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TMI Blog1957 (7) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ses falling under that Act. Taking the relevant provisions of the Act of 1953, we have first, a definition of "dealer" given in section 2(6) which before the Act was amended by subsequent legislation read "'dealer' means any person who carried on business of selling goods in the State of Bombay". Then there is in sub-clause (20) a definition of "turnover of sales" and turnover of sales means "the aggregate of the amounts of sale price received and receivable by a dealer in respect of any sale of goods made during a given period." Section 5 of the Act subjects taxable turnover to a general tax. Then section 7 provides how the taxable turnover shall be determined and it is in these terms: "The taxable turnover for the purpose of sub-section (1) of sec- tion 6 shall be determined in the following manner, namely: (i) From the turnover of the dealer in respect of all sales of goods during any period of his liability to pay the general tax, there shall first be deducted his turnover in respect of- (a) sales of any goods declared from time to time as tax-free under section 8, and (b) such other sales as may be prescribed." Therefore, under section 7(i)(b) there is power conferred on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers purchased cloth for processing and then selling it. They sold some of the goods and despatched them outside the State of Bombay. These sales did not attract general tax and in the case of such sales the purchase price of the goods sold by the petitioners was added to their taxable turnover by virtue of the proviso to rule 5(1)(vii). In some cases the purchase price was added to the taxable turnover for failure to produce a certificate in Form A3 in accordance with paragraph (B)(b) of sub-clause (I) under rule 5(xi)(II). These petitions challenge the provisions in these rules that purchase price shall be included in the taxable turnover of the purchasing dealer as being ultra vires the rule- making power. A provision which is in pari materia with the provisions that have now been challenged was challenged before a Division Bench of this Court in Special Civil Application No. 1077 of 1955 (unreported judgment delivered on the 13th September, 1955). I was a party to that decision. We were there dealing not with general sales tax but with special sales tax; and the provision that was challenged was the proviso to rule 5(1)(i)(b) which was in these terms: "Deduction of certain sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy and collection of the tax on such turn- over, and the proceedings held and orders made for making such assessment, levy and collection, shall not be and shall be deemed never to have been illegal;". Whilst on the one hand the Advocate-General contends that this section validates the provisions of the rule which we had held to be ultra vires, on the other the petitioner's Advocates contend that the Legislature has failed in its object of validating the rule. It is common ground that the object of inserting section 51 in the Act of 1953 was to validate the rules and the marginal note to the section itself is "validation of certain rules made under Bombay Ordinance No. III of 1952 and Bombay III of 1953". But the question is, has the Legislature succeeded in its object? This question may fairly be considered in the light of rule 6(1)(i)(b) which we had held to be ultra vires as it is agreed that the result will apply to the rules that are challenged before us in these petitions. Now, the operative part of section 51 is that any rule falling within the ambit of that section "shall not be deemed to be and shall be deemed never to have been invalid or inconsistent with the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sales Tax Act is that the incidence of tax must fall upon a seller and not upon the purchaser............." (2) "Really the effect of rule 6 is to impose a penalty upon the petitioner for giving a false certificate and permitting his vendor to escape paying the sales tax" and (3) "When one really analyses the matter, it really comes to this that rule 6 has extended the definition of a turnover given in the statute itself; whereas in the Act a turnover could only be the aggregate of prices of sales effected by the dealer, rule 6 extends that definition and includes in that turnover a purchase price under certain circumstances." These appear to us to be the main grounds of the decision of the Division Bench. The reference to a purchase price being deemed to be a sale price appears in the following passage in that judgment: "As the Act stands, and as the definition of 'turnover' stands, it is impossible to contend that a turnover can possibly include a purchase price, because the attempt of rule 6, as we have already pointed out, is to include in the turnover of the petitioner not the sale price of any article but the purchase price of these goods in question. But is it competent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will according to English law of property both real and personal, which otherwise would devolve according to Natal law. Section 1 which brought about this result concluded with the words "as if such subject resided in England" the effect of which was to leave both the lex situs and the lex domicilii in operation, thus reducing the section to a nullity. Their Lordships held that the words quoted above should be treated as immaterial or non-existent as other- wise they would destroy the entire effect of the section and defeat the object of the Legislature. In this context Lord Hobhouse in his judgment observes: "It is, however, a very serious matter to hold that when the main object of a statute is clear, it shall be reduced to a nullity by the draftsman's unskilfulness or ignorance of law. It may be necessary for a Court of Justice to come to such a conclusion, but their Lordships hold that nothing can justify it except necessity or the absolute intractability of the language used." The Advocate-General contends, relying on these observations, that since in the case of section 51 of the Sales Tax Act of 1953 the object of the Legislature is clear, we should so interpret the langu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords as to whether under English law of partnership the old partnership can be regarded as ceasing to carry on the business and the new partnership as succeeding to it. Viscount Simon emphatically took the view that the old partnership cannot be regarded as ceasing to carry on the business and the new partnership cannot be regarded as succeeding to it. Having taken this view, the rule, if interpreted from this stand- point, would not have enabled the Commissioners to adjust the assessment and the case would not have fallen within it; but Viscount Simon proceeded to hold that the rule must be so interpreted as to bring this case within its scope and in this connection he observes at page 414: "It is these considerations which have made it necessary for me to look further into the statutory history and possible application of (1) [1942] A.C. 402; 10 I.T.R. Suppl. 121. rule 9, not because I have any doubt of the correctness of the proposition of English law as to the nature of a partnership firm, but because our duty in construing a statute such as this is to find out what the Legislature must be taken to have really meant by the expressions which it has used, without necessarily at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , where Lord Cairns observes: "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 hard- ship 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." It appears to us, therefore, that in any event in the case of interpretation of fiscal statutes the principle laid down by Lord Hobhouse in the case which we have referred to is not strictly applicable. But then the Advocate-General urges that we are not dealing with the construction of a fiscal statute when interpreting section 51 of the Act of 1953. He says that this is not a section that imposes tax on anyone, it is merely a validating section, and the canons of construction of fiscal statutes apply to statutes which impose a tax. With respect to the learned Advocate-General, we find it difficult to hold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to be and shall be deemed never to have been inconsistent with the provisions of this Act and therefore he says that the rule shall not be deemed to be inconsistent with the provisions of section 7. Now, this argument, with respect, ignores the word "merely" in the validating section. The validation is restricted to the invalidity that arose by reason of the ground specified in the section only. If there is any other ground of invalidity, that, in our opinion, is not cured by the section. Therefore, in any event, even if section 51 had succeeded in validating the rule if it was invalid on the ground mentioned in that section, the rule is still invalid on other grounds and no tax can be levied on the petitioners under the rules under which the tax is purported to be levied. There are some subsidiary arguments to which a reference may be made. It was urged in regard to the period covered by the Ordinance that the rules made under the Ordinance had in any event not been validated by section 51. This argument has, in our opinion, no sub- stance in it because section 49(2) of the Act of 1953 in terms provides that rules made under the Ordinance "shall continue in force and be deem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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