Ashok Service Centre & ANR Vs.
State of Orissa [1983] INSC 14 (18 February 1983)
VENKATARAMIAH, E.S. (J) VENKATARAMIAH, E.S.
(J) SEN, A.P. (J) MISRA, R.B. (J)
CITATION: 1983 AIR 394 1983 SCR (2) 363 1983
SCC (2) 82 1983 SCALE (1)123
CITATOR INFO :
R 1985 SC1211 (5)
ACT:
Orissa Sales Tax Act, 1947-Section 8-Orissa
Additional Sales Tax Act, 1975 as amended in 1979-Section 3(2)-Levy of tax
under the amending Act of 1979 subject to section 8 of the 1947 Act-Section
3(2) provided that provisions of 1947 Act apply mutatis mutandis in relation to
additional tax as if they apply in relation to the tax payable under the
Principal Act-The two Acts, if should be read together.
Interpretation-mutatis mutandis-Meaning
of-Words fn an Act are clear-If open to court to go fn search of the intention
of the Legislature-Later of two Acts provides that the two are to be read-
together-Whether every part of each Act must be construed as if the two Acts
had been one.
Words and phrases: Mutatis mutandis-Meaning
of.
HEADNOTE:
The proviso to section 8 of the Orissa Sales
Tax Act, 1947 (Principal Act) lays down that the same goods cannot be taxed
under it at more than one point in the same series of sales or purchases by
successive dealers. In 1975 the State Legislature enacted the Orissa Additional
Sales Tax Act (the Act) levying additional sales tax on certain classes of
dealers. In 1979 the State Legislature amended the Act by the Orissa Additional
Sales Tax (Amendment) Act, 1979 by which sections 2 and 3 of the Act were substituted
by new sub-sections 2 and 3. After the amendment section 3 of the Act provided
that every dealer shall, in p addition to the sales tax payable by him for 3
year under the said Act be liable to pay additional tax at such rate not
exceeding one per cent of his gross turnover (excluding the gross turnover
which relates to sale and purchase of declared goods) for that year as may be
notified from time to time by the State Government. By a notification the State
Government notified the rates of additional tax payable under section 3 of the
Act as amended in 1979 at one half per cent of the annual gross turnover.
Sub-section (2) of section 3 made it clear that the provisions of the Principal
Act would mutatis mutandis apply in relation to the additional tax as if they
apply in relation to the tax payable under the Principal Act.
Construing section 3 of the Act-after its
amendment, the State Government took the view that the new levy was in the
nature of a multi point tax and that every dealer was liable to pay additional
tax on his annual gross turnover irrespective of its taxability. under the
Principal Act.
364 In a number of writ petitions filed
before the High Court by dealers it was A contended that section 8 of the
Principal Act which prohibited the levy of tax at more than one point in the
same series of sales or purchases by successive dealers was applicable to the
additional tax leviable under the Act as amended in 1979.
Without referring to the effect of the
provisions of section 3 of the Act the High Court held that since the Principal
Act and the Act as amended in 1979 had been passed by a competent legislature
providing for a different base and for a different scheme it was not open to
the assessee to rely upon any of the provisions of the Principal Act relating
to incidence and levy of tax.
In appeal to this Court it was contended on
behalf of the appellants that wherever there was no express provision to the
contrary in the Act the provisions of the Principal Act, including those
relating to the incidence and levy of tax should apply to the additional tax
also.
The Department on the other hand contended
that section 3(2) of the Act was intended only to make those provisions of the
Principal Act relating to assessment and collection of tax applicable to
proceedings under the Act and no part of section 33 to section 8 of the
Principal Act would be applicable to the levy of additional tax.
Allowing the appeals,
HELD: If the contention of the Department
that only the machinery provisions of the Principal Act become applicable to
the proceedings under the Act is accepted it would lead to many anomalies. [377
F] Section 8 of the Principal Act which begins with a non- obstante clause is
given an over-riding effect over the rest of the provisions of the Principal
Act. Levy of tax at a single prescribed point and prohibition against levy of
tax at more than one point is an important characteristic of the scheme of the
Principal Act. [370 C-D] The Act was virtually in the nature of an amendment of
the Principal Act. The additional sales tax payable by dealers specified in
section 2(a), (b) and (c) as originally enacted was in the nature of an
enhancement of their liability to pay tax under the Principal Act by specified
percentages but they were prohibited from passing on the incidence of
additional tax to the purchasers. [372 E-F] Although the provisions of the Act
could have been incorporated in the Principal Act itself, by the introduction
of sections 2 and 3 in the Principal Act, the State Legislature passed a
separate Act. But it was made clear by section 3(2) of the Act that the
provisions of the Principal Act would mutatis mutantis apply in relation to the
additional tax as they apply in relation to the tax payable - under the
Principal Act. The two Acts, i.e., the Principal Act and the Act as originally
enacted had to be read together in order to make the provisions contained in
the Act effective. This position continued up to the coming into force of the
Amending Act on April 1, 1979 by which sections 2 and. 3 of the Act wore
substituted by new sections 2 and 3. [373 G-H, 374 A-C] 365 With the
substitution of section 3(2) in 1979 the prohibition of passing of the
additional tax, which existed formerly was removed. Secondly the additional
tax, instead of being an enhancement of the tax payable by a dealer by a
certain percentage, became a percentage of the annual turnover of a dealer.
Both the statement of objects and reasons and the Amending Act were silent on
the question whether the additional tax payable after the amendment was a multi
point levy or a single point levy as also on the classes of dealers liable to
pay additional tax. [375 F-H]
2. The view of the High Court that the two
Acts were independent of each other was not correct. It is necessary to read
and to construe the Principal Act and the Act together as if the two wore one,
and while doing so to give effect to the provisions of the Act which is a later
one in preference to the provisions of the Principal Act wherever the Act has manifested
an intention to modify the Principal Act. [377 B-C] The definition of mutatis
mutandis given in legal dictionaries is "with the necessary changes in
points of detail meaning that matters or things are generally the same, but to
be altered when necessary" as to names, offices and the like. [378 E-F]
Extension of an earlier Act mutatis mutandis to a later Act brings in the idea
of adaptation, but so far only as it is necessary for the purpose, making a
change without altering the essential nature of the thing changed, subject to
express provisions made in the later Act. [378 H, 379 A] In the instant case
section 3(2) of the Act shows that the State Legislature intended not to depart
substantially from the Principal Act except with regard to matters in respect
of which express provision had been made in the Act.
Though the Act had the usual features of a
state, it could not be considered as an independent statute but must be read
together with the Principal Act to be effective. [379 A-C] Earl Jowitt's The
Dictionary of English Law (1959);
Black's Law Dictionary (revised 4th edn.
(1968) Bouvier's Law Dictionary (3rd Revision) Vol. II, referred to the
additional tax levied under the Act could be passed on to consumer after the
amendment. The object of the amendment made in 1979 as set out in the statement
of objects and reasons was to rationalise the scheme of additional sales-tax
and to introduce flexibility in The implementation of the Act. If the object of
the amendment was to make the additional tax a multi-point levy, nothing was
easier than using the appropriate words in the Act by excluding the application
of section 8 of the Principal Act expressly in section 3(2) of the Act. In the
absence of any such words in the Act, by reason of section 3(2) of the Act
section 8 of the Principal Act must be construed as being applicable to the
levy of an additional tax also. The gross turnover referred to in section 3(1)
should, therefore, be understood as that part of the gross turnover which is
taxable under the Principal Act. [380 A-G] If section 3(1) is read as
"every dealer (who is liable to pay tax under the Principal Act) shall in
addition to the tax payable by him for a year under the 366 said Act, be liable
to pay additional tax at such rate not exceeding one per cent of his gross
turnover which is taxable under the Principal Act) for that year as may be
notified from time to time by the State Govt.. " there would not be any
anomaly. On the other hand it would effectuate the intention of the legislature.
[381 A-B] It is true that if the words used in a statute are clear it is not
open to the Court to go in search of the intention of the legislature and to
arrive at a meaning different from what the words of the statute convey. When
the Act is read as a whole it becomes inevitable that it has to be read
together with the Principal Act. It is a well settled principle of construction
that where the later of the two Acts provides that the two are to be read
together every part of each Act must be construed as if the two Acts had been
one, unless there is some manifest discrepancy making it necessary to hold that
the later Act has, to some extent, modified the provisions of the earlier Act.
When section 3(1) of the Act is read in the light of sub-section 2 thereof,
section 8 of The Principal Act which prescribes a single point levy becomes
immediately attracts. [381 C-f] The argument that since section 8 of the
Principal Act opens with the words "notwithstanding anything to the
contrary in 'this Act" the operation of that section should be confined to
the tax payable under the Principal Act and could not be extended to the
additional tax payable under the Act has no force. When the Principal Act was
enacted, section 8 could apply only to the liability under the Principal Act,
but by reason of section 3(2) of the Act, section 8 has been made applicable to
the levy, assessment and collection of additional tax under the Act. If this
argument is accepted many provisions of the Principal Act which are necessary
for making the levy under the Act effective would become inapplicable, as for
example section 13 relating to the machinery for recovery of tax and penalty.
[381 F-H, 382 A] The second proviso to section 3(1) of the Act does not in any
way curtail the effect of section 3(2) of the Act which forms an integral part
of the charming section.
Consequently any exemption granted under
sections 6 and 7 of the Principal Act would also be applicable in the case of
levy of additional tax under the Act. [382 C-D]
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 1408- 16, 2650-67, 2498-2524, 2640-47, 1874-79, 2127-38 and 3255 of 1982.
Appeals by special leave from the Judgements
and orders dated the 4th and 5th February, 1982 of the Orissa High Court in
original Jurisdiction Case Nos. 1391 of 1979, 218, 320/1981, 2060, 2051/80,
35/81,525/80, 1567 and 1569/80, 1196,319, 1194, 1162, 1658 337, 2044, 1905,
1168, 1766, 1165, 1166, 336, 1659, 1662, 1884, 1161, and 1159 of 1981, 694,
1031, 945, 944, 400, 617, 375, 697, 616/81, 2015 and 2016/80, 118, 1935, 2803,
1646, 1647, 2831, 2167, 59, 1637, 602, 603, 695, 1224, 1195, 1230, 60, 1360,
1359, 1393, 1394, 604, 2152 of 1981, 846/80, 57/81, 1464/80, 595, 797, 1538,
1537 of 1981, 367 1584/80, 676, 677 of 1981, 1008/80, 1009/80, 2379/ 81, 915/80,
A 235/81,236/81, 1837/80, 1839/80, 1533/79, 1649/81 and 535 of 1981.
A.B.Divan, A.K. Sen, Shankar Ghose, P.R.
Mridul and S.T. Desai, Talat Ansarl, Ashok Sagar, Sandeep Thakore, Ms.
Rainu Walia, D.N. Mishra, D.P. Mukherjee, J.
R. Das M.C. Dhingra, Laxmi Rant Pandey, B.R. Agarwala, Miss Vijaya- lakshmi
Menon, U.P. Singh, B.B. Singh, B.S. Chauhan, Anil Kumar Sharma, Praveen Kumar,
A.T. Patra, Vineet Kumar, A.R. Jha, M.P. Jha, R.S Sodhi, Hardev Singh, A.
Minocha, Mrs. Indu Goswamy S.R. Sinha, Vinoo Bhagat, P.N. Mishra, R.R. Jain and
Pramod Dayal, for the Appearing Appellants.
K. Parasaran, Sol. Genl. C. Rath, Advocate
General for the State of Orissa, S. Rangarajan and M.C. Bhandari, F.S. Nariman,
CSS Rao, Pramod Swarup, R.B. Mahto, U.S. Prasad, A.R Panda and R.K. Mehta for
the appearing Respondents.
The Judgment of the Court was delivered by -
VENKATARAMIAH, J. The usual complaint against some of tho modern fiscal
statutes is that they are unduly long and therefore complex. But here we have
an orissa Act which is very short but clarity is not certainly its virtue.
The only point for determination in
these'appeals by special leave is whether the levy of additional tax under the
Orissa Additional Sales Tax Act, 1975 (Orissa Act 24 of 1975) (hereinafter
referred to as 'the Act') as amended by the orissa Additional Sales Tax
(Amendment) Act, 1979 (hereinafter referred to as 'the Amending Act') is a
single point levy or a multi point levy.
In order to understand the contentions of the
parties it is necessary to give briefly the legislative history of the sales
tax law of the State of orissa and to refer to some of its salient points.
The orissa Sates Tax Act, 1947 (orissa Act
XIV of 1947) (hereinafter referred to as the Principal Act') was enacted and brought
into force in the year 1947. It has continued to remain in force even now,
although a number of changes have been introduced into it by successive
legislative amendments It is a law intended for levying taxes on the sale or
purchase of goods other than newspapers subject to the provisions of Entry
92-A, of List I of the Seventh Schedule to the 368 Constitution. Section 3-B,
4, 4-A, 5, 6, 7 and 8 of the Principal Act together lay down the extent of the
charge Section 4 (1) of the Principal Act read:
"4 (1) Subject to the provisions of
sections 3-B, S, 6, 7 and 8 and with effect from such date as the State
Government may, by notification, in the Gazette, appoint, being not earlier
than 30 days after the date of the said notification, every dealer whose gross
turnover during the year immediately preceding the date of commencement of the
Orissa Sales Tax (Amendment) Act, 1981 exceeding Rs. 50,000 shall be liable to
pay tax under this Act on sales and purchases effected after the date so
notified." This provision imposes the liability to pay tax in accordance
with the provisions of the Principal Act on every dealer whose gross turnover
during a fiscal year exceeds Rs 50,000 According to section 2(dd) of the
Principal Act 'gross turnover' means the total of D, 'turnover OF sales' and
'turnover of purchases', ' turnover of sales is defined in section 2 (i) of the
Principal Act a, the aggregate of the amounts of sale prices and tax. if any,
received and receivable b, a dealer in respect of sale or supply of goods other
than those declared under section 3-B of the Principal Act and 'turnover of
purchases' is defined in section 2 (j) of the Principal Act as the aggregate of
the amounts of purchase prices paid and payable by a dealer in respect of the
purchase or supply of goods or classes of goods declared under section 3-B of
the Principal Act. Sub-sections (2) to (5) of section 4 of the Principal Act
deal with the point of time at which such dealer would become liable to pay
tax, the period during which he would remain liable to pay the tax and the time
at which he would cease to be liable to pay tax after his annual gross turnover
has failed to exceed Rs. 50,000. Unless he is a casual dealer as defined in
section 2(bb) of the Principal Act who is liable to pay tax irrespective of his
gross turnover as provided in section 4- A of the Principal Act, every dealer
would become liable to pay tax under the Principal Act only when his gross
turnover exceeds Rs. 50,000, otherwise not. The expression 'dealer is defined
in section 2 (c) of the Principal Act as a person who carries on the business
of purchasing, selling, supplying or distributing, goods, directly or
otherwise, whether for cash, or for deferred payment or for commission,
remuneration or other valuable consideration and includes others mentioned in
that clause It may be noted that this definition does not specify the extent of
the gross turnover of such person as a 369 qualification for being treated as a
dealer. Every person who carries A on the activities specified in section 2 (c)
of the Principal Act is a dealer for purposes of the Principal Act. Section
2(f) of the Principal Act defines the expression 'registered dealer' as a
dealer registered under it. Section 9 of the Principal Act imposes the
obligation on every dealer who is liable to pay tax under section 4 of that Act
to register himself and to obtain a registration certificate. On such of
registration he becomes a registered dealer. Section 9-B (l) (a) of the
Principal Act lays down That no person who is not a registered dealer shall
collect in respect of any sale by him any amount by way of tax under the
Principal Act and a registered dealer can collect such tax only in accordance
with the said Act and Rules made thereunder. Section 9-A of the Principal Act,
however, provides for voluntary registration of a dealer whose annual gross
turnover exceeds Rs 10,000 even though he is not liable to pay tax under
section 4 of that Act and every such dealer on such registration is entitled to
collect tax under that Act and to pay it to Government as long as such
registration remains in force. There are corresponding provisions made in
section 9-C of the Principal Act for provisional registration of certain other
kinds of dealers Section IO of the Principal Act provides for the publication
of the list of registered dealers Any other dealer cannot collect tax from his
customers. There are other provisions in the Principal Act providing for the
machinery for assessment and recovery of the tax due under it. Before proceeding
further it is necessary to quote section 8 of the Principal Act. It reads:
"8. Power of the State Government to
prescribe points at which goods may be taxed or exempted.
Notwithstanding anything to the contrary in
this Act, the State Government may prescribe the points in the series of sales
or purchases by successive dealers at which any goods or classes or
descriptions of goods may be taxed or exempted from taxation and in doing so
may direct that sales to or purchases by a person other than a registered
dealer shall be exempted from taxation:
Provided that the same goods shall not be
taxed at more than one point in the same series of sales or purchases by
successive dealers.
Explanation-Where in a series of sales, tax
is prescribed to be levied at the first point, such point, in respect of 370
goods dispatched from outside the State of Orissa shall mean and shall always
be deemed to have meant the first of such sales effected by a dealer liable
under the Act after the goods are actually taken delivery of by him inside the
State of orissa." The proviso to section 8 of the Principal Act which is
of considerable significance in these cases clearly lays down that the same
goods cannot be taxed under the Principal Act at more than one point in the same
series of sales (or purchases) by successive dealers. Section 8 of the
Principal Act which begins with a non-obstante clause is given an over-riding
effect over the rest of the provisions of the Principal Act and the proviso
found in it also naturally has a similar over-riding effect. Levy of tax at a
single prescribed point and prohibition against levy of tax at more than one
point is an important characteristic of The scheme of the Principal Act and
such prescription was introduced deliberately by the State Legislature to
prevent hardship to consumers which would be caused by the gradual increase of
prices as the goods pass from dealer to dealer before they reach the consumer
which would be the natural result of a multi-point levy of sales tax and also to
make collection of sales tax more convenient. Even though the language of
section 8 of the Principal Act by itself was sufficient to prevent a
multi-point levy and to prescribe a single point levy in order to emphasis the
principle of single point levy of tax, section 4 (1) of the Principal Act was
expressly made subject to section 8.
When such was the position, with a view to
augmenting the resources of the State Government the Orissa Legislature enacted
the Act in the year 1975 levying additional sales tax on certain classes of
dealers The Act as it was originally passed read thus:
"ORISSA ACT 24 OF 1975 THE ORISSA
ADDITIONAL SALES TAX
ACT, 1975
AN ACT TO PROVIDE FOR LEVY OF ADDITIONAL TAX
ON SALE OR
PURCHASE OF GOODS IN ORISSA Be it enacted by
the Legislature of the State of Orissa in the Twenty-sixth Year of the Republic
of India, as follows:
371
1. (1) This Act may be called the Orissa
Additional A Sales Tax Act. 1975.
(2) It shall extend to the whole of the State
of orissa.
(3) It shall be deemed to have come into
force on the 1st day of April, 1975.
2. (1) The tax payable by a dealer for a year
under the orissa Sales Tax Act, 1947 (hereinafter referred to as the said Act)
shall be increased by an additional tax at the rate of - C (a) two percent of
the tax, if his gross turnover for that year does not exceed one lakh of
rupees;
(b) three percent of the tax, if his gross
turnover for that year exceeds one lakh of rupees but does not exceed five
lakhs of rupees; D (c) five percent of the tax, if his gross turnover for that
year exceeds five lakhs of rupees - Provided that where in respect of declared
goods the tax payable by such dealer under the said Act together with the
additional tax payable under this sub-section exceeds the maximum percentage of
the sale or purchase price thereof specified, from time to time, under clause
(a) of section 15 of the Central Sales Tax Act, 1956, the rate of additional
tax in respect of such goods shall be reduced to such an extent that the tax
and the additional tax together shall not exceed such maximum percentage of the
sale or purchase price of such goods.
Explanation-"Declared goods" shall
have reference to declared goods as defined in the Central Sales Tax Act, 1956.
(2) The provisions of the said Act shall,
mutatis mutandis apply in relation to the said additional tax as they apply in
relation to the tax payable under the said Act.
(3) Notwithstanding anything contained in the
said Act, no dealer referred to in sub-section (I) shall be entitled to collect
the additional tax Payable under this Act.
3. (1) Any dealer who collects the additional
tax pay able under this Act, in contravention of the provisions of sub-section
(3) of section 2 shall be punishable with fine which may extend to one thousand
rupees.
(2) No Court inferior to that of a Judicial
Magistrate of the first class shall try an offence under this Act.
4. (1) The State Government may make rules
for carrying out the purposes of this Act.
(2) All rules made under this Act shall, as
soon as may be after they are made, be laid before the State Legislature for a
total period of fourteen days which may be comprised in one session or in two
or more successive sessions and if during the said period the State Legislature
makes modifications, if any, therein, the rules shall thereafter have effect
only in such modified form; so, however, that such modifications shall be
without prejudice to the validity of anything previously done under the
rules." A reading of the Act shows that it was virtually in the nature of
an amendment of the Principal Act. It, however, followed the pattern of the
Tamil Nadu Additional Sales Tax Act. 1970, the validity of which arose for
consideration in S. Kodar v. State of Kerala('). The additional sales tax
payable by the dealers specified in clauses (a), (b) and (c) of section 2 of
the Act as it was originally enacted was in the nature of an enhancement of
their liability to pay tax under the Principal Act by the specified percentages
but they were prohibited from passing on the incidence of addition tax to the
purchasers. The Statement of objects and Reasons attached to the Bill which was
latter on enacted as the Act read thus:
"STATEMENT OF OBJECTS AND REASONS To
mobilise additional resources for the Plan, it has been proposed to impose an
additional sales tax in addition to the sales tax payable by dealers under the
general sales tax law of the State. This additional sales tax may be said to be
in the nature of surcharge on the State sales tax payable by dealers.
2. The proposed legislative measure contains
a pro vision that the incidence of the tax cannot be passed on to consumers.
Perhaps, a view may be taken that the proposed additional tax would be added to
the price of goods sold and thereby jack up prices. But as this additional
sales tax would be on a graded scale and a specific provision is proposed to be
made in the Act debarring dealers to pass on the incidence to consumer, it will
be difficult for dealers to pass on the incidence of this tax to consumers. It
may not be possible to increase the price of goods by an amount equivalent to
the amount of additional sales tax as there is statutory price control in
respect of certain goods and where there is no statutory price control; there
is keen competition between dealers for sale of goods. Moreover, the rate of
the additional sales tax on big dealers will be more than that in the case of
small dealers. To meet the competition from the small dealers, the big dealers
cannot increase the price of goods so as to recoup themselves, of the amount of
additional sales tax paid by them. Moreover, if dealers increase the price of
goods so as to recoup themselves, they will be liable to pay more sales tax
under the general sales tax law of the State and their turnover will also
increase as a result of which the rate of additional sales tax may be more.
Besides, if they increase the price exceeding the amount of additional sales,
their profit will increase as a result of which they will be liable to pay more
income tax. It may not, therefore, be a pragmatic step to pass on the incidence
of this new tax to consumers.
3. The Bill seeks to achieve the above
objective." F The contents of the above Statement of objects and Reasons
chow the concern of the mover of the Bill regarding the likely increase in the
burden on the consumers by reason of the probable escalation in the prices of
Bonds as a result of the new levy.
The provisions of the Act set out above could
have very well been incorporated in the Principal Act itself by the
introduction of sections 2 and 3 set out above in the Principal Act. But the
State Legislature following the pattern of the Tamil Nadu Act referred to above
passed a separate Act. It was, however, made clear by section 2 (2) thereof
that the provisions of the Principal Act would mutatis 374 mutandis apply in
relation to the additional tax as they apply in relation to the tax payable
under the Principal Act. The additional tax thus levied being only an
enhancement of the tax payable under the Principal Act by a specified percentage;
it did not affect the general scheme of the Principal Act including the
principle of single point levy contained in section 8 of the Principal Act. The
two Acts i.e. the Principal Act and the Act as it was originally enacted had to
be read together in order to make the provisions contained in the Act
effective. This position continued up to the corning into force of the Amending
Act on April 1 1979 by which sections 2 and 3 of the Act were substituted by
new sections 2 and 3. After such Amendment, sections 2 and 3 of the Act read
thus - "2. In this Act, unless the context otherwise requires- (a)
"declared goods" shall have the same meaning as in clause (c) of
section 2 of the Central Sales Tax Act, 1956;
(b) words and expressions used but not
defined shall have the same. meanings as are respectively assigned to then in
the Orissa Sales Tax Act, 1947 (hereinafter referred to as the said Act).
3. (1) Every dealer shall, in addition to the
tax payable by him for a year under the said Act, be liable to pay additional
tax at such rate not exceeding one percent of his gross turnover for that year,
as may be notified, from time to time, by the State Government;
Provided that no additional tax as aforesaid
shall be payable on that part of the gross turnover which relates to sale and
purchase of declared goods:
Provided further that the State Government
may, by notification, subject to such conditions and restriction, if any,
exempt any class of dealers or the turnover relating to any goods or class of
goods from the levy of the additional tax and likewise withdraw any such
exemption.
(2) The provisions of the said Act shall,
mutatis mutandis apply in relation to the said additional tax as they apply in
relation to the tax payable under the said Act." 375 Sections 1 and 4 of
the Act however remained as before.
After the above amendment, section 2 took the
form of the interpretation clause of the Act. Clause (a) of section 2 defined
the expression 'declared goods' and clause (b) provided that the words and
expressions used but not defined shall have the same meanings-as are
respectively assigned to them in the Principal Act. Section 3, however, altered
the pattern of levy of additional sales tax from what it was when the Act was
passed in 1975. The object of the alteration is set out in the statement of
objects and Reasons attached to the Bill which later became the Amending Act.
It read thus:
'STATEMENT OF OBJECT AND REASONS With a view
to rationalising the scheme of additional sales tax it is proposed to amend the
Orissa Additional Sales Tax Act, 1975 to facilitate wider application of first
point levy and introduction of flexibility in the implementation of the Act.
2.The Bill seeks to achieve the above
objectives".
Section 3 of the Act after the amendment
provided that every dealer shall, in addition to the tax payable by him for a
year under the said Act, be liable to pay additional tax at such rate not
exceeding one percent of his gross turnover (excluding the gross turnover which
relates to sale and purchase of declared goods) for that year as may be
notified from time to time by the State Government. By a notification dated
March 23, 1979, the State Government notified the rate of additional tax
payable under section 3 of the Act as amended in 1979 at one-half percent of
the annual gross turnover. The prohibition of the passing of the additional,
tax which existed formerly was removed. One significant change which was
brought about by the amendment was that the additional tax instead of being an
enhancement of the tax payable by a dealer by a certain percentage became a
percentage of the annual turnover of a dealer. Both the Statement of objects
and Reasons and the Amending Act were however, silent on the question whether
the additional tax payable after the amendment was a multi-point levy or single
point levy. They were also silent on the class of dealers who were liable to
pay additional tax. Controversies arose between the Department and many of the
assesssees on the construction of section 3 of the Act after its amendment. The
stand of the State Government was that every dealer was liable to pay
additional tax on his annual gross 376 turnover irrespective of its taxability
under the Principal Act. The State Government claims that the new levy was in
the nature of a multi point tax. A number of writ petitions were filed before
the High Court of Orissa raising a number of contentions including some
relating to the constitutionality of the amended Act. All the petitions were
dismissed by the High Court. The main judgment was delivered in O.J. Case No.
1391 of 1979, filed by M/s. Ashok Service Centre.
Following that judgment, the other writ
petitions were dismissed. These appeals are filed against the decision of the
High Court with the special leave of this Court.
In these appeals, the only contention pressed
before us relates to the applicability of section 8 of the Principal Act which
prohibits the levy of tax at more than one point in the same series of sales or
purchases by successive dealers in the State of Orissa to the additional tax
leviable under the Act as amended in 1979. The High Court negatived the said
contention on the ground that since both the Principal Act and the Act as
amended in 1979 had been passed by a competent legislature providing for a
different base and for a different scheme and because they happened to be two
independent Acts, it was not open to the assessees to rely upon any of the
provisions of the Principal Act relating to incident and levy of tax in support
of their contention. The High Court observed in para 8 of the judgment thus:
"8. On an analysis of Section 3 (1) of
the Act it is also clear that the legislative intention is to raise a tax in
addition to the liability under the 1947 Act. If the liability under the 1947
Act in respect of a dealer is taken as `X'. Section 3 (1) of the 1975 Act
creates an additional liability which has to be within one percent of the gross
turnover for that year (the State Government at present has prescribed half
percent which may be taken as 'Y'). 'Y' is an additional liability and,
therefore, has been nomenclatured as additional tax. Under the 1947 Act, the
dealer's liability to sales tax is on the basis of his taxable turnover which
is determined in the manner prescribed by that Act. Under the 1975 Act, the
liability of the dealer is with reference to his gross turnover of the year. It
was competent for the sovereign Legislature to adopt either of the methods for
raising sales tax.
While sustaining the scheme under the 1947
Act, it could also raise an additional tax on the gross 377 turnover and
combine the two for the purposes of computation as also recovery. In the
premises, the submission of Mr. Agarwala on this score has also no force."
The High Court was of opinion that the Act being an independent Act it could
not be read subject to the provisions of the Principal Act. It may, however, be
noticed that there is no reference in the judgment of the High Court to the
effect of the provisions of section 3 (2) of the Act which forms part of the
charging section and provides that the provisions of the. Principal Act shall
mutatis mutandis apply in relation to the additional tax levied under the Act
as they apply in relation to the tax payable under the Principal Act. There is
also no reference in the judgment of the High Court to section 8 of the Principal
Act.
It is urged on behalf of the appellants
before us depending upon section 3 (2) of the Act that wherever there is no
express provision to the contrary in the Act, the provisions of the Principal
Act including those relating to incidence and levy of tax should apply to the
additional tax also. On behalf of the State Government, it is urged that
section 3 (2) of the Act is intended only to make those provisions of the
Principal Act relating to the assessment and collection of tax applicable to the
proceedings under the Act and no part of sections 3-B, 4, 4-A, 5, 6, 7 and 8 of
the Principal Act would be applicable to the levy of additional tax.
We may straight away say that the contention
of the Department leads to some anomalies. Section 3 (1) of the Act states that
every dealer shall, in addition to the tax payable by him for a year under the
Principal Act liable to pay additional tax at such rate not P exceeding one
percent of his gross turnover for that year as may be notified from time to time
by the State Government. If as stated in section 2 (b) of the Act, we define
the expression 'dealer' in section 3 (1) of the Act as provided in section 3
(c) of the Principal Act, and we do not apply the qualification of the minimum
annual gross turnover of Rs. 50,000 stipulated in section 4 (1) of the
Principal Act, then irrespective of his annual gross turnover every person who
carries on the business of purchasing, selling, supplying or distributing goods
directly or otherwise would become liable to pay additional tax even though he
may not be liable to pay any tax under the Principal Act. If he is not
registered as a dealer on account of his annual gross turnover being less than
the prescribed 378 minimum, he would not be able to collect the additional tax
in view of section 9-B of the Principal Act which says that no person other
than a registered dealer shall realise any amount by way of tax under the
provisions of the Principal Act. That could never have been the intention of
the State Legislature. The 'dealer' referred to in section 3 (1) of the Act
should be understood as a 'dealer' who is liable to pay tax under the Principal
Act as provided in section 4 (1) of the Principal Act. Next 'gross turnover
means the total of 'turnover of sales' and 'turnover of purchase'. If under
section 3 (1) of the Act, liability to pay additional tax just on the 'gross
turnover' a dealer has to pay additional tax on the aggregate of the purchases
of goods declared under section 3-B of the Principal Act and also on the
turnover of sales of other goods. To determine the gross turn over it becomes
necessary to read section 3-B of the Principal Act into the Act although the
said section deals with the liability of certain class of goods to tax under
the Principal Act. These anomalies show that the contention of the Department
that only machinery provisions of the Principal Act become applicable to the
proceedings under the Act cannot be accepted.
Section 3 (2) of the Act which makes the
provisions of the principal Act mutatis mutandis applicable to the levy of
additional tax is a part of the charging provision of the Act and it does not
say that only those provisions of the Principal Act which relate to assessment
and collection of tax will be applicable to the proceedings under the Act.
Before considering what provisions of the
Principal Act should be read as part of the Act, we have to understand the
meaning of the expression 'mutatis mutandis'. Earl Jowitt's 'The Dictionary of
English Law (1959)' defines 'mutatis mutandis' as 'with the necessary changes
in points of detail'. Black's Law Dictionary (Revised 4th Edn. 1968) defines
'mutatis mutandis' as 'with the necessary changes in point of detail, meaning
that matters or things are generally the same, but to be altered when necessary
as to names, offices, and the like. Houseman v. Waterhouse, 191 App. Div. 850,
112 N.Y.S 249, 251.' In Bouvier's Law Dictionary (3rd Revision, Vol. II), the
expression 'mutatis mutandis' in defined as '(T)he necessary changes. This is a
phrase of frequent practical occurrence, meaning that matters or things are
generally the same, but to be altered when necessary, as to names, offices, and
the like.
Extension of an 'earlier Act mutatis mutandis
to a later Act brings in the idea of adaptation, but so far only as it is
necessary for the purpose, making a change without altering the essential
nature of the 379 thing changed, subject of course to express provisions made
in the later Act. Section 3 (2) of the Act shows that the State Legislature intended
not to depart substantially from the Principal Act except with regard in
matters in respect of which express provision had been made in the Act. The
assumption made by the High Court that the Act was an independent Act having
nothing to do with the Principal Act is not correct. The Act only levied some
extra sales tax in addition to what had been levied by the Principal Act. The
nature of the taxes levied under the Act and under the Principal Act was the
same and the Legislature expressly made the provisions of the Principal Act
mutatis mutandis applicable to the levy under the Act. The additional sales tax
was in the nature of a surcharge over and above what was due and payable by
assessee under the Principal Act. The Act, though it had a long title, a short
title and other usual features of every statute, could not be, considered as an
independent statute. It had to be read together with the Principal Act to be
effective. In the circumstances the conclusion reached by the High Court that
the two Acts were independent of each other was wrong. We are of the view that
it is necessary to read and to construe the two Acts together as if the two
Acts are one, and while doing so to give effect to the provision, of the Act
which is a later one in preference to the provisions of the Principal Act
wherever the Act has manifested an intention to modify the Principal Act. The
following Observations of Lord Simonds in Fendoch Investment Trust Co. v.
Inland Revenue Commissioners(1) made in connection with the construction of
certain fiscal statutes are relevant here. He said at page 144:
"My Lords, I do not doubt that in
construing the latest of a series of Acts dealing with a specific subject
matter, particularly where all such Acts are to be read as one, great weight
should be attached to any scheme which can be seen in clear outline and
amendments in later Acts should if possible be construed consistently with that
scheme".
Originally when the Act was passed in 1975,
the Act levied an additional tax on dealers whose annual gross turnover did not
exceed rupees one lakh as two percent of the tax payable by them under the
Principal Act, on dealers those gross turnover exceeded rupees one lakh but did
not exceed rupees file lakhs at three percent 380 of the tax payable under the
Principal Act and on dealers whose gross turnover exceeded rupees five lakhs at
five percent of the tax payable under the Principal Act. Such additional tax
levied under the Act could not be passed on to consumers. The object of the
amendment made in 1979 was, as can be seen from the Statement of Objects and
Reasons, to rationalise the scheme of additional sales tax and to facilitate
'wider application of first point levy' and to introduce flexibility in the
implementation of the Act. What the words 'wider application of first point
levy' mean is not very clear the words 'first point levy' is no doubt a single
point levy. Even a last point levy in the same series of sales is a single
point levy which is distinguishable from a multi point levy. If the State
Legislature wanted that the new levy i.e. the additional tax should be a multi
point tax which had to be paid by every dealer irrespective of the fact that
the entire annual gross turnover in his hands may not be liable to bear the tax
under the Principal Act, it would have expressly said so as it would have
amounted to a substantial departure from the general scheme of the Principal
Act as set out in the proviso to section 8 of thereof which stipulated that no
goods should suffer tax which could be passed on to the purchaser at more than
one point in the same series of sales or purchases by successive dealers to
which the people of the State of Orissa had become accustomed. If the object of
the amendment was to make the additional tax a multi point levy, nothing was
easier than using the appropriate words in the Act by excluding the application
of section 8 of the Principal Act expressly in section 3 (2) of the Act. In the
absence of any such words in the Act, by reason of section 3 (2) of the Act, we
have to construe that section 8 of the Principal Act which is given an
overriding effect by the use of the non- obstante clause is applicable to the
levy of additional tax also. This construction receives support from the use of
the word 'additional' in section 3 (1) which involves the idea of joining or
uniting one thing to another so as thereby to form one aggregate (see Black's
Law Dictionary). The gross turnover referred to therein should, therefore, be
understood as that part of the gross turnover which is taxable under the
Principal Act. The definition of the expression 'gross turnover' in section 2
(dd) of the Principal Act does not present any insurmountable difficulty as the
words defined in section 2 of the Principal Act have to be given the meaning as
indicated in that section unless there is anything repugnant in the subject or
context. In view of the foregoing, section 3 (1) of the Act has to be read as:
381 "Every dealer (who is liable to pay
tax under the Principal Act) shall, in addition to the tax payable by him for a
year under the said Act, be liable to pay additional tax at such rate not
exceeding one percent of his gross turnover (which is taxable under the
Principal Act) for that year, as may be notified from time to time by the State
Government.
Provided
.........................................
Provided
.........................................
If section 3 (1) is so read there would not
be any anomaly but on the other hand it would effectuate the intention of the
State Legislature. We are aware of the principal that a statute has to be
interpreted according to the words used therein and if the word used therein
are clear it is not open to the Court to go in search of the intention of the
Legislature and to arrive at a meaning different from what the words of the
statute convey. When the Act is read as a whole it becomes inevitable that it
bas to be read together with the Principal Act. Craieson Statute Law (7th Edn )
says at page 223 that 'where the later of two Acts provides that the Who are to
be read together every part of each Act must be construed as if the two Acts
had been one, unless their is some manifest discrepancy making it necessary to
hold that the later Act has to some extent modified the provisions of the
earlier Act'. When section 3 (1) of the Act read in the light of subsection (2)
thereof, section 8 of the Principal Act which prescribes a single point levy
becomes immediately attracted. It was, however, argued on behalf of the
Department that since section 8 of the Principal Act opened with The words
'notwithstanding anything to the contrary in this Act', the operation of
section 8 should be confined to the tax payable under the Principal Act and
could not be extended to the additional tax payable under the Act. We do not
find any merit in this submission, since the words 'this Act' were used in
section 8 because when the Principal Act was enacted section 8 could apply only
to the liability under the Principal Act. Now by reason of section 3 (2) of the
Act, section 8 has been made also applicable to the levy, assessment and
collection of the additional tax under the Act. If we accept the argument of
the Department even section 13 of the Principal Act which provides for the
machinery for ff recovery of tax and penalty would become unavailable for
collecting the additional tax under the Act as section 13 also uses the words
382 'tax payable under this Act'. Likewise, many other provisions of the
Principal Act which are necessary for making the levy under the Act effective
will become inapplicable. The above contention has therefore to be rejected.
Lastly it was contended on behalf of the
State Government that section 3 (1) of the Act should be construed as a
complete and self-contained code on the charge created by the Act in view of
the second proviso contained in it which conferred powers of exemption OD the
State Government.
That proviso only empowers the State
Government to exempt certain dealers or transactions pertaining to certain
goods from the levy of additional tax. It does not in any way curtail the
effect of sub-section (2) of section 3 of the Act which forms an integral part
of the charging section.
Consequently any exemption granted under
section 6 and section 7 of the Principal Act will also be applicable in the
case of levy of additional tax under the Act.
In view of the foregoing, we hold that any
dealer is not liable to pay tax under the Principal Act either by reason of his
not having sufficient gross turnover or by reason of exemption given under section
7 of the Principal Act, is not liable to pay additional tax under the Act. If a
dealer is exempted by the State Government under the second proviso to section
3(1) of the Act he is also not liable to pay the additional tax under the Act.
If the turnover of a dealer relating to any sales or purchases of goods is
exempted under section 6 of the principal Act, such turnover cannot be
subjected to any levy of additional tax under the Act by virtue of section 3
(2) of the Act. The Government Notifications S.R.O.. No. 410/79 dated March 23,
1979 issued under the second proviso to section 3 (1) of the Act exempting the
turnover relating to goods whose turnover is exempted from payment of tax under
section 6 of the Principal Act from payment of additional tax under the Act is,
therefore, redundant. The turnover in respect of goods whose sales or purchases
are not taxable under the Principal Act in the hands of any dealer by reason of
section 8 of the Principal Act is not liable to the payment of additional sales
tax under the Act. The turnover in respect of sales and purchases of declared
goods is not taxable under the Act by reason of the first proviso to section 3
(1) of the Act.
Any other turnover which is exempted by the
State Government under the second proviso to section 3 (1) of the Act is also
not taxable under 383 the Act. The levy of the additional tax on the gross
turnover of a dealer under section 3 of the Act is subject to these
conclusions.
In the result the appeals succeed. The
judgment of the High Court in each of these cases is set aside. lt is hereby
declared that the additional tax under the Act can be levied and collected
under section 3 of the Act in accordance with our conclusions set out in the
previous paragraph There shall, however, be no order as to costs.
P.B.R. Appeals allowed.
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