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The State of Andhra Pradesh Vs. Murali Cafe - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberT.A. No. 376 of 1966 and T.R.C. No. 5 of 1967
Judge
Reported in[1971]28STC399(AP)
AppellantThe State of Andhra Pradesh
RespondentMurali Cafe
Appellant AdvocateP. Venkatarama Reddy, Adv. for ; Government Pleader
Respondent AdvocateP. Nagaraja Rao, Adv. for ;J.V. Srinivasa Rao and ;M.J. Swamy, Advs.
DispositionAppeal allowed
Excerpt:
- - against the order splitting up the turnover into two parts and applying two different rates of tax in respect of the total turnover, the assessee preferred an appeal unsuccessfully to the assistant commissioner of commercial taxes, kakinada. but rule 5(2)(i) being clearly severable from rule 5(1)(i), could be ignored and the exemption under rule 5(1)(i) might be allowed to stand......the substituted provision came into effect on 1st august, 1963, the state cannot split up or separate the turnover so as to levy tax at different rates on the turnover prior to 31st july, 1963, and subsequent to that date. the proviso does not, in our opinion, admit of such splitting up the turnover 'for the year' into two parts. the rates of tax provided in the proviso are 'for the year' and, therefore, in our view, there is no warrant for importing something which is not there in the proviso so as to empower the assessing authorities to split the turnover into two parts and levy the sales tax at different rates.9. to a similar effect is the view expressed by hidayatullah, j. (as he then was) speaking for the majority in mathra parshad and sons v. state of punjab [1962] 13 s.t.c. 180.....
Judgment:
ORDER

Obul Reddi, J.

1. This revision preferred by the State against the order of the Sales Tax Appellate Tribunal in T.A. No. 376 of 1966, raises an important question whether the amendment to the proviso to Section 5(1) of the Andhra Pradesh General Sales Tax Act introduced by Section 5 of the Amendment Act No. 16 of 1963 with effect from 1st August, 1963, empowers the assessing authority to levy tax at one rate up to the period 31st July, 1963, in accordance with the proviso as it stood prior to its amendment and in respect of the period subsequent to 31st July, 1963, at a different rate as provided for in the substituted proviso.

2. To appreciate the question involved, we may set out the relevant facts of this case in brief: M/s. Murali Cafe, Vizianagaram (hereinafter referred to as the assessee) was assessed to tax by the Deputy Commercial Tax Officer, Vizianagaram, for the year 1963-64 on 30th June, 1964, on a net turnover of Rs. 2,77,618.21 out of which the turnover of meals and coffee worked out to Rs. 2,73,996.96. The Deputy Commercial Tax Officer assessed the turnover of meals and coffee splitting it up into two parts : (1) Rs. 93,113.23 up to 31st July, 1963, at 3 per cent. applying the old provision; and (2) up to the limit of Rs. 39,999 at 2 per cent. and the balance of Rs. 1,40,884.73 at 3 per cent. from 1st August, 1963 to 31st March, 1964, applying the substituted provision. Against the order splitting up the turnover into two parts and applying two different rates of tax in respect of the total turnover, the assessee preferred an appeal unsuccessfully to the Assistant Commissioner of Commercial Taxes, Kakinada. Thereafter, a further appeal was preferred to the Sales Tax Appellate Tribunal and the Tribunal, holding that the amendment, which came into effect on 1st August, 1963, is prospective, gave relief in accordance with the rates prescribed in the amended proviso. It is this order that is assailed before us by the revision petitioner, the State of Andhra Pradesh.

3. In order to judge whether the assessing authority can invoke the old proviso up to 31st July, 1963, and the substituted proviso thereafter, it is necessary to notice both the provisions. Section 5(1) of the Andhra Pradesh General Sales Tax Act with its proviso prior to the amendment is in the following terms :

5. Levy of tax on sales or purchases of goods.--(1) Every dealer (other than a casual trader and an agent of a non-resident dealer) whose total turnover for a year is not less than Rs. 10,000 and every agent of a nonresident dealer, whatever be his turnover for the year, shall pay a tax for each year, at the rate of two naye paise on every rupee of his turnover :

Provided that if and to the extent to which such turnover relates to articles of food or drink or both sold in a hotel, boarding house, restaurant, stall or any other place, the tax shall be calculated at the rate of three naye paise in the rupee, if the total turnover relating to those articles is not less than Rs. 25,000.

and after the amendment by Act 16 of 1963, which came into effect on 1st August, 1963, it reads :

5. Levy of tax on sales or purchases of goods.--(1) Every dealer (other than a casual trader) whose total turnover for a year is not less than Rs. 10,000 and every agent of a non-resident dealer, whatever be his turnover for the year, shall pay a tax for each year, at the rate of two naye paise on every rupee on his turnover :

Provided that if and to the extent to which, such turnover relates to articles of food or drink or both sold in a hotel, boarding house, restaurant, stall or any other place for consumption on the premises and if the total turnover relating to those articles is not less than Rs. 40,000 for the year, the tax shall be calculated at the rate of two naye paise in the rupee on the first Rs. 39,999 and at the rate of three naye paise in the rupee on the balance of the turnover.

(There was a further amendment of the rates with effect from 1st April, 1966, by the Amendment Act 7 of 1966).

4. The learned Principal Government Pleader relying upon a decision of two learned Judges of this Court, Kumarayya, Acting C.J., and Kondaiah, J. in T.R.C. No. 65 of 1966 (decided on 18th June, 1969) contended that, although the order of assessment made by the assessing authority relates to a particular assessment year, the period of assessment can nevertheless be separated or split up into two or more periods, if different rates of tax are provided for different periods. The learned Principal Government Pleader has also invited our attention to the decision in State of Bombay v. United Motors (India) Ltd. [1953] 4 S.T.C. 133 at 156 (S.C.) which was relied upon by the Supreme Court in State of Jammu and Kashmir v. Caltex (India) Ltd. [1966] 17 S.T.C. 612 (S.C.) We may here quote what Patanjali Sastri, C.J., observed in United Motors case:

In the present case the tax is imposed, in ultimate analysis, on receipts from individual sales or purchases of goods effected during the accounting period, and it is therefore possible to separate at the assessment the receipts derived from exempted sales or purchases and allow the State to enforce the statute with respect to the constitutionally taxable subjects, it being assumed that the State intends naturally to keep what it could lawfully tax, even where it purports to authorise the taxation of what is constitutionally exempt.

5. Their Lordships in that case were considering the vires of Rule 5(2)(i) made under the Bombay Sales Tax Act, 1952. It was held that Rule 5(2)(i), which provided that in order to claim deduction for the sales covered by Clauses (1)(b) and (2) of Article 286, the goods should be consigned only through a railway, shipping or aircraft company or country boat registered for carrying cargo or public transport service or by registered post, was ultra vires the rule-making authority inasmuch as Article 286(2) in exempting sales in the course of inter-State trade, made no distinction between modes of transport by which the goods were despatched and there was no reason why sales of goods despatched by other modes of transport should not also be deductible from the taxable turnover. But Rule 5(2)(i) being clearly severable from Rule 5(1)(i), could be ignored and the exemption under Rule 5(1)(i) might be allowed to stand.

6. It is in that context that their Lordships held that severability in such cases includes the separability in enforcement. But the question here is whether the language of the substituted proviso permits such separability in the matter of levy of tax, which shall be on the total turnover for the assessment year.

7. To separate the assessment on the basis of the receipts derived from the sales and levy tax at different rates, the State should have been empowered to do so by the Legislature. We cannot read something which is not there in the provision. A taxing statute cannot be interpreted on any presumptions or assumptions. The court must look squarely at the words employed in the statute and interpret them in the light of what is expressed therein. Therefore, the court cannot add words or read something which is not there in the statute.

8. Section 5(1) of the Andhra Pradesh General Sales Tax Act, which has been extracted supra provides for the levy of tax on sales or purchases of goods by a dealer whose total turnover 'for the year' is not less than Rs. 10,000; in other words, a tax is levied under the Act yearly. The substituted proviso with which we are now concerned is also expressed in the same manner that 'if the total turnover relating to those articles is not less than Rs. 40,000 'for the year', the tax shall be calculated at the rate of two naye paise in the rupee on the first Rs. 39,999 and at the rate of three naye paise in the rupee on the balance of the turnover.' We may here point out that, by subsequent amendments, the rates were changed so as to make it three paise in the rupee on the first Rs. 39,999 and four paise in the rupee on the balance of the turnover. It is no doubt true that the substituted provision came into effect on 1st August, 1963; but by mere reason of the fact that the substituted provision came into effect on 1st August, 1963, the State cannot split up or separate the turnover so as to levy tax at different rates on the turnover prior to 31st July, 1963, and subsequent to that date. The proviso does not, in our opinion, admit of such splitting up the turnover 'for the year' into two parts. The rates of tax provided in the proviso are 'for the year' and, therefore, in our view, there is no warrant for importing something which is not there in the proviso so as to empower the assessing authorities to split the turnover into two parts and levy the sales tax at different rates.

9. To a similar effect is the view expressed by Hidayatullah, J. (as he then was) speaking for the majority in Mathra Parshad and Sons v. State of Punjab [1962] 13 S.T.C. 180 (S.C.). Although their Lordships were dealing with the case of exemption, the principle enunciated by them equally applies to the levy of tax. The material portion of their Lordships' observations may be quoted with advantage:

that as the tax under the Act was yearly and was to be paid on the taxable turnover of a dealer, the exemption, whenever it came in, in the year for which the tax was payable, would exempt sales of those goods throughout the year, unless the Act said that the notification was not to have this effect, or the notification fixed the date for the commencement of the exemption.

10. This decision, according to the learned Judges of this Court, far from rendering assistance to the dealer in the case before them, supported the plea of the State that the amended proviso, which came into force on 1st August, 1963, had no retrospective effect.

11. The question here is, as already stated, whether the total turnover for the year can be split up so as to apply two different rates for the periods prior and subsequent to 1st August, 1963. We may now refer to the decisions relied upon by the learned Judges, who decided T.R.C. No. 65 of 1966.

12. The observations of Shah, J., in Commissioner of Sales Tax v. Modi Sugar Mills Ltd. [1961]. 12 S.T.C. 182 (S.C.) do not answer the question involved, as there is nothing to suggest from the substituted proviso that the levy of tax at the altered rate is only in respect of sales taking place after 1st August, 1963. That was a case where there was a notification altering the rates of tax and in the face of the language employed in that notification, sales anterior to the date specified could not be affected.

13. Commissioner of Sales Tax, U.P. v. Bijli Cotton Mills, Hathras, U.P. [1964] 15 S.T.C. 656 (S.C.), is a case where a substituted provision provided that, notwithstanding the option exercised by the assessee, the tax would have to be computed in the light of the rate prevailing in 1948-49, as if they were projected upon the turnover of the previous year. Therefore, on the facts of that case, the Supreme Court observed:

If the law which the Tribunal seeks to apply to the dispute is amended, so as to make the law applicable to the transaction in dispute, it would be bound to decide the question in the light of the law so amended. Similarly, when the question has been referred to the High Court and in the meanwhile the law has been amended with retroactive operation, it would be the duty of the High Court to apply the law so amended if it applies.

14. The decision in State of Jammu and Kashmir v. Caltex (India) Ltd. [1966] 17 S.T.C. 612 (S.C.), where it was held that the assessment could be split up and dissected and the items of sale could be separated and taxed for different periods, was based on the facts of that case where the Petrol Taxation Officer assessed the dealer to pay sales tax for the period January, 1955, to May, 1959, on the petrol supplied pursuant to a contract between the Director-General of Supplies, Delhi, and the dealer. The price of petrol so supplied was paid to the dealer at Delhi by the Director-General of Supplies. In that case, two-questions arose for determination : (1) Whether sales tax could be imposed on the dealer for the period from October, 1955, to May, 1959, in view of the prohibition contained in Article 286(2) of the Constitution as it stood before its amendment; and (2) whether sales tax could be validly levied on sales taking place between 1st January, 1955, to 6th September, 1955, in view of the provisions of the Sales Tax Laws Validation Act, 1956 (Act 7 of 1956). On the first question, it was held that Section 3 of the Jammu and Kashmir Motor Spirit (Taxation of Sales) Act applied to the transactions of sale of petrol made by the dealer during the period from 1st January, 1955, to 6th September, 1955, and the levy of sales tax for that period was valid. On the other question, it was held :.it is possible to separate the assessment of the receipts derived from the sales for the period from 1st January, 1955 to 6th September, 1955, and to allow the taxing authorities to enforce the statute with respect to the sales taking place in this period and also prevent them by grant of a writ from imposing the tax with regard to sales for the exempted period.

15. So, it is in that context that the learned Judges ultimately held that the High Court was in error in holding that the assessment for the entire period was invalid in toto.

16. It should be remembered that, in the instant case, the rate of tax as provided for in the proviso is on the total turnover 'for the year' and the rate applicable depends upon the total turnover and, therefore, we are of the view that it cannot be split up into two parts so as to apply two different rates of tax.

17. With great respect to the learned Judges, who decided T.R.C. No. 65 of 1966, we are unable to persuade ourselves to agree with that decision and, therefore, we are bound to refer this revision case to a Full Bench for an authoritative pronouncement on the question involved, viz., the scope and applicability of the proviso as amended by the Amendment Act 16 of 1963.

18. We, therefore, direct that the papers may be placed before the Honourable the Chief Justice for directions as to posting before a Full Bench.

19. In pursuance of the abovesaid order of reference the revision case came on for hearing before the Full Bench:--


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