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Vattikutti China Venkata Subbaiah and Co. Vs. State of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAndhra Pradesh High Court
Decided On
Case NumberTax Revision Case Nos. 1 and 2 of 1958
Judge
Reported in[1960]11STC466(AP)
AppellantVattikutti China Venkata Subbaiah and Co.
RespondentState of Andhra Pradesh
Appellant AdvocateG.V.R. Mohana Rao, Adv.
Respondent AdvocateD.V. Sastry, Adv. for ;The Second Government Pleader
DispositionPetition dismissed
Excerpt:
.....to the well-known canons of construction, coupled with the fact that the normal rule-making authority is the state government, we hold that it was a case of inadvertent omission and that the legislature must have intended the state government to make rules under 4. 17. the objection to the jurisdiction of the commercial tax officer (evasions) to make the assessment is wholly unsustainable. 22. in the result, these revision cases fail and are dismissed with costs......purchases of paddy were all completed with the ryots prior to the coming into force of the andhra general purchase tax act, though the paddy was actually delivered to them subsequent to 1st august, 1956, when the act came into force and that, therefore, the transactions were not liable to tax. both the assessing authority and the appellate authority held that the purchases were completed after the act came into force. against the provisional assessments for the months of august and september, 1956, the assessees preferred appeals to the sales tax appellate tribunal. before the tribunal, it was argued on behalf of the assessees that the special commercial tax officer (evasions) had no jurisdiction to make the assessments in question and that as the purchases of paddy were.....
Judgment:

Satyanarayana Raju, J.

1. These two revision cases arise from a common order of the Sales Tax Appellate Tribunal, dated 6th November, 1957, in T.A. Nos. 158 and 159 of 1957.

2. The material facts are these : The petitioners are contractors of Sri Laxmi Rice Mill situated at Patchalatadiparru, Guntur District. They were purchasing paddy and after milling the same, selling the rice and other by-products. They were submitting returns in Form No. A-3 for each month of assessment. While so, they failed to submit A-3 returns for the months of August and September, 1956, before the due dates. The Special Commercial Tax Officer (Evasions) made a surprise check of the assessees' place of business and seized certain books and papers. He then issued notices to the assessees to show cause why they should not be assessed to the best of his judgment on the turnovers determined by him on the bas is of the seized books and papers. The assessees contended that the transactions representing purchases of paddy were all completed with the ryots prior to the coming into force of the Andhra General Purchase Tax Act, though the paddy was actually delivered to them subsequent to 1st August, 1956, when the Act came into force and that, therefore, the transactions were not liable to tax. Both the assessing authority and the appellate authority held that the purchases were completed after the Act came into force. Against the provisional assessments for the months of August and September, 1956, the assessees preferred appeals to the Sales Tax Appellate Tribunal. Before the Tribunal, it was argued on behalf of the assessees that the Special Commercial Tax Officer (Evasions) had no jurisdiction to make the assessments in question and that as the purchases of paddy were completed even prior to 1st August, 1956, they could not be taxed under the provisions of the Andhra General Purchase Tax Act. Both these contentions were negatived by the Tribunal; and hence these revisions.

3. Sri G.V.R. Mohana Rao, learned counsel for the assessees, has raised the following points before us:-

(1) Th at the Andhra General Purchase Tax Rules are void for want of pre-publication as required by 19 of the Madras General Sales Tax Act, read with 11 of the Andhra General Purchase Tax Act

(2) that the Special Commercial Tax Officer (Evasions) had no jurisdiction to assess the petitioner; and

(3) that the sales were completed before the date of coming into force of the Andhra General Purchase Tax Act.

4. We shall deal with these contentions seriatim.

5. The Andhra General Purchase Tax Act, which was intended to provide for the levy of a general tax on the purchase of certain goods in the State of Andhra and further to amend the Madras General Sales Tax Act, 1939, was enacted by the Andhra Legislature in the year 1956. The Act received the assent of the President on the 27th July, 1956 and was published in the Andhra Gazette, Extraordinary, on the 30th July, 1956. It came into force on the 1st of August, 1956, by virtue of a notification made by the State Government in the Gazette. This Act has since been repealed by the Andhra Pradesh General Sales Tax Act, 1957, which came into force on the 14th June, 1957 and its salient provisions were incorporated in the Act of 1957. As the provisional assessments in these cases relate to the months of August and September, 1956, they are governed by the provisions of the Andhra General Purchase Tax Act, 1956 (hereinafter referred to as 'the Act').

6. At this stage, it will be convenient to read the relevant provisions of the Act. 4, which provides for the levy of taxes on purchases of goods, in so far as it is material for the present purpose, reads:

(1) Notwithstanding anything contained in the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939), the first purchase of rice, paddy, coconut, copra, raw jute and turmeric, in the State of Andhra, by a dealer, shall be liable to tax at the rates specified in Sub-section(3):

* * * *(4) The tax payable under this shall be paid by every dealer liable to tax under this Act, for each year on his total turnover for such year :

Provided that the tax for each year may be provisionally assessed, levied and collected in advance during the year, in monthly or quarterly instalments on the basis of estimated or actual turnover of the dealer and for that purpose a dealer may be required to submit a return or periodical returns of estimated or actual turnover, in such manner as may be prescribed.

(5) The turnover shall be determined in accordance with such rules as may be prescribed :

Provided that no such rules shall come into force, unless they are approved by a resolution of the Legislative Assembly.

(6) The tax under this shall be assessed, levied and collected, in such manner and in such instalments, if any, as may be prescribed.

(7) Subject to such rules as may be prescribed, the assessing authority may assess a dealer for any year, as if his transactions in such year had been the same as in the previous year.

6. Section 11 provides as follows :

The provisions of the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939), which are not inconsistent with the foregoing provisions of this Act shall apply mutatis mutandis in respect of any matter not specifically provided by this Act.

7. In exercise of the powers conferred by Sub-sections (5) and (6) of 4 of the Act, the Government of Andhra made certain rules called the Andhra General Purchase Tax Rules, 1956. These rules were approved by a resolution of the Andhra Legislative Assembly on the nth September, 1956 and were published in the Andhra Gazette on the 18th October, 1956.

8. Sri Mohana Rao has argued that, notwithstanding the fact that the rules were approved by a resolution of the State Legislative Assembly, they are invalid by reason of the non-compliance of the condition laid down in Sub-section (4) of 19 of the Madras General Sales Tax Act. His argument in this behalf may be summarised thus : 11 of the Act incorporates by reference the provisions of the Madras General Sales Tax Act, 1939. Among the provisions so incorporated in 19 and Sub-section (4) thereof provides that 'the power to make rules conferred by this shall be subject to the condition of the rules being made after previous publication for a period of not less than four weeks'; that the condition as to previous publication had not been complied with and, therefore, the rules are invalid, as has been held by a Full Bench of this Court in Sreeramulu Chetty v. State of Andhra [1958] 9 S.T.C. 215 (F.B.)

9. In order to appreciate the point debated before us, it is necessary at the outset to consider the precise scope of the Full Bench decision. The question that was referred to the Full Bench was, 'whether Rule 13 of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, is invalid by reason of the non-compliance of the condition laid down in Sub-section (4) of 19 of the Act ?' The Madras General Sales Tax (Turnover and Assessment) Rules were made under Sub-Sections (4) and (5) of 3 of the Madras General Sales Tax Act, 1939, which provided as follows :

(4) For the purposes of this and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed :

Provided that no such rules shall come into force unless they are approved by a resolution of the Legislative Assembly.

(5) The taxes under Sub-sections (1) and (2) shall be assessed, levied and collected in such manner and in such instalments, if any, as may be prescribed.

10. Section 19 of the Act provided :

(1) The State Government may make rules to carry out the purposes of this Act.

(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for-

(a) all matters expressly required or allowed by this Act to be prescribed;

* * * *(4) The power to make rules conferred by this shall be subject to the condition of the rules being made after previous publication for a period of not less than four weeks.

(5) All rules made under this shall be published in the Fort St. George Gazette and upon such publication shall have effect as if enacted in this Act.

11. Before the Full Bench it was common ground that the rules were not published as required by Sub-section (4) of 19. It was there argued by the learned Government Pleader that the provisions in Sub-sections (4) and (5) of 3 and those contained in 19 of the Madras General Sales Tax Act authorised the making of two sets of rules, one set' for the purpose of turnover and assessment and the other for other purposes mentioned in 19, which were, independent and that while the rules made under 19 were subject to the condition of pre-publication under Sub-section(4), the rules made under Sub-sections (4) and (5) of 3 were not so subject, the only requirement being that they should be approved by a resolution of the Legislative Assembly, which had been done in the case of the impugned amendment of Rule 13. This contention was negatived by the Full Bench which held that the rule was invalid by reason of the non-compliance with the conditions laid down in Sub-section (4) of 19. The basis on which the Full Bench reached this conclusion was that Sub-section (2)(a) brought within its ambit all matters expressly required or allowed by the Act to be prescribed which included matters also required to be prescribed under Sub-sections (4) and (5) of 3.

12. Now if the provisions of 19 of the Madras Act should be deemed to have been incorporated in the Andhra Act, the rules made under the latter (Andhra) Act also would be invalid. On a reading of 11, it is clear that the provisions of the Madras General Sales Tax Act were not all of them so incorporated but only those provisions' in respect of matters which were not provided for and which were not inconsistent with the provisions of the Act. '

13. Sub-section (5) of 4 of the Act provides that the turnover shall be determined in accordance with such rules as may be prescribed and makes specific provision that such rules shall come into force only after they are approved by a resolution of the Legislative Assembly. Therefore, there is a specific provision in the Act providing for the making of rules and their being approved by the State Legislative Assembly. The matter being specifically provided under the Act, there is no need to invoke the provisions of the Madras General Sales Tax Act for the purpose of empowering the Government to make rules. If this is the correct position, as we hold it to be, the requirement as to pre-publication laid down in Sub-section (4) of 19 does not come into play. We, therefore, hold that the Andhra General Purchase Tax Rules, 1956, are valid.

14. The learned counsel for the petitioners then raised a subsidiary contention, which is that 4 does not specifically empower the State Government to make rules because Sub-section (5) only says that 'the turnover shall be determined in accordance with such rules as may be prescribed.' In other words, the objection is that the Legislature has not specified the rule-making authority. It may be observed that Parliament or Legislature instead of incorporating the rules into the statute itself, ordinarily authorises Government to carry out the details of the policy laid down by the Legislature by framing the rules under the statute and once the rules are framed, they are incorporated and become part of the statute. 4 has not specifically indicated the authority by whom the rules are to be prescribed. It appears to us that this was a case of casus omisus. As pointed out by Crawford in his Treatise on Statutory Construction, 1940 edition, at page 260 :

Inasmuch as it is the intention of the legislature which constitutes the law of any statute and since the primary purpose of construction is to ascertain that intention, such intention should be given effect, even if it necessitates the supplying of omissions, provided, of course, that this effectuates the legislative intention.

15. Maxwell on Interpretation of Statutes, gth edition, at page 279 contains the following :

Where the alternative lies between either supplying by implication words ' which appear to have been accidentally omitted ', or adopting a construction which deprives certain existing words of all meaning, it is usual to supply the words

16. Words may be supplied in a statute in order to give it effect or to avoid repugnancy or inconsistency with the legislative intention, or where omission is due to inadvertence, mistake, accident or clerical error, or where omission makes the statute obscure, meaningless, irrational, or unreasonable, or where legislative intent is clearly indicated by the context or other parts of the statute, it is permissible to supply omissions to effectuate the legislative intention. 5 specifically empowers the Government, by notification, to make an exemption or reduction in rates. In this provision the intention to clothe the Government with the power to make the notification is clearly indicated. Having regard to the well-known canons of construction, coupled with the fact that the normal rule-making authority is the State Government, we hold that it was a case of inadvertent omission and that the Legislature must have intended the State Government to make rules under 4.

17. The objection to the jurisdiction of the Commercial Tax Officer (Evasions) to make the assessment is wholly unsustainable. In G.O.Ms. No. 377 Finance (Commercial Taxes) dated 18th May, 1956, it was notified that Commercial Tax Officers appointed for investigation of evasions were empowered to make assessments in all cases where an omission or suppression was detected by such officers. The notification reads :

Notwithstanding anything contained in paragraphs (1) and (2), the Commercial Tax Officer (Special) appointed for investigation of evasions under the said Act is empowered to exercise, at his discretion, the powers of an assessing authority in the case of all dealers in respect of whose transactions any suppression or omission (whether or not fraudulent or wilful) is detected by such officer or brought to his notice in any manner whatsoever.

18. Therefore, there is no merit in this contention.

19. Lastly, it was argued that the transactions of sale comprised in the disputed turnover were completed before the coming into force of the Act. In support of this contention, Sri Mohana Rao has relied upon 20 of the Sale of Goods Act, which reads :

Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed.

20. This definition cannot be invoked in the present case because the Andhra Act defines the word 'purchase' as meaning' a transaction involving acquisition of the goods specified in 4, by one person from another, in the course of trade or business, for cash or for deferred payment (including payment in instalments) or other valuable considera-tion, but does not include any acquisition under a mortgage, hypothecation, charge or pledge.'

21. Admittedly, the possession of the goods was transferred and the price was paid after the coming into force of the Act. The fact that the contract was entered into anterior to the date of the Act does not, therefore, help the petitioner. There is no definition of 'purchase' in the Sale of Goods Act. The word 'acquisition' undoubtedly involves the actual transference of possession. That being the position, we cannot accede to this contention.

22. In the result, these revision cases fail and are dismissed with costs. Advocate's fee Rs. 100 in each of the cases.


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