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Union Medical Agency Vs. the State of Gujarat - Court Judgment

LegalCrystal Citation
Overruled ByCommissioner of Sales Tax, State of Gujarat Vs. Union Medical Agency
SubjectSales Tax
CourtGujarat High Court
Decided On
Case NumberSales Tax Reference No. 9 of 1969
Judge
Reported in[1973]31STC396(Guj)
ActsBombay Sales Tax Act, 1959 - Sections 2, 2(25), 3, 4, 4(1), 6, 7, 7(1), 7(2), 7(3), 8, 9, 10, 11, 12, 13, 14, 19, 19(6), 22, 22(1), 32, 33, 34, 35, 36, 37, 38, 46, 47, 48 and 61; Central Sales Tax Act, 1956 - Sections 2, 4(2), 6, 7, 7(1), 8, 8(1), 8(2), 8(2A), 8(3), 8(4), 8(5), 14 and 15
AppellantUnion Medical Agency
RespondentThe State of Gujarat
Advocates: S.L. Modi, Adv.
Cases ReferredRein v. Lane
Excerpt:
sales tax - dealer - sections 2, 2 (25), 3, 4, 4 (1), 6, 7, 7 (1), 7 (2), 7 (3), 8, 9, 10, 11, 12, 13, 14, 19, 19 (6), 22, 22 (1), 32, 33, 34, 35, 36, 37, 38, 46, 47, 48 and 61 of bombay sales tax act, 1959 and sections 2, 4 (2), 6, 7, 7 (1), 8, 8 (1), 8 (2), 8 (2a), 8 (3), 8 (4), 8 (5), 14 and 15 of central sales tax act, 1956 - term registered dealer in clause (ii) of section 8 would include dealer registered under act of 1956 on whom liability to pay sales tax imposed under section 4 - dealer who purchases goods from dealer registered under act of 1956 entitled to deduct from his turnover resales of goods purchased by him - purchases which are deducted to be made on or after appointed day if goods at time of their purchase were goods specified in schedule c. - - 1. an interesting.....desai, j.1. an interesting question of law arises for our determination in this reference. the question is whether the expression 'registered dealer' in clause (ii) of section 8 of the bombay sales tax act, 1959 (hereinafter referred to as the 'bombay act'), bears the meaning that is assigned to it in sub-section (25) of section 2, which is the definition section, or whether the said expression is capable of bearing a different meaning in view of the subject and context in which it is used in clause (ii) of section 8 of the act. the question arises in these circumstances : the assessees were at all material times dealers in spirit and alcohol and were registered as dealers under the bombay act. during the relevant assessment periods, namely, 1st january, 1960, to 31st march, 1963, the.....
Judgment:
Desai, J.

1. An interesting question of law arises for our determination in this reference. The question is whether the expression 'registered dealer' in clause (ii) of section 8 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as the 'Bombay Act'), bears the meaning that is assigned to it in sub-section (25) of section 2, which is the definition section, or whether the said expression is capable of bearing a different meaning in view of the subject and context in which it is used in clause (ii) of section 8 of the Act. The question arises in these circumstances :

The assessees were at all material times dealers in spirit and alcohol and were registered as dealers under the Bombay Act. During the relevant assessment periods, namely, 1st January, 1960, to 31st March, 1963, the assessees had purchased goods from one Motibhai Gopalbhai Patel, who was carrying on business at Baroda and was at the relevant time a dealer registered under the Central Sales Tax Act, 1956 (hereinafter referred to as the 'Central Act'). The said Motibhai Patel was, however, not registered as a dealer under the Bombay Act. During the course of proceedings for assessment to sales tax under the Bombay Act, the assessees claimed deduction from their turnover in respect of resales of goods purchased by them from the said Motibhai Patel. The claim for deduction was found on the provisions of clause (ii) of section 8 of the Bombay Act which in substance provides that resales of goods purchased by an assessee from a registered dealer shall be deducted from the turnover of sales of goods on which sales tax is leviable if certain conditions are fulfilled. The Sales Tax Officer rejected the claim of the assessees for such deduction on the ground that the said Motibhai Patel from whom the goods were purchased was not a registered dealer within the meaning of clause (ii) of section 8 in that he was not a dealer registered under the Bombay Act at the relevant time. The assessees carried the matter in appeal before the Assistant Commissioner of Sales Tax but the appeal was dismissed. The assessees thereupon preferred a second appeal before the Gujarat Sales Tax Tribunal (hereinafter referred to as the 'Tribunal'), but the Tribunal also dismissed the appeal holding that in order to claim deduction from the turnover of sales of goods under clause (ii) of section 8 of the Bombay Act, what was required to be shown was that the goods were purchased by the dealer on or after the appointed day from a 'registered dealer' and in view of the definition of the said expression as contained in sub-section (25) of section 2 of the Bombay Act, such registered dealer must of necessity be a dealer registered under the Bombay Act. The Tribunal held that since the said Motibhai Patel from whom the assessees had purchased the goods in question was not a dealer registered under the Bombay Act, the requirements of clause (ii) of section 8 of the Bombay Act were not satisfied and the claim for deduction made by the assessees was not justified.

The assessees thereupon made an application under section 61 of the Bombay Act requiring the Tribunal to refer to this court the question of law arising out of its order. The Tribunal acceded to the request of the assessees and has stated a case in respect of the following question of law :

'Whether for the purpose of allowing deduction from the turnover of sales under clause (ii) of section 8 of the Bombay Sales Tax Act, 1959, purchases of goods made by a dealer registered under the Bombay Sales Tax Act, 1959, from a dealer registered under the Central Sales Tax Act, 1956, but not registered under the Bombay Sales Tax Act, 1959, can be said to be purchases of goods made from the registered dealer within the meaning of clause (ii) of section 8 of the Bombay Sales Tax Act, 1959 ?'

It may be mentioned at this stage that Mr. S. L. Modi, the learned Advocate appearing on behalf of the assessees, had submitted in the forefront of his arguments that the question as framed did not bring out the real question of law which arises out of the order of the Tribunal. The submission was that the question should have been so framed as to confine itself to purchases of goods from a dealer registered under the Central Act who, by virtue of section 4 of the Bombay Act, was liable to pay tax on the sales of those goods to the dealer registered under the Bombay Act. We find that there is justification in the grievance made by Mr. Modi and we have accordingly reframed the question in the following terms :

'Whether for the purpose of allowing deduction from the turnover of sales under clause (ii) of section 8 of the Bombay Sales Tax Act, 1959, purchases of goods made by a dealer registered under the Bombay Sales Tax Act, 1959, from a dealer who is registered under the Central Sales Tax Act, 1956, and who is liable to pay tax under section 4 of the Bombay Sales Tax Act, 1959, though not registered under the Bombay Sales Tax Act, 1959, can be said to be purchases of goods made from a registered dealer within the meaning of clause (ii) of section 8 of the Bombay Sales Tax Act, 1959 ?'

The question which arises for our decision turns upon the true construction of clause (ii) of section 8 of the Bombay Act in the light of the definition of the expression 'registered dealer' found in sub-section (25) of section 2 of the said Act. In order to appreciate the rival contentions which were strenuously urged before us, it would be necessary first to refer to the relevant provisions of the Central Act as well as of the Bombay Act. We shall first turn to the Central Act and briefly refer to the relevant provisions of the said Act.

2. The Central Act was enacted to formulate principles for determining as to when a sale or purchase of goods takes place in the course of inter-State trade or commerce or outside a State or in the course of import into or export from India, to provide for the levy, collection and distribution of taxes on sales of goods in the course of inter-State trade or commerce and to declare certain goods to be of special importance in inter-State trade or commerce and specify the restrictions and conditions to which State laws imposing taxes on the sale or purchase of such goods of special importance shall be subject. Clause (b) of section 2 of the Central Act defines the expression 'dealer' to mean 'any person who carries on the business of buying or selling goods, and includes a Government which carries on such business'. 'Registered dealer' is defined in clause (f) to mean 'a dealer who is registered under section 7'. We shall presently refer to section 7. However, before we do so, it would be convenient to refer to section 6, which reads as under :

'6. (1) Subject to the other provisions contained in this Act, every dealer shall, with effect from such date as the Central Government may, by notification in the official Gazette appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales effected by him in the course of inter-State trade or commerce during any year on and from the date so notified.

(1-A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.

(2) Notwithstanding anything contained in sub-section (1) or subsection (1-A), where a sale in the course of inter-State trade or commerce of goods of the description referred to in sub-section (3) of section 8 -

(a) has occasioned the movement of such goods from one State to another; or

(b) has been effected by a transfer of documents of title to such goods during their movement from one State to another; any subsequent sale to a registered dealer during such movement effected by a transfer of documents of title to such goods shall not be subject to tax under this Act : Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner a certificate duly filled and signed by the registered dealer from whom the goods were purchased, containing the prescribed particulars.'

Sub-section (1) of section 7 provides that every dealer liable to pay the tax under the Central Act shall make an application for registration under the Act to such authority in the appropriate State as the Central Government may, by general or special order, specify, within such time as may be prescribed for the purpose and every such application shall contain such particulars as may be prescribed. Sub-section (2) of the said section provides that any dealer liable to pay tax under the sales tax law of the appropriate State, or where there is no such law in force in the appropriate State or any part thereof, any dealer having a place of business in that State or part, as the case may be, may, notwithstanding that he is not liable to pay tax under the Central Act, apply for registration under the said Act to the authority referred to in sub-section (1) and every such application shall contain such particulars as may be prescribed. There is an explanation to this sub-section which says that for the purposes of the said sub-section, a dealer shall be deemed to be liable to pay tax under the sales tax law of the appropriate State notwithstanding that under such law a sale or purchase made by him is exempt from tax or a refund or rebate of tax is admissible in respect thereof. We are not concerned with the rest of the sub-sections of section 7. Section 8 of the Central Act lays down the rate structure of tax on sales in the course of inter-State trade or commerce. Transactions of sale in the course of inter-State trade or commerce are classified by section 8 into four broad categories, namely : (i) sales to Government falling within section 8(1)(a); (ii) transactions falling within section 8(1)(b), that is, sales to a registered dealer other than Government of goods referred to in sub-section (3) of section 8; (iii) transactions falling within section 8(2)(a), that is, sales of goods which are declared under section 14 to be of special importance in inter-State trade or commerce, and (iv) transactions falling within section 8(2)(b), that is, sales not falling within section 8(1) in respect of goods other than declared goods. Different rates of tax in respect of each of these four categories of transactions are prescribed by the Parliament in section 8. So far as sales to Government are concerned, they constitute a large bulk of sales in the course of inter-State trade or commerce. For these inter-State sales a uniform rate of tax is fixed under section 8(1)(a). The same is the position in regard to inter-State sales falling within section 8(1)(b), that is, inter-State sales to a registered dealer of goods described in section 8(3), which inter alia include goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or, subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power. There also a uniform rate of tax is prescribed. The rate of tax in respect of both these categories of inter-State sales was originally two per cent., but since 1st July, 1956, it has been raised to three per cent. It may be mentioned, however, that sub-section (4) of section 8 inter alia provides that the provisions of sub-section (1) shall not apply to any sale in the course of inter-State trade or commerce, unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority. The rate of tax prescribed by section 8(2)(a) for inter-State sales of declared goods is the rate applicable to the sale or purchase of such goods inside the appropriate State. The rate applicable to the sale or purchase of declared goods inside the appropriate State could not, however, exceed two per cent. prior to 1st July, 1966, and, since then, three per cent. by reason of section 15 of the Central Act. So far as transactions of sale falling within section 8(2) are concerned, the rate of tax prescribed is 10 per cent. or the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. Sub-sections (2-A) and (5) of section 8, broadly speaking, provide that in certain circumstances no tax shall be payable or tax shall be payable at a rate lower than that prescribed in sub-section (1) or sub-section (2), as the case may be.

3. From the relevant provisions of the Central Act set out above, it would appear that under the said Act every dealer is liable to pay tax on sales effected by him in the course of inter-State trade or commerce and every such dealer is required to obtain a certificate of registration under the said Act. It may be noted that the combined effect of sub-sections (1)(b), (3) and (4) of section 8 is that a dealer, who in the course of inter-State trade or commerce sells to a registered dealer, other than the Government, goods specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or for use by him in the manufacture or processing of goods for sale is liable to pay tax at the concessional rate of 3 per cent. provided the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled in and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from a prescribed authority.

4. We shall now turn to the relevant provisions of the Bombay Act. Section 2 defines various expressions used in the Act. The said section, however, is expressly made subject to the restriction which is usually found in all definition sections. The opening part of the said section conveys that the expressions used in the Act would bear the meaning assigned to them in the definition section 'unless the context otherwise requires'. Sub-section (25) of section 2 defines the expression 'registered dealer' as meaning a dealer registered under section 22. Sub-section (1) of section 22, in so far as it is material, provides that no dealer shall, while being liable to pay tax under section 3 or under sub-section (6) of section 19, carry on business as a dealer, unless he possesses a valid certificate of registration as provided by the Act. The requirement of obtaining a certificate of registration is thus connected with the liability of a dealer to pay tax under section 3 or under sub-section (6) of section 19. The rest of the sub-sections of section 22 provide for the manner of registration, issue of registration certificate and amendment and cancellation thereof. Section 3 provides for incidence of tax and sub-section (1) thereof, in so far as it is material, provides that every dealer whose turnover either of all sales or of all purchases made during the year ending on the 31st day of March, 1959, or the year commencing on the 1st day of April, 1959, has exceeded or exceeds the prescribed limit specified in sub-section (4) shall, until such liability ceases under sub-section (3), be liable to pay tax under the Act on his turnover of sales and on his turnover of purchases made, on or after the appointed day. There is a proviso to the said sub-section, which is not material for the present case. The rest of the sub-sections of section 3 also do not require to be referred to. Section 6 enacts that subject to the provisions of the Act and to any Rules made thereunder, there shall be paid by every dealer, who is liable to pay tax under the Act, the tax or taxes leviable in accordance with the provisions of Chapter II. Section 6 is followed by a group of sections, which deal with the levy of sales tax or general sales tax, as the case may be, on turnover of sales of different classes of goods at prescribed rates. These sections are sections 7 to 10. It is not necessary to set out those sections in this judgment. What requires to be noted, however, is that in each of these four sections a provision has been made to the effect that in levying the sales tax or general sales tax, as the case may be, at the prescribed rates, certain deductions shall be made from the turnover of sales of goods of the dealer concerned. In other words, while assessing the sales tax or general sales tax, as the case may be, payable by the concerned dealer, sections 7 to 10 contemplate certain deductions to be made from the turnover of sales of the said dealer. We shall set out section 8 in order to illustrate this position. Section 8, as it stood at the material time, read as under :

'8. There shall be levied a sales tax on the turnover of sales of goods specified in Schedule C at the rate set out against each of them in column 3 thereof, but after deducting from such turnover, -

(i) resales of goods on the purchase of which the dealer is liable to pay purchase tax under section 13 or 14,

(ii) resales of goods purchased by him on or after the appointed day from a registered dealer, if the goods at the time of their purchase were goods specified in Schedule C, and,

(iii) sales of goods, or resales of goods to which clauses (i) and (ii) do not apply, to an authorised dealer, or recognised dealer, or to a commission agent holding a permit who purchases on behalf of a principal who is an authorised dealer or recognised dealer, upon such dealer or commission agent, as the case may be, furnishing a certificate as provided in section 12.'

It would be seen that in levying sales tax on the turnover of sales of goods specified in Schedule C at the rate set out against each of them in column 3 thereof, deduction from turnover is required to be made in respect of the following categories of sales or resales of goods : (i) resales of goods on the purchase of which the dealer is liable to pay purchase tax; (ii) resales of goods purchased by him on or after the appointed day from a registered dealer if the goods at the time of their purchase were goods specified in Schedule C; and (iii) sales of goods, or resales of goods, to which clauses (i) and (ii) do not apply to an authorised dealer, or recognised dealer, or to a commission agent, provided certain conditions are satisfied. We are, in the instant case, directly concerned with clause (ii) of section 8 and the effect of the said provision is that if the concerned dealer, upon whom sales tax is sought to be levied, shows that in his turnover of sales of goods are included resales of goods purchased by him on or after the appointed day from a registered dealer, such resales would be deducted from his total turnover provided the goods at the time of their purchase were goods specified in Schedule C and he would be assessed to sales tax accordingly.

5. We may at this stage point out that the obvious intention of the Legislature in enacting this and similar provisions is to restrict the levy of sales tax to a single point and to avoid multiple levy of sales tax on goods. The intention of the Legislature is that sales tax should be levied at the stage of first sale and should be recovered from the registered dealer who effects the first sale and all subsequent sales of such goods should not be subjected to sales tax over again. We find that this thread runs throughout sections 7 to 10 and the legislative intention is clearly manifested in this group of sections which, in substance and effect, provide that the levy of sales tax should be at a single point and that too at the point of first sale of the goods. This aspect has a direct bearing on the question which arises for our determination in this case and will have to be borne in mind.

6. We shall now turn to another section of the Bombay Act which creates a special liability to pay tax in the case of a dealer who might be registered under the Central Act but who is not registered under the Bombay Act on the sales of certain goods. The relevant provision is section 4 of the Bombay Act, which reads as under :

'4. (1) Notwithstanding anything in section 3, a dealer who is registered under the Central Sales Tax Act, 1956, but who is not liable to pay tax under the said section 3, shall nevertheless be liable to pay tax -

(a) on sales of goods in respect of the purchase of which he has furnished a declaration under sub-section (4) of section 8 of the Central Sales Tax Act, 1956, and

(b) on sales of goods in the manufacture of which the goods so purchased have been used, and accordingly, the provisions of sections 7 to 12 (both inclusive) shall apply to such sales, as they apply to the sales made by a dealer liable to pay tax under section 3.

(2) Every dealer who is liable to pay tax under sub-section (1) shall, for the purposes of sections 32, 33, 34, 35, 36, 37, 38, 46, 47 and 48 be deemed to be a registered dealer.'

This section provides that a dealer registered under the Central Act, who may not be liable to pay tax under section 3 of the Bombay Act, would nevertheless be liable to pay tax under the Bombay Act on sales of goods in respect of the purchase of which he has furnished a declaration under sub-section (4) of section 8 of the Central Act and on sales of goods in the manufacture of which the purchased goods have been used. The provisions of sections 7 to 12 are made applicable to such sales in the same manner in which they apply to the sales made by a dealer liable to pay tax under section 3 and every dealer who is liable to pay tax under section 4 is, for the purpose of sections 32 to 38 and 46 to 48, deemed to be a registered dealer. Sections 32 to 38 and 46 to 48 make provision inter alia for assessment, reassessment, recovery and refund of tax and imposition of penalty. The effect of these provisions is that so far as sales referred to in section 4 are concerned, a dealer registered under the Central Act is liable to pay tax thereon like any other dealer registered under the Bombay Act and such dealer is deemed to be a registered dealer for certain purposes under the Bombay Act. These are the relevant provisions of the Bombay Act, which are required to be noted for the purposes of this Act.

7. Mr. S L. Modi, learned Advocate appearing on behalf of the assessees, urged that in the present case, the dealer from whom the assessees had purchased the goods was liable to be assessed to sales tax under section 4 of the Bombay Act on the sales made to the assessees and in order to avoid multiple levy of sales tax, it was necessary to give to the assessees the benefit of section 8(ii) of the Bombay Act, although the dealer from whom the assessees purchased the goods was not a registered dealer under the Bombay Act. The submission was that the expression 'registered dealer' appearing in clause (ii) of section 8 of the Bombay Act was required to be given a meaning different than that which is ascribed to it in the definition section in order to carry out the intention of the Legislature and the object of clause (ii) of section 8 of the Bombay Act. According to Mr. Modi, clause (ii) of section 8 was obviously enacted to ensure a single point levy of sales tax when the first sale was effected and to avoid multiple levy of sales tax when subsequent sales of such goods take place. If the expression 'registered dealer' appearing in clause (ii) of section 8 were given the narrow meaning ascribed to it in the definition section, the intention of the Legislature would be defeated in a case like the present one where special liability to pay sales tax is created by section 4 in respect of sales of certain kinds of goods made by a dealer registered under the Central Act. Sales of such goods would be subjected to the levy of sales tax at least at two stages; first, when the said goods are sold by the dealer registered under the Central Act and secondly, when the dealer registered under the Bombay Act, who purchased the goods from such dealer, sells them again within the State. The submission was that the definition of the expression 'registered dealer' as contained in sub-section (25) of section 2 of the Bombay Act was in terms subject to the qualification laid down in the opening part of section 2 and that having regard to the context in which the expression 'registered dealer' is used in clause (ii) of section 8, the expression 'registered dealer' should be so construed as to include not only a dealer registered under the Bombay Act but also a dealer registered under the Central Act who incurs special liability to pay sales tax under the provisions of section 4 of the Bombay Act. According to Mr. Modi, such construction would be in consonance with the scheme of the Act and instrumental in carrying out the object of the Legislature in enacting clause (ii) of section 2 of the Bombay Act.

8. The argument put forward by Mr. Modi raises the question whether the expression 'registered dealer' appearing in section 8(ii) should be so construed as to include within its ambit not only a dealer registered under the Bombay Act but also a dealer registered under the Central Act upon whom a special liability to pay sales tax has been imposed by section 4 of the Bombay Act. Now, it is true that sub-section (25) of section 2 defines the expression 'registered dealer' as a dealer registered under section 22 of the Bombay Act and further that the said definition is an exhaustive definition. Ordinarily, therefore, the expression 'registered dealer', which is used in section 8(ii), would bear the meaning which is given to it in the definition section, namely, sub-section (25) of section 2. However, it is well-settled that it is possible for a defined expression to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. The point for determination is : does that rule apply in the case of the expression under consideration

9. We may, in this connection, first refer to the decision of the Supreme Court in V.F. & G. Insurance Co. v. M/s. Fraser and Ross ([1960] 30 Comp. Cas. (Ins.) 13 (S.C.); A.I.R. 1960 S.C. 971). The Supreme Court was in that case concerned with the meaning of the word 'insurer' which was used in sections 33 and 2D of the Insurance Act, 1938. The word was defined by sub-section (9) of section 2 of the said Act, inter alia, as meaning any body corporate (not being a person specified in sub-clause (c) of the said clause), carrying on the business of insurance which is a body corporate incorporated under any law for the time being in force in India or stands to any such body corporate in the relation of a subsidiary company within the meaning of the Indian Companies Act. The appellant-company in that case had closed down its business of insurance and still by virtue of the authority conferred upon it by section 33 of the Act, the Government of India passed an order directing the Controller of Insurance to investigate the affairs of the company and to submit a report. The respondents were thereafter appointed to act as auditors to assist him in the investigation. The order passed by the Government of India was challenged by the appellant company in a writ petition inter alia on the ground that the company having closed all its insurance business, no order could be passed against it under section 33 as that section only applied to an 'insurer', that is, to a company actually carrying on the business of insurance. The writ petition was dismissed in the first instance by a single Judge of the Madras High Court and on appeal by a Division Bench of the same High Court. The company thereupon carried the matter in appeal to the Supreme Court. The argument on behalf of the appellant-company before the Supreme Court was based on the exhaustive definition of the word 'insurer' in section 2(9) of the Act. The Supreme Court, while dealing with this contention, observed as follows :

'The main basis of this contention is the definition of the word 'insurer' in section 2(9) of the Act. It is pointed out that that definition begins with the words 'insurer means' and is therefore exhaustive. It may be accepted that generally the word 'insurer' has been defined for the purposes of the Act to mean a person or body corporate, etc., which is actually carrying on the business of insurance, i.e., the business of effecting contracts of insurance of whatever kind they might be. But section 2 begins with the words 'in this Act, unless there is anything repugnant in the subject or context', and then comes the various definition clauses of which (9) is one. It is well-settled that all the statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case, namely, unless there is anything repugnant in the subject or context. Therefore, in finding out the meaning of the word 'insurer' in various sections of the Act, the meaning to be ordinarily given to it is that given in the definition clause. But this is not inflexible and there may be sections in the Act where the meaning may have to be departed from on account of the subject or context in which the word has been used and that will be giving effect to the opening sentence in the definition section, namely, unless there is anything repugnant in the subject or context. In view of this qualification, the court has not only to look at the words, but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances. Therefore, though ordinarily the word 'insurer' as used in the Act would mean a person or body corporate actually carrying on the business of insurance it may be that in certain sections the word may have a somewhat different meaning.'

Having considered the matter in the light of these principles, the Supreme Court in fact found in that case that the word 'insurer' in section 33 not only refers to a person who is actually carrying on business, but in the context of that section and taking into account the policy of the Act and the purposes for which the control envisaged by the Act was imposed on insurers, also refers to insurers who were carrying on the business of insurance but have closed it.

10. In Maxwell's Interpretation of Statutes, the learned author has made the following observations on this aspect at page 30 of the Eighth Edition :

'Even where an Act contains a definition section it does not necessarily apply in all contexts in which a defined word may be found. If a defined expression is used in a context which the definition will not fit, the context must be allowed to prevail over the 'artificial conceptions' of the definition clause, and the word must be given its ordinary meaning.'

In Craies on Statute Law, Sixth Edition, page 213, the learned author has dealt with this question and relying upon the decision of Scott, L.J., in Jobbins v. Middlesex County Council ([1949] 1 K.B. 142), observed that a definition section ought to be so construed as not cutting down the enacting provisions of an Act unless there is absolutely clear language having the opposite effect.

11. It is thus clear that though ordinarily the meaning to be given to an expression found in a provision of a statute is one that is given in the definition clause, there may be cases in which that meaning may have to be departed from having regard to the context, collocation and the object of the statute and it may become necessary to interpret the word differently so as to give effect to the enacting provision of the Act.

12. We may also in this connection refer to another rule of construction applicable to all statutes alike, which is spoken of as exposition ex visceribus actus. In Mahomed Tayoob Daruwala v. State of Bombay ([1960] 11 S.T.C. 612), a Division Bench of the Bombay High Court has set out the effect of this rule of construction in the following words :

'The court is bound to see that every provision of a statute is construed with reference to the context and the other provisions of the statute and preferably of the same section, where it is possible to do so. The court is entitled and even bound, as far as possible, to see that the interpretation it puts on a particular provision makes a consistent enactment of the whole statute. In applying these rules the court has to remember what has so often been emphasised that as far as possible nothing can be read and nothing can be implied in a taxing statute. One can only look fairly at the language used. The indispensable starting point and the first step in case of any provision of the nature before us is to examine the words of the particular provision under consideration, of course, bearing in mind that it is not a detached enactment but one forming a connected scheme.'

In Craies on Statute Law, Sixth Edition, the following observations are found at page 99, which are also pertinent :

'This rule of construction (namely exposition ex visceribus actus) has frequently been recognised and acted upon by courts of law from Coke's time down to the present day. In Brett v. Brett ([1826] 3 Add. 210, 216), Sir John Nicholl, M. R., said as follows : 'The key to the opening of every law is the reason and spirit of the law; it is the animus imponentis, the intention of the law-maker expressed in the law itself, taken as a whole. Hence, to arrive at the true meaning of any particular phrase in a statute, the particular phrase is not to be viewed detached from its context in the statute; it is to be viewed in connection with its whole context, meaning by this as well the title and preamble as the purview or enacting part of the statute.' In Bywater v. Brandling ([1828] 7 B.& C. 643, 660), Lord Tenterden said : 'In construing Acts of Parliament we are to look not only at the language of the preamble or of any particular clause, but at the language of the whole Act. And if we find in the preamble or in any particular clause an expression not so large and extensive in its import as those used in other parts of the Act, and upon a view of the whole Act we can collect from the more large and extensive expressions used in other parts the real intention of the Legislature, it is our duty to give effect to the larger expressions, notwithstanding the phrases of less extensive import in the preamble or in any particular clause.''

At page 100, the following observations from the decision of Blackburn, J., in Rein v. Lane ([1867] L.R. 2 Q.B. 144, 151), are quoted :

'It is, I apprehend, in accordance with the general rule of construction that you are not only to look at the words, but you are to look at the context, the collocation, and the object of such words relating to such matter, and interpret the meaning according to what would appear to be the meaning intended to be conveyed by the use of the words under the circumstances.'

We shall now proceed to consider the provisions of section 8 of the Bombay Act in the light of these principles. As stated above, the legislative intention in providing for deduction in section 8 is to avoid multiple levy of tax on sales of goods and to restrict the levy to the stage at which the first sale takes place. Similar provisions are to be found also in sections 7, 9 and 10, which are the other sections, which deal with the levy of tax on sales of goods specified in different schedules of the Act. It would thus appear that the scheme of the Act is that there should be a single point levy of tax and that too at the point of first sale. This proposition is not disputed even on behalf of the Commissioner. If that be so then there is no reason to limit the meaning of the expression 'registered dealer' appearing in clause (ii) of section 8 only to a dealer registered under section 2 of the Bombay Act and to exclude from the ambit of that expression a dealer registered under the Central Act who is liable to be assessed to sales tax under section 4 of the Bombay Act. We must read the provisions of section 4 along with the provisions of section 8 and also give effect to the intention of the Legislature in providing for deductions in section 8. The context in which the words 'registered dealer' appear in clause (ii) of section 8 of the Act suggests that the meaning given to the said expression in the definition section of the Bombay Act must be departed from and to do so would only give effect to the policy of the Act and the object behind enacting the relevant provisions.

13. Mr. B. R. Shah, the learned Assistant Government Pleader, appearing on behalf of the department strenuously urged that there was no warrant for departing from the meaning given to the expression 'registered dealer' in the definition section while construing the said expression in the context of section 8. He contended in the first place that if the Legislature really intended that the expression 'registered dealer' in section 8(ii) should take within its ambit a dealer registered under the Central Act upon whom liability to pay sales tax is imposed under section 4 of the Bombay Act, the Legislature would have said so in clear words and it would have made the necessary provision in sub-section (2) of section 4 of the Bombay Act, which provides that every dealer liable to pay tax under sub-section (1) shall be deemed to be a registered dealer for the purposes of certain sections of the Bombay Act. The argument in other words was that it would have been specifically enacted in sub-section (2) of section 4 that every such dealer shall be deemed to be a registered dealer also for the purposes of clause (ii) of section 8 of the Bombay Act. We find that this submission, attractive though it may appear at first sight, is fallacious. As observed earlier, sub-section (1) of section 4 is enacted with the specific object of imposing upon a dealer registered under the Central Act liability to pay sales tax under the Bombay Act on sales of goods specified therein at designated rates. Having thus provided for the charge of tax and the rate structure, the Legislature has proceeded to lay down in sub-section (2) of section 4 the machinery for assessment, reassessment, collection and enforcement of payment of tax and penalty as well as for other incidental and connected matters. The Legislature has achieved this object by creating a fiction in sub-section (2) of section 4 as a result of which the relevant sections of the Bombay Act, which provide the machinery for assessment, reassessment and recovery of tax imposed by section 3 on a dealer registered under the said Act, become applicable proprio vigore to a dealer registered under the Central Act upon whom liability to pay tax is imposed by section 4. It is apparent that the fiction in sub-section (2) is created for this limited purpose, namely, to make section 4 a self-contained code which not only imposes the charge of tax and lays down the rate structure but also provides a machinery for the assessment and recovery of tax and other allied matters. It would, therefore, have been inappropriate or at any rate wholly inartistic for the Legislature to provide in sub-section (2) of section 4 that every dealer who is liable to pay tax under sub-section (1) shall be deemed to be a registered dealer for the purpose of clause (ii) of section 8 since the latter section provides for the levy of sales tax on sales of goods of an altogether different dealer after making certain deductions from the turnover of sales of goods of such dealer. The Legislature could have made a specific provision, if any, in this behalf only in clause (ii) of section 8 and not in sub-section (2) of section 4.

14. Mr. Shah next contended that the effect of giving to the expression 'registered dealer' in clause (ii) of section 8 a meaning different from that found in the definition section would in fact be to extend the legal fiction created by sub-section (2) of section 4 beyond its legitimate field. Mr. Shah urged that when a legal fiction is created it should be confined to the purpose for which it was created and should not be extended to an altogether different or alien field. The argument, in our opinion, is wholly misconceived. The expression 'registered dealer' in clause (ii) of section 8 is construed as taking within its ambit a dealer registered under the Central Act who is made liable to pay sales tax under section 4 of the Bombay Act not on account of the legal fiction created by sub-section (2) of section 4 of the Bombay Act, but having regard to the context, collocation, object and policy of the Act. The legal fiction created by sub-section (2) of section 4 does not at all enter into consideration in giving an extended or different meaning to the expression 'registered dealer' in section 8(ii).

15. Mr. Shah then advanced an argument founded on provisions of sub-section (3) of section 7 of the Bombay Act. Section 7 deals with single point levy of sales tax or general sales tax on declared goods and sub-section (3) thereof reads as under :

'(3) In order to ensure that after the date of the coming into force of section 15 of the Central Sales Tax Act, 1956, tax shall not be levied on the sales or purchases of declared goods at more than one stage, it is hereby provided that if under this Act, or any earlier law, any tax has been levied or is leviable on the sale or purchase of such goods, then no further tax shall be levied under this Act on any subsequent sale or purchase thereof; and accordingly, for the purpose of arriving at the taxable turnover of sales or purchases of a dealer, there shall be deducted from his total turnover of sales, or as the case may be, of purchases, the sales or purchases of such declared goods as have borne tax at any earlier stage.'

Mr. Shah urged that the provisions of sub-section (3) of section 7 would show that whenever it was intended that there should be a single point of levy of tax, the Legislature has made a specific provision to that effect in the Act. Therefore, if the Legislature had intended that no further tax should be levied under the Act on subsequent sales of goods, which might already have been subject to sales tax under the provisions of section 4 of the Act at the stage of previous sale, the Legislature would have made a clear provision to that effect in section 4 or section 8 on the lines of the provisions contained in sub-section (3) of section 7.

16. We find that this argument of Mr. Shah is also devoid of any merit. Sub-sections (1) and (2) of section 7 provide for the levy of tax on sales of declared goods. In these two sub-sections, provision is already made for deductions from the turnover of sales of the concerned dealer of declared goods in order to avoid multiple levy of tax. Sub-section (3) of section 7 is, however, specifically enacted to carry out the mandate of section 15 of the Central Act which contains an injunction that the tax payable under the sales tax law of a State on the sale or purchase of declared goods within the State shall not be levied at more than one stage. It would appear from the language used in sub-section (3) of section 7 of the Bombay Act that it is enacted to ensure that after the date of coming into force of section 15 of the Central Act, the mandate contained in the said section is in no case violated and if any tax has been levied or is leviable on the sale or purchase of declared goods either under the provisions of the Bombay Act (1959) or under any earlier sales tax law of the State, no further tax shall be levied on any subsequent sale or purchase of such goods. This provision was obviously enacted to meet a special situation, namely, to give complete effect to the provisions of section 15 of the Central Act and to ensure that there is no multiple levy of tax even in cases inadvertently left but or not specifically covered by the provisions of sub-sections (1) and (2) of section 7, so that there is no conflict with section 15 of the Central Act. Sub-section (3) of section 7 cannot, therefore, help us in construing clause (ii) of section 8 of the Bombay Act.

17. Mr. Shah next contended that the legislative history clearly indicated that the Legislature did not intend to exempt from the levy of tax subsequent sales of goods, which might have borne the levy of tax at the stage of earlier sale under section 4 of the Act. In this connection, Mr. Shah invited our attention to the provisions of section 5A of the Bombay Sales Tax Act, 1953, which read as under :

'5A. (1) A dealer registered under the Central Sales Tax Act, 1956, who is not liable to pay tax under section 5 of this Act, shall nevertheless be liable to pay tax on his sale of any goods in respect of the purchase of which he has furnished a declaration under sub-section (4) of section 8 of the Central Sales Tax Act, 1956, or on the sale of any goods in the manufacture of which such goods have been used, at a rate equal to the aggregate of the rates specified in columns 2 and 3 of Schedule B or, as the case may be, at the rate specified under section 7A :

Provided that the tax under this section shall not be payable if the seller shows to the satisfaction of the Collector that the purchaser of the goods is a dealer registered under this Act and has furnished to such seller a certificate in the prescribed form declaring inter alia that the goods so sold to him are intended for resale by him or for use by him, in the prescribed manner, in the manufacture or processing of any goods for sale. (2) Every dealer who is liable to pay tax under sub-section (1) shall, for the purposes of sections 13, 14, 16, 21 and 22, be deemed to be a registered dealer.'

Mr. Shah contended that the provisions of section 5A of the Bombay Act of 1953 are substantially in pari materia with the provisions of section 4 of the Bombay Act, 1959, in that both these provisions created a special liability in respect of a dealer registered under the Central Act to pay tax on sales of goods of specific kind under the sales tax law of the State. However, the 1933 Act enacted a specific proviso to section 5A, which provided that the dealer under the Central Act will not be liable to pay sales tax under section 5A if the dealer showed to the satisfaction of the Collector that the purchaser of the goods was a dealer registered under the Bombay Act and had furnished to the seller a certificate in the prescribed form declaring inter alia that the goods sold to him were intended for resale by him or for use by him in the manufacture or processing of any goods for sale, as the case may be. Mr. Shah drew our attention to the fact that such a proviso was not enacted in section 4 of the Act of 1959 nor was a similar provision made in section 8 of the said Act and that having regard to this conscious omission on the part of the Legislature, we should proceed on an assumption that the Legislature did not intend that no tax shall be levied on subsequent sales of goods which might have been subject to levy of sales tax under the provisions of section 5 at the stage of earlier sale. The submission made by Mr. Shah cannot be accepted for two reasons. In the first instance, mere omission in a later statute of a provision contained in an earlier one cannot by itself be said to be an indication of the legislative intent. The Legislature may have omitted to make a similar provision in the later Act if it found it unnecessary to make such a provision having regard to the other provisions of the Act which might bring about the same effect or it may have made the relevant provision in the earlier Act ex abundanti cautela. The circumstance that in a later Act a provision which found place in an earlier Act has been deleted cannot, therefore, by itself and conclusively determine the question. Secondly, we find that the scheme of the Act of 1953 is materially different from the scheme of the Act of 1959. Section 5A of the 1953 Act contemplated the levy of a single point tax at the stage when the second sale takes place, viz., the stage at which a dealer registered under the Bombay Act effects the sale. Under the 1959 Act, the scheme has been altered and the sales tax is now sought to be levied under section 4 on sales of certain class or classes of goods at the stage when the first sale takes place. Having regard to this change in the scheme of the Act, it is not unreasonable to assume that the Legislature did not find it necessary to enact in section 4 a proviso similar to that found in section 5A of the Act since the object of single point levy of sales tax was achieved by providing for suitable deductions from the turnover of sales of goods in clause (ii) of section 8 of the Act.

18. Mr. Shah lastly urged that if the expression 'registered dealer' appearing in clause (ii) of section 8 were to be interpreted to include a dealer registered under the Central Act on whom a special liability to pay sales tax has been imposed by section 4, the object of enacting section 4 itself would be frustrated. Mr. Shah elaborated his submission by illustrating the point in this manner : suppose the dealer registered under the Central Act sells to a dealer liable to pay sales tax under section 8 of the Act not only these goods upon the sale of which sales tax has been assessed under the provisions of section 4 of the Act, but also other goods upon the sale of which he was not to be liable to pay sales tax under the Bombay Act. In such a case, the dealer registered under the Bombay Act would be able to claim deduction from his total turnover of sales of goods not only in respect of the goods on the sale of which the dealer under the Central Act has paid sales tax under section 4 but also in respect of resales of other goods on the sale of which no liability is imposed upon the dealer registered under the Central Act to pay sales tax under the Bombay Act. The argument in other words was that the effect of construing the expression 'registered dealer' in section 8(ii) to mean and include a dealer registered under the Central Act would be to leave doors open for evasion of tax on certain class or classes of goods sold by a dealer registered under the Central Act to a dealer registered under the Bombay Act. The submission, in our opinion, is misconceived. Even if the expression 'registered dealer' in clause (ii) of section 8 is given a wider meaning for which the assessees contend, it would only include a dealer registered under the Central Act who is liable to pay tax on the sales of goods under section 4 and the deduction under clause (ii) of section 8 would be allowable only if the goods resold are goods on the sale of which the dealer registered under the Central Act is liable to pay tax under section 4 of the Act. If the dealer registered under the Central Act has sold to the dealer registered under the Bombay Act goods other than those specified in section 4 of the Bombay Act and such goods have been later resold by the dealer registered under the Bombay Act, no deduction from turnover of sales would be permissible in respect of resales of such goods and such sales would be includible in the total turnover of sales of the dealer registered under the Bombay Act. The apprehension voiced on behalf of the department is, therefore, misconceived.

19. The result of the foregoing discussion is that having regard to the context, collocation and the object of the expression 'registered dealer' in clause (ii) of section 8 of the Bombay Act and having regard to the policy of the Act, the said expression would also include a dealer registered under the Central Act on whom special liability to pay sales tax has been imposed under section 4 of the Act. A dealer who purchases goods from a dealer registered under the Central Act, who is liable to pay sales tax on the sale of the said goods by virtue of the provisions of section 4 of the Bombay Act, would, therefore, be entitled to deduct from his turnover of sales of goods, resales of goods so purchased by him on or after the appointed day if the goods, at the time of their purchase, were goods specified in Schedule C.

20. Our answer to the question as reframed by us is, therefore, in the affirmative. The reference is disposed of accordingly. The department to pay to the assessees the costs of this reference.

21. Reference answered accordingly.


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