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TMI Blog1974 (11) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... a Division Bench of this Court in Channulal Motilal v. Commissioner of Sales Tax, M.P., Indore[1965] 16 S.T.C. 297; 1965 M.P.L.J. 354., had been correctly decided. The said Division Bench doubted the correctness of that decision in view of the pronouncement of their Lordships of the Supreme Court in State of Gujarat v. Sakarwala Brothers[1967] 19 S.T.C. 24 (S.C.). , and the decision of the Andhra Pradesh High Court in Paro Co. v. State of Andhra Pradesh[1970] 25 S.T.C. 34. Hence this reference has come up before a Full Bench. 3.. The facts leading to the present reference are as follows: The petitioner is a dealer in ghee and sweetmeats. For the assessment period from 9th November, 1961, to 27th October, 1962, he submitted a return of his gross turnover amounting to Rs. 5,02,456.69. But as per the books exclusive retail sales account it was Rs. 4,94,053.41. The gross turnover of the petitioner was increased to Rs. 5,25,000, which included an estimated sale of Rs. 25,000 of sweetmeats. According to the petitioner, he had prepared batasas, chironjidana and sugar-candy out of 62 bags of sugar transferred by him from his wholesale shop to the retail shop. The petitioner carries on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Board of Revenue by a statement of case dated 13th May, 1969, has referred the two questions for the opinion of this Court. When this reference was heard by a Division Bench, it was directed to be heard by a Full Bench by order dated 16th July, 1971. 5.. At the outset, we may note that there have been many amendments after the year 1962 in the M.P. General Sales Tax Act, 1958, and the Central Sales Tax Act, 1956. We are not concerned with all those amendments, which may be misleading. But, we have necessarily to consider the Channulal Motilal v. Commissioner of Sales Tax, M.P., Indore [1965] 16 S.T.C. 297; 1965 M.P.L.J. 354. law as it stood at the time of the assessment year, i.e., the period from 9th November, 1961, to 27th October, 1962. We shall, therefore, be confining to the law as it existed at that time unless we find that the subsequent amendments have retrospective operation. At this stage we might advert to an earlier decision of this court in a reference sought by the petitioner, namely, Channulal Motilal v. Commissioner of Sales Tax, M.P., Indore1965] 16 S.T.C. 297; 1965 M.P.L.J. 354. In that case at the instance of the petitioner, the Board of Revenue had refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Item 1 of Schedule III was as follows: "(1) Sweetmeats other than chocolates, toffees, lozenges and peppermint drops." The entries in the relevant year, i.e., 1961-62, were the same as above. Subsequently, amendments were made in the schedule. But in the present case we are necessarily required to interpret the entries as they stood in the years 1960 to 1962. The subsequent amendments will not be material unless we find that they have any retrospective operation. For purposes of comparison, we may reproduce the entries as they stand at present in the year 1971. Item 9 in Schedule I was omitted by Amendment Act No. 9 of 1964 with effect from 1st April, 1964. Item 41 of Schedule I now, as amended, stands as follows: "Sugar including khandsari and palmyra but excluding mishri, batasa, and chironji." This amendment was made by Amendment Act No. 23 of 1967, which was operative with effect from 1st September, 1967. The residuary entry in Part VI of Schedule II merely enhanced the tax from 4 per cent to 7 per cent. During all this period the rate of tax on this was raised from 4 per cent to 6 per cent and then 7 per cent. Entry No. 1 of Schedule III, as amended, now stands as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t may consider reasonable, of its intention to issue such notification. (2) Every notification issued under sub-section (1) shall as soon as may be, after it is issued, be laid on the table of the Legislative Assembly." Thus, the amendment to Schedule II, as is suggested by this section, would also be prospective. 7.. Section 12 of the Act, as amended up to date, is as follows: "Section 12. Saving.-The State Government may, subject to such restrictions and conditions as may be prescribed by notification, exempt whether prospectively or retrospectively in whole or in part any class of dealers or any goods or class of goods from the payment of tax under this Act for such period as may be specified in the notification." 8.. It is to be noted that the amended section empowers the State Government to grant an exemption retrospectively. This is the only provision which gives retrospective operation; otherwise all other amendments would be prospective. 9.. Section 13 of the Act is as follows: "Section 13. Licensing of certain dealers.-(1) The Commissioner may, subject to such conditions as may be prescribed, license under this section any dealer who carries on business in any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word of every day use must be understood in the sense in which it is understood in general usage. As Craies observed in his Statute Law, Sixth Edition, at page 163, it must be construed in its popular sense meaning 'that sense which people conversant with the subject-matter with which the statute is dealing would attribute to it'. This rule of construction was accepted and applied by the Supreme Court in Ramavatar v. Assistant Sales Tax Officer[1961] 12 S.T.C. 286 (S.C.); A.I.R. 1961 S.C. 1325., and also in Planters Nut and Chocolate Co. Ltd. The King[1952] 1 D.L.R. 385. and Commissioner of Sales Tax, M.P. v. Laddumal Jangilal[1964] 15 S.T.C. 54; 1964 M.P.L.J 358. It is obvious that sugar as understood in the popular sense does not include products of sugar like 'batasa', 'chironji', 'mishri', etc. So, in Jethmal Ramswaroop v. The State[1959] 10 S.T.C. 270; A.I.R. 1958 Raj. 262. , Wanchoo, C.J. (as he then was), observed: 'Turning briefly to the merits of the case, we are of the opinion that there is no force in the contention raised by the applicants. Mishri, batasa, etc., are not merely sugar and the fact that sales tax has been paid on sugar is no reason for not levying sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Act, the phrase used is merely "sugar" including khandsari and palmyra. Of course, subsequent amendments have been made from time to time, but the phrase "sugar" was given a meaning unqualified by any other category. Their Lordships of the Supreme Court, affirming the view of the Gujarat High Court, held that the word "sugar" as used in entry 47 was wide enough to cover "batasa", "harda" and "alchidana". We do not see any distinction between the two definitions of "sugar" in all its forms as provided by the Central Excises and Salt Act, 1944, and the phrase "sugar" as used in the M.P. General Sales Tax Act, 1958. Of course, if sugar were to be mixed with some other substance, in that event it would be a taxable item. Moreover, the definition of "sugar" as provided by an allied enactment, which has a bearing on the M.P. General Sales Tax Act, 1958, ought to be taken for the purposes of interpreting the word "sugar" occurring in the M.P. General Sales Tax Act, 1958. 13.. In Paro Co. v. State of Andhra Pradesh[1970] 25 S.T.C. 34., a Division Bench of that High Court held that the term "sugar" used in item 6 of Schedule V of the Andhra Pradesh General Sales Tax Act, 1957, would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned judges of the Division Bench followed the view as expressed by their Lordships of the Supreme Court in State of Gujarat v. Sakarwala Brothers[1967] 19 S.T.C. 24 (S.C.). 16.. In M.L. Abdul Malik and Co. v. Commercial Tax Officer, 2nd Circle, Basavangudi, Bangalore[1963] 14 S.T.C. 214., a Division Bench of the Mysore High Court held that sugar would include sugar-candy and both of them were the subjectmatter of legislation in the Additional Duties of Excise (Goods of Special Importance) Act, 1957, and they would not be wholly exempt from taxation, but the power of the State Legislature to tax all those items would be subject to the restrictions provided by the Central enactment in view of section 15 of the Central Sales Tax Act, 1956. However, the learned judges of the said Division Bench opined that sugar would include sugar-candy. 17.. In Vasantha Co. v. State of Madras[1963] 14 S.T.C. 696., a Division Bench of the Madras High Court similarly opined that sugar-candy being included within the meaning of sugar would be exempt from payment of sales tax. 18.. In Mangoo Mal Ram Kishore v. H.K. Sharma, Assistant Sales Tax Officer, Delhi(2), a Single Bench of the Delhi H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sold in the course of inter-State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State." (1) [1963] 14 S.T.C. 696. (3) [1959] 10 S.T.C. 270; A.I.R. 1958 Raj. 262. (2) [1974] 33 S.T.C. 182. (4) [1965] 16 S.T.C. 297; 1965 M.P.L.J. 354. (5) [1967] 19 S.T.C. 24 (S.C.). 21.. Previously, the rate mentioned in this section was 2 per cent, while the words "three per cent" were substituted by the Finance Act No. 13 of 1966, with effect from 1st July, 1966. Therefore, prior to 1st July, 1966, if a State law imposed sales tax on declared goods, it could in no case exceed 2 per cent in respect of sales inside the State. Later on the Parliament passed the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (Act No. 58 of 1957). Section 3 of the said Act provided as follows: "Section 3. (1) There shall be levied and collected in respect of the following goods, namely, sugar, tobacco, cotton fabrics, rayon or artificial silk fabrics and woollen fabrics produced or manufactured in India and on all such goods lying in stock within the precincts of any factory, wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such manner and subject to such conditions as may be provided in any law in force in that State." 23.. The clear implication of the section is that any State levying sales tax on declared goods would not be entitled to participate in the distribution of additional excise duty and the further restriction is that before 1st July, 1966, the State Government, in no case, could charge sales tax in excess of 2 per cent. It appears that in accordance with the provisions, the State Government issued a notification dated 10th October, 1965, purporting to be under section 12 of the M.P. General Sales Tax Act, 1958, taxing sugar at 2 per cent in compliance with the provisions made by the Central enactment. This is one of the factors to be considered in the present case. 24. The word "sugar" has not been defined by the M.P. General Sales Tax Act, 1958. The question is whether the definition provided by the Central Excises and Salt Act, 1944, which is adopted by the Central Sales Tax Act, 1956, and the Additional Duties of Excise (Goods of Special Importance) Act, 1957, can be taken as a guide for interpreting the word "sugar" for the purposes of the M.P. General Sales Tax Act, 1958. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought it proper to tax them subsequently. 26.. As a result of the discussion aforesaid, we are of the opinion that the view as taken by a Division Bench of this Court in Channulal Motilal v. Commissioner of Sales Tax, M.P.[1965] 16 S.T.C. 297; 1965 M.P.L.J. 354., was an erroneous view in the light of the statutory provisions existing at that time and, moreover, the view as expressed in that case would not be in consonance with the view as expressed by their Lordships of the Supreme Court in State of Gujarat v. Sakarwala Brothers[1967] 19 S.T.C. 24 (S.C.). The distinction sought to be made by the learned AdvocateGeneral that the definition of the word "sugar" under the Central Excises and Salt Act, 1944, may have been relevant in that case, but not in the present case would, in our opinion, not be tenable, especially in view of the fact that sections 14 and 15 of the Central Sales Tax Act, 1956, have a bearing on all State Sales Tax Acts, and, therefore, we would be justified in adopting the definition of the word "sugar" as provided by an allied enactment, such as the Central Sales Tax Act, 1956. Of course, that position would be altered by the subsequent legislative enactments. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment' assessment. It is primarily made on the basis of the accounts maintained by the assessee. But when the assessing officer comes to the conclusion that no reliance can be placed on the accounts maintained by the assessee, he proceeds to assess the assessee on the basis of his 'best judgment'. In doing so, he may take such assistance as the assessee's accounts may afford; he may also rely on other information gathered by him as well as on the surrounding circumstances of the case. The assessments made on the basis of assessee's accounts and those made on 'best judgment' basis are totally different types of assessments." In that particular case a bill book had been seized by the sales tax authorities, which disclosed sales, which were not at all mentioned in the account books. Therefore, while reassessing, the sales tax authorities came to the conclusion that the account books of the assessee were not correct and for that reason they were rejected. It was for that reason that the sales tax authorities added certain amount on the basis of best judgment assessment. It may be that at the time of assessment, the account books of the assessee may have been taken as correct. But, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancashire) Limited v. Inland Revenue Commissioners[1943] 11 I.T.R. (Suppl.) 50.. The next question is that when proceedings under section 28 are penal in character what would be the nature of the burden upon the department for establishing that the assessee is liable to payment of penalty. As has been rightly observed by Chagla, C.J., in Commissioner of Income-tax v. Gokuldas Harivallabhdas[1958] 34 I.T.R. 98 (Bom.)., the gist of the offence under section 28(1)(c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and, therefore, the department must establish that the receipt of the amount in dispute constitutes income of the assessee. If there is no evidence on the record except the explanation given by the assessee, which explanation has been found to be false, it does not follow that the receipt constitutes his taxable income. Another point is whether a finding given in the assessment proceedings that a particular receipt is income after rejecting the explanation given by the assessee as false would, prima facie, be sufficient for establishing, in proceedings under section 28, that the disputed amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade in the Act and the schedules from time to time. 30.. Let the case be returned to the Board of Revenue for passing orders in the light of answers given by us above. Parties to bear their own costs. SINGH, J.-Facts have been fully stated by my Lord the Chief justice and it is not necessary to repeat them. The period covered by assessment is the Diwali year 2018-19 beginning from 9th November, 1961, and ending on 27th October, 1962. 2.. As regards the first question, it is pertinent to note that the assessing authority did not reject the accounts of the assessee outright. The assessee's account books relating to total sales of mishri, batasa and chironjidana were merely doubted as incorrect on the hypothesis that they did not completely explain the utilisation of 62 bags of sugar for preparation of these goods. The assessing authority did not, however, come to the conclusion that no reliance could be placed on the books of account. It was, therefore, not a case of best judgment assessment but of assessment made on the basis of accounts: see the distinction drawn in Commissioner of Sales Tax v. H.M. Esufali H.M. Abdulali[1973] 32 S.T.C. 77 at 81 (S.C.). The assessing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fers to goods in respect of which licence can be taken under section 13. When licence is taken, licence fee becomes a substitute for sales tax. Entry No. 1 in this schedule read from time to time as follows: SCHEDULE III From 1-4-59 to 31-3-64. 1. Sweetmeats other than chocolates, toffees, lozenges and peppermint drops. From 1-4-64 by Act 9 of 1964. 1. Cooked food including sweetmeats but excluding cakes, pastries, biscuits, chocolates, toffees, lozenges and peppermint drops. By notification dated 10-10-65 1. Cooked food including sweetmeats and "mishri, batasa and chironji" mishri, batasa and chironji, but excluding added with retrospective effect cakes, pastries, biscuits, chocolates, toffees, from 1-4-59. lozenges and peppermint drops. 4.. By section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957, additional duty of excise was imposed on certain goods of special importance, namely, sugar, tobacco, cotton fabrics, silk fabrics, rayon or artificial silk fabrics and woollen fabrics produced or manufactured in India. The words and expressions "sugar", "tobacco", "cotton fabrics", etc., are defined by section 2(c) of the Act to have the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as may be provided in any law in force in the State. After Central Act 61 of 1972 it is the person making the sale in the course of inter-State trade or commerce who has to be reimbursed. Section 15 of the Central Sales Tax Act was brought into force from 1st October, 1958, but the restrictions contained in it were earlier given effect to by section 7 of the Additional Duties of Excise Act, 1957, with effect from 1st April, 1958. 6.. In the Central Excises and Salt Act, 1944, sugar was originally defined in item No. 8 of the schedule to mean "any form of sugar containing more than ninety per cent sucrose". By the Finance Act, 1961, sugar now find place in item No. 1 which defines sugar substantially in the same terms to mean "any form of sugar in which the sucrose content, if expressed as a percentage of the material dried to constant weight at 105 centigrade, would be more than ninety". 7.. A perusal of the relevant entries in the schedules to the Madhya Pradesh General Sales Tax Act, 1958, will show that "mishri, batasa and chironji" for the first time came to be specifically included in the entry of cooked food in item No. 1 of Schedule III by notification of 10th October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y mishri, batasa and chironji. But before the popular meaning is accepted as expressing the legislative intention, it has further to be examined whether the meaning so derived does not lead to any absurdity or repugnancy. In this connection it is relevant to recollect the provisions of the Additional Duties of Excise Act, 1957. By this Act sugar as defined in the Central Excises and Salt Act, 1944, was declared to be one of the goods of special importance and provision was made for replacement of sales taxes on declared goods by additional duties of excise. Sugar as defined in the Central Excises and Salt Act means any form of sugar containing more than 90 per cent sucrose. The meaning of this definition is now settled; it includes not merely all varieties of sugar but all forms of sugar and mishri, batasa and chironji are implicitly included in this definition: State of Gujarat v. Sakarwala Brothers[1967] 19 S.T.C. 24 (S.C.). It is difficult to assume that when the Madhya Pradesh Sales Tax Act came to be enacted in 1958, soon after the passing of the Additional Duties Act, the legislature did not intend to give a complete exemption in the matter of levy of sales tax to all forms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, be construed to include all forms of sugar in the same way as they are included in the definition of sugar in the Central Excise and Salt Act. Mishri, batasa and chironji are merely different forms of sugar. These items were not specifically included in any entry in the schedules during the relevant period and they must be deemed to be included in the entry of sugar in entry 41 of Schedule I. I will, however, like to make it clear that after these goods were specifically mentioned in one or more of the entries of the schedules, the question whether thereafter they continued to be impliedly included in entry 41 is not before us. I am confining my answer to the relevant period when these goods were not specifically included in any entry. 9.. The case of Channulal v. Commissioner of Sales Tax, Indore[1967] 19 S.T.C. 24 (S.C.)., must be taken to be wrongly decided as it did not take into consideration the provisions of the Additional Duties of Excise Act and the Central Sales Tax Act, which, as already stated, have an important bearing in considering the full import of the exemption enacted under entry 41 of Schedule I of the State Act. 10.. It was argued, though somewhat hal ..... 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