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Vino Chemical and Pharmaceutical Works Vs. the Sales Tax Officer and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. Nos. 176, 177 and 178 of 1964
Judge
Reported inAIR1965MP115; [1966]18STC466(MP)
ActsCentral Provinces and Berar Sales Tax Act, 1947 - Sections 6; Madhya Pradesh General Sales Tax Act, 1958 - Sections 10(1); Medicinal and Toilet Preparations (Excise Duties) Act, 1955; Prohibition Act, 1938; General Clauses Act, 1897 - Sections 8; Excise Act, 1915 - Sections 27A
AppellantVino Chemical and Pharmaceutical Works
RespondentThe Sales Tax Officer and anr.
Appellant AdvocateA.P. Sen and ;K.K. Adhikari, Advs.
Respondent AdvocateR.J. Bhave, Govt. Adv.
DispositionPetition dismissed
Cases ReferredJagannath v. Sales Tax Officer
Excerpt:
- - with the taking away of the state's power to levy excise duty on medicinal preparations containing alcohol, this basis disappears, and there can be no justification for making the state lose both the excise duty as well as the sales tax. and berar excise act, 1915, cannot be read as reference to the medicinal and toilet preparations (excise duties) act, 1955, then the petitioner's claim for exemption must fail......was exempt from tax under section 6 read with entry 32 of schedule ii of the central provinces and berar sales tax act, 1947, and that its turnover during the period from 1st april, 1959 to 31st december, 1960 was likewise exempt from tax under section 10(1), read with entry 28 of schedule i of the madhya pradesh general sales tax act, 1958, inasmuch as it had paid duty under the medicinal and toilet preparations (excise duties) act, 1955, on the medicinal preparations sold by it. this claim for exemption was rejected by the sales tax officer, raipur. against these orders of assessments, the petitioner has filed appeals before the appellate assistant commissioner of sales tax. according to the petitioner, those appeals arc still pending and the appellate assistant commissioner has.....
Judgment:

Dixit, C.J.

1. This order will also govern the disposal of Misc. Petitions Nos. 177 and 178, both of 1964.

2. These are three applications under Articles 226 and 227 of the Constitution for the issue of writs of certiorari for quashing three separate orders of the Sales Tax Officer, Raipur, assessing the petitioner to sales tax on its turnover of the sale of medicinal preparations during the year from 1st January 1958 to 31st December 1958, and the two subsequent years.

3. In the course of assessment proceedings for the aforesaid three years, the petitioner claimed that its turnover of medicinal preparations upto 31st March 1959 was exempt from tax under Section 6 read with Entry 32 of Schedule II of the Central Provinces and Berar Sales Tax Act, 1947, and that its turnover during the period from 1st April, 1959 to 31st December, 1960 was likewise exempt from tax under Section 10(1), read with Entry 28 of Schedule I of the Madhya Pradesh General Sales Tax Act, 1958, inasmuch as it had paid duty under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, on the medicinal preparations sold by it. This claim for exemption was rejected by the Sales Tax Officer, Raipur. Against these orders of assessments, the petitioner has filed appeals before the Appellate Assistant Commissioner of Sales Tax. According to the petitioner, those appeals arc still pending and the Appellate Assistant Commissioner has threatened to dismiss those appeals summarily in case it fails to deposit the amount of tax and penalty it has been directed to by the appellate authority.

4. Under Section 6, read with Entry 32 of Schedule II, of the C. P. and Berar Sales Tax Act, 1947, exemption from sales tax was granted on.

'Goods on which duty is or may be levied under the Central Provinces and Berar Excise Act. 1915 (II of 1915), or the Central Provinces and Berar Prohibition Act, 1938 (VII of 1938) or the Opium Act, 1878 (I of 1878).'

So also, by Section 10(1), read with Entry 23 of Schedule I of the M. P. General Sales Tax Act, 1958, exemption from sales tax has been granted to the following goods, namely,--

'Goods other than foreign and Indian made foreign liquor on which duty is or may be levied under Central Provinces and Berar Excise Act, 1915 (II of 1915), or the Central Provinces and Berar Prohibition Act, 1938 (VII of 1938), Madhya Bharat Excise Act, 1953, Rewa Excise Act, 1921, Bhopal Excise Act, 1955, Rajasthan Excise Act, 1955, or Opium Act, 1878 (1 of 1878).'

The claim for exemption is founded in the petitions before us mainly on the ground that under the Central Provinces and Berar Rectified Spirit Rules, 1942, promulgated by the State Government under Section 68 of the Central Provinces and Berar Prohibition Act, 1938, the petitioner obtained permits for the import of rectified spirits required for the manufacture of various medicinal preparations and paid duty on the rectified spirits supplied to him; that when the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, came into force on 1st April, 1957, the C. P. and Berar Prohibition Act, 1938, and the C. P. and Berar Rectified Spirit Rules, 1942, stood repealed by Section 21 of the Act of 1955 and thereafter the petitioner was required to pay duty under the Act of 1955; and that, therefore references in entries reproduced above of the Sales Tax Acts of 1947 and 1958 to the C. P. and Berar Prohibition Act, 1938, should be read according to the rule of construction laid down in Section 8of the General Clauses Act, 1897, as references to the Act of 1955; and that the references, when so read, entitled the applicant to claim exemption as it had paid duty under the Act of 1955 on the medicinal preparations manufactured and sold by it.

In his argument supporting the petitioners. Shri Sen, learned counsel for the applicant, added that under the C. P. and Berar Excise Act, 1915, a duty was leviable on medicinal or toilet preparations containing alcohol; that this Act was also repealed by Section 21 of the 1955 Act when it came into force; and that the reference in the aforesaid entries to the C. P. and Berar Excise Act, 1915, must be construed as reference to the Act of 1955 which repealed and re-enacted the provision in the Excise Act of 1915 with regard to levy of duty on medicinal and toilet preparations containing alcohol.

5. In our Judgment, all these petitions are without any merit and must be dismissed. Taking first the exemption claimed on the basis of duty paid on alcohol used as an ingredient in the manufacture, of medicinal preparations, it must be noted that the tax imposed on the petitioner under the Sales Tax Acts of 1947 and 1958 is on the sale transactions of medicinal preparations and not on any transaction of sale or purchase of alcohol as such, and the duty that was imposed under the C. P. and Berar Rectified Spirit Rules, 1942, made under the Prohibition Act of 1938 was on alcohol supplied to the applicant for the manufacture of medicinal preparations and not on medicinal preparations containing alcohol.

That being so, even if it is taken that after the coming into force of the Act of 1955 the duty which the petitioner paid on alcohol used by it as an ingredient in the manufacture of medicinal preparations was paid under the Act of 1955, and not under the C. P. and Berar Prohibition Act, 3938, and further even if it be assumed for the sake of argument that in regard to the payment of duty on alcohol the reference to the Prohibition Act of 1938 In the aforesaid entries should be construed by virtue of Section 8 of the General Clauses Act, 1897, as referring to the Act of 1955, still the petitioner, on the language of the entries referred to above, cannot claim exemption from sales tax on the turnover of sales of medicinal preparations merely because it paid duty on alcohol used in the manufacture of those preparations.

The said entries exempt from tax only those goods on which duty is or may be levied under the Acts mentioned in the entries and not the goods in the manufacture of which alcohol has been used as an ingredient and on which alcohol duty is or may be levied under the Acts referred to in the entries.

6. It is true that the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, levies duty on medicinal preparations. But this imposition of duty on medicinal preparations can afford no justification whatsoever for reading the reference to the C. P. and Berar Prohibition Act of 3938 in the relevant entries in the two Sales Tax Acts as reference to the Act of 1955. The reason is that under Section 8 of the General Clauses Act, 1897. It is only when the General Clauses Act or any Central Act or any Regulation after the commencement of the Genera) Clauses Act not only repeals but also re-enacts, with or without modification, any provision of a former enactment, then references in any other enanctment to the provision so repealed are required, unless a different intention appears, to be construed as references to the provision so re-enacted.

As the C. P. and Berar Prohibition Act, 1938, did not contain any provision imposing a duty on medicinal preparations, no question of repeal and re-enactment of such a non-existent provision can arise so as to attract Section 8 of the General Clauses Act, 1897. The words 'repeals', 're-enacts' and 'the provisions so repealed' occurring in Section 8 of the General Clauses Act, 3.897 are important and very significant, and limit the operation of the rule of 'construction of references' only where any provision of former enactment is repealed and re-enacted. In such a case, it is only the particular re-enacted provision that can be read in place of the repealed provision. The rule of construction laid down in Section 8 of the General Clauses Act, 1897, does not authorise the substitution of any provision whatsoever of the repealing enactment for the provision repealed of a former enactment.

If the contention of the petitioner were to prevail, the startling result would be that by reading the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, in place of the C. P. and Berar Prohibition Act of 1938, the petitioner would become entitled to claim exemption from sales tax on those goods to which no exemption was at all granted by the entries referred to earlier of the Sales Tax Acts of 1947 and 1958. In our opinion, the petitioner's claim for exemption from sales tax on its turnover of medicinal preparations based on the C. P. and Berar Prohibition Act of 1938 with the substituted references to the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 is altogether untenable.

7. The further argument of the learned counsel for the petitioner that the provision in the C. P. and Berar Excise Act, 1915, imposing a duty on medicinal preparations containing alcohol was repealed and re-enacted by the Act of 1955 and, therefore, the references to the Excise Act of 1915 in the aforesaid entries should be read as references to the Act of 1955 is equally unsound. The argument ha s obviously been advanced to get rid of the effect of the decision of a Division Bench of this Court in Alembic Distributors Ltd. v. Asst. Commr. of Sales Tax, 1901 MPLJ 1897, where it has been held that after the enactment of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, the power of Stale Government to levy excise duty under the C. P. and Berar Excise Act, 1915, on medicinal and toilet preparations containing alcohol' terminated and such articles ceased to be leviable with excise duty under the Excise Act and accordingly Entry 32 in Schedule II of the C. P. and Berar Sales Tax Act, 1947, no longer applies to the medicinal preparations and the sales of such preparations are subject to sales tax.

Learned counsel for the applicant frankly admitted that the decision in 1961 MPLJ 1397 (supra) stood in the way of the petitioner-Company in claiming exemption of sales tax on its turnover of medicinal preparations. In the case of Alembic Distributors Ltd., 1961 MPLJ 1897 (supra), the question of the operaliveness to the exemption granted by entry 32 to medicinal preparations containing alcohol, liable to duty under the Excise Act, 1935, was decided with reference to the power of the Stale Government to levy sales tax on the sale of such preparation and the termination under the Act of 1955 of the power of the State Government to levy excise duty on such preparations under the Excise Act, 1915. That decision is not, therefore, of any assistance in deciding the controversy raised before us.

8. Now, Section 27A of the Excise Act, 1915, no doubt authorised the imposition of a duty on medicinal and toilet preparations containing alcohol, and the power of the State Government to impose this duly came to an end by Section 21 of the Act of 1955 when it came into force. The Act of 1955 also imposed duties on medicinal preparations containing alcohol. But that Act, though it repealed the provision in the C. P. and Berar Excise Act, 1915, with regard to the imposition of duty on medicinal preparations containing alcohol, did not re-enact the repealed provision. Under the Excise Act of 1915, the Stale had the power to levy duty on medicinal preparations containing alcohol and to retain the proceeds thereof. It was this power and the right which were repealed by the Act of 1955. The Act of 1955 did not re-enact the provision in the Excise Act, 1915, with or without modification, giving to the Stale the right to levy-duty on medicinal preparations containing alcohol.

Under that Act the right of the State to levy such a duty was terminated and the excise duty that was imposed on medicinal preparations containing alcohol was a duty levied and imposed by the Central Government. There is a clear distinction between an excise duty levied by the State and an excise duty levied by the Central Government, and a provision taking away the State's right to levy the duty and giving it to the Central Government cannot in any sense be regarded as 're-enactment' within the meaning of Section 8 of the General Clauses Act, 1897, of the provision in the State Act giving to the State the right to levy excise duty on medicinal preparations containing alcohol. If the Act of 1955 had authorised the State Government to levy excise duty on medicinal preparations containing alcohol, then the matter would have been different and it could be said that the duty imposed under the Act of 1955 was in exactly the same way as before under the Excise Act of 1915.

It is also important to note that the exemption granted by the entries of the Sales Tax Acts referred to earlier, to medicinal preparations containing alcohol proceeded on the basis that as the preparations had already been subjected to duty under the Excise Act of 1915 and the State had benefited by it, a second tax in the form of sales tax should not be levied on the sale of such preparations. With the taking away of the State's power to levy excise duty on medicinal preparations containing alcohol, this basis disappears, and there can be no justification for making the State lose both the excise duty as well as the sales tax.

Section 8 of the General Clauses Act, 1897, uses the words 'unless a different intention appears', and the 'different intention' is shown by the frame of the entries granting exemption from sales tax to the medicinal preparations on the assumption of their liability to duty under the State Excise Act. If, as we think, the reference in the exemption entries to the C. P. and Berar Excise Act, 1915, cannot be read as reference to the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, then the petitioner's claim for exemption must fail.

9. In support of the argument that in the present case Section 8 of the General Clauses Act, 1897, was attracted, learned counsel for the applicant relied on Jagannath v. Sales Tax Officer, (1964) 15 STC 702 (Ker). In that case, it has been held that by virtue of Section 7 of the Travancore Cochin Interpretation and General Clauses Act, the reference in Section 4 of the General Sales Tax Act to the Cochin Abkari Act must be taken to be reference to the Medicinal and Toilet Preparations (Excise Duties) Act, 1955; that as the later Act repealed and replaced those provisions in the Cochin Abkari Act which provided for imposition of duty on spirituous medicinal preparations, those preparations could not be assessed to sales tax under the General Sales Tax Act.

There is a difference between the wording of Section 7 of the Travanoore-Cochin Interpretation and General Clauses Act which uses the words 'where any Act repeals and re-enacts' and Section 13 of the M. P, General Clauses Act, 1957, which begins with the words 'Where any Madhya Pradesh Act repeals and re-enacts'. Section 13 of the M. P. General Clauses Act, 1957, cannot, therefore, be applied here. Leaving aside this difference, the decision of the Kerala High Court no doubt supports the petitioner in his contention about the applicability of Section 8 of the General Clauses Act, 1897. But, as we have endeavoured to point out earlier, there is no re-enactment by the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, of the provision in the local Act authorising the State Government to impose duty under the Excise Act, 1915, on medicinal preparations containing alcohol, and for this reason, with respect to the learned Judge of the Kelara High Court, we do not find ourselves in agreement with the view expressed by him in Jagannath's case, (1964) 15 STC 702 (Ker) (supra).

10. For the foregoing reasons, our conclusionis that the petitioner has been rightly assessed tosales tax on its turnover of medicinal preparationsduring the material years. The result is that allthese petitions are dismissed with costs. Counsel'sfee in each case is fixed at Rs. 100. The outstanding amount of security deposit, if any afterthe deduction of costs, shall be refunded to thepetitioner.


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