Sales Tax Officer, Cuttack and Another v. M/S. B.C. Patel & Co.

Supreme Court15 Apr 19581958 INSC 43 · [1959] 1 S.C.R. 5201958 INSC 43

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Sales Tax Officer, Cuttack and Another versus M/S… — Service and Employment | Supreme Court (1959)

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our learned Brother S. K. Das J. for reasons stated by him that the assessment orders for the three post- Sales Tax Officer, Constitution quarters were hit by cl. (1) of Art. 286 Cul tack v. and also s. 30 (1) (a) (i) of the Act and were rightly B. C. J>iilrl &- Co. held by the High Court to be without jurisdiction. It is with regard to the assessment orders for the two Das C. ]. pre-Constitution quarters that we have come to a conclusion different from that to which our learhed Brother has arrived. We proceed to state our reasons. The impugned notification, as hereinbefore stated, was issued on March 1, 1949, under s. 4 (1) of the said Act. Under that sub-section every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded Rs. 5,000 would be liable to pay the tax under the Act o~ sales effected after the date "so notified'', that is to sav, the date which the provincial Government might by notificationin the Gazette appoint. It is clear, therefore, that s. 4 (1) by its @wn terms determined the persons on w horn the tax liability would fall but left it to the provincial Government only to appoint the date with effect from which the tax liability would commence. It follows, therefore, that the only power conferred by s. 4(1) on the Government was to appoint, by a notification in the Official Gazette, a date with effect from which the tax liability would attach to the dealers described and specified in the sub-section itself as the persons on whom that liability would fall. The Government of Orissa issued the .notification, hereinbefore quoted, " in exercise of the powers conferred by sub-section (1) of section 4" and appointed March 31, 1949, as the date with effect from which the tax liability would commence. It was none of the busiq,ess of the Government of Orissa to say on what class of dealers the tax liability would fall, for that had been already determined by the sub-section itself. Therefore, by the notification the Government of Orissa properly exercised its powers under imb-s. (1) in so far as it appointed March 31, 1949, as th~ date, but it exceeded its powers by proceeding to say that all dealers whose gross . - turnover . during the year ending

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March 31, 1949, exceeded Rs. 5,000 should be liable to pay tax qnder the Act. This part of the notificaSafo~ Tax Offioer, tion clearly ran counter to the sµb-section itself, for Cutfack under that sub-section it is only those dealers whose v. gross turnover exceeded Rs. 5,000 "during the year B. c. Patel & Co. immediately preceding the commencement of this Act" that became liable to pay the tax. For the purposes Das C. ]. of 'the five assessment orders it made no difference whether the ·Act is taken to have commenced on December 14, 1948, when it was extended to the feudatory States by notifica.tion under s. 4 of the Extra Provincial Jurisdiction Act, 1947, or on March 1, 1949, when the notification under s. 1 (3) was issued, for in either case the year immediately preceding the commencement of this Act was April 1, 1947, to March. 31, 1948. The position, therefore, is that by the earlier part of the impugned notification the Government of Orissa properly and rightly exercised its power in appointing March 31, 1949, as the date with effect from which the liability to pay tax under the Act would commence, but by its latter part did' something more which it had no business to do, i.e., to indicate, contrary to the sub-seetion itself, that those dealers whose gross turnover during the year ending on March 31, 1949, would be liable to pay tax under . the Act. The notification in/ so far as it purports to determine the class of dealers on whom the tax liability would fall, was certainly invalid. The question that immediately arises is· as to whether the whole notification should be adjudged invalid as has been done by the High Court and as is proposed to b~ done by my learned Brother S. K. Das J. or the two portions of the notification should be severed and effect should be given to the earlier part which is in conformity with s. 4(1) and the latter J:>art which goes beyond the powers conferred by the sub-section to the Government of Orissa should be . rejected. Immediately the questiim of severability arises. Are the two portions severable? We find no difficulty in holdirrg that the portion of the notification' which went beyond the powers conferred on the Government of Orissa is quite clearly and easjly severable from that . . .

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which w.ts within its powers. It cannot possibly be Sales Tax Officer, said that had the Government of Orissa known that cu11ack it had no power to determine the persons on whom v. the tax liability would fall it would not have appoint- B. C; Patel&Co. eel a date at all. In our view there is no'question of the two parts being inextricably wound up. We, Das C. ]. therefore, hold that the notification, in so far as it appointed March 31, 1949, as the date with effect frbm which liability to pay tax would commence was valid and the test of the notification was invalid and must be treated as surplus without any legal efficacy. The . result, therefore, is that the charging section was effectively brought into force and the entire charging section became operative and dealers could be pro. perly brought to charge under the appropriate part of the charging section. • It is true that the notification having also stated that the dealers, whose gross turnover exceeded Rs. 5,000 during the year ending March 31, 1949, would be liable to pay the tax, the sales tax authorities naturally applied their mind to the question whether during the year ending March 31, 1949, the gross turno¥cr of tN.e respondents exceeded the requisite amount, but did not inquire into the question whether the respondent's gross turnover exceeded J{.s. 5,000 during the year immediately preceding the commencement of the Act which in this case was the financial year from April I, 1947 to March 31, 1948. · lf the matter stood there, it would have been necessary to. send the case back to the i-lales Tax Officer to enquire· into and ascertain whether the quantum of the gross turnover of the respondents during the last mentioned financial year ending on March 31, 1948, exceeded Rs. 5,000 or it did not. But a remand is not called for because it appears from the judgment under appeal that it was conceded that for the period Aprill, 1949, till the commencement of the Constitution on January 26, 1950,'the respondents would haye been liable to pay sales tax provided a valid notification ha cl been issued, under sub-s. ( 1) of s. 4. • This · concession clearly amounts to an admission that the 0. "ross turnover • of the respondents • during the financial

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r958 the business of collection and sale of Ken du lea vee. The firm has its headquarters at Pallahara, which was Sales T.ax O!fi.cer, .c 1 f h 10 S f d Cuttack 1ormer y one o t e ,,'eudatory , tates o Orissa an v. merged in the then province of Orissa by a merger B. c. Patel & Co, agreement dated January 1, 1948. The Sales Tax authorities, Cuttack, in the State of Orissa, assessed s. I<. Das J. the respondent to sales tax in respect of sales of Kendu leaves which took place for five quarters ending on• September 30, 1949, December 31, 1949, June 30, 1950, September 30, 1950 and December 31, 1950. It should be noted that two of the aforesaid quarters related to a period prior to the commencement of the Constitution, and the remaining three quarters were post-Constitution. The facts which the Sales Tax authorities . found were (l) that the respondent collected Kendu leaves in Orissa and sold them to various merchapts of Calcutta, Madras and other places on receipt of orders from them, (2) that the goods were sent either f. o. r. Talchcr or f. o. r. Calcutta, and (3) the sale price was realised by sending the bills to the purchasers for payment. The admitted position was that the goods were delivered for consumption at various places outside the State of Orissa. The Sales Tax authorities proceeded on the footing that all the sales took place in Orissa even though the goods were delivered for consumption at places outside Orissa. By five separate assessment orders dated May 31, 1951, the Sales Tax Officer, Cuttack, held that the sales having taken place in Orissa, the respondent was clear1y liable to sales tax for the pre-Constitution period and, for the post-Constitution period, though the sales came within cl. ( 2) of Art. 286 of the Constitution, the respondent was liable to sales tax under the Sales Tax Continuance Order, 1950, made by the President. These findings were affirmed by the Assi8tant Collector of Sales Tax, Orissa, on appeal, by his order dated April 12, 1952. The respondent assessee then filed a petition under Art. 226 of the Constitution in the High ·court of Orissa and prayed for the issue of a writ of certiorari or other appropriate writ quashing the aforesaid orders of assessment. The case of the respondent before the HigQ. Court was t.hat the asse~sment orders, both with

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the Act; but for sub-s. (2) the crucial year is the year in which the dealer's gross turnover first exceeded Rs. 5,000. We ageee that for the same relevant year both sub-sections (1) and (2) cannot apply, because snb-s. (2) says-" Every dealer to whom sub- B. s. (1) does not ::tpply etc." Let us, for example, take tpe year 194'6-47 in the old province of Orissa. That was the year i mmecliat'.lly ·preceding the commencement of the Act in that area, and sub-s. (1) applied to all dealers whose gross turnover exceeded Rs. 5,000, first or otherwise, in that year; sub-s. (2) did not apply to such dealers evcl1 if their gro;;s turnover exceeded Rs. 5,000 for the first time in that year; because where snb-s. (1) applies, sub-s. (2) does not apply. But what is the case before us? The year in1mediatcly preceding the commencement of the Act in the Pallahara area was 1947-48, and sub-s. (1) would have applied to the respondent if the notification had mentioned thnt yea,1-. But it did not, and . the result was that it 'ms not necessary to find if the respondent's gross turnover exceeded Rs. 5,000 in HJ4 7-48. 'Vhat was found was that the respondent's gross turnover exceeded Its. 5,000 in HJ48-49, that is, ·the year ending March 31, HH9, which was not the year irnmediately preceding the commencement of the Act in the Pallalrnra area,, Obviously, therefore, sub-s. (1) did not apply to the respondent; hut he clearly ca,mc tinder sub-:;. (2). The Act came into force in the Orissa States on i\Jarch 1, 1949. By March 31, Hl49, the reRpomlcnt's gros:; turnover cxcecclecl Hs. 5,000. He was, tlwreforc, liable to pay tax under· sub-s. (2) >vith effect fnnu the commencement of the year immediately foUo"'illg 1\farch :31, 19Ml, that is, from April 1, 1949. H has been argued for the respondent that the won[ ' first' in :ml,.s. (2) means ' first ' after the commencement of the Act. Assuming this to be correct, the respondent still comps under sub-s. (2); because even if the Act came into force on March 1, 1949, the respondent's gross turnover first 0 cxceecled .Rs. 5,000 in the year ending .March :H, 1949-whioh was after the commencement of the Act. •

Sales Tax Officer, Cuttack and Another v. M/S. B.C. Patel & Co.

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A compact analysis

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

The Nagpur Electric Light and Power Co., Ltd. & Others versus K. Shreepathirao

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