1970 (11) TMI 99 - HC - VAT and Sales Tax

Issues Involved:
1. Interpretation of "registered dealer" under clause (ii) of section 8 of the Bombay Sales Tax Act, 1959.
2. Applicability of the definition of "registered dealer" from section 2(25) of the Bombay Act.
3. Legislative intent behind the provisions of section 8(ii) of the Bombay Act.
4. Interaction between the Bombay Sales Tax Act, 1959, and the Central Sales Tax Act, 1956.
5. Single point levy of sales tax and avoidance of multiple levies.

Issue-Wise Detailed Analysis:

1. Interpretation of "Registered Dealer" under Clause (ii) of Section 8 of the Bombay Sales Tax Act, 1959:
The primary issue revolves around whether the term "registered dealer" in clause (ii) of section 8 of the Bombay Sales Tax Act, 1959, should be interpreted strictly as defined in section 2(25) of the Bombay Act or if it can be extended to include dealers registered under the Central Sales Tax Act, 1956. The court examined the legislative intent behind the provision, which aims to avoid multiple levies of sales tax and restrict the levy to the first sale.

2. Applicability of the Definition of "Registered Dealer" from Section 2(25) of the Bombay Act:
Section 2(25) of the Bombay Act defines "registered dealer" as a dealer registered under section 22 of the Bombay Act. The court noted that the definition section is subject to the qualification "unless the context otherwise requires," indicating that the term could bear a different meaning based on the context in which it is used. The court cited precedents, including the Supreme Court's decision in V.F. & G. Insurance Co. v. M/s. Fraser and Ross, to support the principle that statutory definitions may be contextually flexible.

3. Legislative Intent Behind the Provisions of Section 8(ii) of the Bombay Act:
The court highlighted that the legislative intention behind section 8(ii) is to ensure a single point levy of sales tax and avoid multiple levies. This intention is evident throughout sections 7 to 10 of the Bombay Act, which collectively aim to impose sales tax at the point of the first sale. The court emphasized that interpreting "registered dealer" to include dealers registered under the Central Act who are liable to pay tax under section 4 of the Bombay Act aligns with this legislative intent.

4. Interaction Between the Bombay Sales Tax Act, 1959, and the Central Sales Tax Act, 1956:
The court examined the provisions of the Central Sales Tax Act, 1956, particularly sections 6 and 7, which mandate that every dealer effecting inter-State sales must register under the Central Act. The court also considered section 4 of the Bombay Act, which imposes a special liability on dealers registered under the Central Act to pay tax on certain sales. The court concluded that the legislative scheme of the Bombay Act supports the inclusion of such dealers within the ambit of "registered dealer" for the purpose of section 8(ii).

5. Single Point Levy of Sales Tax and Avoidance of Multiple Levies:
The court reiterated that the scheme of the Bombay Act is to levy sales tax at a single point, specifically at the first sale. The court found that excluding dealers registered under the Central Act from the definition of "registered dealer" in section 8(ii) would result in multiple levies of sales tax, contrary to the legislative intent. The court dismissed the department's arguments that such an interpretation would extend the legal fiction created by section 4(2) of the Bombay Act beyond its intended scope.

Conclusion:
The court concluded that the expression "registered dealer" in clause (ii) of section 8 of the Bombay Sales Tax Act, 1959, includes dealers registered under the Central Sales Tax Act, 1956, who are liable to pay tax under section 4 of the Bombay Act. This interpretation aligns with the legislative intent to avoid multiple levies of sales tax and ensure a single point levy at the first sale. The reference was answered in the affirmative, and the department was directed to pay the costs of the reference to the assessees.

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