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TMI Blog1964 (1) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the price received in respect of sales of any goods in the course of inter-State trade. Section 6 lays down that every dealer shall be liable to pay tax under the Act on all sales effected by him in the course of inter-State trade during any year. Rates of tax payable by a dealer under the Act are laid down in section 8. It is not in dispute that the rates mentioned in sub-section (1) are not applicable in the instant case and it is sub-section (2), which reads as follows, that is applicable: "The tax payable by any dealer in any case not falling within subsection (1)..................shall be calculated at the same rates and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State, and for the purpose of making any such calculation any such dealer shall be deemed to be a dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law." Section 9 deals with the levy and collection of tax ; it empowers the State authorities competent to assess, collect and enforce payment of any tax under the State Sales Tax Act to assess, collect and enforce pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Under section 8(2) of the Central Act, in determining the tax payable one has to consider the rates of tax mentioned in section 3 and the notifications and the manner of calculation laid down in the State Act. Sections 4, 5 and 6 deal with the manner of calculation as much as section 3. Therefore, if an assessee would be exempt from payment of tax under the State Act, under a notification issued under section 4, he will be exempt from payment of tax under the Central Act. An assessee is to be deemed to be a dealer liable under the State Act for the purpose of calculation of the tax payable by him; so all the provisions of the State Act prescribing both the rates and the manner of calculation will be applied to him. The legal fiction that the petitioner is a dealer liable to pay tax under the State Act is to be used whenever the tax payable by him is to be calculated. The non-obstante clause in section 8(2) of the Central Act ignores only the non-liability to pay the State tax under section 3, i.e., on account of the assessee's turnover being of less than Rs. 12,000; if he is not liable to pay the State tax under any other provision such as a notification issued under section 4 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operative part of section 8(2) of the Central Act is the very first clause and the second clause embodying a legal fiction is only for the purpose of giving effect to the first clause. If one were to read only the first clause one would be obliged to hold that the petitioner, who would not have been liable to pay any tax under the State Act, will not be liable to pay any tax under the Central Act and the second clause having been intended to give effect to, and not alter the effect of, the first clause should not be interpreted as laying down a rule conflicting with that laid down in the first clause. I confess I am not quite sure about the necessity for the second clause; the first clause seems to be quite ample to achieve the object behind it and it does not seem to have been necessary for the Legislature to enact the second clause. If the tax payable by a dealer is to be calculated at the same rates and in the same manner as would have been done if the sale had been an intra-State sale one would have of necessity to assume that the dealer is a dealer liable to pay the State tax. Without such an assumption the provisions of the State Act would not be applied to him (because they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of the State Act and in calculating the amount of the tax the provisions of the State Act exempting certain goods from the tax will be given effect to. The Parliament's distinguishing between the non-liability on account of the turnover being less than the minimum prescribed under the State Act and the non-liability on account of the goods being exempted or the sales being exempted from tax under the State Act is understandable. While the Parliament could respect the State Act in so far as it exempted certain goods or certain sales, it could not be expected to respect the minimum prescribed by the State Act for taxability because the minimum that is prescribed is for the total turnover and cannot be applied to a part of a turnover. A dealer effects sales in the course of intra-State trade and also in the course of inter-State trade. While the total turnover may exceed the minimum prescribed by the State Act, the turnover of the inter-State sales may be less than the prescribed minimum. On account of the total turnover being above the prescribed minimum he must pay tax on the total but the question is of dividing the tax between the State and the Union of India. The S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as intended by the Parliament in a case governed by sub-section (2) it would not have used the abovementioned words. Section 8(2) of the Central Act came in for interpretation before the High Court of Mysore in Y. Lakshminarasimhiah Setty & Sons v. State of Mysore [1962] 13 S.T.C. 583., the Kerala High Court in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Gopalan [1962] 13 S.T.C. 832., and the High Court of Madras in Mariappa Nadar v. State of Madras [1962] 13 S.T.C. 371. and in M. A. Abbas and Co. v. State of Madras [1962] 13 S.T.C. 433. In the Mysore case the question was the same as the question that has arisen in this petition and was answered as I have answered it. It was contended in that case on behalf of the State that in the same manner means following the same procedure for assessment and this contention was repelled by Hegde and Mir Iqbal Hussain, JJ. The learned Judges pointed out that the non-obstante clause refers to the dealer and not to sales which are the subject-matter of taxation, that a State Sales Tax Act usually provides three types of exemptions, one exempting dealers, another exempting goods and the third exempting sales and that the clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover falling short of the prescribed minimum or for any other special provisions that may exist in the local sales tax law, he is nevertheless liable to pay under the Central Act; and this provision in effect denies him the exemption which he would enjoy under the local law." Under the Madras Sales Tax Act turnover of sales of hides and skins was taxable only at a certain point and the dealer in the case of M. A. Abbas and Co. [1962] 13 S.T.C. 433. sold these goods at a different point and claimed that because it would not have been taxed under the State Act it could not be taxed under the Central Act also. The learned Judges dismissed the contention with the observation that "for the purpose of attaching the liability to Central sales tax, the fact that in respect of that transaction he may not be liable to tax under the local sales tax law is of no consequence" (page 435). With great respect to the learned Judges, I cannot share their view. I, therefore, find that the petitioner is to be deemed to be a dealer liable to pay the State tax (and would have been deemed to be a dealer liable to pay the State tax even if the turnover of inter-State sales had been of less than Rs. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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