(1) This is an appeal against the order of the Board of Revenue, which it made under S. 34 of the Madras General Sales Tax Act 1959, read with S. 9 of the Central Sales Tax Act, 1956. The appellant, who was a dealer in cotton was assessed to tax for the year 1957-58 on a turnover of Rs. 12,76,440-27p. by an order of the Assessment Commercial Tax officer, Madurai dated 25-8-1960. By a notice dated 21-7-1964, the Board of Revenue called upon the dealer, purporting to exercise jurisdiction under S. 34 of the Madras General Sales Tax Act, to show cause why the turnover relating to sales exigible to tax should not be refixed at Rs. 1,79,78,330-19p. Eventually, after considering the objections of the dealer, the Board finally refixed the turnover liable to tax at Rs. 1,53,07,997-75 p. inclusive of the turnover which had been originally brought to tax. The Board has levied the tax on this turnover under S. 5-A(3) of the Madras General Sales Tax Act 1939, read with rule 4-A(iv) of the Madras General Sales Tax Rules and Ss. 6 and 9 of the Central Sales Tax Act.
(2) The appellant contends that cotton in the Madras State is liable to sales tax at the last purchase in the State and that the sales which have been added by the Board of Revenue as assessable to tax, are not such transactions which will attract tax at the point of last purchase. He, therefore, argues that although S. 6 of the Central Sales Tax Act charges inter-State sales, nevertheless, as a result of Ss. 8(2) and 9(1) of the same Act, the sales in question are not liable to tax. The point really turns on the interpretation of Ss. 8(2) and 9(1) of the Central Sales Tax Act.
(3) The type and nature of transactions which the appellant entered into are not in dispute. He purchased cotton from out of State dealers and instructed such dealers to consign the cotton so purchased to ultimate buyers in the State with whom he entered into contracts for supply of cotton. But, there is controversy on as to whether the consignments made by out of State sellers were on railway receipts drawn up in the names of the ultimate buyers in the State. The Board was of the view that the appellant had not let in any evidence that the railway receipt stood in the name of the ultimate buyers and that even if they stood so, the important fact to remember was that the appellant had entered into contracts with the ultimate buyers, received railway receipts corresponding to the consignments of cotton made by such out of the State sellers and transferred those receipts to the ultimate buyers in the State. On this view of the nature of the transactions, the Board held that they were sales within the meaning of S. 3(B) of the Central Sales Tax Act. the Board repelled the contention of the appellant that there was no transfer of the railway receipts or bills of lading as there was no endorsement thereon made by the appellant in favour of the local ultimate purchasers.
(4) On a contention similar to that raised by the appellant as to the scope of Ss. 8(2) and 9(1) of the Central Sales Tax Act in their interaction with the provisions of the Mad.ras General Sales Tax Act, this court held in Marriappa Nadar v. State of Madras that the phrase "in the same manner" in S. 9(3) of the Central Act did not make applicable all the incidents of the local sales tax law to the assessment under the Central Sales Tax Act & that what was contemplated by that phrase was that the procedure of making an assessment, collection of tax etc, was the same as laid down in the local Sales Tax Act. This court further held:
"The application of that procedural provision of the local law did not assimilate other provisions in that law which dealt with the determination of the turnover, which, in so far as the Central Sales Tax Act was concerned, was required to be determined only under the Central Act and the rules framed thereunder".
If the matter stood there, there would have been no difficulty in upholding the validity of the assessment on the assumption that the sales in question are of the description in S. 3(b) of the Central Act. But, the Supreme Court has not accepted that view of the scope and effect of Ss. 8(2) and 9(1) of the Central Act.
(5) The majority of the learned Judges in State of Mysore v. Lakshminarasimiah Setty and Sons, , were of the view that the expression levied' in S. 9(1) of the Central Act referred to the expression "levied" in S. 5(3)(a) of the Madras General Sales Tax Act, and that being the case, although the transactions, which may fall within the purview of S. 3(b), would be chargeable under S. 6, as the latter provision is subject to the other provisions of the Central Act, the effect of Ss. 8(2) and 9(1) was to assimilate the provisions of the State enactments even in respect of the manner of levy and not merely the rate. The Supreme Court observed:
"The expression 'in the manner' may give rise to two conflicting views, namely, (1) it is concerned only with the calculation of the tax and (2) it deals not only with the Calculation of the rates but also the manner of levy of the tax. But, Sec. 9(1) dispels the ambiguity for it says that the tax payable by any dealer under the Central Act shall be levied and collected in the appropriate State by the Government of India in the manner provided in sub-sec. (2) and sub-sec. (2) of S. 9 empowers the appropriate State authorities to assess, collect and enforce payment of any tax payable by any dealer under the Central Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed paid and collected. The expression "levy" means 'impose ".
The Supreme Court considered that 'impose in in the context had reference to imposition of tax under the charging provisions of the State Act, and proceeded to observe further:
"When Sec. 9(1) says that under the Central Act tax shall be levied in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected, it is reasonable to hold that the expression 'levied' in Sec. 9(1) of the Central Act refers to the expression 'levied" in S. 5(3) of the State Act."
In expressing that opinion, the Supreme Court took into account also the fact that there was no reason why the Central Act should be taken to have made a departure in the manner of levy of tax on the specified goods which are taxed only at a single point under the State Act Shah J. differed, and was inclined to uphold the view of the Madras High Court in Abbas and Co. v. State of Madras, . But, we are bound by the majority judgment of the Supreme Court, but for which, as we must confess, we would find it difficult to depart from the earlier view of this court in .
(6) Mr. G. Ramanujam, for the State, tried to distinguish by contending that there the Supreme Court was
dealing with a second sale, the charging provision in the State Act being that tax should be levied at the first sale in the State of powerloom textiles. But, we are unable to appreciate the distinction. The sales in question, assuming them to be of the type under S. 3(d) of the Central Act, are not the last sales in the State in which the last buyer can be brought to tax. As a matter of fact, as we find from the facts of the present case, there have been subsequent sales by the appellant himself of the very goods to the ultimate buyers, namely, the consuming mills in the State. The crux is that what is taxable in the State is the last purchase of cotton. The states in question do not certainly answer that description. On the interpretation placed by the Supreme Court on Ss. 8(2) and 9(1) and (3), and having regard to the fact that the State Act, as it stood at the relevant time, levied tax only on the last purchase of cotton, we must hold that the turnover in dispute is not liable to tax under S. 6 of the Central Act. Mr. Ramanujam, invited our attention to S. 5-C(2) of the Madras Act, which provides that the provisions of that Act relating to taxation of successive sales inside the State only at a single point or only at one or more stages apply only to the sales inside the State other than the sales in the course of inter-State trade or commerce and the tax under the Central Sales Tax Act 1956, shall be levied at the appropriate rate notwithstanding that a sale or purchase of the same goods has been taxed under this Act. We do not think that this provision is of assistance to him, for the expression "levied" in S. 9(1) comprehends, in our view, also the point at which tax is attracted under the State Act.
(7) On behalf of the appellant further contentions were made that the proceedings of the Board of Revenue under S. 34 of the Madras General Sales Tax Act were time barred and that in any case the sales which have been added by the Board of Revenue to the original turnover are not inter-State sales within the meaning of S. 3(b) of the Central Act, and the Board of Revenue had failed to give the appellant a proper opportunity to place necessary evidence to establish that the sales did not come within the purview of Sec. 3(b). But, on the view we have taken, following the decision of the Supreme Court, on the interpretation of Ss. 8(2) and 9(1) of the Central Act, we do not think it necessary to deal with the further contentions. In fact, no elaborate arguments were addressed before us on them.
(8) The tax case is allowed, but without costs.
(9) Order accordingly.