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TMI Blog1950 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... not be liable unless it is shown that the value of the goods imported was Rs.5,000 and above. The provision in the Act which creates liability to pay tax is Sec- tion 4. Broadly speaking, under that section a person is liable to pay tax if his turnover for the preceding year exceeded the taxable quantum. The word "turnover," according to the definition contained in Section 2(j), means the aggregate of the sale prices received and receivable in a parti- cular year. The expression "taxable quantum" has also been defined in the Act. Its definition reads thus: "(2)(i) 'taxable quantum' means: (a) in relation to any dealer who himself manufactures or produces any goods for purposes of sale by himself, five thousand rupees; or (b) in relation to dealers not falling within clause (a), such sum or sums as may be prescribed;" This definition must be read along with Rule 18, which is in the following terms: "The taxable quantum in relation to dealers not falling within sub- clause (a) of clause (i) of Section 2 shall be Rs. 5,000 for importers of goods and Rs. 25,000 for other dealers." The expression "importer of goods" is defined thus in Rule 2(k) of the Sales Tax Rules: "'Importer of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these goods, the whole of it is rendered liable to tax. That is so even though the sale of the imported article alone during the year is also free from being assessed to tax. This is, if I may say so, an absurd result and could not have been intended by the legislature. If, however, the word 'sales' occurring in Section 4 is given a restricted meaning the absurdity can be avoided. It is one of the canons of interpretation that when too literal an adherence to the words of a statute leads to absurdity it is open to a Court to so interpret the statute as will obviate an absurd result. In such a case it is also open to the Court to give a restricted meaning to the words used in a statutory provision so as to give it a reasonable effect. The question is whether this course should be adopted in the present case. The learned Government Pleader states that the department has been interpreting the provisions of Section 4 literally, and if this Court were to hold that that is not the correct interpretation several complications as well as loss of revenue would result. These are, of course, not grounds on which a Court would refrain from adopting a construction of a statutory provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxable quantum in relation to an importer of goods is specified in Rule 18 and is Rs. 5,000. The turnover of the applicant was Rs. 13,000 and exceeded the taxable quantum of Rs. 5,000. He was therefore liable to pay tax under Section 4 of the Act. The trial Court held that "being importer of goods, the taxable quantum in his case was Rs. 5,000 as laid down under Section 2(b) of the Sales Tax Act read with Rule 18, Sales Tax Rules, 1947, and as such he should have applied and registered himself as a dealer." The Additional District Magistrate in rejecting the contention of the applicant of his non-liability to pay tax as the value of imported goods was less than Rs. 5,000 observed as follows: "It is clear from the definition of taxable quantum that it is fixed with respect to various classes of dealers, like manufacturers, producers, importers of goods etc. Once it is found that a dealer falls in a parti- cular category, the taxable quantum for him is defined. The liability for sales tax in case of a dealer, arises under Section 4(1) ibid by reason of his turnover [defined in Section 2(j) ibid] of taxable goods, in the year under assessment, exceeding his taxable quantum. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed period." We have to construe the words "five thousand rupees" specified in Section 2(i) and Rule 18. One of the rules of construction is that words must be construed with reference to the context. The words cannot be effectively construed if they are divorced from the context. The words "five thousand rupees " in Section 2(i)(a), in our opinion, refer to the turnover of goods manufactured or produced by a dealer for purposes of sale by himself. It is only when the sale price of goods manufactured or produced by a dealer exceeds Rs. 5,000 that he be- comes liable to pay tax under Section 4(1) of the Act. The words do not refer to the sale price of goods not manufactured or produced by a dealer. A dealer who himself manufactures or produces any goods for sale is not liable if the sale price of goods manufactured or produced by him is less than Rs. 5,000; nor does he become liable if the turnover com- prising the sale price of goods manufactured or produced by him and of other goods locally obtained exceeds Rs. 5,000 but does not exceed Rs. 25,000. The same interpretation applies to Rule 18. The words "five thousand" refer to the turnover of imported goods and not to goods o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General v. Selborne(1) where he cites a passage of Lord Cairns in Partington v. Attorney-General(2): "I am not at all sure that, in a case of this kind-a fiscal case- form is not amply sufficient; because, as I understand the principle of all fiscal legislation, it is this: If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In other words, if there be admissible, in any statute, what is called an equitable construction, certainly such a construction is not admissible in a taxing statute, where you can simply adhere to the words of the statute. Therefore the Crown fails if the case is not brought within the words of the statute, interpreted according to their natural meaning; and if there is a case which is not covered by the statute so interpreted that can only be cured by legislation, and not by an attempt to construe the statute benevolently in favour of the Cro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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