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TMI Blog1991 (6) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.. The Assistant Commissioner of Sales Tax (Audit) issued a notice in form 49 and took up the matter in suo motu revision on the ground that the rate of tax collected at 10 per cent should have been enhanced by 6 per cent being the rate of additional tax leviable under section 4A of the Gujarat Act. The opponent-dealer objected to the notice. After hearing the parties, the Assistant Commissioner held that the Sales Tax Officer had assessed tax on inter-State sales at lower rate. The tax was, therefore, assessed at the rate of 10.6 per cent and the amount of tax calculated came to Rs. 1,00,629.48. Thus an additional demand of Rs. 5,695.98 was raised. This order was passed by the Assistant Commissioner of Sales Tax on December 12, 1979. The dealer preferred revision application before the Gujarat Sales Tax Tribunal. The Tribunal after hearing the parties, as per its judgment and order dated December 10, 1981, allowed the revision application and set aside the order passed by the Assistant Commissioner. The Tribunal restored the order passed by the Sales Tax Officer and also directed that the amount of tax if paid pursuant to the order of the Assistant Commissioner of Sales Tax sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate State. [See section 8(2)(a)]. (iii) Tax payable relating to inter-State sales of other goods (other than declared goods) and not falling under sub-section (1) of section 8 shall be at ten per cent or at the rate applicable for sales inside the appropriate State, whichever is higher. [See section 8(2)(b)]. (iv) Notwithstanding anything contained in section 8(1) or section 8(2)(b), if the goods are sold inter-State, the sale or purchase of which is under the general sales tax law of the State exempt from tax generally or subject to a rate generally at a rate lower than 4 per cent it shall be either exempt from tax or the tax under the Central Sales Tax Act shall be levied at the lower rate as it is obtained in the State. [See section 8(2A)]. (v) Notwithstanding anything contained in section 8(1) to 8(4) of the Act, the State Government, may in public interest and subject to such conditions as may be specified by it, exempt any person from payment of tax regarding the inter-State sales, or levy a rate lower than that specified in section 8(1) or (2). [See section 8(5)]. 6.. In the instant case it is an undisputed position that the transactions in question related to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notwithstanding any judgment, decree or order of any court, Tribunal or other authority, no additional tax levied under sub-section (1) shall be or shall be deemed ever to have been, construed as partaking of the character of sales tax, general sales tax or, as the case may be, purchase tax, on which it is levied; and (b) for the avoidance of any doubt it is hereby declared that the additional tax shall be and shall be deemed always to have been distinct from sales tax, general sales tax or, as the case may be, purchase tax." Together with the aforesaid amendment, definition of "tax" occurring in section 2(32) has also been amended. Prior. to January 5, 1981, the definition of tax read as follows: "2(32) 'tax' means a sales tax, general sales tax, or purchase tax, payable under this Act." With effect from January 5, 1981, the expression "does not include additional tax" has been added and the definition of "tax" reads as follows: "'tax' means a sales tax, general sales tax, or purchase tax, payable under this Act, but does not include additional tax." Simultaneously, the definition of "additional tax" has been inserted by introducing clause (1A) in section 2 which reads as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal tax has ceased to be a tax on sale and purchase of goods, it would run counter to the provisions of section 4A(1) of the Gujarat Act. Section 4A(1) specifically states that it is an additional tax on sale and purchase of goods. Moreover, if one were to hold that it has ceased to be a tax on sale and purchase of goods it cannot be taken within the purview of entry 54 of List II of the Seventh Schedule to the Constitution. (Entry 54 relates to tax on the sale or purchase of goods other than newspapers.) 11.. Here reference may be made to a decision of the Supreme Court in the case of S. Kodar v. State of Kerala reported in [1974] 34 STC 73 and in the case of Ashok Service Centre v. State of Orissa reported in [1983] 53 STC 1. In the case of S. Kodar [1974] 34 STC 73 (SC), the question arose as regards the legislative competence of the Tamil Nadu Government to enact the law by which additional sales tax was imposed. Negativing the contention, the Supreme Court, inter alia, observed as follows: "The object of the Act, as is clear from its provisions, is to increase the tax on the sale or purchase of goods imposed by the Tamil Nadu General Sales Tax Act, 1959, and the fact that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal becomes obvious. Moreover, the State Legislature has no competence to tax a dealer or to impose tax on tax. To say that the additional tax is a tax on dealer or a tax on tax would amount to ignoring the express provisions contained in section 4A(1) of the Gujarat Act. Moreover if such interpretation is accepted, we will have to come to the conclusion that the tax is constitutionally invalid and beyond the legislative competence of the State Legislature. Attempt of the court should be to interpret a legislation so as to make it constitutional. Therefore there is no room for adopting such a construction. 15.. It may be noted that the provisions of section 8(2)(b) of the Central Act was required to be enacted by the Parliament pursuant to the recommendation made by the Taxation Enquiry Commission. In the case of State of Tamil Nadu v. Sitalakshmi Mills Ltd. reported in [1974] 33 STC 200, the Supreme Court observed as follows: "The report of the Taxation Enquiry Committee would indicate that the main reason for enacting the provision was to canalize inter-State trade through registered dealers, over whom the appropriate Government has a great deal of control and thus to prevent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods in question though it may exceed the local rate in case that rate be less than 10 per cent." 17.. If this is the object underlying the provisions of section 8(2)(b) of the Central Act, the interpretation which advances or that which is consistent with the object of the Act has to be accepted rather than the one which may frustrate the same. If the interpretation accepted by the Tribunal and canvassed by the learned counsel for the dealer is accepted, the rate of Central sales tax will be lower than the rate of tax on intra-State transactions applicable in the State. This would be clearly against the object of the provision contained in section 8(2)(b) of the Act. Such an interpretation cannot and should not be accepted by the court. In the instant case, as indicated hereinabove, there are no compelling reasons to adopt such an interpretation which is against the object of the Act. On the contrary, the interpretation which we are adopting is consistent with the provisions of the local Act as well as the provisions of the Central Sales Tax Act. 18.. The learned counsel for the dealer submitted that the definition of "tax" occurring in the Gujarat Act should alone be taken into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is not possible to agree with the reasoning adopted by them. The reasons given and the conclusion arrived at by the Karnataka High Court are contrary to the principles laid down by the Supreme Court in the case of S. Kodar [1974] 34 STC 73 and in the case of Ashok Service Centre [1983] 53 STC 1 and in the case of Hoechst Pharmaceuticals Ltd. [1984] 55 STC 1; AIR 1983 SC 1019. For this reason, we are not inclined to discuss this judgment in detail. Suffice it to say that the decision of the Karnataka High Court is not in consonance with the principles laid down by the Supreme Court. It is observed by the Karnataka High Court that section 6-B of the Karnataka Sales Tax Act does not empower nor does it intend to levy additional tax on inter-State sale. Be it noted that the Karnataka Sales Tax Act is a local Act. It can never intend nor it can confer power to levy tax on inter-State sales. For determining the rate of Central sales tax on the inter-State sale transactions, one has to refer to section 8. It is not necessary for the Central Legislature to declare that additional tax, if and when levied under the State enactment would also form part of the rate of tax. On interpretati ..... 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