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TMI Blog1966 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... y section 2(c) would include khandsari sugar and whether in interpreting the phrase sugar the definition of sugar as given at the relevant item of the Central Excises and Salt Act in the First Schedule shall be borrowed in spite of the notification No. M.F. (R.D.) 11-C-Exc. dated 19th July, 1952, issued by the Central Government." All references arise out of assessment to sales tax for the assessment year 1958-59 on the assessees, who are manufacturers of khandsari sugar by means of power. Under section 3 of the Sales Tax Act, sales tax is payable at a certain rate by every dealer for each assessment year on his turnover of the year. The State Government is authorised by section 3-A to declare, by notification in the official Gazette, that the turnover in respect of any goods shall not be liable to tax except at such single point "in the series of sales by successive dealers" as it may specify and to declare the rate at which it shall be liable. In exercise of this power the State Government issued Notification No. 418/X-902 (9)-52 dated 31st January, 1957, declaring that with effect from 1st February, 1957, the turnover in respect of khandsari sugar manufactured in Uttar Pradesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principles of distribution formulated and recommendations made by the Finance Commission in its report dated 30th September, 1957, and for declaring the goods to be of special importance in inter-State trade or commerce. Sugar was defined in section 2(c) of the Act to have the meaning assigned to it in item No. 8 of the First Schedule to the Central Excises and Salt Act, 1944. Section 3 provided that duties of excise at the rate of Rs. 3.31 per cent. were to be levied and collected in respect of sugar manufactured in India in addition to the duties of excise chargeable on it under the Central Excises and Salt Act, 1944, or any other law for the time being in force; these duties were known as "additional duties". By section 7 it was declared that sugar and certain other goods were "of special importance in inter-State trade or commerce and every sales tax law of a State shall, in so far as it imposes......a tax on the sale...of the declared goods, be subject as from the 1st day of April, 1958, to the restrictions and conditions specified in section 15 of the Central Sales Tax Act, 1956". The result was that with effect from 1st April, 1958, the sales tax imposed on sugar by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed on the State laws. The liability of the assessees in all these references arises out of the Notification No. 418 dated 31st January, 1957. It is challenged by them on several grounds. One is that it was ultra vires the State Government because under it sales by the manufacturer were taxed whereas it could select sales by any of "successive dealers". The argument was that the phrase "successive dealers" does not include a manufacturer because he is the very first dealer and means "dealers succeeding a dealer", that successive dealers are those who succeed a dealer such as a manufacturer-dealer and that a manufacturer being the first dealer cannot be said to be a successive dealer on account of there being no dealer preceding him and he not succeeding any other dealer. This interpretation of "successive dealers" must be rejected; it confounds "successive" with "succeeding". Murray's Dictionary gives the following meanings of the word "successive": "1(a) With pl. or compound sb: Coming one after another in an uninterrupted sequence; following one another in order"................. (and gives the following instances of the meanings: "Three successive Bishops, John, Bened ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of fact and the judge (Revisions) has not said in the statements of cases that the sales by the assessees were not the last sales. The very first sale can be the last sale; if there is only one sale it is both the first and the last sale. If the sales by the assessees were the only sales in U.P. they were the first sales but they were also the last sales in U.P. and could be taxed. Merely because they were the first sales it could not be said as a matter of law that they were not the last sales. The fact that a sale is the first sale does not prevent its being the last sale; it cannot help being the last sale if another sale does not succeed it. The assessees themselves never contended before the Judge (Revisions) that the sales by them were not the last sales in U.P. Another way of looking at the matter is that the question of selecting the sale to be taxed arises only if there is a series of sales in the State; it is then only that the last sale is to be taxed. If there is only one sale the question of selection simply does not arise and if sales tax has to be levied it has to be levied on that sale. If it is not levied on it, it would result in no sales tax being levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is incorporated by reference into a second statute, the repeal of the first statute by a third does not affect the second, as the incorporated provisions have become part of the second statute." (page 360 relying upon Clarke v. Bradlaugh(1881) 8 Q.B.D. 63.). "Sometimes an Act of Parliament, instead of expressly repeating the words of a section contained in a former Act, merely refers to it, and by relation applies its provisions to some new state of things created by the subsequent Act. In such a case......the repeal of the first statute by a third does not affect the second." (page 416). "It is but common sense that, where a second Act in effect reenacts an older Act, the second Act must be expressly repealed as well as the older Act, otherwise it must be taken to remain in force." (page 417 quoting from Blackburn, J., in R. v. Smith(1873) L.R. 8 Q.B. 146,151. ). What applies to repeal applies also to the non-enforcement of a statute. A repealed statute ceases to be in force after the repeal whereas a statute passed but not yet brought into force before a certain date is not in force up to that date. The effect of a statute not being brought into force on another statute whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ober, 1958, and not 1st April, 1958, because prior to 1st October, 1958, section 15 had not come into force. The learned Judge seems to have lost sight of the fact that section 7, by which the restrictions and conditions specified in section 15 were made applicable to a State Sales Tax Act, itself did not exist with effect from 16th September, 1958. He also stated at page 504: "So long as section 15 itself was not brought into force, there was no prohibition effectively introduced by section 7 of the Act of 1957, and the fact that it specified the date 1st April, 1958, as the date of commencement of the prohibition was of no effect." With great respect, I do not agree. The learned Judge then said: "Section 15 of the Act of 1958, as amended by the Central Sales Tax (Second Amendment) Act of 1958............provides as follows: ............................................................................................. (a) the tax payable under that law in respect of any sale......of such goods inside the State shall be levied in respect of the last sale ......inside the State and shall not exceed two per cent. of the sale ......price thereof, and such tax shall not be lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily implies that it was intended to be given retrospective operation. No retrospective operation was called for in the interest of the Central Sales Tax Act. The argument was advanced only as an alternative reply to the argument that section 15 was not in force prior to 1st October, 1958, and that consequently the restrictions and conditions specified in it could not be read for the purposes of applying section 7. I have already rejected the latter argument. Another ground of attack on the notification dated 31st January, 1957, was that it became a dead letter on the enactment of section 7 with effect from 26th December, 1957, that it was not revived on 16th September, 1958, when section 7 was repealed by Act 31 of 1958, and that without a fresh notification no sales tax was leviable on a sale by a manufacturer of khandsari sugar. The very premise that the notification became dead on the enactment of section 7 is incorrect. It is Article 286(3) of the Constitution that gave the alleged effect to the notification but it did not render it non-existent once for all and only made it subject to the restrictions and conditions specified in section 7 (read with section 15). It remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contended that the sub-article applied only in relation to inter-State sales and that intra-State sales were not affected by it. The contention arises out of a misreading of the provisions of the sub-article. The words "inter-State trade" are used only with reference to the declaration by Parliament and not with reference to the imposition of a tax by a State Sales Tax Act. What is required for the applicability of the provisions is a declaration by Parliament that certain goods are of special importance in interState trade. Once the declaration has been given a State Sales Tax Act imposing a tax on sale of the goods becomes subject to the restrictions and conditions specified in an Act enacted by Parliament; it becomes subject to the restrictions and conditions regardless whether a particular sale is an inter-State sale or an intra-State sale. In deciding whether a State Sales Tax Act is subject to the restrictions and conditions specified in an Act enacted by Parliament it is irrelevant to consider whether a particular sale is inter-State sale or intra-State sale. The word "inter-State" qualifies the words "trade or commerce" and there is no reference in the sub-article to inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on hand-made bidis. In M/s. Chhotabhai Jethabhai Patel v. State of Uttar PradeshA.I.R. 1962 S.C. 1614., no additional Central excise duty was paid on hand-made bidis by an assessee and the Supreme Court held that he was not entitled to the benefit of the notification. A notification similar to the notification dated 14th December, 1957, issued by the State of Andhra Pradesh was considered by the Supreme Court in Innamuri Gopalam v. State of Andhra Pradesh[1963] 14 S.T.C. 742. That notification also used the words "goods in respect of which additional duties of excise are leviable by the Central Government" and the exemption was subject to the condition that the dealer should prove to the satisfaction of the assessing authority that the additional Central excise duty had been paid and that in default of the proof he was liable to pay the sales tax. The goods involved in that case were textile goods but they were not subject to the additional Central excise duties. The Supreme Court held that the dealer came within the operative words of the notification granting the exemption, that the condition regarding the proving of the payment of the additional Central excise duties was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the earlier notification. The exemption is subject only to the conditions of payment of the additional Central excise duty leviable on the goods and of the proof of the fact. The word "leviable" is obviously used to mean "which may be levied", i.e., "which may be levied, if there is a law for the levy". Neither is there general exemption nor is there re-grant of exemption in respect of goods excluded from the general exemption. In the former case, a case not governed by the proviso remains governed by the general exemption while in the latter case a case not governed by the proviso is not governed by the notification at all and remains governed by the earlier notification. Therefore, the instant case is governed by the decision in M/s. Chhotabhai Jethabhai PatelA.I.R. 1962 S.C. 1614. and not that in Innamuri Gopalam[1963] 14 S.T.C. 742. There was a controversy at the Bar whether the assessees are entitled to raise the question discussed just above. The Judge (Revisions) has not discussed it at all; it was admittedly not pressed before him in this and the associated references barring Reference No. 9 of 1964. Sri S.C. Khare stated that he had raised the question, but in view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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