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TMI Blog1963 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... th which we are concerned in these petitions form other 'dealers' in the State before 1st October, 1957, though they sold those coffee seeds after 1st October, 1957, the date on which the 'Act' came into force. The question is whether they are liable to be assessed to sales tax in respect of sales of coffee seeds effected by them after the 'Act' came into force. The Sales Tax Appellate Tribunal has come to the conclusion that the respondents are not the first or the earliest of successive dealers in the State who are liable to pay tax under section 5. The correctness of this conclusion is disputed on behalf of the petitioner. Section 5 is the charging section. Section 5(1) without the proviso reads: "Every dealer shall pay for each year tax on his total turnover at the rate of two per cent. of such turnover." The next relevant sub-section for our present purpose is subsection (3)(a) of section 5 excluding the proviso. That sub-section reads: "Notwithstanding anything contained in sub-section (1), the tax under this Act shall be levied (a) in the case of the sale of any of the goods mentioned in column (2) of the Second Schedule, by the first or the earliest of successive deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion does not appear to support the contention that 'the first or the earliest of successive dealers' mentioned therein is the first 'dealer' who sells the coffee seeds in question after 1st October, 1957. Section 40 of the 'Act' repeals the Sales Tax Laws that were operating in the various parts of the State till 1st October, 1957. But, in view of the proviso to that section, previous operation of the repealed enactments or anything duly done or suffered thereunder are preserved. That provision also preserves obligation or liability already accrued or incurred. Section 43(1) provides: 'Notwithstanding anything contained in section 40 or in any enactment repealed by that section, any person assessed or assessable to tax or taxes under any of the said enactments during the assessment year prior to the commencement of this Act, shall be liable to tax or taxes on his total turnover or turnovers during the period of the assessment year ending on the date of commencement of this Act, at the rate or rates specified in the said enactments whatever his total turnover or turnovers for the whole of the assessment year may be.' The effect of this provision, in our opinion, is that though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst or the earliest of successive dealers in the State, who is liable to tax under this section' found in section 5(3) of the Act." As mentioned in the above order, section 5 of the Act is the charging section. Sub-section (1) makes every dealer liable to pay for each year of assessment, tax on his total turnover at the rate of 2% of such turnover. This provision read with the definition of "turnover" shows that every sale or purchase is liable to the tax at every point. The proviso to sub-section (1) and sub-sections (2) to (5) (b) are exceptions to this provision. Sub-sections (6) to (9) relate to the determination of the turnover and the levy and collection of the tax. Sub-sections (3) and (4) provide for levy of the tax at a single point of sale or purchase. When there are successive transactions in relation to the same goods, the tax is leviable on only one of those transactions and not on all of them and if there is only one transaction the tax will be leviable in respect of that transaction. The categories of goods, the point of levy as also the rate of tax are given in the respective Schedules. Sub-section (3) consists of two clauses, namely, (a) which provides for a single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which reads: "Goods on the sale of which a single point tax is leviable on the first or earliest of successive dealers in the State under section 5(3)(a)." In this connection, we may also point out that the words "a tax" occurring before the words "at the rate specified in the corresponding entry of column (3) of the said Schedule" in sub-section (3)(a) appear to be superfluous. Coming to the main question, it is contended for the assessee that there is nothing in sub-section (3)(a) to indicate that the first or the earliest of successive dealers in the State is the first or the earliest in the State after the Act came into force and that what is contemplated is that in respect of any specified goods falling under any of the categories in the Second Schedule the sale transaction in respect of which the tax can be levied should be the first of the series of transactions or the only transaction irrespective of when it took place. On the other hand, it is contended by the learned Government Pleader that, since such dealer should be one who is liable to tax "under this section", i.e., under section 5, there can be no liability under the section until after the Act came into operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to pay the tax in respect of sales of goods mentioned in column (2) of the Second Schedule is the first or the earliest of the successive dealers in the State after the Mysore Sales Tax Act, 1957, came into force. Before that Act came into force, sales of those goods were exempt from the payment of sales tax and there could have been no dealer during that period who was liable to pay sales tax in respect of the sales of such goods. For the first time, the new Act made sales tax payable even in respect of those sales, and it indicated the first or the earliest of the successive dealers in the State as the person who was liable to pay such tax. For the purpose of section 5(3), the only material question would be as to who is the first or the earliest of the successive dealers after the new Act came into force on 1st October, 1957. The fact that there were other dealers who dealt in those goods before that date and the fact that the first and earliest of the dealers after the Act came into force had purchased before 1st October, 1957, the goods from any one of those dealers, are quite immaterial considerations. The incidence of liability is on the first or the earliest of the succes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, namely, that the goods in question were exempt from the payment of sales tax under the Mysore Sales Tax Act, 1948, and that therefore no tax was leviable in respect of sales effected prior to the date on which the new Act came into operation. That is not the position in the case on hand, since sales tax was leviable on coffee seeds even under the old Act, and whether the fact that no tax could be levied in respect of any particular category of goods prior to the new Act coming into operation would make any difference in the position requires examination. In the next and last paragraph in the above extract, it is stated that any person dealing with the specified goods before the new Act came into operation is not only not liable to tax under the earlier Act (this circumstance being applicable to the category of goods that their Lordships were considering and not to the category of goods with which we are concerned, as already stated above) but such dealer is not liable to pay tax under the new Act since it had not come into operation and therefore in terms of section 5(3)(a) of the new Act he cannot be the first or the earliest dealer in the State who is liable to tax under that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e word "dealer" has reference to the operation of the Act. The provision says that such first or earliest of successive dealers should be one who is liable to tax under the section and it appears to be their Lordships' view that, as that section would come into operation only at the same time as the Act, the liability could only be with reference to a transaction after the date of the operation of the Act-in other words a transaction taking place after such date. That is the position contended for by the learned Government Pleader on behalf of the State. It is no doubt true that the single point liability in respect of a transaction relating to any specified goods coming under the Second Schedule, in the sense that such transaction is to be included in the turnover of sales of such dealer in each year relating to such goods, is to be fixed on the first or earliest of successive dealers in the State and that such dealer should be liable to tax under section 5. But it will be noticed that while the provision says that the liability of the dealer should be under that section, it does not say that the liability should be with reference to the particular transaction in question. The lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) such dealer is to be one who is liable to tax under that section, i.e., section 5, under sections 5(3)(b) and 5(4) as also in the Third and Fourth Schedules such dealer is to be one who is liable to tax under the Act. This aspect of the matter will be dealt with later. The interpretation of section 5(3)(a) appears to offer no difficulty in its application to determine the liability of a dealer in respect of any assessment year wholly falling in the post-Act period. If a sale takes place in respect of any specified goods coming under the Second Schedule and the dealer who sells the goods is the first or the earliest of successive dealers in the State and if he is not exempt under section 5(5) from liability to pay tax in consequence of his total turnover in that year being less than Rs. 7,500 that transaction will be included in the turnover of sales of such goods. If he is an exempted dealer, then the transaction of the next dealer in the series who is an unexempted dealer will be included in his turnover. But in the case of a series of sales of specified goods coming under the Second Schedule, if there have been more sales than one, and one or more of such sales has taken plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ole of the assessment year may be. This, however, cannot be regarded as a liability under section 5 of the Act, which liability can arise only after the Act came into operation. It is a liability under section 40 of the Act which saves liabilities incurred under the repealed enactments. Section 43(2) provides that in respect of that part of the assessment year which falls after the commencement of the Act, the dealer shall be liable to tax on his total turnover during that period whatever the total turnover for the whole of the assessment year may be and this tax is to be in accordance with the new Act, namely, under section 5. Hence, in respect of a series of sales of specified goods coming under Schedule II, if one or more of the sales have taken place prior to the Act, at the hands of a dealer liable to tax as provided under section 43(2) in consequence of his having entered into other transactions after the Act, he will be the first or the earliest dealer in the series who is liable to tax under section 5 and a dealer whose transaction occurs in the series after the Act will not be the first or the earliest dealer liable under section 5 and his transaction cannot be included in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransactions on the ground that his total turnover is below a particular limit. The single point indicated in the First Schedule is the "first sale" in the State in respect of some goods, the "last purchase" in respect of some others and the "first purchase" in respect of some items. The Second Schedule, i.e., that relating to declared goods, specifies as the "single point" the first sale, the first purchase or the last purchase with reference to categories of goods. As the dealer gets no exemption in regard to the sales or purchases of goods coming under these Schedules there is no reference in the relevant provisions to his position in a series of transactions by dealers with reference to their liability under the Act as in the Mysore Act. Section 60 of the Act reads: "60. Certain transactions deemed to be first sales or purchases.-Notwithstanding anything contained in this Act, the sale or purchase of such of those goods- (i) as were not liable to tax only at the point of first sale or purchase before the commencement of this Act; and (ii) as are liable to tax only at the point of first sale or purchase under sub-section (2) of section 3 of this Act; effected within the Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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