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TMI Blog2005 (10) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... expression shall pay tax used in sections 5, 5-B, 5-C, 5-F, and 6-A and shall be liable to tax used in section 6 are not dissimilar to the expression tax shall be levied and collected as used in section 6-C. Further the heading of section 5 is levy of tax on sale or purchase of goods , that of section 5-A is levy of tax on turnover , section 5-F is levy of tax on transfer of property in goods involved in the execution of works contract , section 6-A is levy of tax on turnover relating to purchase of certain goods and section 6-C is levy of tax on packing material . Thus sections 5, 5-A, 5-F, 6-A and 6-C are provisions which relate to levy of tax. If sections 5 and 5-A are to be held as charging sections we see no reason, in the absence of any discernible distinction, to hold that section 6-C is not. Sri V. Bhaskar Reddy, learned counsel for the respondents, would urge, rightly so, that the interpretation placed by us on section 6-C would result in gunnies being taxed at multiple points. If that is what the Legislature intended, by providing a non obstante clause in section 6-C, and in subjecting section 5(1) to the other provisions of the APGST Act including section 6-C, such a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Tribunal in T.A. Nos. 894 of 2002 and batch dated March 31, 2004, is: Whether gunnies which have suffered tax within the State of A.P. can, under section 6-C of the Andhra Pradesh General Sales Tax Act, 1957 again be subjected to tax when they are sold along with the contents, despite the prescription in entry 19 of the First Schedule that gunnies, sold with or without its contents, are liable to be taxed only at the point of first sale in the State? 2. Facts, in brief, are that the respondents, in these batch of tax revision cases, are rice millers and registered dealers under the APGST Act. In respect of some of the assessees, the Commercial Tax Officers finalised assessments exempting the value of gunnies purchased from local registered dealers in the State. The contention, that under entry 19(iii) of the First Schedule to the APGST Act gunnies were taxable at the first sale point, was accepted by the assessing authorities and tax was levied only at one per cent under section 5A of the APGST Act. The Deputy Commissioners (CT) took up revision of assessment, under section 20(2) of the APGST Act, in so far as it related to exemption of second sale of gunnies from being taxed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntive provision of section 6-C in view of the non obstante clause contained therein. According to the learned Special Standing Counsel, section 6-C is also a charging section and has an overriding effect over section 5(1) of the Act. According to the learned Special Standing Counsel, section 6-C is divisible into three distinct parts, viz., (1) Overriding provision with non obstante clause employing the words notwithstanding anything contained in sections 5, 5F, 6 and 6-A ; (2) Substantive provision prescribing that the rate of tax on packing material sold with the goods shall be the same as that of goods packed or filled ; and (3) Deeming provision in the form of whether or not there is separate sale or agreement for sale for the packing material and the goods packed or filled . 5. Learned Special Standing Counsel would further submit that, when gunnies are sold with rice, the deeming provision in section 6-C would come into operation and since rice is taxed at four per cent, the gunnies which contain rice are also required to be taxed at four per cent. Learned counsel would place reliance on K.C.P. Ltd. v. Commercial Tax Officer [2002] 126 STC 303 (AP); [2002] 34 APSTJ 198, Premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the APGST Act, and the very same gunnies are used for sale of rice, it cannot be subjected to tax again under section 6-C of the APGST Act. Learned counsel would submit that section 6-C of the APGST Act prescribes only the rate of tax on packing material and would apply only when the packing material is liable to tax. If the packing material used, is not liable to tax, it cannot be said that, by virtue of section 6-C, it can again be subjected to tax. Learned counsel would submit that when the Legislature deliberately did not mention the words point of levy in section 6-C of the APGST Act, taxing statutes could not be interpreted by adding words thereto so as to make out some presumed object of the Legislature, as the law is wellsettled that in case of doubt, an interpretation which is beneficial to the tax-payer must be adopted. Reliance is placed by the learned counsel on State of Bombay v. Automobile and Agricultural Industries Corporation [1961] 12 STC 122 (SC) , in this regard. 7. Learned counsel would submit that sale of gunnies, by the respondents, are secondary sales as the gunnies were purchased from registered dealers within the State and therefore the value of gunn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponent of the sale price of the contents and that it is necessary for the assessing authority to go into the question of ingredients of sale or agreements for sale of container, where contents are packed and sold with the packing material, for the purpose of taxing the container under the amended section 6-C also. The Tribunal held, that under section 6-C only the rate of tax on packing material has been prescribed and would apply only when gunnies were sold for the first time along with the goods at the rate applicable to the goods contained in it, that section 6-C did not provide that even if the packing material had already suffered tax it should be taxed again, whenever it is sold along with the goods, at the rate at which the goods are to be charged and if it were to be so interpreted, it would yield absurd results, and may well result in a situation where the very same gunny may have to suffer tax several times whenever it is used though gunnies were treated as single point tax goods. 10. The Tribunal relied on Raj Sheel [1989] 74 STC 379; AIR 1989 SC 1696, wherein the Supreme Court held that where the packing material is an independent commodity and the packing material and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are sold or purchased, the materials in which the goods are so packed shall be deemed to have been sold or purchased along with the goods and the tax shall be leviable on such sale or purchase of the materials at the rate of tax, if any, as applicable to the sale, or, as the case may be, purchase of goods themselves. 14. In Raj Sheel [1989] 74 STC 379; AIR 1989 SC 1696, the Supreme Court held that section 6-C provides, by legal fiction, that the packing material shall be deemed to have been sold along with the goods, and although there was no sale of packing material it would be deemed that there was such a sale, in which event, section 6-C declared that tax would be leviable on such deemed sale of the packing material at the rate of tax applicable to the sale of the goods themselves. The Supreme Court held that section 6-C could, at best, be regarded as a provision by way of clarification of the existing legal situation, and the contention that a rate applicable to the packing material in the Schedule should be applied to the sale of such packing material in a case under section 6-C, could not be accepted since in fact that there was no such sale of packing material and it was onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such sale or purchase of the materials at the rate of tax, if any, as applicable to the sale, or, as the case may be, purchase of goods themselves. 6-C. Levy of tax on packing material. - Notwithstanding anything contained in section 5, section 5F, section 6 and section 6A, the rate of tax on packing material sold with the goods shall be the same as that of the goods packed or filled, whether or not there is separate sale or agreement for sale for the packing material and the goods packed or filled. 19. Sri K. Raji Reddy, learned Special Standing Counsel would place reliance on Premier Breweries [1998] 108 STC 598 (SC) to contend that as section 5(5) of the Kerala General Sales Tax Act is in pari materia with the amended section 6-C of the APGST Act, 1957 the APGST suffered gunnies are liable to be taxed again when they are sold along with their contents. On the other hand, Sri V. Bhaskar Reddy, learned counsel for the respondents, would place reliance on Raasi Cement Ltd. [1997] 106 STC 169; [1997] 24 APSTJ 100, wherein this court, referred to section 5(3-D) of the Karnataka Sales Tax Act, 1957 which had come up for consideration before the apex Court in Vasavadatta Cements v. St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be that of its contents, whether the packing material had already been subjected to tax or not, the A.P. State Legislature did not choose to introduce such words in section 6-C of the APGST Act, obviously for the reason that they did not intend to tax packing material once again when it was sold along with the goods, in case the packing material had suffered tax earlier under the APGST Act. The Tribunal held that if the A.P. State Legislature had intended to levy tax on packing material, more than once, they would have specifically provided for the same in the amended section 6-C of the APGST Act, which came into force from April 1, 1995 and that the law laid down in Premier Breweries [1998] 108 STC 598 (SC), had no application to the amended section 6-C of the APGST Act, as the principle laid down in Raj Sheel [1989] 74 STC 379 (SC); AIR 1989 SC 1696, had not been overruled and had only been distinguished for the reason that the corresponding provisions in the Kerala General Sales Tax Act and the A. P. General Sales Tax Act were not similar. The Tribunal held that in so far as the principle laid down in Raj Sheel [1989] 74 STC 379 (SC); AIR 1989 SC 1696, is concerned, this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the goods packed or filled. Though neither the underlined(1) words nor their substance was part of unamended section 6-C of the Act, the purport of the same is incorporated in section 5(3-D) of the KST Act, by enacting 'whether the price of the container or of the packing material is charged for separately or not'. This leads us to the enquiry as to whether the presence of those words will make any difference in interpreting section 6-C. We are unable to accede to the contention of the learned Government Pleader that by incorporating the underlined1 words in the impugned provision the enquiry into the question of fact with regard to ingredients of sale and intention of the parties, directed by the Supreme Court in Raj Sheel's case [1989] 74 STC 379, in each case is dispensed with and that in view of those words now it is not necessary for the assessing authority to go into the question of ingredients of sale or agreement for sale of container where contents (goods) are packed and sold with the packing material (container) and the intention of the parties for the purpose of taxing the container under the impugned provision as in Vasavadatta Cements' case [1996] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds contained in the packing material. This is because the goods are sold packed in containers and are charged accordingly. This is a rule of computation of the turnover of the goods. If no tax is ultimately found leviable on the goods then no tax can be levied on the containers in which the goods are contained. 27. The constitutional validity of entry 18 of the First Schedule, as introduced by A.P. Act No. 27 of 1996 was the subject-matter of challenge in Associated Cement Companies Ltd. [2001] 121 STC 201 (AP); [2000] 31 APSTJ 149. While upholding the vires of the said entry, the division Bench of this court held thus: . . . . .The new section 6-C introduced by Act No. 22 of 1995 is almost in pari materia with sub-sections (5) and (6) of section 5 of the Kerala General Sales Tax Act which was interpreted by the Supreme Court in Premier Breweries v. State of Kerala [1998] 108 STC 598. Sub-sections (5) and (6) of section 5 of the said Act reads as under: '5(5) Notwithstanding anything contained in sub-section (1) or sub-section (2), but subject to sub-section (6) where goods sold are contained in containers or are packed in any packing materials, the rate of tax and the point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adatta Cements' case [1996] 101 STC 168 (SC), the Supreme Court opined that the point of tax and rate of tax on containers and packing material shall be the same as that of the goods sold even where containers or packing materials are sold separately. 29. In none of the aforementioned judgments, has the question raised in the present batch of tax revision cases, arisen for consideration. It is therefore necessary to consider this question in the light of the scheme of the APGST Act and the provisions therein. Non obstante clause: 30. Section 6-C has a non obstante clause. A non obstante clause is generally appended to a section with a view to give the enacting part of the section, in case of conflict, an overriding effect over such other provisions of the Act as are mentioned in the non obstante clause. It is equivalent to saying that inspite of the provisions of the Act mentioned in the non obstante clause, the provision following it will have full operation or the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment or the provision in which the non obstante clause occurs. (Principles of Statutory Interpretation-9th Editi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the rice sold to F. C. I. is four per cent the same rate of tax of four per cent shall be applicable to the gunnies sold along with the rice. Further, in view of the non obstante clause contained therein, the enacting part of section 6-C shall, in the case of conflict, have an overriding effect over the provisions of section 5(1) of the APGST Act. 32. Since levy of tax on packing material, under section 6-C, is notwithstanding anything contained in sections 5, 5-F, 6 and 6-A of the APGST Act, it is necessary to refer to those sections also: 5. Levy of tax on sales or purchases of goods.-(1) Save as otherwise provided in this Act, every dealer shall pay a tax under this Act for each year on every rupee of his turnover of sales or purchases of goods in each year irrespective of the quantum of his turnover at the rates of tax and at the points of levy specified in the Schedules. [Sub-section (1) substituted for sub-sections (1) and (2) by Act No. 4 of 1989] (3) For the purpose of this section and the other provisions of this Act, the turnover which a dealer shall be liable to pay tax shall be determined after making such deductions from his total turnover, and in such manner as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production of proof that such sub-contractor is a registered dealer liable to tax under the Act and that the turnover of such amount is included in the return of turnover filed by such subcontractor. 6.. Tax in respect of declared goods.-Notwithstanding anything contained in section 5, the sales or purchases of declared goods by a dealer shall be liable to tax at the rate, and only at the point of sale or purchase specified against each in the Third Schedule on his turnover of such sales or purchases for each year irrespective of the quantum of his turnover in such goods; and the tax shall be assessed, levied and collected in such manner as may be prescribed: Provided that where any such goods on which a tax has been so levied are sold in the course of inter-State trade or commerce, and tax has been paid under the Central Sales Tax Act, 1956, in respect of the sale of such goods in the course of inter-State trade or commerce, the tax so levied, shall be reimbursed to the person making such sale in the course of inter-State trade or commerce, in such manner and subject to such conditions as may be prescribed. 6-A. Levy of tax on turnover relating to purchase of certain goods.- Ever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Save as otherwise provided 34. Since the Schedules are parts of the relevant sections in the main enactment, the First Schedule to the APGST Act, must be held as part of section 5. Section 5(1) starts with the words save as otherwise provided in the Act . 35. The expression save as otherwise provided by or under the Act would mean, save as otherwise expressly barred by or under the Act . (State of Rajasthan v. Noor Mohammad [1972] 2 SCC 454; AIR 1973 SC 2729). It is a simple provision which merely subjects the provisions of the subject section to the provisions of the other section. Where there is no clash, the phrase does nothing: if there is collision, the phrase shows that the other section is to prevail. The phrase provides no warranty of universal collision. (Clark (C J) Ltd. v. Inland Revenue Commissioners [1973] 2 All ER 513). It is well settled that the expression notwithstanding is in contradistinction to the phrase subject to , the latter conveying the idea of a provision yielding place to another provision or other provisions to which it is made subject. (Chandavarkar Sita Ratna Rao v. Ashalata S. Guram [1986] 4 SCC 447; AIR 1987 SC 117). 36. Since both sections 5(1) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of a statute, much less a fiscal statute, can be read in such a manner. Would not accepting this submission, we ask ourselves, result in adding words in section 6-C, to the effect that it shall apply only at the point of levy specified in the Schedule , which construction is equally impermissible? Our answer is an emphatic yes. While different provisions of a taxing statute are to be harmoniously construed so as to give effect to all of them without reducing any part thereof redundant, it cannot, normally, go so far as to require words to be supplied to some of the provisions to bring about harmony. There is undoubtedly a conflict, and section 6-C [in view of the non obstante clause and the expression save as otherwise provided in section 5(1)], must prevail over the point of sale prescribed in entry 19(iii)(b) of the First Schedule. 39. The contention that section 6-C is not a charging section cannot also be accepted. We are unable to appreciate the distinction sought to be made by Sri V. Bhaskar Reddy, learned counsel for the respondents, between sections 5, 5-B, 5-C, 5-F, 6 and 6-A on the one hand and section 6-C on the other. The expression shall pay tax used in sections 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of tax on gunnies, both prior to its amendment, under entry 157, and after the amendment with effect from May 12, 1997 under entry 19(iii), is at the point of first sale, nothing turns on its amendment by Act No. 30 of 1997, while interpreting section 6-C of the APGST Act. 42. Sri V. Bhaskar Reddy, learned counsel for the respondents, would submit that the interpretation placed on section 6-C, by the Tribunal, is a possible interpretation beneficial to the taxpayer, and should therefore be accepted. Learned counsel would place reliance on the judgment in State of Bombay v. Automobile and Agricultural Industries Corporation [1961] 12 STC 122, wherein the Supreme Court held thus: The courts in interpreting a taxing statute will not be justified in adding words thereto so as to make out some presumed object of the Legislature. It is settled law that in case of doubt, that interpretation of a taxing statute which is beneficial to the taxpayer must be adopted. 43. It is no doubt true that any ambiguity in the language of a provision in a tax/fiscal statute should be resolved in favour of the assessee. It is however well-settled that where the language of the section is clear and no am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uage, resort to any interpretative process to unfold the legislative intent becomes impermissible. The supposed intention of the Legislature cannot then be appealed to to whittle down the statutory language which is otherwise unambiguous. If the intendment is not in the words used it is nowhere else. The need for interpretation arises when the words used in the statute are, on their own terms, ambivalent and do not manifest the intention of the Legislature. . . . . Artificial and unduly latitudinarian rules of construction which, with their general tendency to 'give the taxpayer the breaks', are out of place where the legislation has a fiscal mission. 47. After referring with approval to the aforesaid judgments, the Supreme Court in Orissa State Warehousing Corporation v. Commissioner of Income-tax [1999] 237 ITR 589 (SC); [1999] 4 SCC 197, held thus: Be it noted that individual cases of hardship and injustice do not and cannot have any bearing for rejecting the natural construction by attributing normal meanings to the words used since 'hard cases do not make bad laws'. In fine thus, a fiscal statute shall have to be interpreted on the basis of the language used th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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