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TMI Blog1971 (11) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... MATHEW, J. -These two appeals, by special leave, are from the judgment dated November 16, 1966, of the Mysore High Court in S.T.R.P. No, 52 of 1965 and Writ Petition No. 2349 of 1965. The appellant was a dealer, among other things, in textiles, with its head office at Mercara and a branch at Bangalore. It was assessed to sales tax on April 29, 1963, under the Mysore General Sales Tax Act, 1957, on its turnover for the period from October 1, 1957, to March 31, 1958. The question in dispute was whether the turnover of Rs. 3,87,200 estimated to be the value of the stock of mill cloth held by the appellant on December 14, 1957, was exigible to tax. The contention of the appellant before the assessing authority was that the turnover related to mill cloth on which the additional excise duty was not payable and therefore not paid and so the turnover was exempt from sales tax. The contention was rejected. The appellant appealed to the Deputy Commissioner of Commercial Taxes. The appeal was dismissed. Its further appeal to the Sales Tax Appellate Tribunal also proved unsuccessful. The appellant took the matter in revision to the Mysore High Court and it also filed a writ petition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing section 8 of the Act was renumbered as sub-section (1) thereof and continued to read as follows: "No tax shall be payable under this Act on the sale of goods specified in the Fifth Schedule subject to the conditions and exceptions, if any, set out therein." The following sub-section (2) was added by Amending Act No. 9 of 1958 to section 8: "(2) Subject to the provisions of sub-section (1) in respect of the sale or purchase of the goods mentioned in items 1, 2, 3, 4, 5, 6, 7, 27, 28, 29, 30, 31, 32 and 42 of the Second Schedule acquired by a dealer on or after the fourteenth day of December, 1957, on which the said excise duty is not payable shall be exempt from the tax payable under this Act." Entry No. 8A in the Fifth Schedule in the Amending Act No. 9 of 1958 was to have effect from April 1, 1958. The entry reads: "8A. All varieties of textiles, namely, cotton, woollen or silken including rayon, art silk or nylon whether manufactured by handloom, power- loom or otherwise but exclusive of pure silk." In Writ Petition No. 368 of 1961, the Mysore High Court considered the effect of these amendments. Applying the principle enunciated by this court in Innamuri Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uled the contention and held that the tax imposed was on actual sales and not on deemed or fictitious ones. The court also held: "It will be remembered that the position as stated in the judgment of this court in Writ Petition No. 368 of 1961 was that the total effect of the amendment was to give paramount operation or importance to sub- section (1) of section 8 which was a categorical statement of exemptions. The opening words of sub-section (5A), as then inserted, also included the expression 'subject to sub-section (1) of section 8'. The said expression was totally deleted when by the subsequent amendment a new text was substituted for sub-section (5A). Another important circumstance is that, whereas sub-section (5A) as originally introduced contained the words 'on which excise duty or additional excise duty levied by the Central Government with effect from the fourteenth day of December, 1957, has not been paid', no such words are found in the text of the substituted sub- section (5A). On the contrary, the position was simplified by stating that tax will be levied in respect of sales or purchases, as the case may be, relatable to the stock held by the dealer on 14th December, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to sub-section (5A) covering the period of assessment here even if during that period it had the power to do so. Counsel submitted that even though textiles were not declared goods during the assessment period, namely, from October 1, 1957, to March 31, 1958, and the State Legislature was competent to levy sales tax at a rate higher than that specified in section 15 of the Central Sales Tax Act as it then stood, the Legislature lost that power the moment textiles became declared goods and that its power to tax sales of textiles became restricted to 2 per cent. at the time of the enactment of Act No. 9 of 1964 and therefore even for the assessment period it could not have passed a law imposing tax at a rate in excess of two per cent. In support of this proposition, counsel relied upon certain observations in A. Hajee Abdul Shukoor and Company v. State of Madras [1964] 15 S.T.C. 719 (S.C.); (1964) 8 S.C.R. 217 at 231. One of the questions which this court had to consider in that case was whether the Madras Legislature was competent to enact the provisions of sub-section (1) of section 2 of the Madras General Sales Tax (Special Provisions) Act, 1963. Hides and skins had been dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on the turnover of undeclared goods during the assessment period at the rate specified in the Second Schedule to the Act. It was because textiles became declared goods from April 1, 1958, that the Mysore Legislature lost its power to tax the sales of textiles at a rate higher than that specified in section 15 of the Central Sales Tax Act, as it stood at the relevant time. Though the goods on the sale of which tax was imposed remained the same in substance, their legal quality became different. As textiles were not declared goods before April 1, 1958, there was no inhibition on the part of the Mysore Legislature in subjecting the turnover of sales of textiles before that period to a tax higher than that specified in section 15 of the Central Sales Tax Act. The matter can be looked at from a different angle. As we have already indicated, by virtue of section 5(5) of Act No. 9 of 1964, the substituted sub-section (5A) was deemed to have been in the Mysore General Sales Tax Act always. The only limit on the power of a Legislature to create a fiction is that it should not transcend its power by its creation. The limitation on the power of the Legislature of Mysore in 1964 when it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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