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The Malnad Arecanut Syndicate (Pvt.) Ltd. Vs. Commercial Tax Officer, Shimoga District, Shimoga - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 2728 to 2733 of 1966
Judge
Reported in(1969)1MysLJ46; [1969]23STC472(Kar)
ActsCentral Sales Tax Act, 1956 - Sections 3, 8, 8(2), 9 and 9(1)
AppellantThe Malnad Arecanut Syndicate (Pvt.) Ltd.
RespondentCommercial Tax Officer, Shimoga District, Shimoga
Appellant AdvocateJ.V. Srinivasan and ;K. Srinivasan, Advs.
Respondent AdvocateShantharaju for E.S. Venkataramaiah, High Court Special Government Pleader
Excerpt:
.....ordinary letter dispatched by one of the partners of the assessee whether can be considered as a statement recorded as per section 132 (4) of the act held, the said letter cannot be treated as a statement said to have been made under sub-section (4) of section 132 of the income tax act since the said letter is not recorded on oath by the authorised officer during the course of search or seizure. further, it is also not in dispute that return has to be filed in the pro forma prescribed under the income tax act. the letter is not in such pro forma, wherein a partner of the assessee has stated that a revised return would be filed claiming deduction under section 80 hhc and he had only requested not to initiate any penal action against the partners of the assessee. therefore, it is clear..........act, as it then stood, sales tax was payable under the central sales tax act in respect of inter-state sales only if the sale had'taken place inside the state, sales tax would have been payable under the sales tax act of the state. this conclusion was founded on section 9(1) of the central sales tax act which stated that tax payable under the central act shall be lived and collected in the appropriate state by the government of india in the manner provided in sub-section (2) of that section. sub-section (2) to which sub-section (1) referred authorised the assessment, collection and enforcement of payment of tax under the central sales tax act in the same manner in which the tax under the state law was assessed, paid and collected. 4. the supreme court explained that the word 'lived'.....
Judgment:

Somnath Iyer, J.

1. The question arising in these six writ petitions is common, and it arises in this way. The petitioners are traders in arecanut and their turnover in respect of their inter-State sales of arecanut was assessed to sales tax for the assessment year 1959-60 and subsequent years under the Central Sales Tax Act, 1956 (Central Act 74 of 1956).

2. The Third Schedule to the Mysore Sales Tax Act, 1957, enumerates goods in respect of which only a single point purchase tax is leviable under section 5(3)(b) of the Act The seventh item of that Schedule, which refers to arecanut, states that such tax is payable only at the point of purchase by the first or earliest of successive dealers in the State liable to tax under the Act.

3. In The State of Mysore v. Lakshminarasimhiah Setty & Sons [[1965] 16 S.T.C. 231] the enunciation made by the Supreme Court was that under the provisions of sub-sections (1) and (2) of section 9 of the Central Sales Tax Act, as it then stood, sales tax was payable under the Central Sales Tax Act in respect of inter-State sales only if the sale had'taken place inside the State, sales tax would have been payable under the Sales Tax Act of the State. This conclusion was founded on section 9(1) of the Central Sales Tax Act which stated that tax payable under the Central Act shall be lived and collected in the appropriate State by the Government of India in the manner provided in sub-section (2) of that section. Sub-section (2) to which sub-section (1) referred authorised the assessment, collection and enforcement of payment of tax under the Central Sales Tax Act in the same manner in which the tax under the State law was assessed, paid and collected.

4. The Supreme Court explained that the word 'lived' occurring in sub-section (1) of section 9 of the Central Sales Tax Act should be under-stood in the same sense in which that word occurring in section 5(3)(a) of the Mysore Sales Tax Act, 1957, had to be understood and that any ambiguity in the language of section 8(2) of the Central Sales Tax Act stood dispelled by the clear provisions of sub-sections (1) and (2) of section 9.

5. In the case decided by the Supreme Court, the assessee who was a dealer in certain textiles, was assessed to tax under the Central Sales Tax Act, as it then stood, and under the provisions of the Mysore Sales Tax Act only the first or the earliest of the successive dealers in respect of those goods was liable to pay sales tax. It was contended before the Supreme Court that since he was not the first or the earliest of the successive dealers, he could not have been taxed under the Mysore Sales Tax Act had the sale taken place inside the State, and so, he could not be taxed under the Central Sales Tax Act.

6. The Supreme Court which accepted this contention made the enunciation that in respect of an inter-State sale, tax under the Central Sales Tax Act is payable only by a dealer who would have been liable under the State Sales Tax Act to pay the tax if the transaction had taken place inside the State.

7. On the basis of this pronouncement, the petitioners in the cases before us sought rectification of their assessments under the Central Sales Tax Act, under rule 38 of the Mysore Sales Tax Rules, and those applications were presented within the period of five years prescribed by that rule which admittedly governed the matter.

8. The Commercial Tax Officer dismissed those applications and the prayer in these writ petitions is that we should issue a mandamus to the Commercial Tax Officer to cancel the assessments made by him under the Central Sales Tax Act or that we should gnash those orders of assessment and direct the Commercial Tax Officer to refund the tax collected from them.

9. It is now clear from the decision of this Court in Govindaraju Chetty v. Commercial Tax Officer. [[1968] 22 S.T.C. 46] that a pronouncement by the Court that a levy is wrong or is not in accordance with law, means that the levy was at no time good. It was further explained by this Court that in that situation, any assessee could on such enunciation seek rectification of the mistake committed by the original authority when making his own assessment in the same way in which he could prefer an appeal from it.

10. The rectification sought by the assessee in Govindaraju Chetty case [[1968] 22 S.T.C. 46] was refused by the Commercial Tax Officer and this Court quashed those assessments which fell within the enunciation of the Supreme Court in Lakshminarasimhiah Setty's case [[1965] 16 S.T.C. 231]

11. So, if the elucidation made by the Supreme Court in Lakshminarasimhiah Setty's case [[1965] 16 S.T.C. 231] is applicable to the cases before us, the rectification and the refund sought by the petitioners could not be refused.

12. The decision in Lakshminarasimhiah Setty's case [[1965] 16 S.T.C. 231] rested on the interpretation of sections 8 and 9 of the Central Sales Tax Act as they stood before their amendment by Central Act 31 of 1958. But the assessments of the petitioners before us relate to periods when the amended sections were operating. Those amendments came into force on 1st October, 1958, and so the relevant statutory provisions of the Central Act which were applicable to the impugned assessments are sections 8 and 9 of that Act as they stand after their amendment.

13. But it is clear that the amendments made to those sections did not change the law stated by the Supreme Court in Lakshminarasimhiah Setty's case [1965] 16 S.T.C. 231] That statement of the law, which was founded more on the provisions of section 9 than on those of section 8, was that sales tax was payable under section 9 in respect of an inter-state transaction only if sales tax would have been payable under the State Sales Tax Act had the sale been an intra-State sale. That conclusion rested on the provisions of sub-sections (1) and (2) of section 9 which, as they then stood, directed that the levy and collection of sales tax under the Central Act shall be made in the same manner in which tax is assessed, paid and collected under the general sales tax law of the State.

14. Section 8(2) of the Central Sales Tax Act stated that tax under the Central Act shall be calculated at the same rates and in the same manner as would have been done if the sale had taken place inside the appropriate State. The Supreme Court pointed out that the expression 'in the same manner' occurring in section 8(2) could be understood as merely referring to the arithmetic, in the same way in which it could be interpreted as also regulating the levy; but that no such ambiguity was discernible in subsections (1) and (2) of section 9 since the expression 'lived' occurring in sub-section (1) of section 9 referred to imposition, and not to mere arithmetic or calculation.

15. So, in the consideration of the question whether the petitioners could depend upon that pronouncement of the Supreme Court even after sections 8 and 9 were amended, we should attach greater importance to the provisions of section 9 as it stands after its amendment than to section 8.

16. The amendment made to section 8 by the Central Sales Tax (Second Amendment) Act, 1958 (Act 31 of 1958) has many alterations to it and the language, which sub-section (2) of that section contained before its amendment, is not to be found in any part of that sub-section offer it was altered. But in respect of 'levy' and 'collection' of tax under the Central Sales Tax Act on an inter-State sale, section 9 in effect remains unchanged. Sub-section (1) of the amended ninth section is in substance similar to the old sub-section. But old sub- section (2) has now become sub-section (3) which however incorporates the same old provisions on assessment, levy and collection.

17. That that is so becomes clear when those sub-sections are read in juxtaposition.

------------------------------------------------------------------------- Section 9 as it stood before its Section 9 as it stands after its amendment. a amendment (which came into force on 1st October, 1958). ------------------------------------------------------------------------- 9. (1) The tax payable by any 9. (1) The tax payable by any dealer dealer under this Act shall be under this Act on sales lived and collected in the of goods effected by him in the appropriate State by the course of inter-State trade or Government of India in the commerce (whether such sales manner provided in sub-section fall within clause (a) or clause (b) of (2). section 3) shall be lived and collected by the Government of India in the manner provided in sub-section (3) in the State from which the movement of the goods commenced.

9. (2) The authorities for the 9. (3) The authorities for the time time being empowered to assess, being empowered to assess, collect and collect and enforce payment of enforce payment of any tax under the any tax under the general sales general sales tax law of the appropriate tax law of the appropriate State State shall, on behalf of the Government shall, on behalf of the of India and subject to any rules made Government of India and subject under this Act, assess, collect and to any rules made under this Act, enforce payment of any tax, including assess, collect and enforce any penalty, payable by a dealer under payment of any tax payable by a this Act in the same manner as the tax dealer under this Act in the on the sale or purchase of goods under same manner as the tax on the the general sales tax law of the State sale or purchase of goods under is assessed, paid and collected; and for the general sales tax law of the this purpose they may exercise all or State is assessed, paid and any of the powers they have under the collected; and for this purpose general sales tax law of the State; and they have under the general the provisions of such law, including sales tax law of the State; and provisions relating to returns, appeals, the provisions of such law, reviews, revisions, references, penalties including provisions relating and compounding of offences, shall to returns, appeals, reviews, apply accordingly. revisions, references, penalties and compounding of offences, shall apply accordingly.

----------------------------------------------------------------------

18. Notwithstanding the difference in language, the importance of subsection (1) as it stood before the amendment and as it now stands, is the same, in the sense that it directs the levy and collection of tax on an inter-State sale in the manner specified in what was originally subsection (2) but has now become sub-section (3). And the only modification made to the second sub-section after it was renumbered as sub-section (3) is to include the power to assess, collect and enforce payment of penalty to which there was no reference in the old sub-section.

19. So, we should read the relevant provisions of section 9 as it now stands in the same way in which the old section was interpreted by the Supreme Court.

20. It is, therefore, clear that in respect of their inter-State sales, no tax was payable by the petitioners before us unless tax would have been payable by them under the Mysore Sales Tax Act if those sales had in fact been made inside the State. It is not controverted that had the sales made by the petitioners been intra-State sales, they would not have been liable to pay any sales tax under the Mysore Sales Tax Act since under the seventh entry in the Third Schedule to that Act, the turnover relating to arecanut is taxable only at the point of purchase and not at the point of sale. The levy to which they were subjected was, therefore, not a good levy and they were, as pointed out by this Court in Govindaraju Chetty's case [[1968] 22 S.T.C. 46] entitled to seek the rectification which they sought and to get the refund which they claimed.

21. So, we allow these writ petitions and quash the assessments made the Commercial Tax Officer and we direct a refund of the tax collected .by him under the Central Sales Tax Act in respect of those assessments. No costs.

22. Petitions allowed.


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