1965 (10) TMI 48 - SC - VAT and Sales Tax

Sales tax liability - Held that - Appeal dismissed. We cannot discern any intention in Act 12 of 1957 to destroy the rights and liabilities acquired or incurred under the Madras General Sales Tax Act. The Second Schedule reproduced above shows that the intention was to preserve old rights such as registration and licences issued under the old Act. In our opinion, if the Legislature had the intention to override the right attached to the liability under section 3(5) of the Madras General Sales Tax Act, it would have used more clear and precise words. In the result we agree with the High Court that the turnover of Rs. 7,757.54 is not liable to taxation.

Summary

Issues:
1. Assessment of turnover for the assessment year 1957-58.
2. Interpretation of provisions under the Madras General Sales Tax Act and the Travancore-Cochin General Sales Tax Act.
3. Effect of the Travancore-Cochin General Sales Tax (Amendment) Act, 1957 on taxation.
4. Repeal of the Madras General Sales Tax Act and its impact on existing rights and liabilities.

Analysis:
The judgment pertains to an appeal challenging the assessment of turnover for the assessment year 1957-58. The respondent, a tobacco dealer, contested the assessment on the grounds that the goods had already been taxed at the point of purchase under the Madras General Sales Tax Act. The High Court accepted the assessee's contention, ruling that the turnover was not subject to further taxation. The case involved the interpretation of Section 3(5) of the Madras Act, which specified that a dealer taxed at the purchase point would not be taxed again on the sale of those goods.

The introduction of the Travancore-Cochin General Sales Tax (Amendment) Act, 1957 brought changes to the tax regime, extending it to the Malabar District. The insertion of Section 26A and Schedule II under the Amendment Act impacted the assessment of turnover for the period in question. The court analyzed the transitory provisions and the effect on existing registrations and turnover calculations.

The judgment delved into the repeal of the Madras General Sales Tax Act and its implications on accrued rights and liabilities. The court examined whether the new Act manifested an intention to override the rights attached to liabilities under the previous legislation. The interpretation of Section 4(c) of the General Clauses Act was crucial in determining the continuity of taxation obligations and associated rights.

Ultimately, the court upheld the High Court's decision, ruling that the turnover in question was not liable to taxation under the new Act. The judgment emphasized the importance of legislative intent in preserving existing rights and liabilities when repealing and enacting new tax laws. The appeal was dismissed, affirming the decision in favor of the respondent.