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Patwala Sales Corporation and anr. Vs. the State of Uttar Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ No. 12 of 1977
Judge
Reported in[1982]51STC281(All)
AppellantPatwala Sales Corporation and anr.
RespondentThe State of Uttar Pradesh and ors.
DispositionPetition allowed
Cases ReferredEngineering Traders v. State of U.P.
Excerpt:
- interpretation of statutes definition clause: [markandey katju & h.l. dattu, jj] meaning given to an expression in one statute cannot be applied to another statute. - the view of the sales tax officer that the turnover thereof should be taxed at the rate of 6 per cent was clearly erroneous. 17 of 1974 and that for such earlier period as well their turnover had to be treated as that of machinery as distinguished from agricultural implements. the sales tax officer as well as the appellate authority went wrong in holding, on the basis of the amendment made by section 9 of u. we, therefore, do not find any force in this submission of the learned standing counsel which certainly appears to be based on extremely invalid reasoning as well......officer, jhansi, vide his order dated 29th january, 1975, determined the petitioner's turnover of sales of pumping sets for the assessment year 1970-71 as rs. 40,210.59 and subjected it to sales tax amounting to rs. 1,206.32 at the rate of 3 per cent. subsequently a notice under section 22 of the sales tax act was issued to the petitioner and the sales tax officer, vide his order dated 19th august, 1975, corrected the assessment order dated 29th january, 1975, by determining the tax payable by the petitioner in respect of its turnover of pumping sets as rs. 2,412.66 instead of rs. 1.206.32 calculated at the rate of 6 per cent instead of 3 percent. being aggrieved by the order of the sales tax officer the petitioner went up in appeal before the assistant commissioner (judicial), sales.....
Judgment:

H.N. Seth, J.

1. By this petition under Article 226 of the Constitution, the dealer, M/s. Patwala Sales Corporation, Manik Chowk, Jhansi, questions the validity of the order under Section 22 of the U. P. Sales Tax Act, passed by the Sales Tax Officer, Jhansi, on 29th September, 1975, in respect of the petitioner's assessment for the year 1970-71 as also that of the appellate order of the Assistant Commissioner (Judicial), Sales Tax, Jhansi, passed on 20th November, 1976.

2. The petitioner, M/s. Patwala Sales Corporation, Manik Chowk, Jhansi, is a registered partnership firm which carried on business in machinery parts, rubber hose, sowing machines, pumping sets, etc. During the course of regular assessment under Rule 41(5) of the Rules framed under the Sales Tax Act, the Sales Tax Officer, Jhansi, vide his order dated 29th January, 1975, determined the petitioner's turnover of sales of pumping sets for the assessment year 1970-71 as Rs. 40,210.59 and subjected it to sales tax amounting to Rs. 1,206.32 at the rate of 3 per cent. Subsequently a notice under Section 22 of the Sales Tax Act was issued to the petitioner and the Sales Tax Officer, vide his order dated 19th August, 1975, corrected the assessment order dated 29th January, 1975, by determining the tax payable by the petitioner in respect of its turnover of pumping sets as Rs. 2,412.66 instead of Rs. 1.206.32 calculated at the rate of 6 per cent instead of 3 percent. Being aggrieved by the order of the Sales Tax Officer the petitioner went up in appeal before the Assistant Commissioner (Judicial), Sales Tax, Jhansi and urged that the pumping sets being agricultural implements had rightly been assessed to tax at the rate of 3 per cent. The view of the Sales Tax Officer that the turnover thereof should be taxed at the rate of 6 per cent was clearly erroneous. The Assistant Commissioner repelled the plea raised by the petitioner and pointed out that in the relevant assessment year turnover of the pumping sets had been assessed at 3 per cent treating it as an agricultural implement. According to Section 9 of the Sales Tax (Amendment) Act, 1974, water pumps had always to be considered as a machinery and were always assessable to tax as machinery. He relied upon a decision of this Court in the case of Basant Industries, Agra v. Commissioner of Sales Tax, U.P. 1975 UPTC 88 and held that the Sales Tax Officer has correctly assessed the turnover of pumping sets at the rate of 6 per cent in exercise of his powers under Section 22 of the U. P. Sales Tax Act. In the result he did not find any merit in the appeal and dismissed the same.

3. Aggrieved, the petitioner has approached this Court for relief under Article 226 of the Constitution. The learned counsel for the petitioner pleaded inter alia that the Sales Tax Officer had, while assessing the petitioner's turnover of sales of pumping sets during the year 1970-71, rightly assessed the same at the rate of 3 per cent. The view eventually taken by the Sales Tax Officer in the proceedings under Section 22 of the U. P. Sales Tax Act as also that taken by the Assistant Commissioner (Judicial), Sales Tax, in the appeal filed against the order of the Sales Tax Officer that such turnover was taxable at the rate of 6 per cent was erroneous. According to the learned counsel there is nothing in the decision of Basant Industries, Agra v. Commissioner of Sales Tax, U.P. 1975 UPTC 88, which runs counter to his submission that the turnover of sales of pumping sets during the year 1970-71 was correctly assessed at the rate of 3 per cent.

4. According to Notification No. S.T. 3609/X-900(21)-69 dated 1st July, 1969, the Governor in exercise of his powers under Sections 3-A and 4 of the U. P. Sales Tax Act, 1948, was pleased to declare that the turnover of 'agricultural implements other than those worked by human or animal power and tractors including their parts and accessories other than tyres and tubes' was liable to tax at the rate of 3 paise per rupee. Similar goods under an earlier Notification No. S.T. 1365/X-990-1956 dated 1st April, 1960, which continued in force up to 30th June, 1969, were liable to tax at the rate of 2 paise per rupee. While considering the question with regard to the rate of tax payable on the turnover of water pumping sets under the notification dated 1st April, 1960, a Full Bench of this Court in the case of Engineering Traders v. State of U.P. reported in 1973 UPTC 91 (FB) Ruled that water pumping sets used for the purpose of pumping water to field were agricultural implements other than those worked by human or animal power and as such their turnover was liable to tax at the rate of 2 paise per rupee. It cannot be doubted that the scope and ambit of the nature of goods covered by Notification No. S.T. 3609/X -900(21)-69 dated 1st July, 1969, which was in force during the assessment year 1970-71, is the same as that of the goods mentioned at serial No. 38 of Notification No. S.T. 1365/X-990-1956 dated 1st April, 1960. It is thus obvious that unless there has been some change in law the turnover of the pumping sets would under Notification No. S.T. 3609/X-900(21)-69 dated 1st July, 1969, also be liable to tax at the rate of 3 per cent treating the same as an agricultural implement.

5. It appears that prior to the enactment of the Uttar Pradesh Sales Tax (Amendment and Validation) Act, 1971 (U. P. Act No. 20 of 1971), which received the assent of the Governor on 21st August, 1971 and was published in the U. P. Gazette dated 22nd August, 1971 (hereinafter referred to as the 1971 Amendment Act), the State Government was authorised to issue notifications fixing the rate at which the turnover of a particular class of goods could be taxed and it was under that authority that Notification No. S. T. 3609/X-900(21)-69 dated 1st July, 1969, had been issued determining the rate of tax payable on the turnover of agricultural implements other than those worked by human or animal power as 3 per cent. The 1971 Amendment Act, however, brought about a substantial change in this regard and substituted Sections 3 and 3-A by new Sections 3, 3-A and 3-AB. Substituted Section 3-A laid down that the turnover in respect of goods specified in the second column of the First Schedule shall be taxed at the point specified in the third column thereof at such rate not exceeding 10 per cent as the State Government may, by notification in the Gazette, declare. It also provided that unless altered, the rates prevailing by virtue of Section 3-AB immediately before the commencement of the 1971 Amendment Act shall continue to be in force. Newly added Section 3-AB made the following provision :

Notwithstanding any judgment, decree or order of any court, any tax imposed, assessed, levied or collected, or purporting to have been imposed, assessed, levied or collected before the commencement of the Uttar Pradesh Sales Tax (Amendment and Validation) Act, 1971, under any of the notifications specified in the Second Schedule shall be deemed to have been validly imposed, assessed, levied or collected in accordance with law, as if the said notifications had been included in and formed part of this section and this section had been in force at material times when such tax was imposed, assessed, levied or collected.

6. Notification No. S. T. 3609/X-900(21)-69 dated 1st July, 1969, was mentioned at serial No. 1ll of the Second Schedule to the Amendment Act. The effect of the substituted Section 3-A and the newly added Section 3-AB was that till such time as the State Government did not issue a fresh notification fixing the rate at which the turnover of agricultural implements (including pumping sets) was to be taxed such turnover was, by virtue of the provisions contained in Section 3-AB read along with item No. 1ll of the Second Schedule, to continue to be liable to tax at the rate of 3 per cent. It is apparent that the First Schedule inserted by Section 16 of the 1971 Amendment Act merely describes various categories of goods and specifies the point at which the tax is leviable. At item No. 1 it mentioned that agricultural implements, other than those worked by human or animal power and tractors, including their parts and accessories other than tyres and tubes shall be taxed at the point of sale by the manufacturer or importer. Likewise at item No. 52 of the same schedule it provided that the turnover of machinery and spare parts of machinery, not being such machinery or spare parts thereof as are taxable under any other item in this schedule shall also be taxable at the point of sale by the manufacturer or importer. It is only by virtue of the provisions contained in Section 3-AB read in the light of item No. 1ll in the Second Schedule inserted by Section 16 of the 1971 Amendment Act read along with the proviso to Sub-section (1)(a) of Section 3-A of the substituted section which lays down that the rate prevailing by virtue of Section 3-AB immediately before the commencement of the 1971 Amendment Act shall continue in force until altered by any such notification issued under Section 3-A(l)(a) that the turnover of agricultural implements continued even after passing of the 1971 Amendment Act to be taxable at the rate of 3 per cent as provided in Notification No. S.T. 3609/X-900-(21)-69 dated 1st July, 1969.

7. Once again the legislature stepped in and enacted the Uttar Pradesh Sales Tax (Amendment) Act, 1974 (U. P. Act No. 17 of 1974) and by Section 9 of the Act amended the First Schedule as inserted in the principal Act by the 1971 Amendment Act by substituting the existing entries Nos. 1 and 52 thus :

'Existing entry Substituted entryItem 1. Agricultural implements, other Agricultural implements,than those worked by human or other than implementsanimal power and tractors, in- worked by human or animalcluding their parts and accesso- power and water pumps, butries other than tyres and tubes. including their parts andaccessories other than tyresand tubes.Item 52. Machinery and spare parts of Machinery and spare partsmachinery, not being such of machinery, includingmachinery or spare parts there- water pumps, not being suchof as are taxable under any machinery or spare partsother item in this schedule. thereof as are taxableunder any other item inthis schedule.'

8. Section 9 further provided that the entries in place of the existing entries Nos. 1 and 52 substituted by it shall be deemed always to have been substituted. The legislative intendment under the aforementioned deeming clause obviously was that in place of entries Nos. 1 and 52, which originally found place in the First Schedule to the 1971 Amendment Act, the entries as substituted by Section 9 of U. P. Act No. 17 of 1974 should be treated to have been there in the First Schedule, ever since its inception. In other words, in the First Schedule, as originally enacted, entry No. 1 should be read as agricultural implements, other than implements worked by human or animal power and water pumps, but including their parts and accessories other than tyres and tubes; and entry No. 52 thereof should be read as machinery and spare parts of machinery, including water pumps, not being such machinery or spare parts thereof as are taxable under any other item in the schedule and that ever since the enactment of the 1971 Amendment Act, the turnover of the water pumps has been taxable either in the hands of the manufacturer or in the hands of the importer, as the case may be, under item No. 52 instead of item No. 1 of the First Schedule.

9. However, in the case of Basant Industries, Agra v. Commissioner of Sales Tax, U.P. 1975 UPTC 88, a Division Bench of this Court appears to have, without saying so in so many words, taken the view that the amendment made by Section 9 of U. P. Act No. 17 of 1974 in entries Nos. 1 and 52 of the First Schedule (inserted in the Sales Tax Act, 1948, by Section 16 of the 1971 Amendment Act) indicates that the legislature wanted to make it clear that for purposes of the Sales Tax Act water pumps should not be treated as agricultural implements but should be placed at par with machineries and spare parts specified in item No. 52. The Bench accordingly held that in view of the fact that it has been provided that the amendment by way of substitution made by Section 9 of U. P. Act No. 17 of 1974 will be deemed always to have been substituted, the meaning given to the expression 'agricultural implements' as used in Notification No. S.T. 1365/X-990-1956 dated 1st April, 1960, by the Full Bench in the case of Engineering Traders v. State of U.P. 1973 UPTC 91 (FB), was not available to the assessee in the case before it.

10. It cannot be doubted that the legislature, when it enacted Section 9 of Act No. 17 of 1974 and provided that the entries substituted by it shall be deemed always to have been substituted, intended the substituted entries to be operative with retrospective effect. But then, when the legislature stated that the entries at serial Nos. 1 and 52 in the First Schedule were deemed always to have been substituted, all it meant to say was that it should be taken that the entries at item Nos. 1 and 52 as stated in Section 9 of Act No. 17 of 1974 and not as originally enacted under Section 16 of the 1971 Amendment Act existed in the First Schedule to the U. P. Sales Tax Act, 1948, ever since introduction of the schedule in the U. P. Sales Tax Act, 1948, by the 1971 Amendment Act. The legislature, in our opinion, certainly did not mean to give retrospectivity to the aforementioned amendment even for a period prior to the coming into existence of the First Schedule to the 1971 Amendment Act. It would, in our opinion, be meaningless to say that the amended entry existed in the schedule even at a time when the schedule itself was not in existence. Certainly the fiction created by Section 9 of U. P. Act No. 17 of 1974 cannot be stretched to the extent of saying that the First Schedule to the 1971 Amendment Act existed at any time before its enactment in the year 1971.

11. It is true that as a result of this Court's decision in Basant Industries' case 1975 UPTC 88, the turnover of the assessee of that case for the assessment years 1965-66 and 1966-67 had to be dealt with and made liable to tax in the light of the amendment made in item No. 52 of the First Schedule (introduced by the 1971 Amendment Act by Section 9 of U. P. Act No. 17 of 1974), but then the question with regard to the extent of retrospectivity of the provisions contained in Section 9 of U. P. Act No. 17 of 1974 was neither raised nor canvassed before it. We are accordingly of the opinion that the ratio of Basant Industries' case [1975] 36 STC 209; 1975 UPTC 88 merely is that in view of the provisions contained in Section 9 of U. P. Act No. 17 of 1974 amending the entries specified in items Nos. 1 and 62 of the First Schedule introduced in the Act by the 1971 Amendment Act, water pumping sets could, notwithstanding the Full Bench decision of this Court in the case of Engineering Traders v. State of U.P. 1973 UPTC 91 (FB),not be treated as 'agricultural implements' even in respect of a period prior to coming into force of U. P. Act No. 17 of 1974 and that for such earlier period as well their turnover had to be treated as that of machinery as distinguished from agricultural implements. The Division Bench did not consider the question with regard to the extent of retrospective operation of the amendment made in the First Schedule for the period prior to the introduction of the schedule in the U. P. Sales Tax Act. Accordingly it cannot be treated as an authority for the proposition that entries Nos. 1 and 52 of the First Schedule, as substituted by Section 9 of U. P. Act No. 17 of 1974, were to affect the liability to tax, incurred by the petitioner, even for a period prior to the inception of the schedule itself.

12. Interpreting the decision of this Court in Basant Industries, Agra v. Commissioner of Sales Tax, U.P. 1975 UPTC 88 in the aforesaid manner, the position that emerges is that the decision of the Full Bench in the case of Engineering Traders v. State of U.P. 1973 UPTC 91 (FB) to the effect that the expression 'agricultural implements' in Notification No. S. T. 6552/X-900/(3)-65 held full sway in respect of various assessment years till the coming into force of the 1971 Amendment Act which introduced the First Schedule in the Sales Tax Act and that the implications in this regard contained in the 1971 Amendment Act and U. P. Act No. 17 of 1974 would not in any way affect the ratio underlying the Full Bench decision in respect of the period prior to the enactment of the 1971 Amendment Act.

13. As already stated, the scope and ambit of the expression 'agricultural implements' used in Notification No. S.T. 3609/X-900(21)-69 dated 1st July, 1969, is the same as the scope and ambit of that expression as used in Notification No. S. T. 1365/X-990-1956 dated 1st April, 1960. The Full Bench of this Court has, in the case of Engineering Traders v. State of U.P. 1973 UPTC 91 (FB), Ruled that water pumping sets are agricultural implements within the meaning of the expression as used in the notification dated 1st April, 1960. A fortiori they would also be agricultural implements within the meaning of the said expression as used in the notification dated 1st July, 1969.

14. In the instant case the assessment year involved is 1970-71 (1st May 1970, to 31st March, 1971). The 1971 Amendment Act received the assent of the Governor on 21st August, 1971 and was published in the Gazette dated 22nd August, 1971. There is nothing in that Act to indicate that insertion of the First Schedule by Section 16 of that Act was to have any retrospective effect. As the assessment in this case was being made for a period prior to coming into force of the First Schedule inserted by Section 16 of the 1971 Amendment Act, the case would continue to be governed by Notification No. S. T. 3609/X-900 (21)-69 dated 1st July, 1969, which provides for payment of sales tax at the rate of 3 per cent on the turnover of agricultural implements and the ratio of the Full Bench in the case of Engineering Traders v. State of U.P. 1973 UPTC 91 (FB) would in any case continue to apply to it. Accordingly the rate of tax applicable to the turnover of pumping sets sold by the petitioner during the period relevant to the assessment year 1970-71 will be governed by Notification No. S. T. 3609/X-900(21)-69 dated 1st July, 1969, treating it as an agricultural implement and would be liable to sales tax at the rate of 3 per cent. The original view taken by the Sales Tax Officer that the petitioner's turnover of the pumping sets for the assessment year 1970-71 was to be treated as the turnover of 'agricultural implements' liable to be taxed at the rate of 3 per cent was, in our opinion, quite correct and did not suffer from any error whatsoever. The Sales Tax Officer as well as the appellate authority went wrong in holding, on the basis of the amendment made by Section 9 of U. P. Act No. 17 of 1974, in the First Schedule inserted by the 1971 Amendment Act, that pumping sets were not to be treated as agricultural implements in respect of the petitioner's assessment for the year 1970-71. There being no error in the original assessment order passed by the Sales Tax Officer, there was nothing which could be corrected by him in proceedings initiated under Section 22 of the U. P. Sales Tax Act.

15. Before parting with the case, we may observe that the learned standing counsel appearing for the respondents urged that Notification No. 7098/X- 1012-1965 dated 1st October, 1965, providing that the turnover of machinery and spare parts of machinery, not being such machinery or spare parts thereof as are taxable under any of the notifications issued under the aforementioned section shall be liable to tax at the rate of 6 paise per rupee as also Notification No. S.T.-3609/X-900(21)-69 dated 1st July, 1969, providing that the turnover of agricultural implements other than those worked by human or animal power and tractors including their spare parts and accessories other than tyres and tubes, were to be taxable at the rate of 3 paise per rupee, were operative when the 1971 Amendment Act came into force. Both these notifications are mentioned in the Second Schedule introduced by the 1971 Amendment Act. Accordingly, because of the provisions contained in Section 3-AB, these notifications became part of the Act itself and it will be deemed that Section 3-AB was, in respect of the assessments to be made in respect of turnover governed by these notifications, in force even during the assessment year 1970-71. It should, therefore, be taken that the assessment of the petitioner for the year 1970-71, even though it was for a period prior to coming into force of the 1971 Amendment Act, had been made under the authority of that Act and as such there should be no difficulty in reading the implications of the substitutions made by U. P. Act No. 17 of 1974 in the First Schedule to the 1971 Amendment Act even in respect of assessment made for a period prior to coming into force of that Act. We are unable to appreciate and accept this submission. The legal position as it emerges from various statutory provisions has already been indicated by us. Section 3-AB which runs thus :

(1) Notwithstanding any judgment, decree or order of any court, any tax imposed, assessed, levied or collected, or purporting to have been imposed, assessed, levied or collected, before the commencement of the Uttar Pradesh Sales Tax (Amendment and Validation) Act, 1971, under any of the notifications specified in the Second Schedule shall be deemed to have been validly imposed, assessed, levied or collected in accordance with law, as if the said notifications had been included in and formed part of this section and this section had been in force at all material times when such tax was imposed, assessed, levied or collected.

(2) Without prejudice to the generality of the provisions of Sub-section (1), the following consequences shall, in particular, ensue, that is to say-

(a) no suit or other proceeding shall be entertained or continued in any court or before any authority for the refund of any tax referred to in Sub-section (1); and

(b) no court shall enforce any decree or order directing the refund of any such tax

16. was enacted merely with a view to regularise the imposition, assessment, levy or collection of sales tax under the various notifications specified in the Second Schedule. It had nothing to do with the ambit and scope of the expressions used in various notifications. Viewed in the light of the contents of the proviso to newly added Section 3-A, it appears that the only object of mentioning various notifications in the Second Schedule to the 1971 Amendment Act was to provide for the taxes being levied at the rates mentioned in them till such time as they were altered by a fresh notification under Section 3-A(l)(a). We are unable to see as to how anything contained in Section 3-AB can be utilised to extend the retrospectivity of the provisions contained in Section 9 of U. P. Act No. 17 of 1974 beyond inception of the First Schedule itself. We, therefore, do not find any force in this submission of the learned standing counsel which certainly appears to be based on extremely invalid reasoning as well.

17. The petition, therefore, succeeds and is allowed. The order of the Sales Tax Officer dated 19th August, 1975 (annexure 2 to the writ petition), in so far as it enhances the levy of sales tax on pumping sets from 3 per cent to 6 per cent, as also the appellate order of the Assistant Commissioner (Judicial), Sales Tax, Jhansi, dated 20th November, 1976 (annexure 3 to the writ petition), in so far as it purports to dismiss the petitioners' appeal concerning determination of tax on the turnover of pumping sets during the assessment year 1970-71 are quashed. The respondents are directed to refund a sum of Rs. 1,206.32 representing enhancement of tax, made by the Sales Tax Officer in respect of the petitioners' turnover of pumping sets for the assessment year 1970-71 in proceedings initiated under Section 22 of the U. P. Sales Tax Act. In the circumstances, we direct the parties to bear their own costs.


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