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A.P. Mariappa Mudaliar Vs. the State of Madras - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtChennai High Court
Decided On
Case Number Tax Case No. 164 of 1960 (Revision No. 85)
Judge
Reported in(1963)IMLJ5; [1962]13STC746(Mad)
AppellantA.P. Mariappa Mudaliar
RespondentThe State of Madras
Appellant Advocate K. Srinivasan, ;D.S. Meenakshisundaram and ; A. Devanathan, Advs.
Respondent Advocate G. Ramanujam, Adv. for ;The Government Pleader
DispositionPetition dismissed
Cases ReferredWhitney v. Inland Revenue Commissioners
Excerpt:
- - he appealed to the appellate assistant commissioner, commercial taxes, coimbatore, and obtained a modification in regard to the rate of assessment on a portion of the turnover but otherwise failed......sub-section (1) of section 3 of the principal act on his total turnover for the year...4. this was repealed by madras act ii of 1958 which received the assent of the governor on 21st march, 1958, and published in fort st. george gazette, on 22nd march, 1958. all the provisions of this act except section 9 came into force at once, and section 9 came into force only on and from 1st april, 1958. section 9 is the repealing provision and is in these terms :(1) notwithstanding anything contained in section 6, the madras tobacco (taxation of sales and registration) act, 1953 (madras act iv of 1953). and the madras medium cotton mill cloth (sales tax) act, 1954 (madras act xli of 1954) are hereby repealed.(2) notwithstanding such repeal, all taxes, fines and other sums which became payable under.....
Judgment:
ORDER

Jagadisan, J.

1. The petitioner is a dealer in handloom and mill cloth at Chennimalai, Coimbatore District. For the year 1957-58 the Deputy Commercial Tax Officer, Erode (Rural) assessed him under the Madras General Sales Tax Act on a turnover of Rs. 3,41,948-82 nP. He appealed to the Appellate Assistant Commissioner, Commercial Taxes, Coimbatore, and obtained a modification in regard to the rate of assessment on a portion of the turnover but otherwise failed. He preferred a further appeal to the Sales Tax Appellate Tribunal, Madras, and disputed the assessment of tax at the rate of 8 per cent, on the turnover of Rs. 88,732-73 nP. This turnover is comprised of the following items:

1. Turnover of sales of medium cloth from Rs. 82,543-08 nP.1st April, 1957 to 31st March, 19582. Turnover of sales of fine and superfine Rs. 7,194-65 nP.cloth from 1st September, 1957 to 12thDecember, 1957 --------------- Total Rs. 89,737-73 nP.---------------

2. The petitioner's contention was that the additional rate of 8 per cent, levied under the Madras Medium Cloth (Sales Tax) Act of 1954 (Act XLI of 1954) as modified by an amendment of the year 1957 was not leviable as that Act was repealed on and from 1st April, 1958, by Madras Act II of 1958. The Tribunal negatived this contention and dismissed the appeal. The revision petition has been preferred against the said order.

3. The only question that arises for determination is whether the turnover of Rs. 89,737-73 nP. relating to sale of medium, fine and superfine cloth should suffer an additional tax at the rate of 8 per cent. besides the ordinary levy under the charging section, Section 3 of the Madras Act XLI of 1954 as amended by Madras Act XXIII of 1957. The relevant provision of that enactment reads thus :

Section 3(1): 'On the first sale in the State of Madras of medium cotton mill cloth by a seller who is not exempt from taxation under Sub-section (3) of Section 3 of the principal Act the seller shall pay a tax and the tax shall be paid by the seller on his turnover in each year relating to such cloth and shall be in addition to the tax which he is liable under Sub-section (1) of Section 3 of the principal Act on his total turnover for the year...

4. This was repealed by Madras Act II of 1958 which received the assent of the Governor on 21st March, 1958, and published in Fort St. George Gazette, on 22nd March, 1958. All the provisions of this Act except Section 9 came into force at once, and Section 9 came into force only on and from 1st April, 1958. Section 9 is the repealing provision and is in these terms :

(1) Notwithstanding anything contained in Section 6, the Madras Tobacco (Taxation of Sales and Registration) Act, 1953 (Madras Act IV of 1953). and the Madras Medium Cotton Mill Cloth (Sales Tax) Act, 1954 (Madras Act XLI of 1954) are hereby repealed.

(2) Notwithstanding such repeal, all taxes, fines and other sums which became payable under either of the Acts repealed by Sub-section (1) immediately before the 1st April, 1958, may be recovered as if this section had not been enacted.

5. In the present case pre-assessment notice was served upon the petitioner on 10th March, 1959, and the assessment itself was completed only on 27th March, 1959. The petitioner submits that no valid levy of tax under Madras Act XLI of 1954 can be made after 1st April, 1958, on which date it stood repealed by reason of Madras Act II of 1958. The petitioner further submits that the saving provision under Section 9(2) of Madras Act II of 1958 can apply only to cases where the tax had been levied on a proper assessment of the turnover before 1st April, 1958. The question therefore is whether any tax was ''payable' within the meaning of Section 9 of Madras Act II of 1958 before 1st April, 1958.

6. Section 3, the charging section, of the principal Act provides that every dealer shall pay for each year a tax on his total turnover for that year calculated at two per cent, of such turnover. The taxable event under the Act is either sale or purchase and the scheme of the Act is that each transaction of sale or purchase by a dealer attracts tax at the point of time when the transactions take place though for the purpose of convenience the computation of the turnover is made annually. The liability to pay tax therefore arises on the happening of the taxable event though collection may be postponed till after the total turnover is determined, the tax levied and the actual demand made. A sum of money is said to be payable when a person is under an obligation to pay it. The word 'payable' may therefore signify an obligation to pay at a future time. We may refer to the oft-quoted observations of Lord Dunedin in Whitney v. Inland Revenue Commissioners [1926] A.C. 37:

Once that it is fixed that there is liability, it is antecedently highly improbable that the statute should not go on to make that liability effective. A statute is designed to be workable, and the interpretation thereof by a Court should be to secure that object, unless crucial omission or clear direction makes that end unattainable. Now, there are three stages in the imposition of a tax : there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi, has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay.

7. We are of opinion that Section 9(2) of Madras Act II of 1958 saves liability to pay tax incurred before 1st April, 1958. The operation of that provision cannot be confined only to cases where there has been a determination and quantification of the tax before the relevant date. The object and purpose of giving effect to the repealing provision only on and from 1st April, 1958, must be to subject the dealers to the additional levy under Madras Act XLI of 1954 in respect of transactions throughout the financial year from 1st April, 1957 to 31st March, 1958.

8. We may also refer to the provisions of the Madras General Clauses Act. Section 8 :

Where any Act, to which this Chapter applies repeals any other enactment, then the repeal shall not...(d) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed.

9. It is clear that this provision will not permit the assessee to escape the liability incurred under Madras Act XLI of 1954. We are unable to read Section 9(2) of Madras Act II of 1958 as in any way derogatory to the provisions of the General Clauses Act. In our opinion, both Section 9(2) of Madras Act II of 1958 and Section 8 of the Madras General Clauses Act sufficiently keep alive the liability of the assessee to pay the additional tax under the repealed Act.

10. The revision petition fails and is dismissed with costs. Counsel's fee Rs. 100.


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