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1988 (1) TMI 312 - SC - VAT and Sales TaxWhether section 9 of the Central Sales Tax Act as it stood at the relevant time that the provision cast a liability to tax only on a registered dealer and not an unregistered dealer like the assessee? Held that - Appeal dismissed. Clause (b) of section 9(1) of the Central Sales Tax Act 1956 is operative only from September 7 1976. The present case is therefore governed by the earlier provision and the decision of this Court in Kasturi Lal s case 1987 (8) TMI 397 - SUPREME COURT OF INDIA . Assuming the correctness of the contention that a purely procedural amendment should ordinarily be construed to be retrospective we are unable to agree that the present amendment is of such nature. The decision of this Court in Kasturi Lal s case supra had held that an unregistered dealer is not taxable under the proviso. The amendment changes this position and imposes a substantive liability on such a dealer. It is also one which confers jurisdiction on an officer in a particular State to levy a tax which he otherwise cannot. It is thus a substantive provision. That apart even the question whether a charge to tax can be imposed in one State or another is not a mere question of venue. It may have an impact on the rate of tax in certain cases and it also regulates the rights inter se of States to levy taxes on such inter-State sales. It is therefore difficult to accept the contention that the amendment should be treated as purely procedural and hence necessarily retrospective.
Issues Involved:
1. Jurisdiction of the Sales Tax Officer to assess the respondent under the Central Sales Tax Act. 2. Interpretation and application of Section 9 of the Central Sales Tax Act. 3. Retrospective effect of the Central Sales Tax (Amendment) Act, 1976. 4. Procedural versus substantive nature of the amendment to Section 9. Issue-Wise Detailed Analysis: 1. Jurisdiction of the Sales Tax Officer to Assess the Respondent: The respondent, a firm of coal merchants, was assessed to sales tax by the Sales Tax Officer for the turnover of coal supplied. The High Court quashed these assessments, holding that the provision cast a liability to tax only on a registered dealer and not an unregistered dealer like the respondent. This decision was challenged in the appeals. 2. Interpretation and Application of Section 9 of the Central Sales Tax Act: Section 9(1) of the Central Sales Tax Act stipulates that tax on inter-State sales shall be levied by the Government of India and collected in the State from which the movement of goods commenced. The proviso to this section allows for tax to be levied in the State from which the registered dealer obtained the prescribed forms, but this applies only to registered dealers. The High Court held that since the respondent was not a registered dealer, there was no scope for taxation in the State of Uttar Pradesh. This interpretation was affirmed by the Supreme Court, referencing the decision in State of Uttar Pradesh v. Kasturi Lal Har Lal. 3. Retrospective Effect of the Central Sales Tax (Amendment) Act, 1976: The appellant contended that the retrospective amendment of the Central Sales Tax Act by the Central Sales Tax (Amendment) Act, 1976, imposed liability on unregistered dealers as well. However, the Supreme Court found that the amendment did not have retrospective effect as suggested. The amendments to Section 9 were analyzed, and it was concluded that the language of the validation section clearly concerned only penalties under Section 9(2) and not the substantive provisions of Section 9(1). 4. Procedural versus Substantive Nature of the Amendment to Section 9: The appellant argued that the amendment was procedural, affecting only the venue of taxation, and thus should be construed retrospectively. The Supreme Court rejected this argument, stating that the amendment imposed a substantive liability on unregistered dealers and conferred jurisdiction on officers in specific states, which is a substantive change. The Court emphasized that changes in the venue of taxation could impact tax rates and inter-state rights, further underscoring the substantive nature of the amendment. Conclusion: The Supreme Court upheld the High Court's decision, concluding that the amendment to Section 9(1) of the Central Sales Tax Act was not retrospective. The appeals were dismissed, affirming that the respondent, being an unregistered dealer, was not liable to be taxed under the proviso to Section 9(1) as it stood prior to the amendment. The decision in Kasturi Lal's case was found applicable, and no costs were ordered.
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