1962 (1) TMI 49 - HC - VAT and Sales Tax

Summary

Issues:
Assessment under the Madras General Sales Tax Act on a turnover, applicability of repealed Acts, interpretation of liability to pay tax under Madras Act XLI of 1954, saving provision under section 9(2) of Madras Act II of 1958, impact of Madras General Clauses Act on liability.

Analysis:
The petitioner, a dealer in handloom and mill cloth, challenged the assessment under the Madras General Sales Tax Act for the year 1957-58. The dispute centered on the levy of an additional tax at the rate of 8 per cent. on a turnover of Rs. 89,737-73 comprising sales of medium, fine, and superfine cloth. The petitioner argued that the Act imposing the additional tax was repealed, rendering the levy invalid post the repeal date of 1st April 1958 by Madras Act II of 1958. The key question was whether the tax was "payable" before the repeal date.

The court examined the charging section of the Act, emphasizing that the liability to pay tax arises upon the occurrence of the taxable event, i.e., sale or purchase. The court referred to legal principles and observed that liability to pay tax is determined separately from the assessment and quantification of the tax. Section 9(2) of Madras Act II of 1958 was interpreted to save the liability to pay tax incurred before 1st April 1958, irrespective of the assessment status before the repeal date. The court's interpretation aimed to ensure that dealers were subject to the additional levy for transactions throughout the financial year preceding the repeal.

Additionally, the court considered the Madras General Clauses Act, particularly Section 8, which safeguards rights, privileges, obligations, or liabilities acquired under repealed enactments. The court held that this provision, along with section 9(2) of Madras Act II of 1958, preserved the liability of the assessee to pay the additional tax under the repealed Act. Consequently, the revision petition challenging the assessment was dismissed, affirming the validity of the tax levy and upholding the liability of the petitioner to pay the additional tax under the repealed Act.

In conclusion, the judgment clarified the legal interpretation regarding the liability to pay tax under a repealed Act, emphasizing the continuity of such liability post-repeal. The court's analysis underscored the interplay between statutory provisions, ensuring that dealers remained accountable for taxes accrued before the repeal date, thereby upholding the assessment and dismissing the petitioner's challenge.