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Mafatlal Kantilal and Co. Oil Mills Vs. the State of Gujarat - Court Judgment

LegalCrystal Citation
SubjectSales Tax/VAT
CourtGujarat High Court
Decided On
Judge
Reported in(1963)4GLR313
AppellantMafatlal Kantilal and Co. Oil Mills
RespondentThe State of Gujarat
Excerpt:
- - the claim was made under clause (viii) of sub-rule (1) of rule 5a of the bombay sales tax rules, 1946. the claim was rejected by the sales tax officer by the assessment order passed by him on 27th august 1956. his order was confirmed in appeal by the assistant collector of sales tax by his order dated 29th july 1956. a revision application to the additional collector of sales tax, ahmedabad, was dismissed by an order dated 22nd december 1959. the matter was carried further before the sales tax tribunal but without success. ..provided that the commissioner may, if satisfied that the goods could not be despatched or removed within the period of three months due to any circumstances beyond the control of the parties, extend the period in any particular case by a further period not..........in our view, as there supervision of the rules framed under the bombay sales tax act, 1946, by the rule framed the under the ordinance, applicants are not entitled to rely upon the provision contained in rule 5a(1)(viii) of the bombay sales tax rules, 1946.4. the bombay sales tax act, 1953, came into operation on 25th march 1953, section 40 of that act provided as under:40(1) the bombay sales tax (no. 2) ordinance, 1952, is hereby repealed:. . .(2) any. rule. made of issued or deemed to have been made or issued under the ordinance hereby repealed sole continue in force and the deemed to have been made or issued under the provision of this act, in so far as such. rule. is not inconsistent with the provision of this act, unless it has been already, or until it is superseded by. a. rule.....
Judgment:

K.T. Desai, C.J.

1. This is a reference under Section 34(1) of the Bombay Sales Tax Act, 1953, at the instance of Messrs. Mafatlal Kantilal & Co. Oil Mills, the applicants herein. The period with which we are concerned is the period commencing from 1st November 1952 and ending with JHst March 1953. The applicants sold oil during this period to exporters in the State of Bombay. The sales were completed and the goods were delivered to the exporters in the State of Bombay. The applicants claimed a deduction in respect of these sales from their turnover in the assessment proceedings. The claim was made under Clause (viii) of Sub-rule (1) of Rule 5A of the Bombay Sales Tax Rules, 1946. The claim was rejected by the Sales Tax Officer by the assessment order passed by him on 27th August 1956. His order was confirmed in appeal by the Assistant Collector of Sales Tax by his order dated 29th July 1956. A revision application to the Additional Collector of Sales Tax, Ahmedabad, was dismissed by an order dated 22nd December 1959. The matter was carried further before the Sales Tax Tribunal but without success. The questions which we have been called upon to determine are the following:

(1). Whether the provisions of Rule 5A(1)(viii) of the Bombay Sales Tax Rules, 1946, are saved by Sub-section (3) of Section 50 of the Bombay Sales Tax (No. 2) Ordinance 1952 and Section 49 of the Bombay Sales Tax Act. 1953?

(2) Whether a dealer who satisfies the conditions of the abovesaid rule is entitled to the deductions of the sales referred to therein from his turnover of sales under the Bombay Sales Tax (No. 2) Ordinance of 1952 and the Bombay Sales Tax Act of 1953?

Rule 5A(1)(viii) of the Bombay Sales Tax Rules, 1946, provides as under:

5A. Exemption of certain sales in calculating taxable turnover:

(1) In calculating the taxable turnover of a dealer, the turnover on the following sales may be deducted from his gross turnover:

xx xx xx xx

(viii) Subject to the conditions specified in Sub-rule (2) sales or supplies of goods which are despatched or removed by him or on his behalf or by the purchaser of such goods within three months from the date of sale or supply to any place outside the Dominion of India....

Provided that the Commissioner may, if satisfied that the goods could not be despatched or removed within the period of three months due to any circumstances beyond the control of the parties, extend the period in any particular case by a further period not exceeding three months.

The point in controversy between the parties is whether this sub-rule was in operation during the relevant period. By Section 50 of the Bombay Sales Tax (No. 2) Ordinance, 1952 (being Ordinance No. III of 1952), the Bombay Sales Tax Act, 1946 as amended by the Bombay Sales Tax (No. 1) Ordinance, 1952 (being Ordinance No. 11 of 1952) has been repealed with effect from the appointed day, viz., 1st of November 1952. By Sub-section (3) of the said Section 50, it is inter alia provided as under:

50... ... ...

(3) Any... rule... made or issued under any of the enactments hereby repealed shall continue in force and be deemed to have been made or issued under the provisions of this Ordinance, in so far as such... rule... is not inconsistent with the provisions of this Ordinance, unless it has been already or until it is superseded by... a... rule made or issued under this Ordinance.

2. By Section 45 of Ordinance No. III of 1952 it has been provided that the State_Government may, subject to the conditions of previous publication, make rules for carrying out the purposes of the Ordinance. Particularly and without prejudice to the generality of the foregoing powers, it has been laid down that such rules may prescribe inter alia '...(a) the other sales, turnover in respect of which be deducted from a dealer's turnover in computing his taxable turnover as defined in Section 7 and in Section 11... (za) any other matter which is required to be or may be prescribed.' By Sub-section (4) of Section 45 of Ordinance No. III of 1952, it is provided as under:

Rules in Schedule HI shall be deemed to have been made under this section, notwithstanding that they were not previously published and shall have effect subject to such alteration, addition or rescission as may be made therein by the State Government in accordance with the provisions of this section.

Schedule III contains a complete set of rules dealing with various matters. Definitions of various words used in the rules have been given, provision has been made for sales tax authorities, calculation of taxable turnover, the registration and licensing of dealers, return of taxable turnover, the payment of tax, penalty or composition money, assessment to tax and penalty under Section 14, the issue of bills and cash memoranda, refund of excess tax, inspection of accounts, appeals and revision, appearances by authorised representatives, service of notice, copies of documents, fees and offences and composition and penalty and various forms are provided. The question which we have to consider is whether in view of the rules in Schedule III of the Ordinance the rules that had been framed under the Bombay Sales Tax Act, 1946, and in particular the aforesaid Rule 5A(1)(viii) which appears in Chapter III under the heading 'Calculation of Taxable Turnover', were in operation at the relevant time.

3. It is strongly urged by Mr. Mody, the learned Advocate who appears on behalf of the applicants that both sets of rules, namely, those to be found in Schedule III of the Ordinance which are deemed to have been made under Section 45 of the Ordinance and the rules that have previously been framed by the Government of Bombay in exercise of the powers conferred by Section 29 of the Bombay Sales Act, 1946, were simultaneously in operation. He urged that by virtue of the provisions contained in Section 50, Sub-section (3) of the Ordinance, the rules framed under the Bombay Sales Tax Act, and in particular the aforesaid Rules A(1)(viii) on which he relies, have been saved. Under the provisions of Section 50(3) the rules made under any of the enactments repealed by the Ordinance, which would include the Bombay Sales Tax Act, 1946, continue in force and are deemed to have been made or issued under the provisions of the Ordinance in so far as such rules are not inconsistent with the provisions of the Ordinance unless they have already been or until they are superseded by rules made or issued under the Ordinance. It has been strongly urged by the learned Advocate General, who appears on behalf of the opponent, that the set of rules framed under Section 29 of the Bombay Sales Tax Act, 1946, by the Government of Bombay, have been superseded by the set of rules found in Schedule III. The rules in Schedule III have been deemed to have been made under the provisions contained in Section 45 of the Ordinance. When any rules have been made under the provisions of an enactment or ordinance, they could only be made after the enactment or ordinance comes into force. As the rules made under Schedule III have been deemed to have been made under the provisions of Section 45 of the Ordinance, they can only be deemed to have been made after the Ordinance came into force. At the time when the Ordinance came into force, the rules framed under Section 29 of the Bombay Sales Tax Act, 1946, were in operation. The Bombay Sales Tax Act, 1946, being repealed, the rules framed under that Act have to be regarded as rules deemed to have been made under the Ordinance in so far as such rules are not inconsistent with the provisions of the Ordinance unless those rules have been superseded by rules made or issued under the Ordinance. The rules appearing in Schedule III must be deemed to have been made under the Ordinance, having regard to what is provided in Section 45(4) of the Ordinance. The only question is whether by these rules made under the Ordinance, the rules framed under the Bombay Sales Tax Act. 1946. have been superseded. When we look at the rules framed under the Bombay Sales Tax Act, 1946, they provide for definitions of various words used in the rules. They provide for the sales tax authorities, for calculation of taxable turnover, for registration of dealers, for return of taxable turnover, for payment of tax, for assessment to tax and penalty under Section 11 of the Sales Tax Act, 1946, for refund of excess tax paid by dealers, inspection of accounts, appeals and revision, service of notice and penalty, and contain various forms. Considering the two sets so rules, it is clear that it was not the inattention of the framers of the rules appearing in Schedule III that the rules framed under the Bombay Sales Tax Act, 1946, should simultaneously exit and be in operation, along with the rules in Schedule III. In our view, the rules made under the Bombay Sales Tax Act, 1946, have been superseded by the rules framed under the Ordinance which find a place in Schedule III of the Ordinance. It was urged by Mr. Mody that it is only those rules framed under the Bombay Sales Tax Act, 1946, which are inconsistent with the provision of Ordinance which cease to operate No doubt, such rules would cease to operate, but that is not the only thing provided. There is further provision for suppression of the rules framed under the Bombay Sales Tax Act, 1946. In our view, as there supervision of the rules framed under the Bombay Sales Tax Act, 1946, by the rule framed the under the Ordinance, applicants are not entitled to rely upon the provision contained in Rule 5A(1)(viii) of the Bombay Sales Tax Rules, 1946.

4. The Bombay Sales Tax Act, 1953, came into operation on 25th March 1953, Section 40 of that Act provided as under:

40(1) The Bombay Sales Tax (No. 2) Ordinance, 1952, is hereby repealed:

. . .

(2) Any. rule. made of issued or deemed to have been made or issued under the Ordinance hereby repealed sole continue in force and the deemed to have been made or issued under the provision of this Act, in so far as such. rule. is not inconsistent with the provision of this Act, unless it has been already, or until it is superseded by. a. rule made or issued under this Act.

Reliance has been placed upon this section in connection with the period coming from 25th March 1953 and ending with 31st March 1953. It is urged that the provision contained in Rule 5A(1)(viii) of the Bombay Sales Tax Rules, 1946, should be deemed to have been made under the provision of the Bombay Sales Tax (No. 2) Ordinance of 1952, that they have continued in force and should be deemed to have been made or issued under the provision of the of the Bombay Sales Tax Act, 1953 and should be regarded as being in operation for the period 25th of March, 1953 to 31st of March 1953. As we have held that Rule 5A(1)(viii) of the Bombay Sales Tex Rules, 1946, was not in operation after the rules found in Schedule III came in force, the said Rule 5A(1)(viii) of the Bombay Sales Tex Rules, 1946, cannot be said to continue in force or be deemed to have been made under the provision of the Bombay Sales Tax Act. 1953. Under the circumstances, our answer to question No. (1) is in negative. Our answer to question No. (2) also is in the negative. The applicants will pay to the opponent the cost of the reference.


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