V. Ramaswami, J.
1. This is an appeal under Section 37 of the Tamil Nadu General Sales Tax Act (hereinafter called the Act) against the order passed by the Board of Revenue under Section 34. The appellant is a manufacturer of iron locks and latches and dealer in hardware. For the assessment year 1966-67 he returned a total and taxable turnovers of Rs. 41,024.43 and Rs. 36,856.69 respectively. On the ground that the day-to-day account was not maintained and the gross profit shown was abnormal, the Deputy Commercial Tax Officer added 25 per cent of the taxable turnover returned to cover defects and probable omissions. On this head the amount added thus came to Rs, 9,214.17. The assessing authority also was of the view that due to wrong classification or wrong inclusion of taxable turnovers in the second or subsequent sales of declared goods, a turnover of Rs. 1,238.46 is also to be included in the taxable turnover. This was arrived at on the basis that out of the turnover of Rs. 4,167.74 shown as second or subsequent sales of declared goods, only a turnover of Rs. 2,929.28 was not liable to tax as second or subsequent sales and the balance of Rs. 1,238.46 represented taxable turnover. Thus, the taxable turnover was determined by the assessing authority at Rs. 47,309.32 adding the said two sums (Rs. 9,214.17 + Rs. 1,238.46) to the taxable turnover of Rs. 36,856.69 returned. Since the assessee wanted to opt for the concessions under Section 7, the assessing authority included the turnover on second sales of declared goods amounting to Rs. 2,929,28 and inter-State sales amounting to Rs. 7,413.13 in ascertaining; the total turnover and thus arrived at the total turnover of Rs. 57,652.33. Since at the relevant period for the applicability of Section 7 the total turnover shown exceeded Rs. 50,000, the assessing authority held that the assessee was not eligible for the benefit of Section 7 and accordingly taxed at 2 1/2 per cent on the taxable turnover under Section 3(1) of the Act.
2. On appeal by the assessee, the Appellate Assistant Commissioner held that only a sum of Rs. 17.13 was includible in the taxable turnover on account of the wrong classification or wrong inclusion from the turnover on second sales of declared goods and that the entire balance after deducting Rs. 17.13 from Rs. 4,167.74 was not liable to tax on the ground that they are second sales of declared goods. In this view, he included only a sum of Rs. 17.13 in the place of Rs. 1,238.46 included by the assessing authority and arrived at the net taxable turnover at Rs. 46,087.99, but while finding out the total turnover for the purpose of applicability of Section 7 he took the figure as Rs. 2,929.28 given by the assessing authority. This is clearly an arithmetical error. When he reduced the sum of Rs. 1,238.46 to Rs. 17.13 as taxable on the ground of wrong inclusion, necessarily the turnover on second sales of declared goods would swell correspondingly, but the Appellate Assistant Commissioner overlooked this aspect. Therefore, instead of determining the second sales on declared goods as Rs. 4,167.74- Rs. 17.13 = Rs. 4,150.61, he took the same figure of Rs. 2,929.28 taken by the assessing authority. The result was the total turnover for the purpose of Section 7 was reduced to below Rs. 50,000 limit. It may be mentioned that there is no dispute in this case and it is also well-settled that for the purpose of determining the total turnover under Section 7, the turnover relating to inter-State sales is to be included. In the result, in the view that the total turnover for the purpose of Section 7 was only Rs. 49,017.27 the Appellate Assistant Commissioner allowed the benefit of concessional tax under Section 7. The Board of Revenue, under Section 34 of the Act and after complying with the formalities, redetermined the total turnover at Rs. 50,238.60 and held that the assessee was not entitled to the concessional rate under Section 7. It is against this order of the Board of Revenue, the appeal has been preferred.
3. The learned counsel for the assessee contended that for the purpose of ascertaining the total turnover under Section 7, the second sales of declared goods shall not be taken into account. He does not dispute that if the second sales of declared goods are to be taken into account he would not be entitled to the benefit of Section 7. According to the learned counsel, in respect of declared goods by reason of Sections 14 and 15 of the Central Sales Tax Act and Article 286(3) of the Constitution of India, the definition of 'total turnover' in Section 2(q) of the Tamil Nadu General Sales Tax Act would have to be understood as not including such turnover as otherwise it would affect the competence of the legislature itself. He also wanted to contend that if the second sales of declared goods are to be included in the total taxable turnover for the purpose of Section 7, it would amount to taxing the second sales of declared goods in violation of the prohibition contained in Section 15(a) of the Central Sales Tax Act. The learned counsel in this connection also referred to Rule 6(e) as supporting his argument.
4. Before dealing with this argument, it is necessary to set out the relevant provisions in the Tamil Nadu General Sales Tax Act. Section 2, which is the definition section, defines 'turnover' as meaning the aggregate amount for which the goods are bought or sold. The other portions in the definition are not material for the purpose of this case. 'Total turnover' is defined as meaning the aggregate turnover in all goods of a dealer at all places of business in the State whether or not the whole or any portion of such turnover is liable to tax. 'Taxable turnover' is defined as meaning the turnover on which the dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed.
5. Section 3, which is-the charging section, as it stood in the relevant time, provided that every dealer whose total turnover for a year is not less than Rs. 15,000 shall pay tax for each year at the rate of 2 1/2 per cent of his taxable turnover. Section 7, which is headed as 'payment of tax at compounded sales', provided that notwithstanding anything contained in Sub-section (1) of Section 3, every dealer whose total turnover is not less than Rs. 15,000 but not more than Rs. 50,000 may, at his option, instead of paying the tax in accordance with the provisions of Section 3(1), pay tax at the rates specified therein. The applicability of Section 7 thus depended on the quantum of the total turnover.
6. The argument of the learned counsel for the assessee was that the words 'total turnover' in Section 7 should not be understood in the sense in which it has been defined in Section 2(q), and it will have to be understood only in the sense that it did not include the second sales of declared goods. He did not go to the length of saying that the total turnover in Section 7 means only taxable turnover.
7. It is true that Section 2 itself starts with the words that the definition given therein would have to be applied 'unless the context otherwise requires' and therefore it is open for consideration whether, in the context of Section 7, the total turnover means something other than what is contained in the definition of that word in Section 2. But is there anything in the context which requires any restricted meaning to be given to the words 'total turnover' It is not in dispute and could not be disputed that even second sales of goods which are liable for single point levy under the First Schedule are liable to be included in the total turnover under Section 7 though such transactions were not liable to tax under Section 3(1). Section 14 of the Central Sales Tax Act is only another list of such goods which could be subjected only to a single point tax and not to multiple taxation. Therefore, inherently there is no difference between the declared goods and the other goods referred to in the First Schedule to the Act for purposes of Section 7. Only in one respect Section 15 of the Central Sales Tax Act makes a difference between these two types of goods. In the case of goods mentioned in the First Schedule it is open to the Legislature of the State to prescribe any rate of tax, but, in respect of declared goods at the relevant period, it could not exceed two per cent. Subject to this limitation as to the rate of tax and the single point levy, the legislature was competent to legislate with reference to the declared goods as well. Therefore, we do not find any difference between the turnover of goods mentioned in the First Schedule and the turnover of goods mentioned in the Second Schedule for the purpose of determining the total turnover under Section 7. As already stated, the learned counsel was not prepared to go to the length of contending that the second sales of goods in respect of which a single point is fixed under the First Schedule are not liable to be included in the total turnover. Logically, we do not find any reason to exclude the second sales of declared goods in computing the total turnover for the purpose of Section 7.
8. The learned counsel in fact argued the question as if it were a question of legislative competence to include the second sales of declared goods in Section 7. This is on the assumption that if the second sales of declared goods are included in determining the total turnover under Section 7, they are indirectly subjected to a multiple taxation. The matter is not res integra. It is covered by authority and against the petitioner's contention. In Sivamurugan v. Assistant Commercial Tax Officer  26 S.T.C. 68, this court had to consider the scope of Section 7, vis-a-vis, Sections 3(1) and 5 of the Act. It was held that the mere fact that the total turnover of an assessee includes a turnover which is not liable to taxation it cannot be stated that the entire turnover had been subjected to tax. What is taxed by applying the provisions of Section 7 is what could have been taxed under Section 3(1) and not those turnovers which were not liable to be taxed either by reason of its being second sales or otherwise. This decision was reaffirmed by a later decision of this court in Coimbatore District Central Co-operative Supply and Marketing Society Ltd. v. Deputy Commercial Tax Officer  35 S.T.C. 226. It therefore follows that by including the turnovers representing the second sales of declared goods in determining the total turnover they are not subjected to tax and no question of legislative competency therefore could arise. What is taxed under Section 7 are only local sales which could have been taxed under Section 3(1), which were within the competence of the legislature.
9. In this connection, we may also refer to two decisions of the Supreme Court with reference to the scope of Sections 14 and 15 of the Central Sales Tax Act which make it absolutely clear that in respect of local second or subsequent sales, in spite of the second or subsequent sale of declared goods being not liable to tax, it can be included by the legislature in determining the total turnover of an assessee. In Modi Spinning to-Weaving Mills Co. Ltd. v. Commissioner of Sales Tax : 1SCR592 , the Supreme Court repelled the contention that a provision in a State law either fixing a different rate or in terms covering second sales of declared goods also within the charging provision, does not act beyond its powers, and held that in such a case by reason of Section 15(a) of the Central Sales Tax Act and Article 286(3) of the Constitution the relevant descrepant provision of the State law would get automatically modified as to be in accordance with Section 15(a). The same view was expressed by the Supreme Court in Devi Dass Gopal Krishnan v. State of Punjab : 3SCR557 . It should also be pointed out that Section 15(a) dealt with the rate of tax and the point of taxation and did not deal with liability of such turnover being included in determining the total turnover of an assessee. Therefore, neither the provisions of Section 15(a) or Article 286(3) of the Constitution were contravened nor the legislature had acted without jurisdiction. Further, the whole scheme of Section 7 is to give the benefit of compounding rate to small traders. For ascertaining the total turnover of such person, therefore, we do not see any justification why such second sales of declared goods could not be included.
10. The learned counsel for the assessee also invited our attention to Rule 6, Clause (e), of the Tamil Nadu General Sales Tax Rules. Clause (e) of the rule states that in determining the taxable turnover the amount for which goods are sold or purchased in the course of export or import or in the course of inter-State trade or commerce would have to be deducted from the total turnover. It was argued on the basis of these provisions that inferentially, but for these exclusions, all inter-State sales would have been included in the total turnover thereby suggesting that the words 'total turnover' in Section 7 included something in respect of which the legislature lacks legislative competence. Apart from the fact that this argument in no way advances the case of the petitioner on the point raised, we are also unable to accept this argument. The provisions excluding inter-State sales and export and import sales are clarificatory and have been specifically provided by way of abundant caution and we cannot interpret a provision in the Act with reference to the provisions in the Rules. Further, we have to interpret the provisions in the Act so as to make it constitutionally valid and not to include something within it so as to make it ultra vires of its powers. This court also held in T. A. Kumarasamy Pathar v. State of Madras  23 S.T.C. 447 that the total turnover as defined in the Act has no reference to inter-State sales which are outside the scope of the Act, but has reference only to sales which are normally chargeable to tax under the Act but due to exemption are not subject to tax.
11. We have, therefore, no doubt in rejecting the argument of the learned counsel that 'total turnover' in Section 7 could not include second sales of declared goods. We may also point out that Section 7 itself is an optional provision and if the assessee considers that it will not be beneficial for him to be assessed under Section 7 he could as well opt to be assessed under Section 3(1); of course the option will have to be exercised as per the Rules.
12. In the result, the appeal is dismissed with costs. Counsel's fee Rs. 250.