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TMI Blog1993 (4) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... nd surcharge in addition to the rates of such taxation that was and has to be levied in the light of the Central Act read with the Tamil Nadu General Sales Tax Act, 1959, hereinafter referred to as the "local sales tax law". Some of the writ petitions have been filed challenging the final orders of assessment on the above basis, contending that the normal statutory remedies provided are neither effective nor appropriate. 2.. The petitioners are all assessees under the Central Sales Tax Act, 1956 and dealers in different commodities in the course of inter-State trade and commerce. In the majority of cases filed, the petitioners were earlier assessed finally to tax under the Central Act. They had different categories of turnover and in these cases, their concern mainly is with reference to the turnover not covered by proper or valid "C" or "D" forms and is, therefore, subject to the general rate to be determined applying section 8(2)(b) of the Central Act. The grievance of the petitioners is that the Special Commissioner and Commissioner of Commercial Taxes, Madras, has clarified as late as November, 1989, that there is no liability of surcharge and additional tax in respect of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in passing of the said rates to the purchaser militates against those levies being held to be general tax under the law relating to the levy of sales tax. 4.. M/s. A.C. Muthanna, S.V. Subramaniam, learned senior counsel and M/s. R.L. Ramani, N. Ganapathi and P.S. Janarthana Raja, learned counsel adopted the submissions made by Mr. C. Natarajan in addition to highlighting one or other special features of the cases in which they were appearing. Mr. R.L. Ramani, learned counsel, contended, that the authorities cannot go behind the circular orders earlier issued that the additional sales tax and surcharge will not be taken into account for purposes of levy under the Central Sales Tax Act and that the show cause notice issued and the final order that was passed pursuant thereto differed and varied in W.P. No. 7131 of 1991 in that what was not proposed was also dealt with to the detriment of the assessee denying him an opportunity to show cause against such proposals. Mr. S.V. Subramaniam, learned senior counsel, contended that some of the assessees acted on the representations of the circulars and did not collect the tax at all and that, therefore, the department cannot go behind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(i): 'Sales tax law' means any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf and 'general sales tax law' means the law for the time being in force in any State or part thereof which provides for the levy of tax on the sale or purchase of goods generally. " "Section 8: Rate of tax on sales in the course of inter-State trade or commerce ................ (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods in the course of inter-State trade or commerce not falling within sub-section (1)................ (b) in the case of goods other than declared goods, shall be calculated at the rate of ten per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; 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." " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (2) of section 8 of the Central Sales Tax Act. The sales were of goods other than the declared goods, therefore, under clause (b) of sub-section (2) of section 8 the tax payable by the dealer on his turnover shall be calculated at the rate of 10 per cent or at the rate applicable to the sale or purchase of such goods inside the State whichever is higher. However, sub-section (2-A) of this section states that notwithstanding anything contained in clause (b) of sub-section (2) the tax payable under the Central Sales Tax Act by the dealer where the intra-State sale of the same under the 'sales tax law' of the State is 'exempt from tax generally or subject to tax generally at a rate which is lower than four per cent shall be nil or, as the case may be, shall be calculated at the lower rate'. Thus if an intraState sale by the dealer is exempt then his inter-State sale also will be exempt. If the intra-State sale is taxed at a rate which is lower than four per cent, then his inter-State sale of the same commodity shall also have to be taxed at the lower rate applicable in the State. But where the rate of tax applicable to intra-State sale was more than four per cent then th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not say that the sales tax law or the general sales tax law which levies taxes on sale or purchase of goods shall be under a single enactment. What is relevant is whether the tax partakes the character of sales tax or purchase tax. Any other construction would restrict the applicability of section 8(2-A) of the Central Sales Tax Act to the sales tax law that was in force in 1956 when the Central Sales Tax Act came into force and any amendment to the local law would not have any effect on the applicability of that provision. We do not see any logic or reason for such a construction. What is relevant is if a particular intra-State sale transaction in a particular assessment year is subjected to a particular rate of tax that automatically gets reflected in and had to be taken into consideration for finding the rate and the applicability of section 8(2-A) or section 8(2)(b) of the Central Sales Tax Act. As already stated if instead of an Additional Sales Tax Act the Legislature has simply amended the Kerala General Sales Tax Act by varying the rate automatically that will come in for consideration and application of the provisions of section 8(2)(b) and 8(2-A) of the Central Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal tax from the definition of "tax". A Division Bench of the Andhra Pradesh High Court also held in Sree Satyanarayana Spinning Mills Ltd. v. Commercial Tax Officer [1988] 68 STC 95 that additional sales tax and surcharge must be taken into account while determining the rate of tax payable under section 8(2-A) and section 8(2)(b) of the Central Act. In coming to such a conclusion, the Andhra Pradesh High Court not only dissented from the decision in State of Karnataka v. P.K.P. Abdul Hakeem Co. [1985] 59 STC 203 (Kar), but also distinguished the decision of the Kerala High Court reported in [1987] 64 STC 435 [Assistant Commissioner (Assessment), Sales Tax v. Janatha Expeller Company]. The decision in Hoechst Pharmaceuticals Ltd. v. State of Bihar [1984] 55 STC 1 (SC) was referred to for the purpose of bringing to our notice the observation that the definition of "gross turnover" in section 2(g) of the Central Act was adopted not for the purpose of bringing to surcharge inter-State sales or outside sales or sales in the course of import into or export of goods out of the territory of India, but is only for the purpose of classifying dealers within the State and to identify the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the turnover of a dealer under the local sales tax law is below the minimum prescribed or that the tax will attract to a transaction only in certain circumstances, it would not amount to an exemption from tax generally. In Phipson and Company (Private) Ltd. v. Government of Madras [1964] 15 STC 740, a Division Bench of this Court which construed section 8(2)(b) of the Central Act, held that the rate of tax applicable as referred to in section 8(2)(b) is the general rate prescribed by section 3 and not the special rate imposed in certain special circumstances. The Division Bench, in coming to such a conclusion noticed the peculiar nature and feature of the levy under section 21-A of the Tamil Nadu Prohibition Act, 1947 and observed that the provisions of section 21-A of the Prohibition Act does not deal with a sale by one dealer to another dealer or by a wholesaler to a retailer and, therefore, the said levy is a special category of levy imposed in certain special circumstances. In State of Madras v. N.K. Nataraja Mudaliar [1968] 22 STC 376, the apex Court held that by virtue of section 9(1) of the Central Act, the Central sales tax has to be levied in the same manner as under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain provision. A passage at page 148 of Principles of Statutory Interpretation by Justice G.P. Singh-5th Edition, was read to highlight the role of an explanation in a provision. It is stated therein that an explanation normally should be so read as to harmonise with and clear up any ambiguity in the main section and should not be so construed as to widen the ambit of the section. Yet another passage from the same book at page 459 was also read to highlight that if the Legislature fails to express itself clearly and the tax-payer escapes by not being brought within the letter of the law, no question of unjustness as such arises since equitable considerations are not relevant in construing a taxing statute as such as mere logic or reason alone could be of any avail. 12.. Reference has also been made to some of the dictionaries to highlight the meaning of certain words such as "general" and "special". The New Lexicon -Webster's Dictionary, of the English language defines the word "general" to mean pertaining to a whole or to most of its parts, not particular, not local; and the word "special" to mean-particular in kind; serving a particular purpose The Law Lexicon-by P. Ramanatha l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso held to be a tax on the turnover relating to sale of goods, the plea now made for the petitioners to the contra does not merit acceptance. The fact that such levy is imposed by a separate enactment and not as part of the general sales tax law of the appropriate State was also held to be wholly irrelevant. The levy of surcharge is also part of and partakes the character of a levy of sales tax on the turnover relating to sale of goods. The mere fact that the measure or computation of the tax has been declared to be made with reference to a particular percentage of the tax payable by a dealer or of a percentage of the taxable turnover does not alter the character of the levy and make it any the less a levy of sales tax on the turnover relating to sale or purchase of goods. We are, therefore, of the view that the ratio of the above two decisions of the apex Court squarely govern the issue, in this regard, in favour of the Revenue and it is futile for the petitioners to contend that the additional sales tax and surcharge levied cannot be included in the computation of the rates of tax under the Central Sales Tax Act, 1956. The claim that additional sales tax and surcharge would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or its incidence and, therefore, the levy of additional sales tax and surcharge under the Tamil Nadu Acts appear to be, in our view, a levy on the sale of goods only and not of anything else. The tax liability under the Act is attracted on all sales of goods and the turnover determined for computing the tax liability is nothing but an aggregate of the sale 'prices received and receivable in respect of sale of goods in the course of inter-State trade or commerce. Viewed thus, in our view, there is no meaning or merit in the so-called difference attempted to be made out for the petitioners in order to exclude the application of the ratio laid down in the decision reported in [1992] 85 STC 106 [Deputy Commissioner of Sales Tax v. Aysha Hosiery Factory (P.) Ltd.]. The emphasis that the surcharge is levied depending upon the place of sale or the place of business of the assessee concerned is equally bereft of any significance or substance in view of the basic and essential character of the levy itself. Classification of dealers on the basis of their turnover as well as the geographical situation, is meant to make the burden of the tax heavier in proportion to the increase in business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the apex Court, as indicated supra by repelling the very plea of discrimination. Even that apart, the prevalence of different rates of taxation on account of the adoption of the rates under the local sales tax law has been held not to be discriminatory (vide [1968] 22 STC 376 (SC) State of Madras v. Nataraja Mudaliar). The difference in the incidence of taxation due to the inclusion of the additional sales tax and surcharge, is purely on account of the difference in the magnitude of business or the place of business depending upon which those rates get attracted and the slab or gradation of levy provided under the Additional Sales Tax Act and Surcharge Act. We find nothing unreasonable or arbitrary in the exercise of the discretion by the Legislature which had indisputably the power to select persons, transactions and objects and apply different methods or different rates of taxation to deal with different situations. Though even fiscal statutes are not immune from a challenge based on article 14 of the Constitution of India, it is by now well-settled that a greater amount of latitude is vested with the Legislature in picking and choosing the objects as well as methods and even r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portunity to the assessee to show-cause against the same and to proceed in the matter thereafter in accordance with law. W.P. No. 7131 of 1991 is, therefore, partly allowed for the reasons stated above with liberty to the assessing officer to proceed in the matter afresh in accordance with law. 20.. As far as the other writ petitions are concerned which involve the consideration of the individual merits of the claims, we are of the view, that the issue of certain directions in the matter would sufficiently take care of the rights of the assessee as well as the department. On an overall consideration in the matter, we are of the view that wherever the petitioners have approached this Court at the stage of show-cause notice, they will have six weeks' time from this date to make their representations against such show-cause notices, raising all such grounds as are available to them in law and the assessing officers concerned shall be at liberty to proceed in the matter further in accordance with law and in the light of our decision in the present batch of cases. So far as the cases in which the writ petitions have been filed against final orders are concerned, we direct that the per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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