1. The proper construction and legal effect of a notification under s. 9(1)of the Andhra Pradesh General Sales Tax Act, 1957 (A.P. VI of 1957) which forshortness we would call the Act, is the principal question that arises forconsideration in this appeal by special leave in which the correctness of thedecision of the High Court dismissing a Writ Petition filed by the appellant ischallenged.
2. Section 5 of the Act is the charging section under which dealers areliable to pay sales tax on their turnover. Under sub-s. (3)(a) of this section,read with Sch. II to the Act cotton textile goods which was the commodity inwhich the appellants were dealing, were liable to tax at a single point.Section 9 of the Act enabled the State Government to exempt the tax leviableunder the Act. In exercise of the power thus conferred a notification wasissued on December 13, 1957, which read :
'In exercise of the powersconferred by sub-Section (1) of Section 9 of the Andhra Pradesh General SalesTax Act, 1957, (Andhra Pradesh Act VI of 1957, hereinafter referred to as thesaid Act) the Governor of Andhra Pradesh hereby exempts from the tax payableunder the said Act, with effect on and from the 14th December, 1957, the saleor purchase of any of the goods appended hereto :
Provided that in the case ofany class of such goods in respect of which additional duties of excise areleviable by the Central Government under clause 3 of the Additional Duties ofExcise (Levy and Distribution) Bill, 1957, read with s. 4 of the provisionalCollection of Taxes Act, 1931 (Central Act XVI of 1931), the exemption shall besubject to the following conditions, namely :-
1. The dealer shall prove tothe satisfaction of the assessing authority that additional duties of excisehave been so levied and collected on such goods by the Central Government, indefault of which the dealer shall be liable to pay the tax under the said Actin respect of such goods.
2. Any dealer who is so liableto pay the tax may, at his option, pay, in lieu thereof a lump sum by way ofcompensation determined in the manner specified in condition (3). ....................................................'
3. As nothing turns on the terms of condition 3 with which the notificationends it is not set out. The appendix which is referred to in the openingparagraph has three clauses the first of which is the only material one andthis runs :
'1. All varieties of textiles, viz., cotton,woollen or silken including rayon, art silk or nylon, whether manufactured byhandloom, powerloom or otherwise;'
4. Pausing here, it is necessary to set out the terms of clause 3 of theAdditional Duties of Excise Bill, 1957, which is referred to in the proviso tothe opening paragraph of the notification. Though the Bill was later passedinto law and became an Act, we shall refer to the Bill conformably to thephraseology of the notification. Clause 3(1) which is the relevant portion ofthat clause reads :
'3. (1) There shall be levied and collected inrespect of the following goods, namely, sugar, tobacco, cotton fabrics, rayonor artificial silk fabrics and woollen fabrics produced or manufactured inIndia and on all such goods lying in stock within the precincts of any factory,warehouse or other premises where the said goods were manufactured, stored orproduced, or in any premises appurtenant thereto, duties of excise at the ratesspecified in the First Schedule to this Act.'
5. How the matter came before the High Court was briefly this. There was nodispute that the appellants were and are doing business in the purchase andsale of textile goods. They claimed exemption from the payment of sales tax inrespect of goods in stock with them on December 14, 1957, relying on thenotification are out earlier. The Sales Tax authorities, however, rejected thisclaim and as a result a Writ Petition was filed in the High Court under Art.226 by the appellants praying for a direction for quashing the notice issued bythe Sales Tax Department of the Government of Andhra Pradesh calling upon themto pay the sales tax on these goods. It is now necessary to mention that thevalidity of the action of the Sales Tax Officials - the Commercial Tax Officer,the second respondent, - making the demand was impugned by the appellants notmerely on the ground that no tax was payable by them by reason of the abovenotification but also on various other grounds including the constitutionalinvalidity of the Sales Tax Act itself and in particular the provisionsimposing sales tax on textile goods. The learned Judges dismissed theirpetition rejecting everyone of the contentions urged, and the appellants havecome up in appeal after obtaining special leave. It must, however, be mentionedthat the argument regarding the constitutional invalidity of the Act and the ruleswere not repeated before us and the only point arising for consideration is asregards the construction of the notification.
6. Before proceeding further it would be convenient to set out the groundson which the learned Judges held that the appellants were not within thebenefit of the exemption conferred by the notification. The argument urged onbehalf of the State Government as regards the construction of the notificationand which was accepted by the learned Judges of the High Court, was brieflythis. The exemption from payment of sales tax was granted in order to avoiddouble taxation i.e., both the excise duty leviable by the Central Governmentunder clause 3 of the Bill and sales tax to the State Government and it wasclaimed that this was made out by the terms of the proviso to the notification.In other words, the reasoning was that if the exemption provision contained inthe 1st paragraph of the notification was to operate, the goods must have beensuch that if was liable to the tax under clause 3(1) of the Bill and that wherethis condition was not satisfied the exemption provision had no application. Itwas admitted before the High Court that the textile goods in the possession ofthe appellants were not subject to excise duty or the additional excise dutyunder clause 3(1) of the Bill. As no excise duty was leviable on these goodsthere was, of course, no question of the dealer being able to prove to thesatisfaction of the assessing authorities under condition 1 of the proviso thatadditional duties had been levied and collected from him. Another and distinctline of argument was based on the use of the expression 'any class of suchgoods' as distinguished from 'any goods' occurring in theproviso and in regard to this the learned Judges observed :
'Textiles fall within the class of such goods inregard to which additional duties could be levied in certain contingencies. Itdoes not mean that only such goods as are actually liable to be taxed by reasonof s. 3 of the abovementioned Central Act, that were intended to be covered bythe proviso. If that were so, the expression 'any class of such goods' would beunmeaning. In our opinion, that clause only conveys the thought 'goodsbelonging to the class' in respect of which additional duties could be levied.That expression does not exclude goods set out in the appendix merely becausethey would not fall within the scope of Section 3 of the central Act.'
7. On these 3 lines of reasoning the learned Judges held that the appellantswere not entitled to the benefit of the exemption and in consequence directedthe dismissal of the Writ Petition. It is the correctness of this interpretationthat is challenged before us.
8. Mr. Chatterjee, learned counsel for the appellants, submitted that onplain reading of the notification the appellants were entitled to the benefitof the exemption if para I stood alone. This submission has to be accepted andwe heard no serious argument against it. The competence of the State Governmentto grant an exemption, whether qualified or unqalified, not being in dispute,the only question for consideration is whether the effect of the first paragraphsof the notification has been qualified or modified by the rest of thenotification including the conditions imposed thereunder. Learned counsel forthe respondent relied on the same two lines of reasoning on which the HighCourt has decided the Writ Petition. He stressed before us in particular theargument based on the use of the words 'any class of such goods' inthe proviso.
9. The Ist paragraph of the notification grants an exemption which, if itstood alone, provides that no sales tax would be leviable on and from December14, 1957 on the sale or purchase of every variety of textiles. This, however,is subject to a proviso which undoubtedly cuts into and restricts the operationof the exemption clause and we have to determine the extent of the restrictionof the area carved out. A plain and prima facie reading of the proviso withoutgoing into the distinction between goods & 'class of goods' wouldappear to show that an exception is made in cases where additional duties ofexcise are 'leviable' by the Central Government under clause 3 of theBill. In such cases the conditions which follow the proviso have to besatisfied, viz., that the additional duties of excise have to be proved to havebeen paid by the dealer in order to claim the benefit of the exemption. It isnow common ground that no additional duty of excise was leviable in respect ofthe goods in the possession of the appellants and consequently there is noquestion of the appellants having to prove to the satisfaction of the assessingauthorities that such duties has been levied and collected from them. Thiswould be the plain reading of the section. Learned counsel for the respondent,however, repeated before us the argument which found favour with the learnedJudges of the High Court based on the interpretation which he sought to placeon the words 'any class of such goods' in respect of which additionalduties are leviable. Now, under clause 3(1) of the Bill, learned counselpointed out, additional duties of excise could be levied on cotton fabricsproduced or manufactured in India and that it was only by reason of such goodsnot lying within the precincts of a factory, warehouse etc. but with a dealer,that no such duty became leviable in the case of the goods with the appellants.The argument was that 'textile goods' were 'a class ofgoods' in respect of which an additional duty was leviable, though byreason of their location viz, not being within the precincts of a factory,warehouse etc. no duty could be levied and that consequently unless condition 1to the proviso was satisfied the exemption could not be claimed. The learnedJudges accepted this argument, but with great respect to them, it appears to usthat they were in error in doing so. In the first place, 'the class ofgoods' referred to in the proviso to the notification are such that inrespect of them duties or excise are leviable. If, therefore, in respect of aclass of goods such duties are not leviable because of the situs in which theyare lying or are stocked, they would not be the class of goods in respect ofwhich duties of excise are leviable for the essential condition for the provisoto be brought into operation is the liability of the goods to the levy of theadditional duty. It therefore appears to us that the expression 'class ofsuch goods' has to be understood as being a reference not merely to thegoods specified in the opening words of clause 3(1) of the Bill but to suchgoods as fall within the entirety of that taxing provision and in respect ofwhich therefore the additional duty would be leviable, for in respect of cottonfabrics produced in India per se or simplicitor no excise duty would beleviable unless they are at the premises which are specified in the latterportion of the clause 3(1) of the Bill. Both these conditions are necessary toexist before the duty of excise is 'leviable' and when the provisotherefore uses the words 'any class of such goods' it could onlyrefer to the class of goods named in the 1st para of clause 3(1) - lying storedor stocked in the places referred to in the concluding portion of the clause.
10. There is another aspect from which this question of construction couldbe viewed. It cannot be disputed that the proviso and the conditions appendedthereto form an integral part thereof. It is obvious that where the provisooperates it would be open to the dealer affected by it to pay the additionalduty and establish that he has paid such duty and thereby entitle himself tothe exemption. In other words, it cannot be that the proviso excludes theexemption but in circumstances in which the conditions cannot be fulfilled. Theconditions themselves would thus throw light upon the words of the proviso, andwhen the proviso is read with the conditions of which they are an integralpart, the conclusion is inescapable that the world 'leviable' used inthe proviso means that in respect of the goods specified as regards which heclaims exemption from the payment of sales tax there was a liability upon himto pay the additional excise duty under clause 3 of the Bill for it was only inthat event that he would be able to prove to the assessing authorities thatthat additional duty has been levied and collected from him.
11. Learned Counsel for the respondent also repeated before us the otherline of argument which the High Court accepted viz., that the notification ofGovernment in granting the exemption was to avoid double taxation, viz., ofliability to pay both the excise duty as well as the sales tax and that as inthe present case the appellants were admittedly not bound to pay the additionalexcise duty they could make no claim to the benefit of the exemption either. Wedo not feel persuaded to accept this argument. No doubt, statutes have to beconstrued as a whole so as to avoid any inconsistency or repugnancy among itsseveral provisions, but if there is nothing to modify, nothing to alter, ornothing to qualify the language of a statute, the words and sentences have tobe construed in their ordinary and natural meaning [vide 36 Hals (3rd Edn.) s.585]. What we are now concerned with is a fiscal provision and it has oftenbeen said that there is no equity in a taxing statute and either the subject iswithin it or not, on the words of the enactment or the rules validly madethereunder. In a taxing statute there is no room for any intendment but regardmust be had to the clear meaning of the words. The entire matter is governedwholly by the words of the provision. If the tax-payer is within the plainterms of the exemption he cannot be denied its benefit by calling in aid anysupposed intention of the exempting authority. If such intention can begathered from the construction of the words of the statute or rule or bynecessary implication therefrom, the matter is different, but that is not the positionhere. In this connection we might refer to the observations of Lord Watson inSalomon v. Salomon & Co. 1897] A.C. 22. 38. :
'Intention of the legislature is a common but veryslippery phrase, which, popularly understood may signify anything fromintention embodied in positive enactment to speculative opinion as to what thelegislature probably would have meant, although there has been an omission toenact it. In a Court of Law or Equity, what the legislature intended to be doneor not to be done can only be legitimately ascertained from that which it haschosen to enact, either in express words or by reasonable and necessaryintendment.'
12. Learned counsel for the State is possibly right in the submission thatthe object behind the framers of the notification was to avoid double taxationbut the operation of an enactment or of a notification has to be judged not bythe object which the legislature or the notifying authority, as the case maybe, may have had in mind but by the words which it has employed to effectuatethe legislative intent. In the case before us the operative words of thenotification are to be found in the 1st paragraph granting the exemption and itwas not disputed that the appellants were within that provision. The next questionwould be as to whether the exemption to which the appellants were manifestlyentitled under the 1st paragraph of the notification they have been deprived ofby the operation of the proviso. If the proviso on its proper construction, aswe have endeavoured to point out earlier, cannot apply to cases where anadditional duty of excise is not leviable under clause 3 of the Bill it wouldfollow that the operation of the exemption is unaffected by the proviso. Theappellants were therefore entitled to the relief from sales tax granted by thenotification dated December 13, 1957.
13. In the writ Petition which they filed to the High Court they prayed fora declaration that certain provisions of the Andhra Pradesh Act VI of 1957 wereultra vires the Constitution of Indian. As stated earlier, this point about theconstitutional invalidity of the Act was abandoned in this Court and theargument before us was confined wholly to their claim to exemption under thenotification.
14. The appeal is accordingly allowed and the order of the learned Judgesdismissing the Writ Petition is set aside. The relief to which the appellantwould be entitled would be, having regard to the fact that appellants failed intheir attempt to impugn the constitutional validity of the Act etc., adeclaration that they are entitled to the benefit of the notification exemptingthem from the payment of sales tax in respect of textile goods in stock withthem on December 14, 1957, and restraining the respondents from levying orcollecting sales tax from them in respect of such stock. As the appellantschallenged unsuccessfully the constitutional validity of the Sale Tax Actbefore the High Court we do not consider that the order for costs passed by thelearned Judges of the High Court should be interfered with. The appellants,however, will be entitled to costs in this Court.
15. Appeal allowed.