Dismissed

International Cotton Corpn. (P) Ltd, v. Commercial Tax Officer, Hubli & Ors.

Supreme Court4 Oct 19741974 INSC 196 · [1975] 2 S.C.R. 3451974 INSC 196

Case brief

AI extract

What is this about?

Dealers challenged levy of central sales tax on inter-State sales of declared goods and rectified assessments. The Supreme Court upheld section 8(2)(a) against excessive-delegation attack, rejected Article 14 discrimination and implied repeal arguments, and sustained rectification under Rule 38.

What did the court decide?

Appeals dismissed with costs; one hearing fee.

What the court decided

AI extract

International Cotton Corpn. (P) Ltd, versus… — GST and Indirect Tax | Supreme Court (1975)

¶1

..... . .... . 7""'" -:; v

¶2

345

¶3

·}. INTERNATIONAL COTTON CORPN. (P) LTD. v.

¶4

COMMERCIAL TAX OFFICER, Hl'BLI & ORS. October 4, I 974

¶5

[A. N. RAY, C. J., Y.V. CHAHFACHto A A B A. C. Gt.JPTA, JJ.) • · lACJJtl~'tl )· r ;.o Ctnlrol Sole& Tax Act, l9S6-S 8(2)(a)-C 1. 8(2A) hod th tffect oj upol/ng s.'6(t·A) of th~~11"1'£:::1 WJ/idity of-Whtrhu of the rtcorti-Jj Sa!s Tax Officer tntltltd to rtcrl'j cr-1, or⁰ _PP<Ut111 011 tht fare_ . _Y tor •tr rtrtljkotlon._ Certam Inter-state sale, of the appeUants were assessed b th _to_ central sales-tax before lOth November 1964 On tha &:; e Sales !Ill( Officer c _do/am Laklhml Nanimhalah Setty_ & Son~ 'held that where'• ~ t!ti' Coun ifl _Yad·_ not liable to aalea tax if it were an Intra-state sales und h am transactJon "'115 appropriate State lt. would not be liable to sales-tax if it '~>'!: ;:;es-aw 0.r .the effect . to this declston the aes.smeot orders of tho appellants W:ete rectified 11 st as1de the effect or this decuioo, sub-s. (l·A) "'-u Inserted 1n 1• 6 and a cocuell· ual amendment '1"8.5 made in au~s. (2-A) of a. 8 of the Central Salts-Tax Act on 9-6-1969. Thereupon the assessma authority Bialn brouaht to tax the inter-stato , sales. D ~cction 8{2)(a) ~ter ita amendment enaeted that the tax pay8ble by any dealer oa hJJ tlll'llO\Icr relatlnf to tho sale of aoods in the ~une of inter-sute trado or commerce not fallina Wlthill •ub-I. (1) ill the ease or declared 1 oods shall be ..UCU· Jated at the rate applicable to the sale or purchase oC such aoodJ uUidc t.bo appropriate State.

¶6

It ...,. contended (1) that the clause it ll.llconstitulion:U in that Parliameot has abdicated 111 lqil!ative (unction by adoptina the rato applicable to the sale or purchaae of sooda ~ the appropm~ State; (2) under a. 8(2)(a) it i3 tho rate of tax that wu prevaknt wlu:n that tectloo was enacted and not any Jubsequcnt variations ill the rate of tax that ru appllcable; (3) that while traDsactions bttwoen lOth No•· ember, 1964 aJ:id 9th Jllllt, 1969 :wore exempted !'rom liability to pay tax, if iD f the tu In respect of th.est transactions had not been collected by the dealer, a silln· lar c:o!ICGSion had not been sranttd to da!en who were siroilally aituated, that ·is, thoso 'll'ho had not collected any tax on their sales prior to !WI NovcmberJ 1964 and that auch concession sbo11ld bo available to ~ who had DOt mace any collection after 23rd January, 1962, that it the d11to of the jdament of Hiah Court; , (4) that Section 8(2A) whJch "u &mended at the samo tJmc as sub-4. 6<1-A) wu inserted had the effect of lmpUcdly rcpealina sut>-s. 6(l.A); (~~t the Salu O&cer h.t.d no power tO rectify tho a.sseuroent ordct1 after C:OJDU!i 11110 force o( ~ Cwtral Sa!ea Tu (,Amwdment) Aet, 1969 aince there was no error appar.Cllt ( .t11• fiiCe of the record; and (6) that the rectil!cation order was beyond tho polllt⁰ tlllll under rule 38 ot tho ,Mysorc Sales Tu Rules.

¶7

Di.mllMin a tho 11ppeaJ.s,

¶8

G RElD : (l)(a) The adoption of Lhe rate oC local .ales tue f tiamellt tho purpote biiS In of dto any Cc:nu . .t Salet tax 1n a partu:ular State doea oot •row ;am<D-t provides w•t tb• ">' abdicated Ita lcaltl11t1ve runctJon. Whcro a aw⁰ a !.iublo to tho .ale or rate or Centr&l aa!ea-tu ahould be calculated at tho rate1111ft Jcsla.tivo policy c&ll puhaq ot such aoods Inside the appropnt. Se, :,:! C<etr&l slllcs-tax should, be dl5certled ill tuch a law, tho policy bellli ., .. I e r A law made by ParllamtDl In 110 event, be lu• than the rate ot lo~.,'<ftesutrerina from the vice of~ containina the above provlsJonJ CI.JliiOt be ""'¹⁰ tho abovo law tncorporatet · ar.c 1ri1hlD cleJeaauon lucl! tho of nccetaatY leiJ,!l&tlvo provialont tuDctlon. to On the ~~ contu:a'objectivt 0~ taea-tu and to pl oC tho ua le.t. r- 0 ~&mdy,. to pr_,yent evuJon of paymtot o loopboA (3$0D·FJ )l s T c. 219, toUond. Q. hylff S/1/c ltl/1· (lf'l'f.) Co. Ltll. v. Aut. Cllllf""· .•

¶9

SUPRE~E COURT REPORTS

¶10

346

¶11

[1975) 2 S.C.R.

¶12

(b) The letislative policy laid down by Parliament in s. 8(2)(a) is that interstate trade should not be discriminated against. If the argument of the appellant is accepted there will have to be unending series of amendments to this section every tinte one State or the other alters its rate of tax. [351-D]

¶13

(2) "Rate applicable" merely means the rate applicable at the relevant point of time and not the rate applicable when section 8(2){a) was enacted, The whole scheme of the Central Sales-Tax Act is to adopt the machinery or the Jaw relating to sales-tax Acts of the various states in cases where those states happen to be the ap· propriate states as also the rates prescribed by those Acts. [352-D; 351-G)

¶14

(3) (a) The fact that transactions of sales during the poriod between 23rd January, 1962 and lOth November, 1964·were not given the same concession as the transactions between lOth November, 1964 and 9th June, 1969 did not mean that the latter concession was unconstitutional. A concession is not a matter of right. Where the legislature, taking into consideration the hardships caused to a certain set of tax payers gives them a certain concession, it does not mean that action is bad as another set of tax payers similarly situated may not have been given a similar concession. {353C·D)

(b) There can be no que.tion of discrimination in this case. Section 6(1-A) read with s, 10 of the Amendment Act i not unconstitutional in so far as it',relates to the p:riod between 23rd January, 1962 and lOth November. 1964. (3S3B-F]

¶19

(4) (a) Such an intention cannot be imputed to Parliament which enacted both the provisions·at the same time. Both the provisions should be so read .as not to aullify the effect of the one or the other. The fact s, 6(1A) is also included in the rron-obstante clause of. s. 8(2A) did not mean by itself that the effect of s. 6(1A) was obliterated. {353G·H:

¶20

(b) Section 6(IA) and s. 8 (2A) can stand toget)ler. The legislature might, for the sake of convenience or from other considerations of policy, make either a sale or a purchase taxable In rpect of the sale of any particular goods. That does aot mean that the sale and ,purchase in respect of the same transaction are two dif· ferent transactions. They are two facets of the same transaction. When sub-s. (2A) of s. 8 uses the words "the sale or, as the case may be, the purchase" it is merely referring to the fact that State Sales-tax Acts make either the sale or purchase taxable and not that where the sale is ta:a:able the purchase i exempt from tax and where the purchase is taxable the sale is exempt from tax and, therefore, where one of them j.8 ex.empt from tax in respect of an intra·.tate sale. the inter-state sale .is completely Olleo:lpt frm tax. [3S4C·DJ

¶21

(c) Reading section 6(1A) and aection 8(2A) toaether along with the explanation the conclwion deducible would be that where the intra-state sates of certain ~:oods are liable to tax even though only at one point, whether of purchase or of sale a subsequent inter-State sale of the same commoditY is liable to tax; but where th11t commodity is not liable to tax at all if it were an intra-State sale, the interState sale of that commodity is also exempt, from tax. Where an Intra-State sale of a particular commodity is taxable at a lower rate thl\n 3 per cen.t then the tax on the inter-State sale of thaJ.. commodity will be at ·hat lower rae. As .sale or purchase of any goods shan rR>t be exempt from tax 1n respect of tnter-State sales of thoSe commodities if as an intra-State sale the purchase or sale of those commodities is exempt only in specific circumstances or under specified conditions or is leviable on the sale or purchase at specified stages, [354F-HJ

¶22

(S) It is incorrect to .say that because this Court had not in Joseph's case considered the arguments regarding conflict between s. 6(JA) and s. 8(2A) there was no error· appa'rent on the face of the record. Clearly when the Court said that. tho ·effect of the Central Sales·ta"< (Amendment) Act, 1969 was to supersede the judgment of this Court in Yaddalam's case the Sales-tax authorities were undoubtedly entitled to rectify their earlier rectification order which was made consequent on the decision in Yaddalam's case. After the Central Sales Tax (Amendment) Act. 1969 the decision of this Court in Joseph's case there was no question about the error not being apparent on the face of the record. _[3SSC·D)

~TEINATIONAL COTTON COIPN, ·v. C.T.O. (J.lagiriswami, /,) 347

¶29

. (6) What was sought to be rectified wa-s the assessment order rectmed as 1. oonscquence of this Court's decision in Yaddalam'.t case. After such rectificatlon the 0r1ginal assessment order was no longer in force. and that was not the order SOUJbt to be rectified. It is admitted that all the rectification ordo1'3 would bo with• .b time calculated from tho original rectification order. Rule 38 itself apeaks of "illy order" and there is no doubt that tho rectified order is also "any order" which tiD be rectified under Rule 38. [3S4E-FJ

¶30

8 CtVlL APPELLATE JURISDiCTION : Civil Appeal No. 514 of 1970 Appeal from the judgme~t and order ·dated the 22nd December, 1969 of the Mysore High Court in W.Ps. No. 5361 of 1969.

¶31

C!VLL APPEAL Nos. 166 to 173 of 1973.

¶32

From the judgment and order dated the 15th October, 1979 of c the Mysoro High Court in W.Ps. Nos . 893/70, 5367/69,2031-2035/70 and 5734 of 1969. respectively. ·

¶33

AND

¶34

CtVJL APPEALS Nos.·I81 to 243 of 1973.

¶35

From the judgment and order dated the 15th October, 1970 of the My~ore ,High Court in W.Ps·. Nos. 2534, 2529; 2532, 2530-31, 253536/70, 3560-3562/67, 7124-7129, 7131/69, 2476-78, 2480 & 2486/70, 2479/70, 1211/70, 1081/70, 4690/69, 3846/70, 5634-35, 5638-39/69, 5632/69; 3040, 3039/70, 3147-48, 2772, 2775, ·2777, 2773/70, 5426, ~770, 5503/69, 3033-36, 3037-38/70, 6087, 6089, 6086, 6088/89, 2062, . 2820/70,470, 1749, 2833 and 2834 of 1970 respectively:

¶36

· Civil Appeal. No. 2078 of 1970.

¶37

From the Judgment and order dated the 25th May, 1970 of the Mysore Higli Court in W. P. No. 5179 of 1969.

¶38

· K. Srinirasan and Vineet Kumar, for the appellants (in C.As. Nos. 514 and 2078/70). · · · K. Srinlrasan and J. Ramamurthy, for the appellantt (in C.As. N0s. : 166-173.& 181·243/73) p

¶39

A. K. Sen, (in C . .A. No. 166/73), H. B. Datar (in C.A. No. 2078) and M. Vttrappa, for respondents nos. l & 2 (in C.A~. Nos. 514 & 2078/70 and 166/73, 181-203, 205·216, 218-236, 242-243/73) and respondents (in C.As. Nos. 204, 217 and .237-241 /73). .

¶40

B. Sen (in C.A. No. 514/70and l66J73) and Girish Chandra, for reG spondent No. 3 (in C.As. Nos . . 514 & 2078/70, 166-173/73, 181-203, 205·216, 218-23.6 and 242-243/73). ·

¶41

K. M. K. Nair the intervener (in C.A. No. 514/70).

¶42

The ~udginent of the Court was delivered by :

¶43

. ALGIJUSWAMJ, J.-These appeals arise out of the judgment of the High Court of Mysore dismissing a batch of writ petitions filed by a · H nuinber of dealers 1nlhe State of Mysore (now Karnataka) questioning · the le.vy of sales tax under the Central Sa1os Tax Act on certain interState sales. The goods dealt with were all declared goods and uner

¶44

stJPREME COURT REPORTS Il975J 2 s.c.a. 348 tho M sore Sales Tax Act they were !lxable at ,tho point of purchase at 1 si 10 point. The assoss.ment petods arc pr1or to lOth November, 1964 he importance of thiS date w11l become clear when wo proceed to ddat with tho mat tor subsequently, Tho assessing authorities asses. sed all these transactions of inter-State sales to tax. This Court doUvored its judgment in what is known as Yaddalam'a Case (16 stc 231) holding that where a certain transaction was not liablo to sales tax if it wore an intra-State sa!e under the Sates. ax Law of he apPropriate State, it would not bo liable to sates tax If 1t were an tnter-Stato sale. Pollowi.ng this decision the assessment orders were rectified giving cfioct to the judgment. To set aside the effect of this decision sub-s (lA) was inserted in section 6 and a consequential amendment was m1do in sub-s. (2A) of s:ction 8 of the Central Sales Tax Act. After this the asessing authorities again rtificd the ase~sment orders c and brought to tax the intcr-Stato sales.

¶45

Before this Court the validity of section 8(2)(a) as well as section 6 (lA) of the Central Sates Tax Act read with section 10 of the Central ·aex T&JC (Amendment) Act, 1969 is questioned. In the alternative 1118 ~ bts le argued to sales that tax. oven Tho after rectification orders tho amendment these transactions arc also impugned are not J) on tho ground : I. tha~ there was no mistake apparent on the face of tho record to JRusufy the rectification under Rule 38 of the Mysorc Sales Ta:r ules, and 2: ' pethaodin .any case such rectification is beyond the permitted tl • 8(2)T(~~ ist cntcnrion regarding tho unconstitutionality of section Silk Mfi. (<;;&¹ to be based on tho decision of this Court in G. &roll tionatit/r s.'lclJ(bCo). Ltd. v. A7.rt. Commr.(l) dealing i the constttu• I ants that do ~ . · We constder that far (rom supporting the appol· behalf of the ;¹ slon actuaiiy 1!s against the contention put foard on f aaid in th.tt d P~~lants. Itts only necessary to set out what thts Court In that case thocts¹⁰ .⁰ • . It ls .hardly necessary to add any thing mo. observed : 0 maJority whtlo upholding tho validity of section 8(2)(b) ·. fitation ' ''It or has ra:e~ argod on behalf of the o.ppel!ants that to m'nt Contralalcs hu und t:r⁰ socl!on ~ u 8(2Xb) a legislative function of the Act, not and as tho fixed the rate of Parli&· or purchaso or but h:u dopted the rate appUcablo to tho solo rato oxooeds 10 goods tnsJde the appropriate Stato in case suh lativo function pe;hoent, tho parliament has abdicated Its legiS· be .constitutioal!y ¹ h<?ve provision is consequently stted¹ ( ;&¹ Jla.tiv0 POwer, ahd bcuse ,of excessive doegauon. U· Oundcd. Section B( )(b contention, t.n our opinion, JS not 'IIi~ h a View to Prevent² . ) of the Act has plainly been enacted wr ~ OVl!IOQ or the payment of tho Central aa⁰⁵ 'T. C. 2151, . •

¶46

l '

¶47

lNTER."lATIONAL COTTON -CORl'N. V. C.T.O. (Alaglri.s~ami, /.) J( 9

¶48

A tax. The Act prescribes a low rate of tax of 3 per cent in the case of inter-State sales only if the goods are sold to the Government or to a -registered dealer other than the Government. In the case of such a registered dealer, it is essential that t.he goods should l?e of the description mentioned in sub-section (3) of section 8 of the Act. In order, however, to avail of the benefit.

¶49

B of such a low rate of tax under section 8(1) of the Act, it · i~ also essential that the dealer selling the goods should furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the regi ~ tered dealer, to whom the goods. are sold, containing the prescribed particulats .in the pres~ cribed form obtained from the prescribed authority, or if the goods are sold to the Government not being a registered dealer,

¶50

c a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government. In cases not falling: under sub-section (1), the tal'l payable by any dealer in res-pect of inter-State sale of declared goods is the Iate applic2ble to the sale or purchase of such goods inside the appropriate. State : vide section 8(2)(a) of the Act. As regards goods other than the declared goods, section 8(2)(b) provides that the tax pay-

¶51

D able by any dealer on the sale of such goods in the course of inter-· State trade or commerce shall be calculated at the rate of 10 per· cent or at the rate applicable to the sale or purchase of such. goods inside the appropriate State, whichever is higher.

¶52

The question with which we arc concerned is whether the. Parliament in not fixing the rate itself and in adoptng -the rate· applicable tothe sale or pruchase of goods 1nstde the E appropriate State has not laid down any lcgislt!.tive policy and has abdicated its legislative function In this connection we are. of the view that a clear legislative policy. can be found in lhe . provisions of section 8(2)(bJ of the Act. Te policy of the law Jn · this . respect is that in· case the rate of local slos tax. be less than 10 per cent, in such an event the dealer, if·the ~ does notJall within section 8(1) of the Act, should pay Central,F sales tax M the rate of 10 per cent. If, however, the rate of loC!ll sates tax for the goods copcerned be more · than 10 per .. cent, tn .that event .the policy is that the tate of Central sales tax shall alsobe the same as that of the local sales tax for the said goods. The object of law thus is that the rate of Central sales talt shall in no event be less than the rate of local sales tax for me goods in question though it may exceed the local rate in case that rae' G be less than 10 per cent. For. example, if the local rate of tax tn the appropriate State for the non.declared goods be 6 per cent, in such an e"ent a dealer, whose case not covered by section8(1) of the Act, would have to pay Central sates tax at the rate· of 10 per cont. In case, however, the rate of local sales tax for such goods be 12 per cent, the rate of Central sates tax would alsobe 12 per cent because otherwise, if the rate of Contra! sates tar. B were only 10 per cent, the unregistered dealer who purchases. goods in the course of inter-State trade would be in a better position than an intra-state purchaser and there would be no·

SUPUMB COUU. REPORTS

-350

[1975] 2 S.C.Il~

disincentive to th~ d1ler to do3is t from selling goo~ to unregistered pruchaser~ in the course of inter-State trade. The. ObJect of the law .apparently is to deter inter-State sales to unegtstered dealers s coch inter-State sales would · facilitate evaSlOn of tx. It s_ also -not possible to fut the maximum rate under section 8(2)(b) because the rate of local sales tax varies from State to State. The .rate of local sales tax can also be changed by the State Legis!atures from time to time. · It is. not within the competence of the Parliament to trx the maximum rate of local sales tax. The fixation of the rate of local sales tax is essentiallY a matter for the State Legislatures and t Parliament does not have any control in the matter. The Parliament has therefore necassarily, if it wants to prevent evasion of payment of Central sales tax, to tack the rate of such tax with that' 9 local .sales tax, in case the rate of s.uch local sales tax exceeds a parttcular limit."

¶57

"The adopt ion oft he rate of local sales tax for the purpose of the Central Sales tn as applicable in a particular State does not show that the Parliament has in any way abdicated its legislative function. Where a law of Parliament provides that the rate of Central sales tax should be 10 per cent or that of the local sales tax, whichever be higher, a definite legislative policy can be discerned in such law, the policy being that the rate of Central sales tax should in no event be less than the rate of local sales t;•.x. In such a case,' it is, :s already stated above, not possible to mention the precise figure of the maximum rate of Central sales taX: in the law made by the Parliamt:nt because such a rate is linked with the rate of local sales tax which is prescribed by the State Lgislaturcs . The PlLrliamcnt in making such a law cannot be said to have indulged in self-effacement. On the contrary, the Parliament by making such a Ia w effectuates its legislative policy, according to which the rate of Central sales tax should in certain contingencies be not less than, the rate of local sales tax in the appropriate State. A law made by Parliament containing the above provision cannot be said to be suffering from the vice of excessive delgatio oflegislative function. On the con· tr.ay, the above law Illcorporates within itself the necessary pro· VISions to cary out the objective of the Legislative, namely, to prevent evasto n of payment of Central sales tax and to plug possible loopholes". .

¶58

Mathew, J. speaking for himself a'nd'the learned Chief Justice held :

¶59

"We think that ~arliament fixed the rate f tax on inter-Stat sales of the descnption specified in section 8(2)(b) of the A t ~ he rate fixed by tlc appropriate State Legislature in rcspet f mtr·State sales with a purpose, namely, to check evasion of tax on. mter-S_tate sales and to prevent discrimination between res1dents m one State and those in other States p 1' . · th ht th t 1 h · ar Jamt;nt . oug_ a un ess t e rate fixed by the States from time to time IS adopted a<> the rJlte of tax for inter-State sales of the

•

INTEllNATIONAL COTTON COlPN. v. C.T.O. (AlagirisWMni. 1.). 351

¶70

¶71

kind specified in the sub-clause, 'there vill be evasion of tax in inter-State sales as well as discrimination. We have already pointed out in our judgment in State of Tamil Nadu and Another· v. Sitalaksh.ni Vilis Ltd. and Others, Civil Appeals Nos. 25472549 of 1969 and 105-106 of 1970 (since reported in 33 STC 200 $C) the objectives which Parliament wanted to achieve by

¶72

B adopting tht:: rate of tax in the appropri~tt: State for tning the local sales. And for attaining these objectives Parliament could. not have fixed the rate otherwise than by incorporating the rate to be fixed from time to time by the appropriate State Legislature in respect oflocal sales. It may be noted that in so far· as inter-State sales are concerned, the Central Sales Tax Act. by section 9(2) has adopted the law of the appropriate State as .

¶73

c regards the procedure for levy and collection of ~he tax as also for impositon of penalties"·:

¶74

It is only nece~sary to add that the leg,slative policy laid dcwn by·· Parliament in section 8(2)(a) is that inter-State tr2.de shculd not be discriminated against.lf the .argument of the appellantf. ili accept(.cl . there will have to be unending series of amendments to this sectio• . D every time one State or other alters its rate of tax. ·

¶75

It is n~.;xt contended that as section 8(2)(a) states that the tax pay-

¶76

able shall be calculated at the rate applicable to the sale or purchaso of such goods inside the appropriate State it is the rate that was prevalent when section 8(2)(a) was enacted that would' be applicable anci not any subsequen variation in this rate of tax. If this ugument is

¶77

E accepted o questionofunconsthutionaldelegationof the Parliament's Legislative powers in favour of the State Legislatures would arise . at· aU. It would be reembered that the ground for attacking the collstitutionality of section 8(2)(a) is that Parliament if it is deemed to haTe permitted the application of rate of sales tax enacted by a State Le~i' lature in respect of intra-State sales to inter-State sales also that wou1c1·

¶78

. be impermissible' delegation by .Parliament of its JegislatiTe pc_:weri.

¶79

F We have already deaJt with that question. All that is necessary ncv to add is that the rate applicable merelymeans the rate app_licable at the relennt point of time and not the rate applicable lYhen sect! on 8(2)(a) -was enacted. The whole scheme of the Central Sales Tax· Act is to adopt the machinery of the law relating to Sales Tax Acts of the variou States, in cases where those States happen to be the appropriate States as also the rates prescribed by those Acts. Under section 9 cf the Act

¶80

G · 1he tax payable by any dealer under the Central Sales Tax Act is fo bo leviedandcollected by the Government of India in accordance lYith the provisions of sub-section (2) of that section. Under sub-sectioa (2) subject to the provisions of that Act and the rules made thereu'nder, the authorities for the time being empowered to assess, re.assess~ col· Ject and enforce payment of any tax under the gener.a1 sales ta~ l2.w of the appropriate State shall, on behalf of the Government of India,

¶81

·B assess, re-assess collect and enforce payment of tax, inchiding an7 penalty, payabte by a dealer ~der this Act as if the tax or·penaltJ payable by such .a dealer under this Act is a tax or penalty payable under the sencral S:&Ies tax law of the State; and for this purpose they may

¶82

,- l 'I

¶83

:352

¶84

sUPREME COURT REPORTS [1975] 2 s.c.a.

¶85

. n of the. powers the) have under the general sales tax A exerc1;e :1 ~~t .Yand the provisions of such law, including revisions law ¹ urs rovisional assessn?ent, a van~ l?ayment of tax, re. rt;l~:f0~0 ;;he t!nsferee of anY. bust ness, tmpostt•on of the tax liag\jit of a person carrying on bu.slfls on the transfere~ of, or successor (o such business, transfer of habtl.ttY of n} firm or Htndu undivided : famil\• to pay tax in the event of the dtssout10n of~uch firm or partition of such family, recovery of taX from thtrd part17s, appeals, re.views, B r.:visions, references, refunds, rebates: penalttes. compoud¹ ng of offences and treatment of documents furntshed by a dc:_aler as confidential, shall apply according)y': .. ~hough the tax IS levted and co!lectc:d by the G:>varnment of Ind1a 1t IS 1ntended for the benefit of and 1s paid 10^{the S!ate whose officers assess andcollect the ax.The adoption} of the mlchinery of and the rate of ta...;: prevalent tn the tate 1s for 'the c;)flv.!nienc of assessment as well a.s for the conventence of the c parties so that they ill not hav t;> dea! wth ~wo .sets of office.rs and two 'ICtS of laws in addttion to aVo1d1ng dtscnmmatton between tntra-State ·and inter-State sales. The '<cry purpose of the Act and its scheme would be defeated or at least considerably impeded if the rates of tax .. I cable to inter-State sales where appliclble in any State in respect that of intra-state State is the sales were appropriate not appli-State . D we are satisfied that the rate applicable is the rate applicable at the re. levant point of time. Only that interpretation is consistent whh the (e. gislative policy that inter-State trade should not be discriminated a&aJnst.

¶86

~~ v.:as also urged that sub-section (lA) of section 6 violates Article 14 10 v1e.w of !cction 10 of the Central Sales Tax (Amer.dment) Act, E 1~ wh1ch by section 3 intserted sub-section (lA) in section 6. ~~~n 10 reads as follows :

¶87

"10. Exemption from liability to pay tax ifl certain cases:- ·(!) where any sale of gocds in the course of inter-State trade or commerce has been effected during the period between the lOth F aay of November, 1964 and the 9th da}' of June, 1969, and the deler effcctil'lg such sale has not collected any tax under the princiJX':l Act on the- ground that no such tax could have been levtcd or collected in respect of such sale or any portion of the turnover relating to such sale and no such tax could have been leVIed or collected if the amend menu made in the principal Act . thing by b!s oontalll.e Act. ha 10 not secl!on n 9 I!lllde, or the then, said amendments, notwith standing the dealers any- G shall not be hblo to pay any tax under the principal Act, as a me ndod by tJ:ia Act, i" respect of such sale or such part of tho turnover rt:latmg to such sale. that(2) Fr the purposes of sub-section (J), tho burden of proving ora.n;'u. 1!" s collcctt under th princip;ll Act in respect portion of tho 1 ferred to¹⁰ • sub-sectton (I) or in respect of any .effectin& •uch ~~~~r relattng to such sale shall be on the dealer .-·· ;._ .. - ... . ' \ •·.

¶88

lNTElNATIONAL COTTON CORP·"· V. C.T.O. (AlafirisiVami, / ,) 35.3

¶89

The argument is that while transac.:tions tetween the lOth day of November, 1964, that is the date of judgment ofthis Court in Yaddalam's case and the 9th day of June, 1969, that is the date on which the Central Sales Tax (Amendment) Ordina.nce,l969, wh.ich preceded and was subsequently replaced by the Central Sales Tax (Amendment) Act, 1969, was promulgated, were exempted from the liabilit} to pay tax, if in. fact the tax in respect of these transactions had not been collected by the dealer, a similarconcessio'n had not been granted to dealers who were similarly situated, that is, who has not collected any tax on their sales prior to 10-11-1964 and that such concession should be available at least in the case of assessees who had n~t made any collection after the judgment of the Mysore High Court in Yaddalam's case, that is, 23rd January, 1962. There are two answers to this submission. Firstly, the fact that transactions of sale prior to the pericd before lOth

¶90

c November 1964 or at least the period between 23· 1·1962 and 10-11 -64 were not given the same concession as the traJUactions between 10-11·64 and 9-6-1969 does not mean that the latter concession is unconstitutional. A concession is not a matter of right. Whc:re the Legislature taking into consideration the hardships caused to a certain set of taxpayers gives them a certain concession it does not mean that that action is bad as another set of tax-payers similarly situated may not have

¶91

D been given a similar concession. It would not be proper to strike. down the provision of law giving conl't:ssion to the former on the ground that the latter are not given such concession. Nor is it possible for this Court to .direct that the latter set should be given a similar concession. That would mean legislation by this Court and this Court has no legislative powers.

¶92

We are not able to appreciate the suggestion on behalf of the appellants that section 6{1A) read with section 10 of th~ Amendment Act should be declared unconstitutional in so far as it relates·to the period between 23-1-62 and 10-11-64 or how that is permissible. That means .that the tax leviable under section 6(IA) cannot be levied during ~hat period. That means even those who have collected the tax would escape. Second I}, in respect ·of that period also the dealers cOncerned might very often be the same set of persons and there .~an therefore be no question of discrimination.

¶93

The next submission on behalf of the appellants was that susec tion (2A) of section 8, which was ameded at the same' time as sub:-sec. tion (lA) was inserted in section 6, has the effect of impliedly repealing sub-section (lA) of section 6. We are unable to accept this contention. · Firstly, such an intention cannot be imputed to Parliament which enacted both the provisions at the same time. }roth the provisions should, therefore, be so. read as not to nullify the effect of the one or the other. Indisputably, sub-s. (lA) of section 6 was inserted. in order to get over the decision of this Court in Yaddalam's cuse. Its ffect is t bring to tax inter-State sales which wuld not ~ li3;ble to H tax tf they were intra-State sales. The fact that t1s sub-sectton ts also included in the non-obstante clause of sub-section (2A) of section 8 does not mean by itself that the effect of sub-section (lA) of section 6

¶94

~ ..

¶95

[1975].2 8.C.l·

¶96

SUPR.EWE COUR.T R.EPOilTS

¶97

354

¶98

¶99

is obliterated. We will, therefore, have to look into th~ amended 5Ub· s. (2A) of section 8 and see what it means . The contention of the appellants primarily depends upon the words "the sale or, as the case may be, the purchase of which is, under the sales tax: law of the appropriate State, exempt from tax''. What is urged is that transactions of purchase are generally exempt from the tax whenever the JOOds are taxable at the point of sale and similar!} the transactions of sale are exempt from tax generally whenevr the goods are taxable at the point of purchase. The untenabilit) of this argument would be apparent from the fact that this means that all sales and purchases are generally e"empt from ta. Tllis ·argument proceeds on the basi~ that the sale and purchase are different transactions. The Legislature might for the ake of convenience or from other _considerations of polic} make either a sale or a· ·purchase tamble in respeCt c of the sale of any particular goods. That does not mean that the sale and purchase in respect of the same transactions are two different transactions. They are two facets of the same trans(ll;ticns. Therefore when sub-stion (2A) of section· 8 uses the words "the sale or, as the case may be, the purchase" it is mereJJ referring to the fac! that State Sales Tax Acts make either the Sale or purchase taxable andnot that wht>re the sale is taxable the purchase is exempt from tax and whre the purchase is taxable the sale is exempt from tax and therefore where one of them is exempt from tax in respect\ of an intra-State sale the inter-State sale is completely exempt from tax. We agree with the view of the Mysore High Court that lhe object of sub-section (2A) of section 8 is to ex-empt transaction of sale of any goods if they are wholly exempt from the tax under the sales tax law of the appropriate State and make the said sale chargeable at lower rates where under Jh Sales Tax Act of the State the ·sale transactions are .chargeable to ta-x. at lower a rate and it is· not rorrectto s'ay that where goods are taxable at the point of purchase or sale the transation is exempt from tax generaHy. A sales tax has necessarily to be levied on a sale or purchase and tbis argument implies that all sales are exempt from tax. The plait. meaning of the said sub-section is that if under the sales taJr law of the appropriate State no.tax is levied either at the point of sale or at the po. · Tf· intof purchase at any stage the tax under the. Act shall be nil. Readins ·section 6(1A) and section 8(2A) together along with the Explanatio:a the conclusion deducible would be this : where the intra-State sales of certain goods are liable to tax, even thoh only at one point, whether of purchase or of sale; a subsequent inter-State sale of the sam~ commodity is liable to tax, but where that commodity is not liable to tax at all if it were an intra-State sale the inter-State sale of that commodity is · also exempt from tax. Where an intraState sale of a particular commodity is taxable at a lower rate than 3 per cent then the tax on the inter State sale of that commo< ity will be at that lower rate. A sale or purchase of any goods shall not be exempt from tax in respect of interState sales of those ~ommodities if as an intra-State sale the purchase or sale of those commodities· is exempt' only in specific circumstances or under specified conditions or is leviable on the sale or purchase at spe. cified stages. On this interpretation se.ction 6(1A) as well as section 8(2A) can stand together.

¶100

¶101

. . :.-= :.. .... . ...-

¶102

-- : ........ ·. · -- • • . lr · .:. ~. _ .

¶103

.. ~

¶104

· ...

¶105

INTERNATIONAL COTTON CORPN. v, C.T.o. (A.faalriswami, ].) 355

¶106

A. Nor are we able~ accept the contention that the Sales Tli't Officers had no power to rectify the assessment orders after the coming into force of the Central Sales Tax (Amendment) Act 1959 on the ground· that !here was no error apparet on the face of the recoru. This argument IS based on the fact tat m two cecisions in Mysore Silk House v. State of Mysare (l) and In Pierce Leslie & Ca. v. State of Mysore (SRTP B No. 63-64 of 1963) the Mysore High Court had taken the view that the inter-State transactions were not liable to tax and that view had been upheld by .Yaddalam's. case and~ Court in its decision in Joseph's case (2) d1d llot consrder the effect of sub-s. {2Al of section 8 and therefore when there is such difference of opinion it cannot be said to. be a case of an error on the face of the record. Tt is incorrect to I&J that because this Court had not, in Joseph's case, considered the argu• ment now pnt forward regar ing the conflict between section 6(1A) c and section 8(2A) there was no error apparent on the faoe of tho record. Clearly when it said that the effect of the Central Salea Tax (Amendment) Act, 1969 is to supersede the judgment of this Court in Yaddalam's case the Sales Tax Authoriti~ were undoubtedly entitled to re.;tif} their earlier rectification order which was made consequent . oh thedecision in Yadrfalum's cas~. After the Central Sales Tall D (Amenoment) there was no queAct.l969 stion about and the the decision error not of being this Court apparent in Joseph' on the face I case .·. ··i •' of the record. This attack on the rectiftcation.order, therefore. fa.J!a. The other attack that the rectification order is beyod the P?int · of time provided in Rule 38 of the Mysore Sales Tax Rules IS also w1th· out substance. What was sought to be reified .v:as e assessmt order rectified as a consequence of this Courts decJSIOO 10 YaddaliJ/'fl $ E case After 5Uch rectification the original assessment order Wll;ified longer . ;n force and that was not the order sought t?thin~ ~ctl cal. It is admitted that all the· rectification orders would be ~ tune • .. , culated from the original rectification order· R:fite 38. dtsc!f !J::~~~ :.' i . "any order'' and there j, o doubt that tbe recti ec. or er IS order" which can be recti.fie<l under Rule 38. . F The appeals arc dismissed with costs. Costs one ~t. .,j/ .. 'I **,** P.B.R. _Apptau dlsml$Ud._ ,:;{ :,.· ·:u .l'· ·i ;f ; .. ;, O> tl s.T.C. m. (2) ~ S. T.C. 411. 1--)(ljJ8U. ~7S ·,. f - --~t ·- · -_;:-·.: ::. ' -

International Cotton Corpn. (P) Ltd, v. Commercial Tax Officer, Hubli & Ors.

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International Cotton Corpn. (P) Ltd, v. Commercial Tax Officer, Hubli & Ors.

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