provides for the point at which the sales were to be taxed generally, specifically excludes a registered dealer from its application. According to him, therefore, since there was no other provision fixing the point at which sales by one registered dealer to another registered dealer were to be taxed, such sales by a registered dealer to another registered dealer were exemption.
19. In our view, in the facts of the case, the said contention of the learned counsel for the appellant could not be accepted. Firstly, the proviso to the said section 8 empowers the Government to fix the first or other point of sale in the case of series of sales of successive dealers otherwise than as provided in the section. In fact, in this case, by a notification issued by the Government under the said proviso, the sale of Indian-made foreign liquor was made liable to sales tax at the first point only. The said notification, therefore, makes it clear that irrespective of the sale being to a registered dealer, the sale of Indian-made foreign liquor was liable to tax at the first point only and therefore sales by appellant No. 1 to appellant No. 2 who was another registered dealer were not exempted.
20. We, therefore, answer the questions as under :
Question No. (1) : Affirmative.
Question No. (2) : Affirmative.
21. Respondents to pay the costs of both the references.