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Ashok Servicentre and anr. Vs. Sales Tax Officer and anr. - Court Judgment

LegalCrystal Citation
Overruled ByAshok Service Centre and Ors. Vs. State of Orissa Dated:18.02.1983
SubjectSales Tax
CourtOrissa High Court
Decided On
Case NumberOriginal Jurisdiction Case No. 1391 of 1979
Judge
Reported in[1983]52STC50(Orissa)
AppellantAshok Servicentre and anr.
RespondentSales Tax Officer and anr.
Advocates:B. Agarwala, ;R.S. Agarwal, ;S.C. Lal and ;K.K. Jena, Advs.
DispositionApplication dismissed
Cases ReferredWallace Brothers and Co. Ltd. v. Commissioner of Income
Excerpt:
.....that does not at all bring out an anomalous situation so as to defeat the right of the orissa state financial corporation. agreement between the orissa state financial corporation and the loanee is a pure and simple contract governed by the provisions of the contract act, 1872 read with the provisions in the act, 1951 and its rules. on the other hand, a confiscation proceeding under the act, 1972 is punitive in nature for commission of a forest offence. thus, by virtue of the provision in section 56 read with section 64 (2) of the act, 1972, the action taken for confiscation of the vehicle cannot be extended to grant protection of the loan advanced by orissa state financial corporation. by doing that it amounts to grant premium to the pick-pockets in as much as, by making payment of..........list ii of the seventh schedule of the constitution of 1950. under section 8 of the 1947 act, the state government has been authorised to prescribe the points in the series of sales or purchases by successive dealers at which any goods or class or description of goods would be taxed and the state government in exercise of such power has prescribed a single point tax both in regard to sale and purchase of goods. the orissa state legislature enacted the orissa additional sales tax act (24 of 1975) (hereinafter referred to as the '1975 act') in exercise of its legislative powers under the said entry 54. section 2 of the 1975 act made provision for levy of additional tax on an escalated basis indicated in clauses (a), (b) and (c) thereof. the 1975 act was amended by orissa act 3 of 1979.....
Judgment:
R.N. Misra, C.J.

1. The Provincial Legislature of Orissa enacted the Orissa Sales Tax Act of 1947 (hereinafter referred to as the '1947 Act') in exercise of the legislative powers provided in entry 48 of List II of the Seventh Schedule of the Government of India Act of 1935. Entry 48 corresponds to entry 54 of List II of the Seventh Schedule of the Constitution of 1950. Under Section 8 of the 1947 Act, the State Government has been authorised to prescribe the points in the series of sales or purchases by successive dealers at which any goods or class or description of goods would be taxed and the State Government in exercise of such power has prescribed a single point tax both in regard to sale and purchase of goods. The Orissa State Legislature enacted the Orissa Additional Sales Tax Act (24 of 1975) (hereinafter referred to as the '1975 Act') in exercise of its legislative powers under the said entry 54. Section 2 of the 1975 Act made provision for levy of additional tax on an escalated basis indicated in Clauses (a), (b) and (c) thereof. The 1975 Act was amended by Orissa Act 3 of 1979 (hereinafter referred to as the '1979 Act') with effect from 1st April, 1979. Under the last Act, Section 2 defined 'declared goods' and Clause (b) thereof provided that unless the context otherwise required, words and expressions used but not defined in the latter Act were to have the same meanings as were respectively assigned to them in the 1947 Act. Section 4 authorised the State Government to make Rules. Challenge in this application under Article 226 of of the Constitution is to the 1975 Act as amended by the 1979 Act on several grounds.

2. At the hearing of the application, Mr. Agarwala for the petitioners advanced the following contentions :

(i) The State Legislature under the two subsequent Acts of 1975 and 1979 purported to levy additional sales tax only and did not intend to levy any new kind of tax grounded upon a different base. Since the scheme in the 1947 Act was not given up, modified or altered, the liability created under the subsequent legislation, if not compatible with the scheme of the 1947 Act, cannot be sustained. Otherwise stated, the impost under the latter Acts is, in pith and substance, an addition to the impost under Section 5(1) of the 1947 Act and consequently must fit into the scheme of the main Act and cannot be destructive of it;

(ii) Under the 1947 Act, the scheme being single point, the latter Acts cannot make provision for multi-point taxation ;

(iii) The latter Acts (1975 and 1979) being supplemental to the principal Act (1947), the tax incidence under the principal Act remains unaltered. Therefore, Section 3 of the 1975 Act as amended and the Rules made thereunder being incongruous are liable to be struck down. On an analysis of Section 3 of the Act of 1975 as amended, it should be held that the legislature has failed to provide a clear charging provision. Alternately, on a true interpretation thereof, it should be held that the legislative intention was to authorise imposition of an additional tax with an upper limit of one per cent as may be notified on the taxable turnover, which is the scheme under the 1947 Act ;

(iv) The Act does not lay down any guideline in respect of levy of tax under the latter Acts on essential commodities like medicine, food, etcetera. While goods like liquor and opium are exempt from taxation, the scope for multi-point additional tax on essential commodities should not be sustained ; and

(v) The Rules made under the 1975 Act as amended having not satisfied the requirements of Section 29 of the 1947 Act are to be struck down.

3. A counter-affidavit has been filed by opposite party No. 1, the Sales Tax Officer, taking the stand that the Act of 1975 is an independent one and it was competent for the State Legislature to make provision for multi-point taxation thereunder. It has been pleaded that the Act of 1975 is an independent statute and merely because the subsequent legislation has adopted certain provisions of the 1947 Act, it cannot be contended that the subsequent legislation is a part of the principal Act. All the contentions advanced on behalf of the petitioners have been averred to be without basis.

4. The Act of 1975 with its amendments in 1979 is not contended to be ultra vires the Constitution. It has been conceded before us that the latter Acts purport to tax sale or purchase of goods, and therefore, are within the legislative field covered by entry 54 of List II. It is unnecessary to refer to the catena of authorities where the Supreme Court has reiterated the position that each entry is a field and has to be construed in the widest possible amplitude as conferring power on the legislature to legislate. So wide is the field that there is no exhaustion of power by exercise and it is competent for the legislature to legislate again and again on the same subject-matter in exercise of the power conferred, provided that the legislations do not suffer from other infirmities.

5. The Act of 1975 as amended in 1979 is really not a supplemental Act and must be taken as an independent statute. The petitioners' counsel does not deny the power of the State Legislature to have legislated independently of the 1947 Act for raising additional sales tax without adopting the provisions of the Act of 1947. That being the position, merely because the Act of 1975 did not contain a long section dealing with definitions of the terms or did not independently provide for the machinery for computing the tax and recovering it or did not make miscellaneous provisions but adopted those in the Act of 1947, unless the context otherwise required, it did not make the Act of 1975 a supplemental one. It may be pointed out that the Act of 1975 has a preamble and a title. The Act defines a term and Section 3 makes provision for raising additional sales tax and Section 4 authorises the State Government to frame Rules. Most of the features found in a normal statute are present in the Act of 1975 and there is no justification for the stand taken on behalf of the petitioners that it is only a supplemental legislation and must be construed as a part of the Act of 1947.

We are inclined to agree with the learned standing counsel that undue emphasis is being put on the term 'additional' on behalf of the petitioners. It may be that the term embraces the idea of joining or uniting one thing to another so as thereby to form one aggregate as indicated in Black's Law Dictionary. It may also be that the extra burden created under the 1975 Act is taken as additional tax but it docs not necessarily mean that for raising an additional tax and thereby raising an aggregate demand, for every aspect of the matter the 1975 Act may be considered as supplemental. It was open to the State Legislature to impose an incidence of tax different from the one under the 1947 Act and yet the tax under the two Acts could be aggregated and a common demand could be raised. As long as the tax raised under both the Acts continued to be tax on sale or purchase covered by the legislative field, a 'no-objection' on the ground of vires could be raised. Since both the statutes have come from the sovereign legislature and the vires of the subsequent statute has not been assailed, the competency of the State Legislature to provide a different base and adopt a different scheme for taxation is not open to challenge. Once we hold that the two Acts are independent legislations coming from the common sovereign source, bulk of the argument advanced on the petitioners' side must stand rejected.

6. In passing, we may indicate that on the supposition that the 1975 Act was supplemental to the main Act of 1947, it had been contended that while the maximum rate of tax under the 1947 Act was 13 per cent, prescribing one per cent of tax on the turnover under the 1975 Act made it possible for the State Government to levy a tax in excess of 13 per cent and this violated the maximum rate prescribed under Section 5 of the 1947 Act. In view of what we have already observed, this argument has no foundation.

7. We shall now turn to the third contention of the petitioners. Section 3(1) of the 1975 Act provides :

Every dealer shall, in addition to the tax payable by him for a year under the said Act, be liable to pay additional tax at such rate not exceeding one per cent of his gross turnover for that year, as may be notified from time to time, by the State Government :

The intention of the legislature in enacting Section 3(1) is found from the following words in that section :Every dealer shall . . . be liable to pay additional tax at such rate not exceeding one per cent of his gross turnover . . .

Lord Dunedin in Whitney v. Commissioners of Inland Revenue (1926) 10 TC 88 observed :

Now there are three stages in the imposition of a tax. There is the declaration of liability, that is, the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment, that ex hypothesi has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly, come the methods of recovery if the person taxed does not voluntarily pay.

This observation was quoted with approval by the Federal Court of India in the case of Chatturam v. Commissioner of Income-tax, Bihar [1947] 15 ITR 302. On reference to Section 3 of the 1975 Act, there is no room for dispute that there is a declaration of liability when the section says :

Every dealer shall be liable to pay additional sales tax.

The Act adopts the scheme under the 1947 Act for quantification of liability as also for recovery of the demand. In the case of Wallace Brothers and Co. Ltd. v. Commissioner of Income-tax, Bombay City and Bombay Suburban District [1948] 16 ITR 240, the Privy Council pointed out that the liability to tax arises by virtue of the charging section alone. We are of the view that Section 3(1) has the requisite elements of a charging section and there is no force in the contention of the petitioners that the words in the section have failed to create a liability. While we agree that in the event of ambiguity in a taxing statute such ambiguity has to be resolved in favour of the taxpayer, we must indicate that where there is no ambiguity and the provision is clear, equitable considerations do not come in and the legislative intention must be in force.

8. On an analysis of Section 3(1) of the 1975 Act it is also clear that the legislative intention is to raise a tax in addition to the liability under the 1947 Act. If the liability under the 1947 Act in respect of a dealer is taken as X, Section 3(1) of the 1975 Act creates an additional liability which has to be within one per cent of the gross turnover for that year (the State Government at present has prescribed half per cent which may be taken as Y). Y is an additional liability, and therefore, has been nomenclatured as additional tax. Under the 1947 Act, the dealer's liability to sales tax is on the basis of his taxable turnover which is determined in the manner prescribed by that Act. Under the 1975 Act, the liability of the dealer is with reference to his gross turnover of the year. It was competent for the sovereign legislature to adopt either of the methods for raising sales tax. While sustaining the scheme under the 1947 Act, it could also raise an additional tax on the gross turnover and combine the two for the purposes of computation as also recovery. In the premises, the submission of Mr. Agarwala on this score has also no force.

9. The next contention advanced on behalf of the petitioners is that the Act does not lay down any guideline in respect of levy of tax under the 1975 Act on essential commodities like medicine, food, etcetera. It has been argued that while goods like liquor and opium are exempt from taxation, multi-point liability has been created in respect of essential articles. Strictly speaking, the argument is one relating to policy of taxation with which the court has ordinarily nothing to do. What items of human necessities would be taxed is ultimately a matter which the legislature has left to the State and the State Government in exercise of that power is entitled to exempt any specified or a class of goods from the liability of additional tax. This power has been vested in the State Government and the State Government is expected to act in consonance with public policy and taking appropriate aspects into consideration. Even the 1947 Act has delegated some of these powers to the State Government. Such delegation has been found valid in several decisions. We see no force in the contention.

10. Though not specifically pleaded, one of the contentions of the petitioners has been that the Rules have not been appropriately framed, and therefore, cannot be said to be validly enforced. Though the averment was not very specific, Mr. Agarwala explained his contention to be that the Rules purported to have been framed under Section 4 of the 1975 Act have not complied with the requirements of Sub-section (2) thereof. Section 4(2) of the 1975 Act provides :

All rules made under this Act shall, as soon as may be after they are made, be laid before the State Legislature for a total period of 14 days which may be comprised in one session or in two or more successive sessions and if during the said period the State Legislature makes modifications, if any, therein the rules shall thereafter have effect only in such modified form ; so, however, that such modificiations shall be without prejudice to the validity of anything previously done under the Rules.

When this point was pressed, we directed the learned standing counsel by order dated 14th January, 1982, to file an additional affidavit indicating clearly if the requirements of Section 4(2) of the 1975 Act had been satisfied. An affidavit has now been filed which shows that the requirements of the sub-section were completely satisfied. Therefore, there is no force in that contention.

11. All the points advanced by Mr. Agarwala on behalf of the petitioners fail. This writ application is accordingly dismissed. We direct the parties to bear their own costs.

B.K. Behera, J.

I agree with my Lord, the Chief Justice.


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