1. The petitioner is a dealer in vegetables in the Kotwal Market, Madras. The petitioner claimed that he specialised in the sale of yams.
2. Section 6 of the Madras General Sales Tax Act (IX of 1939) runs :
6.(1) The State Government may, by notification in the Fort St. George Gazette, make an exemption, or reduction in rate, in respect of any tax payable under this Act-
(i) on the sale of any specified class of goods, at all points or at a specified point or points in the series of sales by successive dealers; or
(ii) by any specified class of persons, in regard to the whole or any part of their turnover.
(2) Any exemption from tax, or reduction in the rate of tax, notified under Sub-section (1)-
(a) may extend to the whole State or to any specified area or areas therein;
(b) may be subject to such restrictions and conditions as may be specified in the notification, including conditions as to licences and licence fees.
3. The relevant portion of the notification dated 25th March, 1954, published in the Fort St. George Gazette dated 7th April, 1954, ran:
In exercise of the powers conferred by Section 6 (1) of the Madras General Sales Tax Act, 1939 (Madras Act IX of 1939) and in supersession of all previous notifications on the subject, the Governor of Madras hereby exempts, with effect from the 1st April, 1954, all sales of...flowers, vegetables and fruits (other than potatoes, onions, nuts, coconuts, dehydrated vegetables, canned, preserved, dried or dehydrated fruits), from the tax payable under the said Act.
4. That notification was amended by a further notification issued by the Government on 16th December, 1954, which in effect excluded from the scope of the exemption granted by the earlier notification dated 25th March, 1954, the following articles of merchandise: 'Sweet potatoes, yam and tapioca, garlic, ginger, green chillies and other similar varieties of vegetables which are used as spices and condiments and not as substantial articles of food.
5. The petitioner, as we pointed out earlier, was a dealer in vegetables specialising particularly in the sale of yams. Sales of yams, ginger and green chillies among other things were exempted from liability to sales tax under the notification dated 25th March, 1954. They again became liable to sales tax under the general charging provision, Section 3 of the Act, after the notification dated 16th December, 1954. The petitioner challenged the validity of the notification dated 16th December, 1954, in his application under Article 226 of the Constitution, where the relief prayed for was a writ of prohibition 'to restrain the assessing authority from levying sales tax on the turnover of the sales effected by the petitioner of green chillies, green ginger and yams.
6. The contentions of the learned counsel for the petitioner were : (1) the power granted by Section 6 (1) of the Act was to exempt from tax the sale of any specified class of goods. The class of goods exempted was vegetables. Section 6 (1) did not confer any power on the Government to exclude any items of vegetables from the class of goods sold, vegetables. (2) Sales of yams, ginger and green chillies among other vegetables had been exempted from taxation by the notification dated 25th March, 1954. That power of exemption having been exercised, the Government had no jurisdiction to amend the terms of the notification granting the exemption. (3) The levy of tax under the Sales Tax Act on vegetables was unlawful and in contravention of Section 3 of the Essential Goods (Declaration and Regulation of Tax on Sale or Purchase) Act, 1952 (Act LII of 1952).
7. Section 3 of Act LII of 1952 runs :
No law made after the commencement of this Act by the legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods declared by this Act to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent.
8. By its terms Section 3 of Act LII of 1952 is made applicable only to a law made after the commencement of that Act. Madras General Sales Tax Act (IX of 1939) was one enacted long before Act LII of 1952, and Section 3 of the Madras General Sales Tax Act subjected the turnover of the sales of all goods to tax. The definition of turnover in Section 2 (i) of the Act included sale of all goods ; and vegetables are undoubtedly goods. Therefore it was not a case of subjecting the sales of vegetables to tax under any law made by the Legislature of the Madras State subsequent to the commencement of Act LII of 1952.
9. The learned counsel for the petitioner urged that the imposition of the tax on the sale of vegetables in which he dealt, yams, green ginger and green chillies, was really under the notification dated 16th December, 1954, the validity of which the petitioner challenged. The fallacy in that argument should be obvious. It was not the notification dated 16th December, 1954, that imposed any tax liability. The tax was that imposed by Section 3 of the General Sales Tax Act (Act IX of 1939). Exemption was granted in exercise of the powers vested in the Government by Section 6 (1) of Act IX of 1939 for the period commencing from 1st April, 1954. The scope of that exemption was curtailed, and in effect exemption was refused to sales of yams, green ginger and green chillies by the notification dated 16th December, 1954. If the notification dated 16th December, 1954, was otherwise valid, the notification itself should not be said to contravene the provisions of Section 3 of Act LII of 1952. The liability to taxation under Section 3 of the Act which remained suspended for the period between 1st April, 1954, to 16th December, 1954, was revived by the notification dated 16th December, 1954. As we said, it was not the notification dated 16th December, 1954, that imposed the liability to tax.
10. The second of the contentions too, in our opinion, has little substance. Section 6 of the Act no doubt does not in express terms confer power on the Government to modify or cancel any notification issued under Section 6 (1) of the Act. In our opinion, however, there is no basis for the theory that the power conferred of granting an exemption was exhausted when a notification was issued exempting certain articles from taxation on 25th March, 1954. Section 13 of the Madras General Clauses Act (I of 1891) enacts : -
Where an Act confers a power or imposes a duty, then the power may be exercised and the duty shall be performed from time to time as occasion requires.
11. This is an express provision negativing the theory of the exhaustion of statutory powers. In addition to this, Section 15 of the Madras General Clauses Act confers a specific power to rescind, revoke, amend or vary the rules or orders issued under statutes. This section enacts :
15. Where an Act confers a power to make any rules or bye-laws or to issue orders, the power shall be construed as including a power exercisable in the like manner and subject to the like consent and conditions, if any, to rescind/ revoke, amend or vary the rules, bye-laws or orders.
12. Learned counsel drew our attention to the fact that Section 21 of the Central General Clauses Act (X of 1897), being the provision corresponding to Section 15 of the Madras General Clauses Act specifically refers to a power to issue notifications which is not to be found in the Madras Act (I of 1891). In our judgment this makes no difference and the word 'order' used in the Madras Act I of 1891 is comprehensive to include the power to issue a notification. We therefore hold that the Government had the power under Section 6 (1)of the Act to modify or amend the earlier notification issued by it under Section 6(1).
13. The question that remains for consideration is whether the exclusion of certain items of vegetables from the class of vegetables, sales of which were exempted from liability to tax, ordered by the notification dated 16th December, 1954, was intra vires and came within the scope of the statutory power conferred on the Government by Section 6 (1) of the Act. We should make it clear even at the outset that we are concerned in these proceedings only with the validity of the notification dated 16th December, 1954; we are not concerned with the validity of the earlier notification dated 25th March, 1954.
14. The statutory power conferred by Section 6 (1) (i) of the Acton the Government is to exempt from liability to tax the sales of any specified class of goods. The argument on this head was somewhat on these lines : Vegetables constituted a specified class of goods. It was clearly the intention of the Government to exempt this class of goods from liability to tax. But the notification however had gone on to provide that 'yams, green chillies and green ginger', to mention only those relevant in the present context, were taken out of the exemption. There is no 'specific class of goods' constituted by 'vegetables other than yams, green chillies and green ginger'. Therefore if the notification were to consist of these words alone and purported to exempt the class as so constituted, it would be outside the exempting power conferred by Section 6 (1) (i). In view however of the clear intention that Government intended to exempt the entire class of vegetables it would follow that the taking out of the class of 'vegetables' the specified vegetables included in the brackets, would be outside the scope of Government's statutory power. The result of this would be that the entire class of vegetables would be exempted and the exclusion from that exemption of those articles within the brackets would be ultra vires the Government. This was the basis upon which the petitioner's right to relief was founded. We are clearly of the opinion that this argument must be rejected. To start with we might mention that we cannot accede to the argument that the impugned notification is capable of being read in two parts, (1) as conferring an exemption on every species of vegetables and (2) as detracting from the scope of that exemption certain class of goods which might fall within the description of vegetables. In our judgment the notification has to be read as one integral whole, namely, as containing an exemption, to confine ourselves to the relevant matter, of vegetables other than the vegetables specified within the brackets. If learned counsel is right in his submission that such a truncated class of vegetables is not 'a specified class of goods', the only result would be to invalidate the entire exemption as one not within the scope of Government's power to exempt under Section 6(1) (i). This of course does not help the petitioner and the attempt of Mr. Thyagarajan, his learned counsel, was to steer clear of this result being reached.
15. The question next to be considered is whether the articles exempted from tax could be treated 'as a specified class of goods' within Section 6(1) (i) and for this purpose we shall confine ourselves to the words of the notification particularly relevant to the present context '...vegetables and fruits (other than potatoes, onions, sweet potatoes, yam and tapioca, garlic, ginger, green chillies and other similar varieties of vegetables which are used as spices and condiments and not as substantial articles of food...)'. We have already set out the reasoning on the basis of which the detraction from the exemption of 'goods' which might be embraced within the general caption 'vegetables' has been urged to be invalid. We are unable to accede to this argument. The fallacy in it proceeds from treating 'vegetables' as a unitary and indivisible class of goods which once having been selected or specified for exemption was incapable of division or subtraction. Take the very classification to be found in the notification : 'Varieties of vegetables which are used as spices and condiments and not as substantial articles of food' and green chillies would fall within this class. Undoubtedly the variety of vegetables thus designated would be 'a class of vegetables', the classification being based on the use to which the items were normally put. If this class had instead of being denied the benefit of the exemption been itself exempted from tax, it could not be urged that the exemption was not within Section 6 (1) (i) on the ground that the class thus described was not 'a specified class of goods.' If this were so, then we are unable to find any logical basis on which it could be urged that a notification which exempted vegetables other than this specified class could be held to be bad.
16. Take again 'potatoes, sweet potatoes, yams and tapioca, garlic and ginger' ; those would all fall into the class of root vegetables or tubers. Similar examples, though not to be found in the notification may be multiplied and to mention only a few-edible flowers, gourds, legumens- which are all species of vegetables, though comprehended within the genus constituted by vegetables. An exemption granted in regard to these several classes of vegetables cannot be challenged as invalid and by parity of reasoning, therefore, the validity of an exemption in favour of 'all classes of vegetables other than these specified classes' could not also be impugned. Suppose again the exemption had been in these terms, all gourds, all leafy vegetables, all tubers and root vegetables and so on ; it can hardly be suggested that the goods exempted did not satisfy the requirements of Section 6(1)(i). Does it make any difference whether the notification was drafted exempting a conglomerate class followed by a subtraction from it of some of the sub-groups making up the larger groups This can be answered only in the negative for the validity of the notification surely cannot depend on a drafting device. We might also express the same matter in slightly different terms. Government might well have proceeded to enumerate individual items or classes of vegetables whose sale was exempt from tax and no objection could have been taken to the validity of such a notification for each class is capable of sub-division. Thus for instance chillies though an item of goods comprised in the genus of vegetables itself consists of several varieties of chillies so that it would not be doing violence to language to call chillies a species of goods. If a notification which enumerated the items were valid it is not possible to accede to an argument that the form of the notification now impugned renders it open to attack as not within Section 6 (1) (i). In our judgment the notification dated 16th December, 1954, was within the scope of the power of the Government under Section 6 (1) (i) and the challenge to its validity must be rejected.
17. There is one other matter necessary to advert, suggested by the learned Government Pleader, whether if the impugned notification could not be sustained on the terms of Section 6 (1) (i) it could be held valid because of the terms of Section 6 (2) (b). The material portion of Section 6 (2) (b) runs :
Any exemption from tax...notified under Sub-section (1) (of Section 6)-(b) may be subject to such restrictions...as may be specified in the notification.
18. The learned Assistant Government Pleader suggested that the notification dated 16th December, 1954, in effect 'restricted' the exemption granted by the Government under Section 6 (1) to vegetables other than yams, green chillies and green ginger and that whether the articles exempted formed a specific class or not the same was valid because of Section 6(2)(b). Though the language of Section 6 (2) is wide and if read without reference to the other provisions of the Act be capable of the construction contended for by the learned counsel for the respondents, in view however of the other relevant provisions of the Act, we have decided to reject this construction. The other provisions which we have in mind in this context are Sections 5 and 6-A of the Act. Section 5 uses the expression 'subject to such restrictions and conditions as may be prescribed, including conditions as to licences and licence fees' which is identical with that used by Section 6(2) (b). When we come to Section 6-A which deals with the consequences of the contravention of the restrictions or conditions imposed by Section 5 or by notifications or conditions imposed by Section 5 or by notification under Section 6 the language used indicates that these restrictions and conditions relate to the manner in which a dealer carries on the business and not to the subject matter of the exemption. Section 6-A runs in these terms:
6-A. If any restrictions or conditions prescribed under Section 5 or notified under Section 6 are contravened or are not observed by a dealer...the sales of the dealer...may be assessed to tax or taxes under Section 3, as if the provisions of Section 5 or of the notification under Section 6 as the case may be, did not apply to such sales...' (to extract only the words relevant to the present context).
19. In our judgment Section 6-A conceives of the 'restrictions' imposed by a notification under Section 6 as those which are capable of contravention. The construction however which the learned Government Pleader invites us to adopt of the expression 'restriction' is as a restriction on the specified class of goods which are the subject of exemption. If the word 'restriction' were construed in that sense, it would be clear that there could be no contravention of such a 'restriction'. It is for this reason that we hold that 'the restriction' contemplated by Section 6 (2) (b) is only 'a restriction' as to the manner in which a dealer to whom exemption is granted is required to conduct his business, say in the matter of keeping his accounts, filing returns etc., and not a 'restriction' of the articles or goods as regards which the exemption is granted.
20. The rule nisi is discharged and the petition is dismissed. There will however be no order as to costs.