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TMI Blog2007 (2) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... again. Validity of Rule 9 of the Central Tax Act (U.P.) Rules, 1957 is not under challenge. Furthermore, it is not necessary that the charging provision and the machinery provisions must be found at the same place in the same section, as the machinery provisions may be found elsewhere. If the rules of the State are applicable, Rule 44-B of the Uttar Pradesh Trade Tax Rules, 1948 would apply, which provides for computation of net turnover by providing for deduction under Section 3F(2)(b) of the 1948 Act from the gross turnover. Section 3F(2)(b) of the 1948 Act in turn provides for all the deductions as has been directed by this Court in M/s. Gannon Dunkerley If enough machinery provisions can be found in the existing Act, it is not necessary to construe the provisions having regard to the subsequent legislation. - Civil Appeal No. 922 of 2007 - - - Dated:- 23-2-2007 - SINHA S.B. AND MARKANDEY KATJU JJ. Vikas Singh, A.S.G., Ashok Bhan, Mrs. Varuna Bhandari Gugnani, Mrs. Sumita Sharma, D.S. Mahra, Kavin Gulati, Kamlendra Mishra and Rajeev Dubey Advocates with him for the respondents. Dhruv Agarwal and Praveen Kumar Advocate for the appellants. [Order per: S.B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such a tax; it did not mean that the legislative power of the State could not be exercised till the enactment of a law under sub-clause (b) of clause (3) of Article 286 by Parliament, observing: ...It only means that in the event of a law having been made by Parliament under Article 286(3)(b) the exercise of the legislative power of the State under Entry 54 in List II to impose a tax of the nature referred to in sub- clauses (b), (c) and (d) of clause (29-A) of Article 366 would be subject to restrictions and conditions in regard to the system of levy rates and other incidents of tax contained in the said law. The existence of a law enacted under Article 286(3)(b) cannot, therefore, be regarded as a condition precedent for the exercise of the taxing power of the State under Entry 54 in List II to impose a tax of the nature referred to in sub-clauses (b), (c) and (d) of clause (29-A) of Article 366. This does not, however, absolve Parliament from enacting a law as envisaged by Article 286(3)(b). Keeping in view the grievance of the contractors that there is wide disparity in the sales tax legislation of the various States in the matter of imposition, mode of assessment, rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods involved in the execution of the works contract in the course of inter-State trade and commerce for the Assessment Years 2002-03 and 2003-04. 8. Writ petitions were filed by the appellant questioning the said orders of assessment before the High Court of Judicature at Allahabad. It is not in dispute that a writ petition had also been filed by the appellant contending that its activities did not come within the purview of the works contract as envisaged under Section 2(g) of the 1956 Act. The said writ petition, however, is pending. We, therefore, are not called upon to answer the said question. By reason of the impugned judgments and orders dated 3-5-2006 and 5-5-2006, the Allahabad High Court dismissed the said writ petitions relying on the decision of this Court in Gannon Dunkerley (supra). 9. Mr. Dhruv Agarwal, the learned counsel appearing on behalf of the appellant, would submit that in the absence of any rule for determination of the sale price in respect of transfer of property in goods involved in the execution of the works contract as envisaged under Section 2(h) of the 1956 Act, the taxable turnover under Section 8A of the said Act cannot be computed for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty in goods (whether as goods or in some other form) involved in the execution of a works contract; (c) . . (d) . (e) . (f) . and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made; 15. Clause 3 of Article 286 of the Constitution was also amended to enable the Parliament to specify by law restrictions and conditions in regard to the system of levy rates and other incidents of the tax on the transfer of goods involved in the execution of works contract. Pursuant to or in furtherance of the said enabling provision, as noticed hereinbefore, and in deference to observations made in Gannon Dunkerley (supra), clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proviso to clause (h) of section 2. 18. Section 6 is the charging provision making a dealer liable to pay tax under the said Act on all sales of goods other than electrical energy effected by him in the course of inter-State trade or commerce during any year on and from the date so notified therefor. Section 8A provides for determination of turnover. We may at this juncture notice the provisions of Sections 9(2) and 13(3) of the 1956 Act, which read as under: 9. Levy and collection of tax and penalties.- (1) . . . (2) Subject to the other provisions of this Act and the rules made there under, the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any tax under general sales tax law of the appropriate State shall, on behalf of the Government of India, assess, reassess, collect and enforce payment of tax including any interest or penalty, payable by a dealer under this Act as if the tax or interest or penalty payable by such a dealer under this Act is a tax or interest or penalty payable under the general sales tax law of the State; and for this purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer referred to in clause (a) of sub-section (1), where such transfer occurred during that assessment year or also for the purpose of determining net turnover referred to in sub-section (1). 21. The State of Uttar Pradesh framed Central Sales Tax (U.P.) Rules, 1957 in exercise of its power conferred upon it under sub-sections (3) and (4) of Section 13 of the 1956 Act; Rule 9 whereof reads as under: R.9. - Application to State Act and Rules: the provisions of UP Sales Tax Act, 1948 and the UP Sales Tax Rules, 1948, as amended from time to time shall in so far as they are not inconsistent with the Act, or the rules made thereunder apply to the dealers liable to assessment under the Act. 22. The State has also framed Uttar Pradesh Trade Tax Rules, 1948, Rules 44B and 44C whereof read as under: 44B.- Determination of turnover of goods involved in the execution of works contracts.- The tax under Section 3F on the turnover relating to the business of transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract shall be computed on the net turnover relating to works contracts. In determining the net tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luable consideration for the transfer of the right to use the goods whether such transfer was agreed to during that assessment year or earlier: Provided that in cases where the transfer of the right to use goods was agreed to before the date of commencement of this rule and the right to use has been continued after the said date, only the amount received or receivable after the said date shall form part of the gross turnover. 23. Sales tax is an indirect tax. It is leviable on transfer of goods. It is, however, well-settled that while construing a taxing statute one has to look merely at what is clearly said. [See speech of Viscount Simon referred to in State of West Bengal v. Kesoram Industries Ltd. Others - (2004) 10 SCC 201], wherein it was noticed: 105. Justice G.P. Singh in Principles of Statutory Interpretation (8th Edn., 2001) while dealing with general principles of strict construction of taxation statutes states: A taxing statute is to be strictly construed. The well-established rule in the familiar words of Lord Wensleydale, reaffirmed by Lord Halsbury and Lord Simonds, means : The subject is not to be taxed without clear words for that purpose; and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Commissioner of Income-Tax, Punjab [(1963) 3 SCR 893], the question which fell for consideration before this Court was construction of the machinery provisions vis-a-vis the charging provisions. Schedule appended to the Motor Vehicles Act is not machinery provision. It is a part of the charging provision. By giving a plain meaning to the Schedule appended to the Act, the machinery provision does not become unworkable. It did not prevent the clear intention of the legislature from being defeated. It can be given an appropriate meaning. In a case of doubt or dispute, it is well-settled, construction has to be made in favour of the taxpayer and against the Revenue. [See Sneh Enterprises v. Commissioner of Customs, New Delhi, (2006) 7 SCC 714]. In M/s. Ispat Industries Ltd. v. Commissioner of Customs, Mumbai [JT 2006 (12) SC 379:2006(9) SCALE 652], this Court opined: In our opinion if there are two possible interpretations of a rule, one which subserves the object of a provision in the parent statute and the other which does not, we have to adopt the former, because adopting the latter will make the rule ultra vires the Act. 27. We are, however, not oblivious of the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The 1956 Act provides for levy of tax. Works contract has been brought within the purview of sale. Wherever the said words have been used, the new definition, therefore, would be applied. Section 8 provides for rates of tax on sales in the course of inter-State trade or commerce. Section 8A provides for determination of turnover. Section 9 provides for levy and collection of tax and penalties. The said provision would, thus, be applied in respect of transfer of property in goods involved in the execution of works contract. The 1956 Act provides for grant of exemptions and various provisions e.g. proviso appended to Section 6(1) and 6(2) of the Act. 30. Section 9(2) of the Act is of wide amplitude. It confers powers on the officers of the State to make assessment or re-assessment, which the officers of the State have, under the general sales tax laws, to carry on assessment under the 1956 Act, as if it is an assessment under the State Act. The expression 'as if' is of some significance. The powers conferred and the procedures laid down under the State sales tax laws would, therefore, be applicable also for the purpose of carrying out assessment under the State Act. Sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... again and again. [See Nagpur Improvement Trust etc. v. Vasantrao and Others etc. (2002) 7 SCC 657 and Sneh Enterprises (supra)]. 34. Validity of Rule 9 of the Central Tax Act (U.P.) Rules, 1957 is not under challenge. Furthermore, it is not necessary that the charging provision and the machinery provisions must be found at the same place in the same section, as the machinery provisions may be found elsewhere. If the rules of the State are applicable, Rule 44-B of the Uttar Pradesh Trade Tax Rules, 1948 would apply, which provides for computation of net turnover by providing for deduction under Section 3F(2)(b) of the 1948 Act from the gross turnover. Section 3F(2)(b) of the 1948 Act in turn provides for all the deductions as has been directed by this Court in M/s. Gannon Dunkerley (supra). 35. In the aforementioned background, the submission of Mr. Agrawal that the matter has to be considered from the point of view of amendments of Section 2 and Section 13 of the 1956 Act by Finance Act, 2005 must be held to be not applicable in the instant case. Even if they are, they provide only for an enabling provision. 36. A proviso inserted subsequently cannot be the determina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst whom to enforce. It is apparent that the extent of liability for tax as well as penalty is not attracted by the doctrine of ejusdem generis in the application of the provisions of the State Act in regard to assessment, reassessment, collection and enforcement of payment of tax including any penalty payable under the Central Act. 17. The deeming provision in the Central Act that the tax as well as penalty levied under the Central Act will be deemed as if payable under the general Sales Tax law of the State cannot possibly mean that tax or penalty imposed under any State Act will be deemed to be tax or penalty payable under the Central Act. The entire authority of the State machinery is that for this purpose meaning thereby the purpose of assessing, reassessing, collecting and enforcing payment of tax including any penalty payable under the Central Act, they, meaning the State agencies, may exercise powers under the general Sales Tax law of the State. The words for this purpose cannot have the effect of enlarging the content of tax and the content of penalty payable wider the Central Act. Liability to pay tax as well as liability to pay penalty is created by the Central Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is well-known. [See Sadashiv Dada Patil v. Purushottam Onkar Patil (D) by L.Rs. - 2006 (10) SCALE 21], wherein it was observed: As in 1957 the right of the respondent to purchase the land became a vested right, proviso appended to Section 8 of the 1962 Act could not be read to mean that such right stood divested. Proviso appended to Section 8 refers to the application of the provisions of the relevant tenancy laws as the same does not abrogate a vested right. Proviso, it is well known, has a limited role to play. It may create an exception. It ordinarily does not create a right or takes away a vested or accrued right. Proviso to Section 8 of the 1962 Act, in our considered opinion, does not take away a vested right conferred under the Tenancy Act. 40. We have noticed hereinbefore that the 2005 amendments are not retrospective in operation. Furthermore, they provide merely for an enabling provision. If enough machinery provisions can be found in the existing Act, it is not necessary to construe the provisions having regard to the subsequent legislation. 41. For the reasons aforementioned, we do not find any merit in these appeals, which are dismissed accordingly. H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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