Amrit Banaspati Co. Ltd. & ANR Vs.
State of Uttar Pradesh & Ors [1964] INSC 165 (27 July 1964)
27/07/1964 DAYAL, RAGHUBAR DAYAL, RAGHUBAR
GAJENDRAGADKAR, P.B. (CJ) HIDAYATULLAH, M.
GUPTA, K.C. DAS SHAH, J.C.
CITATION: 1965 AIR 560 1964 SCR (8) 313
ACT:
Sales Tax-Sales tax levied at the rate of one
anna per rupee-New decimal coinage introduced by Act No. 31 of 1955Effect on
calculation of sales tax-Sales tax to be levied at the rate of one 314 anna or
six Naya Paisa-Indian Coinage Act, 1906 as amended by Act No. 31 of 1955. s.
14(3), (2).
HEADNOTE:
For the assessment years 1956-57 and 1957-58,
the appellant was, assessed to sales tax in respect of Vanaspati and oil under
the U.P. Sales Tax Act, 1948. By a notification issued on March 31, 1956 under
s. 3-A(2), the rate of tax on Vanaspati was fixed at one anna per rupee at the
point of sale by the manufacturer.
The appellant and S. P. Bhasin, a shareholder
of the company, filed a writ petition in the High Court challenging the
validity of the U.P. Sales Tax Validation Act, 1958 and also prayed for the
quashing of the assessment order dated October 15, 1960 and the order dated
February 1, 1961, of the Sales Tax Judge (Appeals), Meerut, in connection with
the assessment of tax on the sale of Vanaspati and other articles both on the
ground that the sale tax was assessed at a higher rate than was permissible
under a valid law and that the tax had been assessed at the rate of one anna
and not at 6 Naya Paisa per rupee. The writ petition was dismissed by a single
Judge of the High Court and the Letters Patent Appeal was also dismissed by
High Court. The appellant came to this Court by special leave.
The only point urged before this Court was that
the tax should have been calculated at the rate of 6 Naya Paisa per rupee and
not at the rate of one anna per rupee as laid down in the relevant provisions
of the U.P. Sales Tax Act and the notice issued under its provisions.
Dismissing the appeal, Held (per P, B. Gajendragadkar, C.J., M. Hidayatullah,
K. C. Das Gupta and Raghubar Dayal, JJ.): The High Court was right in
construing the provisions of sub-s. (3) of s. 14 of Indian Coinage Act to mean
that references to values in any enactment, notification, rule or order under
any enactment or in any contract, deed or instrument, expressed in old coins
should be construed to be references to values expressed in new coins by
converting the old values at the rate of16 annas, 64 pice and 192 pies to 100
Naya Paisa.
The values expressed in new coins must be
absolutely equivalent to the value of the, old coins. Per Shah, J.The liability
for sales tax after the amendment of the Coinage Act will be at the rate of 6
new coins for every rupee of sale price and not one anna. By the notification
issued on March 31, 1956, the liability for payment of sales tax was to be
computed at the rate of one anna in a rupee of the turnover. By virtue of s.
14(3), for an anna mentioned in the notification, 6 1/4 new coins are to be
substituted.
As the substituted rate involves a fraction,
by the process of rounding off at the rate specified in s. 14(2), the fraction
of new coins has to be omitted and the nearest new coins, i.e., 6 new coins are
to be deemed to be substituted in the statute.
J. K. Jute Mills Co. Ltd. v. State of Uttar
Pradesh, [1962] 2 S.C.R. 1, Ram Kishan Sunder Lal v. State of Uttar Pradesh, 13
S.T.C. 923, 315 M/s. Mangalore Ganesh Beedi Works v. State of Mysore, [1963]
Supp. 1 S.C.R. 275, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 887 and 888 of 1963.
Appeals by special leave from the judgment
and order dated October 23, 1961, of the Allahabad High Court in Special
Appeals Nos. 483 and 484 of 1961.
S. K. Kapur, B. L. Khanna, S. Murty and K. K.
Jain, for the appellants.
C. B. Agarwala and C. P. Lal, for the
respondent.
July 27, 1964. The Judgment of the Court was
delivered by :
RAGHUBAR DAYAL, J.The appellant, Amrit
Banaspati Co. Ltd., hereinafter called the company, a joint-stock company, and
S. P. Bhasin. a shareholder of the company, filed writ petition no. 1003 of
1961 in the High Court of Judicature at Allahabad, challenging the validity of
the U.P. Sales Tax Validation Act, 1958 (Act XV of 1958), hereinafter called
the Validation Act, and praying for the quashing of the assessment order dated
October 15, 1960 and the order dated February 1, 1961, of the Sales Tax Judge
(Appeals), Meerut, in connection with the assessment of tax on the sale of
vanaspati and other articles both on the ground that the sales-tax was assessed
at a higher rate than was permissible under a valid law and that the tax had
been assessed at the rate of 1 anna and not at 6 naye paise per rupee. The
learned Single Judge of the High Court dismissed the writ petition as the
Validation Act validating the relevant provision of the U. P. Sales Tax Act and
the notification enhancing the rate of tax had been held valid by this Court in
J. K. Jute Mills Co. Ltd. v. State of Uttar Pradesh(-) and as the contention
about the calculation of tax to be at the rate of 6 naye paise per rupee and
not at the rate of 1 anna had been repelled in earlier decisions of the
Allahabad High Court, one such decision being Ram Kishan Sunder Lal v. State of
Uttar Pradesh(1). A special appeal to a Division Bench of the High Court was
dismissed (1) [1962] 2 S.C.R. 1.
(2) 13 S.T. C. 92 316 in view of the decision
of this Court in the Jute Mills' Case(1). It appears that the second question
about the alleged error in calculating the tax at the rate of I anna instead of
6 naye paise per rupee, was not raised before the Division Bench. Civil Appeal
No. 887 of 1963 has been filed by special leave against this order of the High
Court.
The other appeal no. 888 of 1963 is filed
against the order of the Division Bench confirming the order of the Single
Judge dismissing the writ petition by the appellant company against the
assessment order for the years 1955-56, 1956-57 and 1957-58. The only point
urged for the appellant in this writ petition had been that the Validation Act
was invalid.
The orders of the two Courts below repelled
the contention, in view of the decision of this Court. in the Jute Mills
Case(1).
We did not allow the apellant to urge the
grounds attacking the validity of the Validation Act in view of the decision of
this Court in the lute Mills' Case(1). The ,only point which is urged before us
now is that the tax should have been calculated at the rate of 6 naye paise per
rupee and not at the rate of 1 anna per rupee, as laid down in the relevant
provisions of the U.P. Sales Tax Act and the notification issued under its
provisions. The contention is based on the provisions of the Indian Coinage
Act. 1906 (Act III of 1906), hereinafter called the Coinage Act. as amended by
Act XXXI of 1955. It is urged that in view of the provisions of sub-ss. (2) and
(3) of s. 14 of the Coinage Act, as amended reference to 1 anna in the relevant
Act and notification issued thereunder should be construed to be reference to 6
naye paise and that the wrong calculation by the Sales Tax Authority has
resulted in over-assessment of tax. To appreciate the real contention urged. it
is necessary to refer to the relevant provisions of the Coinage Act.
Section 13' provides the extent up to which
the tender of the various coins would be considered legal tender. Its relevant
portions read:
"13. (1) The coins issued under the
authority of section 6 shall be a legal tender in payment or (1) [1962] 2
S.C.R. 1.
317 on account.(a) in the case of a rupee
coin, for any sum.
(b) in the case of a half-rupee coin, for any
sum not exceeding ten rupees:
(c) in the case of any other coin, for any
sum R not exceeding one rupee:
Porvided that the coin has not been defaced
and has not lost weight so as to be less than such weight as may be prescribed
in its case.
(3) All nickel, copper and bronze coins which
may have been issued under this Act before the 24th day of January, 1942 shall
continue as before to be a legal tender in payment or on account for any sum
not exceeding one rupee." Section 14, after the amendment introducing the
decimal system of coinage, reads:
"14. (1) The rupee shall be divided into
one hundred units and the new coin representing such unit may be designated by
the Central Government, by notification in the Official Gazette, under such
name as it thinks fit, and the rupee, half-rupee and quarter-rupee shall be
respectively equivalent to one hundred, fifty and twenty-five such new coins
and shall, subject to, the provisions of subsection (1 ) and subsection (2) of
section 13 and to the extent specified therein. be a legal tender inpayment or
on account accordingly.
(2) All coins issued under the authority of
this Act in denominations of annas, pice and pies shall, to the extent specified
in section 13, be a legal tender in payment or on account at the rate of
sixteen annas, sixty-four pice or one hundred and ninety-two pies to one
hundred new coins. referred to in sub-section (1), calculated in respect of any
such single coin or number of such coins, tendered at one transaction, to the
318 nearest new coin, or where the new coin above and the new coin below are
equally near, to the new coin below.
(3) All references in any enactment or in any
notification, rule or order under any enactment or in any contract, deed or
other instrument to any value expressed in annas, pice and pies shall be
construed as references to that value expressed in new coins referred to in
sub-section (1) converted the ret o at the rate specified in subsection
(2)." The various factors determining the application of the provisions of
sub-s. (2) for the purposes of calculating the equivalent value of annas, pice
and pies tendered at one transaction are several. The first requisite is that
the amount taken into consideration is the amount which is tendered at one
transaction. The other is that the amount tendered in any of those coins should
be within the extent of legal tender mentioned in s. 13. When these two conditions
are present, those coins would be legal tender in payment or on account at the
rate of 16 annas, 64 pice or 192 pies to 100 naye paise which is the new coin
referred to in sub-s. (1) of s. 14. This means that the number of annas, or
pice or pies tendered have to be multiplied by 100/, 100/64 and 100/192
respectively, to get the equivalent number of new coins. In such arithmetical
calculation there is the possibility that the equivalent number of naye paise
be not an exact number and be a mixed number consisting of a whole number and a
fraction. There is no coin of the equivalent to a fraction of a naya paisa in
value. In such cases, there is not going to be payment of the amount due in
full, if for the amount tendered in payment or on account there is no full
equivalent of naye paises at the rate specified in sub-s. (2). It is for such
contingency of a payment being not a full payment that sub-s. (2) further
provides that the coins tendered will be legal payment at the specified rate
calculated to the nearest new coin or where the new coin above or new coin
below are equally near, to the new coin below. The significance of this
specified mode of calculation would be apparent from a concrete example.
319 7 annas, 6 annas and 5 annas, calculated
at the specified rate, would be equal to 43 3/4, 37 1/2 and 31 1/2 naye paise.
According to the artificial calculation, they will however be ,,deemed to be
legal tender for 44, 37 and 31 naye paise s respectively, as 44 and 31 naye
paise are nearest to the calculated equivalent of 7 annas and 5 annas and 37 naye
paise is the next coin below 37 1/2 naye paise which are equally 'below 38 naye
paise and above 37 naye paise and the artificial mode of calculation directs
the equivalents to be fixed, in such circumstances, to the new coins below. It
is to be noted that each coin of one kind, tendered, is not considered as a
unit for the purposes of calculation, but all the Coins of the denomination are
to be treated as one unit for this purpose. This is to ensure payment of the
amounts due as fully as possible. This will again be clear on a concrete
example. Seven one-anna pieces are tendered, say, at one payment. If each
separate piece be taken to be valid payment for 6 naye paise, the seven
one-anna pieces will be good payment for 42 naye paise only, but if taken as a
whole, they would be good payment for 44 naye paise. Similarly, five one-pice
pieces will be good payment for 8 naye paise only and not for 10 naye paise
which would be the case if each one-pice piece was treated as good payment for
2 naye paise, its equivalent, if it be converted singly to naye poise.
It is therefore clear that the provisions of
sub-s.(2) provide for the conversion of old coins into new at the time of
payment or of accounting, and then too for the conversion of the old coins
within the limit of the extent to which they are legal tender, which means that
one cannot insist on paying a total sum of several rupees in naye paise calculated
in the manner laid down in sub-s. (2) of s. 14 and that two factors affect the
determination of the number of nave paise equivalent in value to the value of
the old coin of annas, pice or pies tendered, the two factors being the rate
specified and the artificial way of calculation. The result of the artificial
way of calculation is that sometimes equivalent number of naye paise is less
than the actual value of the old coins at the specified rate and sometimes it
is higher, the difference being, however, very small.
320 Sub-section (3), however, deals with a
different matter. It has nothing to do with the actual payment of any amount.
It provides a rule for construing values expressed in old coins as values
expressed in new coins or naye paise, and to achieve this object, the only
factor necessary to specify is the rate at which the value of the old coins is to
be converted into the value of the new coins. The object of the provision is to
provide a measure for arriving at the equivalent value in terms of new coins
and not to provide how any amount due in terms of old coins is to be paid in
terms. of new coins. Sub-section (3) therefore simply provide& that
references, in any of the documents referred to in that sub-section, to any
value expressed in annas, pice and pies shall be construed as references to
that value expressed in new coins converted thereto at the rate specified in
sub-s. (2). Sub-s. (2) specifies the rate.
The rate specified in sub-s. (2) is 16 annas,
64 pice or 192 pies to 100 new coins or naye paise. It is this rate which is
referred to in sub-s. (3). There is nothing in sub-s. (3) which can be taken to
refer o that part of subs.(2) which relates to the actual calculation for
arriving at the number of new coins deemed equivalent in value to a certain
number of annas, pice or pies, coins tendered within the limits of legal
tender. The provisions of sub-s. (3) of s. 14 provide for the conversion of the
value of old coins into that of new coins at the rate specified in sub-s. (2)
and do not provide for conversion to be in accordance with the provisions of
sub-s. (2). The other expression would have been preferable if the legislature
had intended that the references of values expressed in old coins be construed
as references to values in new coins according to the mode of artificial
calculation mentioned in sub-s.(2). The provisions deal with the method of
construction of the expression of the value in documents, be the private
documents or be they enactments or notifications, or rules or orders. The
object was to determine the equivalent value which may be taken to replace the
value as expressed in old coins. If the contention urged for the appellant be
accepted, the values expressed in annas, pice or pies will not, on conversion,
be precisely equivalent but could be very much divergent and would adversely,
affect 321 the interests of the persons to whom money be due or in certain
circumstances, the interests of the person from whom it be due. This could not
have been contemplated by the legislature. The futility of the appellants'
contention that the provisions of sub-s. (3) not only refer to the rate
specified in sub-s. (2) but also to the method of calculation mentioned in that
sub-section, is apparent from the anomalies which would arise if it be
accepted. This can be illustrated from the various facts of these appeals.
It is the appellants' contention in writ
petition no. 1003 of 1961 that the sales tax calculated at the rate of 6 naye
paise and not at I anna per rupee on the whole turnover of Rs. 1,40,18,170.84
would reduce the tax demanded by the Sales Tax Officer by Rs. 34,355. This
means that if the tax is calculated at the rate of 1 anna per rupee, as
expressed in the relevant provision of law or at 6.25 naye paise per rupee, the
amount of tax due from the appellant would be Rs. 34,355 more than the amount
of of the same tax on the same turnover calculated at an equivalent value of 6
naye paise per rupee. In the other writ petition, no reference was made by the
appellants to the manner of calculating the tax, the manner of calculation
adopted by the taxing authority being the same as in the other writ petition,
as the appellants' claim for refund, if determined at the values of one anna
and nine pies calculated in accordance with subsection (2) of s. 14, would have
been much reduced. It will be sufficient to state that in clause (e) of para 16
of the writ petition, the figures for the years 1956-57 for the amount paid at
one anna per -rupee and the amount payable at 9 pies per rupee would then vary
the amount refundable to the appellant in a way as to make it much less. The
figures would stand thus :
-----------------------------------------------------------RS.a.
P. Total amount paid at I anna per rupee 8,05,726106 Amount payable at 9 pies
6,03,16753 ---------------------Amount refundable, and therefore which the
petitioner company could detain 2,00,559 53
------------------------------------------------------------If the amount
payable be calculated at the rate of five naye poise in place of 9 pies, the
amount refundable would be 51 S.C.-21.
322 -------------------------------------------------------------much
less as shown below Rs.UP. Total amount paid at anna per rupee 8,05,726 65
Amount payable at 5 naya paise 6,44,661 32 Amount refundable 1,61,065 33 The
appellant stood to lose by calculating the tax payable in terms of naye paise
and therefore made up an account at the old coin rates.
The legislature could not have intended, by
the provisions of sub-section (3), that a mere provision for working out the
value in old coins into values in new coins should provide scope for such huge
variations in the actual amounts to be paid or received. The process of
conversion is not meant or designed to be a process for gaining more or less
than what is rightfully due under a provision of law or under any contractual
term. The conversion is a simple process necessitated by the exigency of
payment to be in currency different from the one in which the payment was to
be.
We are therefore of opinion that what
sub-section (2) of s. 14 requires is that references to any value expressed in
annas, pice and pies will be construed to such values ,expressed in new coins
which would be absolutely equivalent to the value of the old coins when their
value is converted at the rate of 16 annas, 64 pice and 192 pies to 100 naye
paise.
Great reliance is placed for the appellants
on the decisions of this Court in M. G. Beedi Works v. State of Mysore(1).
Apparently some observations of this Court in
that case support the appellants' contention. But, when they are considered in
the context of that case, they do not support the contention as the Court had
not to deal in that case with the actual contention now raised before us.
In the Beedi Works Case the sales tax was to
be levied at the rate of 3 pies for every rupee of turnover. The (1) [1963]
Supp. 1 S.C.R., 275.
323 amount of tax calculated at 3 pies per
rupee worked out to Rs. 91,690 and, calculated at the rate of two naye paise
the equivalent value of 3 pies, when calculated in the manner laid down in
sub-section (2) of s. 14, worked out to a figure higher by Rs. 25,038. The tax
was assessed at two naye paise per rupee in view of the provisions of., the
Mysore Existing Laws (Construction of References to Values) Act, 1957 (Mysore
Act XII of 1957). Section 3 of that Act said :
"3. Construction of references to
certain values in existing laws.
In every existing law, all references to any
value expressed in annas, pice and pies, shall be construed at references to
that value expressed in new coins referred to in subsection (1) of section 14
of the Indian Coinage Act, 1906 (Central Act III of 1906), converted thereto at
the rate specified in sub-section (2) of section 14 of the said Act." The
assessee, by his writ petition, questioned the validity of the enactment which
led to such a result in the amount of tax assessed. The contention raised was
not that the rate of calculation was wrong, but was that the law providing for
the assessing of tax at the rate of 2 naye paise instead of 3 pies per rupee
was invalid as it amounted to enhancing the tax by an Act which was not enacted
in accordance with the procedure laid down in the Constitution. This is clear
from what was stated at p. 277, it being"The grievance of the appellant
was that according to the Mysore Sales Tax Act he was liable to sales tax at
the rate of 3 pies for every rupee on the turnover and calculated on that basis
the amount of tax would be Rs.
91,690, but after the amendment of the Indian
Coinage Act (Act 3 of 1906) by the Amending Act 31 of 1955 the rate of sales
tax which was levied on the appellant's Bee" was -02 nPs.
per rupee 324 and thus the appellant was
called upon to pay Rs. 25,038, more than he would have paid if he had been
charged at the rate, of 3 pi-Is per rupee. It was contended on behalf of the
appellant in the High Court and before us that this amounted to enhancement of
tax which was illegal because the tax had not been increased in the manner
provided under the Constitution and thus it was a breach of Article 265 of the
Constitution and was therefore void and illegal." This Court further said,
at p. 279:
"Two objections were, taken to the
validity of the tax : Firstly it was argued that by the substitution of 2 naye
paise in place 3 pies there was a change in the tax exigible by the Mysore
Sales Tax Act and this could only be done if that enactment had been passed
according to the procedure for Money Bills in the manner provided by Articles
198, 199 and 207 of the Constitution and as no such Money Bill was introduced
or passed for the enhancement of the tax, the tax was illegal and
invalid.".
It is clear that the contention was not that
the tax should be calculated at a rate equivalent to 300/192 naye paise i.e.,
19/16 naye paise and not at 2 naye paise. It was not urged that the assessment
could not have been at 2 naye paise in view of the provisions of s. 3 of the
Mysore Act of 1957. What was contended was that the assessment at the rate of 2
naye paise per rupee, instead of 3 pies per rupee, amounted to assessment of
tax at an enhanced rate and that the Mysore Act, due to procedural defect, was
not valid law.
This Court dealt with these two objections
and simply said with respect to the contention about the provision of law
amounting to a provision enhancing the rate to tax (p. 279) :
"In our opinion by substitution of new
coinage i.e., naye paise in place of annas, pice and pies no enhancement of tax
was enacted but it was 325 merely a substitution of one coinage by another of
equivalent value." This Court expressed the opinion that a law providing
for substitution of new coinage in place of old coinage in the expression of
values does not amount to a provision of enhancing the tax. The pith and
substance of the Act was substitution in terms of new coinage and not varying
the rate of tax.
On p. 278, however, this Court, after
referring to the provisions of sub-sections (1) and (2) of s. 14 of the Indian Coinage
Act about the division of a rupee into 100 naye paise and the old legal tender
in annas, Vice and pies remaining legal tender in naye paise and referring to
the mode of calculation specified in sub-section (2) of s. 14, said:
"Sub-section (3) provides that all
references under any enactment to annas, pice or pies have to be construed as
references to the new coin referred to in sub-section (1). In other wards
wherever the old legal tender, i.e., annas, pice and pies is mentioned in an
enactment it is to be converted into naya paisas and the naya paisas are to be
substituted in place of the old legal tender calculated in the manner laid down
in subsection (2)." Stress is placed on the last sentence but this cannot
be taken as the decision of the Court on the question that subsection (3) of s.
14 made reference not only to the rate of conversion but also to the mode of
calculation, as that question had not been considered in any manner. The last
sentence was a sort of a paraphrase of what had been said earlier in the
quotation with respect to the provisions of sub-section (3). This is clear from
the facts that the provisions of subsection (3) have not been stated in full,
and have been referred to upto the stage of reference-to the new coin referred
to in subsection (1) and that the last portion of the provisions of sub-section
(3), i.e., 'converted thereto at the rate specified in sub-section (2) has not
been mentioned. It is thus that the latter part of the observa326 tions
happened to refer to the method of calculation and not to the rate specified in
subsection (2). The Court was, at the time, thinking of the value of 3 pies in
terms of naye paise as calculated according to the provisions of subsection
(2), there being no contest before it that the value substituted to the
equivalent of 3 pies for assessing the tax was not a correct value for
substitution in place of 3 pies. We therefore do not construe the expression
relied upon by learned counsel for the appellant to be a decision of the Court
on the construction of the provisions of sub section (3) of s. 14 and are
therefore of opinion that the observations in that case cannot be taken to be a
decision of this Court on the actual point for determination now before us.
We therefore hold that the High Court is
right in construing the provisions of sub-section (13) of s. 14 of the Indian Coinage
Act to mean that references to values in any enactment, notification, rule or
order under any enactment or in any contract, deed or instrument, expressed in
old coins should be construed to be references to values expressed in new coins
by converting, the old values at the rate of 16 annas, 64 pice and 192 pies to
1 00 naye paise. We accordingly dismiss the appeals with costs.
SHAH, J.I am unable to agree with the view
expressed by my learned brother Raghubar Dayal, J., about the interpretation of
s. 14 which was incorporated by Act 31 of 1955 in the Coinage Act III of 1906.
For the assessment years 1956-57 and 1957-58
the appellant was assessed to sales tax in respect of "Vanaspati" and
"oil" under the U.P. Sales Tax Act XV of 1948, as amended by the U.P.
Act XXV of 1948. By a notification issued on March 31, 1956 under s. 3-A(2) the
rate of tax an "Vanaspati" was fixed at one anna per rupee, at the
point of sale by the manufacturer. Validity of that imposition was challenged
by the appellant, but the question is not now open to be canvassed in view of
the decision of this Court in J. K. Jute Mills Co. Ltd. v. State of Uttar
Pradesh(1). The only question which survives is about the (1) [1962] 2 S.C.R. 1
327 quantum of liability of the appellant under the notification, in terms of
the new decimal coinage introduced by Act 31 of 1955. The appellant has claimed
that its liability computed in the light of s. 14(3) of the Coinage Act would
be Rs. 34,385, less than the amount demanded by the Taxing Authorities. Section
13 of the Coinage Act III of 1906 (which was substituted by Act 28 of 1947 for
the original sections 13 and 14) in so far as it is material provides:
"(1) The coins issued under the
authority of section 6 shall be a legal tender in payment or on account,(a) in
the case of a rupee coin, for any sum;
(b) in the case of a half-rupee coin, for any
sum not exceeding ten rupees;
(c) in the case of any other coin, for any
sum not exceeding one rupee:
(2) * * *" Section 14 which added by Act
31 of 1955 provides:
"(1) The rupee shall be divided into one
hundred units and the new coin representing such unit may be designated by the
Central Government, by notification in the Official Gazette, under such name as
it thinks fit, and the rupee, half rupee and quarter-rupee shall be
respectively equivalent to one hundred, fifty and twenty-five such new coins
and shall, subject to the provisions of subsection (1) and sub-section (2) of
section 13 and to the extent specified the-rein, be a legal tender in payment
or on account accordingly.
(2) All coins issued under the authority of
the Act in any denominations of annas, pice and pies shall to the "tent
specified in section 13, be 328 a legal tender in payment or on account at the
rate of sixteen annas, sixty-four pice or one hundred and ninety-two pies to
one hundred new coins referred to in sub-section (1) calculated in respect of
any such single coin or number of such coins, tendered at one transaction, to
the nearest new coin, or where the new coin above and the new coin below are
equally near to the new coin below.
(3) All references in any enactment or in any
notification, rule or order under any enactment or in any contract, deed or
other instrument to any value expressed in annas, pice and pies shall be
construed as references to that value expressed in new coins referred to in
sub-section (1) converted thereto at the rate specified in sub-section
(2)." Sub-section (1) of s. 14 declares a rupee as equivalent to a hundred
new coins, and a half-rupee and a quarterrupee as equivalent to fifty new coins
and twenty-five new coins respectively. These new coins are made legal tender
in payment or on account as provided in s. 13 of the Act. By sub-section (2)
all coins issued under the authority of the Act in denominations of annas, pice
and pies also remain legal tender in payment or oil account at the rate of
sixteen annas, sixty-four pice or one hundred and ninetytwo pies to one hundred
new coins. An anna is therefore made legal tender for 2514, a pice for 25116,
and a pie for 25148 new coins. But this involves adjustment of fractions of new
coins, and the Legislature has, instead of issuing fractions of new coins a step
which would have involved the issue of coins of insignificant value--provided
for rounding off fractions of new coins, when to discharge an ascertained
liability in a single transaction payment is made in annas, pice or pies. This
table of equivalence prescribed by subsection (2), however, applies only when
payment is made in old coins to discharge liability under a single transaction.
Sub-section (3) is an interpretation clause.
Where under any law, contract or instrument, reference is made 329 to annas,
pice or pies, liability arising in any transaction governed thereby will be
construed in terms of new coins converted at the rate specified in sub-section
(2). This conversion involves two steps: substitution of the value in terms of
new coins by the application of rates mentioned in sub-section (2), and
rounding off the fractions, if any, resulting from such application. When there
is in any law, ,contract or instrument a reference to any value expressed in
terms of annas, pice or pies, by sub-section (3) the reference has to be
construed as if the value is expressed in terms of new coins at the rates
specified in sub-section (2).
Liability to pay an amount in one transaction
ascertained in terms of new coins may be discharged under subsection (2) by tender
of annas, pice or pies according to the table of equivalence and the fractions
may be rounded off. But in the ascertainment of liability under a transaction,
subsection (2) does not come into play. Liability under a transaction is
ascertained under the general law, and subsection (3) comes in aid as an
interpretation clause when the value is expressed in some law, contract or
instrument governing a transaction not in terms of new coins, but of annas,
pice or pies. Sub-section (3) does not attract the rule of rounding off at the
stage of discharge of liability under any concrete transaction: it merely
prescribes the value which shall be deemed to be substituted in any law,
contract or instrument when the value is specified therein in terms of annas,
pice or pies. It is attracted when liability declared in annas, pice or pies is
to be ascertained in terms of new coins whereas sub-section (2) operates in
considering whether a certain payment in annas, pice or pices discharges an
ascertained liability.
There is nothing in the statute which
supports the view that what the Legislature intended by enacting sub-section
(3) was computation of liability in terms of old coins and then conversion and
rounding off of the total liability in terms of new coins. To interpret clause
(3) in that manner would be to denude it of its true purpose as an
interpretation clause, and to render it practically nugatory. If sub section
(3) is merely intended to serve as determinative of 330 total liability under a
transaction, the purpose is amply served by sub-section (2).
The view I have expressed also finds support
from a judgment of this Court in M/s. Mangalore Ganesh Beedi Works v. The State
of Mysore and another(1). In that case, sales-tax was imposed under the Mysore
Sales Tax Act 6 of 1948 at the -rate of three pies for every rupee of the
turnover' On the application of s. 14 of the Indian Coinage (Amendment) Act, 1955, sales-tax
leviable under the Mysore Sales Tax Act was computed at the rate of two new
coins per rupee of the turnover, and a demand for RS. 1,16,72-44 was made. The
tax-payer contended that he was liable to pay Rs. 91,690 only being the amount
of total tax liability computed at the rate of 3 pies per rupee of turnover. He
challenged the additional demand by a petition in the High Court of Mysore on
the plea that the Act which altered the incidence was a taxing measure and could
only be enacted after complying with the provisions of Arts. 198, 199 and 207
of the Constitution relating to money bills, and the Mysore Existing Laws
(Construction of Reference to Values) Act 12 of 1957 which gave effect to the
amendment made by Act 31 of 1955. dealt with "coinage and legal
tender", and was not within the competence of the State Legislature. In
dealing with these contentions, this Court summarised the scheme of clauses
(1),(2) and (3) of s. 14 and observed:
"Sub-section (3) provides that all
references under any enactment to annas, pice or pies have to be construed as
reference to the new coin referred to in sub-section (1). In other words,
wherever the old legal tender, i.e., annas, pice and pies is mentioned in an
enactment it is to be converted into naya Paisas and the naya Paisas are to be
substituted in place of the old legal tender calculated in the manner laid down
in subsection (2)." The Court rejected the claim of the tax-payer that he
was liable to pay tax computed at the rate of three pies per (1) [1963] Supp. 1
S.C.R 275.
331 rupee only. If sub-section (3) of s. 14
was susceptible of the interpretation submitted on behalf of the State of Uttar
Pradesh, it was wholly unnecessary to enter upon the question of the vires of
the provisions, because between the computation of sales-tax on a total
turnover of Rs.
58,36,422.25 nPs at 2 naye Paise, and at the
rate of 3 pies per rupee in the manner suggested, there would have resulted no
discrepancy at all, and the contention of the tax-payer that he was liable to
pay Rs. 91,690 had to be accepted.
But this Court upheld the claim of the Sales
Tax Department that the computation had to be made by substituting two naye
Paise in the section of the Mysore Sales Tax Act, which imposed liability for
payment of tax, and the total demand for tax computed on the footing of that
substitution was properly made. If the interpretation which is now suggested on
behalf of the State be accepted, the assessee in Mangalore Ganesh Beddi Works'
Case(1) was bound to succeed.
In the present case by the notification
issued on March 31, 1956, the liability for payment of sales-tax was to be
computed at the rate of one anna in a rupee of the turnover.
By virtue of s. 14(3) of the Indian Coinage
Act, for an anna mentioned in the notification 61 now coins will be
substituted. But as the substituted rate involved a fraction by the process of
rounding off at the rate specified in sub-section (2), the fraction of new
coins will be omitted and the nearest new coins i.e., six new coins will be
deemed to be substituted in the statute. Liability for sales-tax after the
amendment of the Coinage Act will, therefore, be at the rate of 6 new coins for
every rupee of sale price.
ORDER BY COURT In view of the judgment of the
majority, the appeals we dismissed with costs.
(1) [1963] SUPP. 1 S.C.R. 275.
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