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TMI Blog1959 (10) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Madras General Sales Tax Act, 1939, to be only at such single point as may be prescribed. The "prescription" was originally contained in rule 16(2) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, which fixed the single point at which the tax on hides and skins could be levied and which ran: "(2) No tax shall be levied on the sale of untanned hides and skins by a licensed dealer in hides or skins except at the stage at which such hides or skins are sold to a tanner in the State or are sold for export outside the State." Based on this provision and other relevant provisions of the Sales Tax Act and the rules a Bench of this Court in Noor Mohammed and Co. v. State of Madras(1), held that an unlicensed dealer in untanned hides and skins was not liable to pay tax on the turnover under the provisions of the Madras General Sales Tax Act, 1939. The result of this decision was that while unlicensed dealers in hides and skins escaped sales tax, licensed dealers were liable to tax and the State Government undertook legislation to rectify this anomaly as it was the defect in the phrasing of the rules that led to this unintended escape from taxation. The releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed, it is necessary to advert to the provisions of the Madras General Sales Tax Act relevant for the formalities prescribed in making rules. The rules whose validity is now impugned are the rules which have been included in the Turnover and Assessment Rules. Section 3 is the charging section, particularly sub-sections (1) and (2). Sub-section (4) of this section as it stood on the date relevant to the present petitions ran: "3. (4) For the purposes of this section and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed: Provided that no such rules shall come into force unless they are approved by a resolution of the Legislative Assembly. (5) The taxes under sub-sections (1) and (2) shall be assessed, levied and collected in such manner and in such instalments, if any, as may be prescribed: Provided that(i) in respect of the same transaction of sale, the buyer or the seller, but not both, as determined by such rules as may be prescribed, shall be taxed; (ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... type of rule which need not conform to the requirements of section 19(4). In other words, the point raised is whether the prescription by rule under section 3(4) has to conform to the single requirement of being approved by a resolution of the Legislative Assembly or whether when the expressions "prescribed" and "rules" are used in section 3(4) and the proviso, the reference is to section 19 and to the terms of sub-section (2)(a) "all matters expressly required or allowed by this Act to be prescribed." This question is really not res integra but has been concluded in favour of the petitioners by a decision of a Bench of this Court in Rangaswami Chettiar and Co. v. Government of Madras[1957] 8 S.T.C. 222. I shall extract a short passage from this judgment to elucidate the position. At page 232 of the report occurs this passage: "The net result of these provisions, therefore, is that in regard to the rules under section 3(2) [now sub-sections (3) and (4) of section 3] regarding the determination of turnover the procedure prescribed both by the proviso to that sub-section as well as that pointed out in section 19(4) have to be followed. In making this observation we have in mind the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisites that the rules have to be published in the Gazette under sub-section (5) of section 19 and upon such publication they will have effect as if enacted under that Act." These are therefore clear authorities for the position that the prescription under section 3, which is what rules 15 and 16 of the Turnover and Assessment Rules are, must comply with the double condition, namely, conformation to the provisions of section 19(4) and receiving the approval of the Legislative Assembly. As it is common ground that rules 15 and 16 have not conformed to the requirements of section 19(4) and if the interpretation placed upon section 3(4) were applied, the rules would appear to be invalid. On this part of the case, the learned Advocate-General who appeared for the State urged three points: (1) the decision of the Bench in Rangaswami Chettiar Co. v. Government of Madras[1957] 8 S.T.C. 222. requires reconsideration; (2) when once a rule is published in the Fort St. George Gazette as a rule, there is an irrebuttable presumption that the provisions of section 19(4) were complied with and that it is not permissible to go behind the statutory presumption; (3) by reason of section 19(5) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n exercise of a power to make rules after previous publication, shall be conclusive proof that the rule has been duly made." The argument of the learned Advocate-General was based on the fact that the rule was published in the Official Gazette and that this publication attracted the terms of section 7(e) of the General Clauses Act, which I have extracted earlier. In my judgment his argument is wholly without force. Whether or not the publication should purport to have been made in exercise of the power to make rules it cannot certainly apply to a case where the Government never intended to invoke or comply with the provisions of section 7 of the General Clauses Act. I have already drawn attention to the fact that in paragraph 3 of the counter-affidavit filed by the State in this case it is admitted that the Government proceeded on the basis that for a rule to be made under section 3(4) of the Act, the only formality to be complied with was to have the resolution approved by the Legislative Assembly and that they did not consider it essential to conform to the requirements of section 19(4) of the Act. In these circumstances, I consider that the second point raised by the learned A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of mistaken assumptions contained in statutes. Based on these decisions the point urged was that the fact that the Legislature mistakenly assumed that the only defect in the rules promulgated in G.O. No. 2733 dated 3rd September, 1955, was the provision therein for their retrospective operation, was really irrelevant and would not control the operation of the validating section. In this connection he particularly relied on the decision of the Privy Council in E.H. Battat v. King(2). The question which the Privy Council was called on to decide was the proper interpretation of section 5 of the Indemnity and Validating Ordinance (No. 1 of 1946) of the Singapore Colony. This section read (to quote only the relevant words): "All laws, proclamations, orders, rules, regulations and legislative Acts whatsoever made or issued during the war period by or with the assent of any British or Allied military authority shall be deemed to have been validly made from the date of promulgation in the area concerned notwithstanding that any such law, proclamation, order, rule ...........may have repealed or amended or been inconsistent with any law previously in force. " The contention urged bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be assessed or collected and licence fees levied or collected for the year 1955-56...........and all assessments made, taxes collected and licence fees levied for the year 1955-56 shall be deemed to have been made, collected or levied, as the case may be, as if those rules as amended were in force at all relevant times. " Still it would be seen that even if section 9 were in this form which is the utmost assistance which the learned Advocate-General could derive from the decision in E. H. Battat v. The King [1951] A. C. 519., there would be no statutory confirmation or validation of the rule to enable a valid assessment to be made for any year other than 1955-56. The decision relied on by the learned Advocate-General does not in my judgment permit the court so to read the section as to eliminate the reference to the assessment year 1955-56 which forms as it were the essential part of the validation provision. I therefore reject the first submission of the learned Advocate-General on this part of the case. His second submission was as I stated earlier based upon the illogicality involved in the statute having confirmed the validity of the rule in regard to the assessment for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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