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TMI Blog1983 (2) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... Indu Goswamy, S.K. Sinha, Vinoo Bhagat and P.N. Mishra, K.K. Jain and Pramod Dayal, Advocates,with them), for the appearing appellants. -------------------------------------------------- The judgment of the Court was delivered by VENKATARAMIAH, J.-The usual complaint against some of the modern fiscal statutes is that they are unduly long and therefore complex. But here we have an Orissa Act which is very short but clarity is not certainly its virtue. The only point for determination in these appeals by special leave is whether the levy of additional tax under the Orissa Additional Sales Tax Act, 1975 (Orissa Act 24 of 1975) (hereinafter referred to as "the Act"), as amended by the Orissa Additional Sales Tax (Amendment) Act, 1979 (hereinafter referred to as "the amending Act"), is a single point levy or a multi-point levy. In order to understand the contentions of the parties it is necessary to give briefly the legislative history of the sales tax law of the State of Orissa and to refer to some of its salient points. The Orissa Sales Tax Act, 1947 (Orissa Act 14 of 1947) (hereinafter referred to as "the principal Act"), was enacted and brought into for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld become liable to pay tax under the principal Act only when his gross turnover exceeds Rs. 50,000, otherwise not. The expression "dealer" is defined in section 2(c) of the principal Act as a person who carries on the business of purchasing, selling, supplying or distributing goods, directly or otherwise, whether for cash, or for deferred payment or for commission, remuneration or other valuable consideration and includes others mentioned in that clause. It may be noted that this definition does not specify, the extent of the gross turnover of such person as a qualification for being treated as a dealer. Every person who carries on the activities specified in section 2(c) of the principal Act is a dealer for purposes of the principal Act. Section 2(f) of the principal Act defines the expression "registered dealer" as a dealer registered under it. Section 9 of the principal Act imposes the obligation on every dealer who is liable to pay tax under section 4 of that Act to register himself and to obtain a registration certificate. On such registration he becomes a registered dealer. Section 9-B(1)(a) of the principal Act lays down that no person who is not a registered dealer shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nte clause is given an overriding effect over the rest of the provisions of the principal Act and the proviso found in it also naturally has a similar overriding effect. Levy of tax at a single prescribed point and prohibition against levy of tax at more than one point is an important characteristic of the scheme of the principal Act and such prescription was introduced deliberately by the State Legislature to prevent hardships to consumers which would be caused by the gradual increase of prices as the goods pass from dealer to dealer before they reach the consumer which would be the natural result of a multi-point levy of sales tax and also to make collection of sales tax more convenient. Even though the language of section 8 of the principal Act by itself was sufficient to prevent a multi-point levy and to prescribe a single point levy in order to emphasise the principle of single point levy of tax, section 4(1) of the principal Act was expressly made subject to section 8. When such was the position, with a view to augmenting the resources of the State Government, the Orissa Legislature enacted the Act in the year 1975 levying additional sales tax on certain classes of dealers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The State Government may make rules for carrying out the purposes of this Act. (2) All rules made under this Act shall, as soon as may be after they are made, be laid before the State Legislature for a total period of fourteen days which may be comprised in one session or in two or more successive sessions and if during the said period the State Legislature makes modifications, if any, therein, the rules shall thereafter have effect only in such modified form; so, however, that such modifications shall be without prejudice to the validity of anything previously done under the rules." A reading of the Act shows that it was virtually in the nature of an amendment of the principal Act. It, however, followed the pattern of the Tamil Nadu Additional Sales Tax Act, 1970, the validity of which arose for consideration in S. Kodar v. State of Kerala [1974] 34 STC 73 (SC); [1975] 1 SCR 121. The additional sales tax payable by the dealers specified in clauses (a), (b) and (c) of section 2 of the Act as it was originally enacted was in the nature of an enhancement of their liability to pay tax under the principal Act by the specified percentages but they were prohibited from passing on the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of goods as a result of the new levy. The provisions of the Act set out above could have very well been incorporated in the principal Act itself by the introduction of sections 2 and 3 set out above in the principal Act. But the State Legislature following the pattern of the Tamil Nadu Act referred to above passed a separate Act. It was, however, made clear by section 2(2) thereof that the provisions of the principal Act would mutatis mutandis apply in relation to the additional tax as they applied in relation to the tax payable under the principal Act. The additional tax thus levied being only an enhancement of the tax payable under the principal Act by a specified percentage, it did not affect the general scheme of the principal Act including the principle of single point levy contained in section 8 of the principal Act. The two Acts, i.e., the principal Act and the Act as it was originally enacted had to be read together in order to make the provisions contained in the Act effective. This position continued up to the coming into force of the amending Act on April 1, 1979, by which sections 2 and 3 of the Act were substituted by new sections 2 and 3. After such amendment, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Act, be liable to pay additional tax at such rate not exceeding one per cent of his gross turnover (excluding the gross turnover which relates to sale and purchase of declared goods) for that year as may be notified from time to time by the State Government. By a notification dated March 23, 1979, the State Government notified the rate of additional tax payable under section 3 of the Act as amended in 1979 at one-half per cent of the annual gross turnover. The prohibition of the passing of the additional tax which existed formerly was removed. One significant change which was brought about by the amendment was that the additional tax instead of being an enhancement of the tax payable by a dealer by a certain percentage became a percentage of the annual turnover of a dealer. Both the Statement of Objects and Reasons and the amending Act were, however, silent on the question whether the additional tax payable after the amendment was a multi-point levy or single point levy. They were also silent on the class of dealers who were liable to pay additional tax. Controversies arose between the department and many of the assessees on the construction of section 3 of the Act after i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the year. It was competent for the sovereign legislature to adopt either of the methods for raising sales tax. While sustaining the scheme under the 1947 Act, it could also raise an additional tax on the gross turnover and combine the two for the purposes of computation as also recovery. In the premises, the submission of Mr. Agarwala on this score has also no force." The High Court was of opinion that the Act being an independent Act it could not be read subject to the provisions of the principal Act. It may, however, be noticed that there is no reference in the judgment of the High Court to the effect of the provisions of section 3(2) of the Act which forms part of the charging section and provides that the provisions of the principal Act shall mutatis mutandis apply in relation to the additional tax levied under the Act as they apply in relation to the tax payable under the principal Act. There is also no reference in the judgment of the High Court to section 8 of the principal Act. It is urged on behalf of the appellants before us depending upon section 3(2) of the Act that wherever there is no express provision to the contrary in the Act, the provisions of the principal A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss turnover it becomes necessary to read section 3-B of the principal Act into the Act although the said section deals with the liability of certain class of goods to tax under the principal Act. These anomalies show that the contention of the department that only machinery provisions of the principal Act become applicable to the proceedings under the Act cannot be accepted. Section 3(2) of the Act which makes the provisions of the principal Act mutatis mutandis applicable to the levy of additional tax is a part of the charging provision of the Act and it does not say that only those provisions of the principal Act which relate to assessment and collection of tax will be applicable to the proceedings under the Act. Before considering what provisions of the principal Act should be read as part of the Act, we have to understand the meaning of the expression "mutatis mutandis". Earl Jowitt's "The Dictionary of English Law (1959)" defines "mutatis mutandis" as "with the necessary changes in points of detail". Black's Law Dictionary (Revised 4th Edn. 1968) defines "mutatis mutandis" as "with the necessary changes in points of detail, meaning that matters or things are generally the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at page 144: "My Lords, I do not doubt that in construing the latest of a series of Acts dealing with a specific subject-matter, particularly where all such Acts are to be read as one, great weight should be attached to any scheme which can be seen in clear outline and amendments in later Acts should if possible be construed consistently with that scheme." Originally when the Act was passed in 1975, the Act levied an additional tax on dealers whose annual gross turnover did not exceed rupees one lakh at two per cent of the tax payable by them under the principal Act, on dealers whose gross turnover exceeded rupees one lakh but did not exceed rupees five lakhs at three per cent of the tax payable under the principal Act and on dealers whose gross turnover exceeded rupees five lakhs at five per cent of the tax payable under the principal Act. Such additional tax levied under the Act could not be passed on to consumers. The object of the amendment made in 1979 was, as can be seen from the Statement of Objects and Reasons, to rationalise the scheme of additional sales tax and to facilitate "wider application of first point levy " and to introduce flexibility in the implementation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l tax at such rate not exceeding one per cent of his gross turnover (which is taxable under the principal Act) for that year, as may be notified from time to time by the State Government: Provided ............................................. Provided ............................................... If section 3(1) is so read there would not be any anomaly but on the other hand it would effectuate the intention of the State Legislature. We are aware of the principle that a statute has to be interpreted according to the words used therein and if the words used therein are clear it is not open to the court to go in search of the intention of the legislature and to arrive at a meaning different from what the words of the statute convey. When the Act is read as a whole it becomes inevitable that it has to be read together with the principal Act. Craies on Statute Law (7th Edn.) says at page 223 that "where the later of two Acts provides that the two are to be read together, every part of each Act must be construed as if the two Acts had been one, unless there is some manifest discrepancy making it necessary to hold that the later Act has to some extent modified the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s exempted by the State Government under the second proviso to section 3(1) of the Act he is also not liable to pay the additional tax under the Act. If the turnover of a dealer relating to any sales or purchases of goods is exempted under section 6 of the principal Act, such turnover cannot be subjected to the levy of additional tax under the Act by virtue of section 3(2) of the Act. The Government Notification S.R.O. No. 410/79 dated March 23, 1979, issued under the second proviso to section 3(1) of the Act exempting the turnover relating to goods whose turnover is exempted from payment of tax under section 6 of the principal Act from payment of additional tax under the Act is, therefore, redundant. The turnover in respect of goods whose sales or purchases are not taxable under the principal Act in the hands of any dealer by reason of section 8 of the principal Act is not liable to the payment of additional sales tax under the Act. The turnover in respect of sales and purchases of declared goods is not taxable under the Act by reason of the first proviso to section 3(1) of the Act. Any other turnover which is exempted by the State Government under the second proviso to section 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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