State of Kerala v. N. Sami Iyer Tobacco Merchant

' The Judgment .of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Kerala in Tax Revision Case No. 44 of 1960. The respondent, N. Sarni Iyer, hereinatfer referred to as the assessee, is a dealer in tobacco. He objected to the assessment of the turnover of Rs. 7,757.54 for the assessment year 1957-58, inter alia, on the ground that the goods were the subject-matter of pur­ chases which had already been assessed at the point of purchase in the hands of the assessee. He failed before the Sales Tax authori­ •ties, but in a revision the High Court accepted his contention and held that this turnover was not liable to tax. In order to appreciate the contention of the appellant it is ·necessary to mention a few facts. During the period April 1, 1957 G "to September 30, 1957, theassessee was residing in Malabar and in this area the Madras General Sales Tax Act (9 of 1939) applied . .'Section 3(5) of this Act provides : "The taxes under sub-sections (l), (1-A) and (2) shall be assessed, levied and collected in such manner and H in such instalments, 'if any, as may be prescribed : Provided that- • • ! '! STATE V. SAM! IYER (Sikri,. J. )1 363. A (i) In respect of the same transaction of sale, the buyer or the seller, but not both, as determined by such rules as may .be prescribed, shall be taxed; (ii) Where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules re- 8 fened to in clause (1) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him." It is common ground that tobacco was taxable at the purchase point under the Madras Act and that the turnover with which we are­ concerned had suffered taxation at that point under the Madras. Act. The Travancore-Cochin General Sales Tax (Amendment) Act, 1957 (12 of 1957) came ~nto force on October 1, 1957. This Act changed the short title of the Travancore-Cochin General Sales Tax Act, 1125 (11 of 1125) to the General Sales Tax Act, 1125, D and extended it to the whole of the State of Kerala, including Mala-· bar district. Section 14 of Act 12 of 1957 inserted s. 26A in Act 11 of 1125 which reads as follows: !I "26A. Transitory provisions.--(1) In the applica­ tion of this Act to the Malabar District referred to in sub­ section (2) of section 5 of the States Reorganisation Act, 1956, during the financial year ending with 31st March, 1958, the provisions of this Act shall be subject to the provisions contained in Schedule II. (2) The Government may from time to time by noti­ fication in the Gazette add to, alter or cancel Schedule II.'" Schedule II is in the following terms : "I. Every registration effected and every licence issued under the Madras General Sales Tax Act, 1939 or the rules made thereunder in their application to the Malabar District referred to in sub-section (2) of sec­ tion 5 of the States Reorganisation Act, 1956 (herein­ after referred to as the Malabar area), and in force at the commencement of the Travancore-Cochin General Sales Tax (Amendment) Act, 1957. shall be deemed to have been effected or issued under this Act or the rules made thereunder. 2. In calculating the total turnover for the financial year ending with 31st March 1958 of a dealer in the· ;354 SUPREME. COURT REPORTS [1%6] 2 S.C.R. Malabar area for purposes of sub-section (3) of section A 3 of this Act, the turnover of the dealer under the Madras General Sales Tax Act, 1939 up to the commencement of the Travancore-Cochin General Sales Tax (Amend- ment) Act, 1957, shall also be taken into account. ... " The effect of s. 26A and the Schedule, among other things, is B ·.that the dealer's registration and the licences are deemed to have been effected under this Act, and secondly, that the total turnover .for the period April 1, 1957 to September 30, 1957, is to be .taken into account under the General Sales Tax Act. Act 12 of 1957, bys. 15 inter alia repealed the Madras General .Sales Tax Act, 1939, as in force in the Malabar District, referred C .to in sub-section (2) of section 3 of the States Reorganisation Act, 1956. Section 3(5) of the General Sales Tax Act, 1125, is in the same terms as s. 3(5) of the Madras General Sales Tax Act, re­ produced above. Section 5(vii) of the General Sales Tax Act (cor­ Tesponding to s. 5 of the Madras General Sales Tax Act) provides ~~m~ D "The sale of goods specified in column (2) of sche­ dule I shall be liable to tax under section 3, sub-section (1) only at such single point in the series of sales by suc­ cessive dealers as may be specified by the Government by notification in the Gazette; and where the taxable point .so specified is a point of sale, the seller shall be liable for the tax on the turnover for which the goods are sold by him at such point, and where the taxable point so specified is a point of purchase, the buyer shall be liable 'for the tax on the turnover for which the goods are brought by him at such point." The description of item 2 in column (2) of Schedule I at the o:relevant time was "Tobacco other than _Beedi Tobacco (Suka)." In exercise of the powers conferred by section 5(vii) the Gov­ ermnent issued a notification No. RI-10674/57 /RD-2 dated G 'September 28, 1957. The relevant portion of the notification reads :as follows : "In exercise of the powers conferred by clause (vii) of section 5, of the General· Sales Tax Act (Act XI of 1125) the Government of Kerala hereby specify the point mentioned in column 3 of the schedule, hereto appended as the point liable to tax under section 3(1) on the goods mentioned in column 2. ·C STATE V. SAM! IYER (Sikri, /.) 365 SCHEDULE Sr. No. ( 1) Description of goods (2) Taxable point (3) 2. Tobacco other than Beedi Tobacco (Suka) Ist sale in the State by a dealer who is not exempt from taxation under section 3 (3). The result of the above notification is that wh~reas previously the taxable point in respect of tobacco was the point of first pur­ chase under the Madras Act, now the taxable point is the first sale in the State. · The learned Advocate-General, who appeared on behalf of the appellant, has raised two points before us : first, that in this case there was no right, much less a vested right, not to be taxed except under the Madras General Sales Tax Act; the right if at all was to take advantage of the provisions of the repealed Act, namely, the proviso to s. 3(5) of the Madras Act. Secondly, he says that even if there was such a right, Act 12 of 1957 manifests a contrary and different intention within the meaning of s. 4(c) of the General Clauses Act, 1125, and the disputed turnover is liable to taxation under Act 12 of 1957. We may mention thats. 4(c) of the General Clauses Act, 1125, corresponds to s. 6(c) of the Indian General Clauses Act. It appears to us that by virtue of s. 4(c) the dealer continued to be liable to taxation under the Madras General Sales Tax Act in respect of the disputed turnover at the purchase point. For example, if for some reason he had not been assessed before Act 12 of 1957 came into force, he would have been assessed under the Madras Act at the purchase point because a liability within the meaning of s. 4(c) would have been incurred by him. To this liability would be attached a right; the right being that he would not be liable to be taxed in respect of any sale of goods which had been the subject-matter of a purchase and t"axation under the Madras Act. In other words, he was liable to be assessed under the Madras Act in respect of the purchase of goods but he had also a right not to be taxed again in respect of any sale of the same goods effected by him. Therefore, we repel the first argument of the learned Advo­ cate-General. The next question that arises is wh.ether Act 12 of 1957 mani­ fests a different intention. As observed by this Court in State of Punjab v. Mohar Singh('), "when the repeal is followed by fresh legislation on the same subject we would undoubtedly have to look lH to the provisions of the new Act, but only for"the purpose of deter­ mining whether they indicate a different intention. The line of (1) [1955] I S.C.R. 893. enquiry would be not whether the new Act expressly keeps alive A old rights and liabilities but whether it manifests an intention to destroy them." We cannot discern any intention in Act 12 of 1957 to destroy the rights and liabilities acquired or incurred under the Madras. General Sales Tax Act. The second schedule reproduced above shows that the intention was to preserve old rights such as registration and licences issued under the old Act. In our opinion, if the Legislature had the intention to override the right attached to the liability under s. 3(5) of the Madras General Sales Tax Act, it would have used more clear and precise words . In the result we agree with the High Court that the tum-over of Rs. 7,754.54 is not liable to taxation. The appeal accordingly C fails and is dismissed with costs. Appeal dismissed. ..