Civil Appeal No 1897 of 1978
From the Judgment and Order dated 19 9 1977 of the Andhra Pradesh High Court Tax Revision Petition No 6676
section T Desai T A Ramachandran Mrs J Ramachandran and M N Tandon for the Appellant
T section Krishnamoorthy Iyer and B Parthasarshi for the Respondent
The Judgment of the Court was delivered by KOSHAL J
The question which falls for determination in the appeal by certificate granted by the High Court of Andhra Pradesh against its judgment dated the 19th September 1977 is whether the appellant which is a limited company is not liable to make good to the State Sales Tax authorities the amount of sales tax leviable under section 6 of the Andhra Pradesh General Sales Tax Act hereinafter referred to as the A P Act in respect of the turn over covering the purchase by the petitioner of cotton during the period 1 4 1969 to 8 6 1969 which turn over had been exempted from sales tax by 1030 the Commercial Tax Officer No II Guntur CTO for short in his assessment order dated the 30th of April 1971
Two assessment orders were passed by the CTO on the date last mentioned
One of them covered the turn over of the appellant liable to tax under the Central Sales Tax Act hereinafter referred to as the Central Act
That turn over included a sum of Rs 2661166 which represented the price realised on account of inter state sale during the period 1 4 1969 to 9 6 1969
In respect of this amount the order made by the CTO was The dealers have not charged and collected Central sales Tax for the period from 1 4 69 to 9 6 69
The turnover of Rs 266116633 upto 9 6 69 is allowed exemption in view of section 10 of Central Sales Tax Amendment Act
 The second assessment order was passed under the AP Act and therein the CTO while considering a sum of Rs 5487879 being the purchase value of cotton sold during the year through inter state sale remarked that the appellant was entitled to exemption  under the proviso to section 6 of the A P Act in respect thereof
He finalised the assessment accordingly
In the year 1972 clause b of section 15 of the Central Act was amended retrospectively so as to be effective from 1st October 1958
Two years later section 6 of the AP Act was also amended and made effective from the same date
On the 21st of August 1974 the Deputy Commissioner Commercial Taxes hereinafter called the DCCT issued a notice to the appellant calling upon it to show cause why the exemption  granted to it by the CTO should not be cancelled
After receiving the appellant s reply the DCCT revised the assessment order dated 30th of April 1971 passed under the AP Act and held that in view of the provisions of section 6 thereof as amended in 1974 the appellant was not entitled to any exemption  in respect of the purchase price amounting to Rs 2300057  of cotton sold by it in the course of interstate trade for Rs 2661166 during the period 1 4 1969 to 8 6 1969
The order of the DCCT was challenged by the appellant in an appeal which was dismissed by the Sales Tax Appellate Tribunal Andhra Pradesh hereinafter called the Tribunal on the 30th of August 1976 mainly on the ground that section 6 of the AP Act did not talk of any exemption  either before or after its amendment in 1974
The appellant sought a revision of the Tribunal s order by the High Court under section 221 of the AP Act but remained unsuccessful as the High Court was of the opinion for 1031 which it relied upon Vadivelu Chetty vs Commercial Tax Officer Tirupathi1 and Daita Suryanarayana and Company vs State of Andhra Pradesh2 that the exemption granted by the CTO was patently wrong 
The High Court however granted a certificate declaring the case to be a fit one for appeal to the Supreme Court under article 1331c of the Constitution of India read with section 109 of the Code of Civil Procedure
In order to appreciate the contentions raised on behalf of the appellant it is necessary to examine the various relevant legislative provisions which are set out below Section 10 of the Central Sales Tax Amendment Act 1969 hereinafter referred to as the 1969 Act
Exemption from liability to pay tax in certain cases
1 Where any sale of goods in the course of inter state trade or commerce has been effected during the period between the 10th day of November 1961 and the 9th day of June 1969 and the dealer effecting such sale has not collected any tax under the principal Act on the ground that no such tax could have been levied or collected in respect of such sale or any portion of the turn over relating to such sale and no such tax could have been levied or collected if the amendments made in the principal Act by this Act had not been made then notwithstanding anything contained in section 9 on the said amendments the dealer shall not be liable to pay any tax under the principal Act as amended by this Act in respect of such sale or such part of the turn over relating to such sale
2 For the purposes of sub section1 the burden of proving that no tax was collected under the principal Act in respect of any sale referred to in sub section 1 or in respect of any portion of the turn over relating to such sale shall be on the dealer effecting such sale
 Section 6 of the A P Act as on 30 4 1971 6 Tax in respect of declared goods Notwithstanding anything contained in section 5 the sale or purchase of declared goods by a dealer shall be liable to tax at the rate and only at the point of sale or purchase specified against 1032 each in the Third Schedule on his turn over of such sales or purchases for each year irrespective of the quantum of his turn over in such goods and the tax shall be assessed levied and collected in such manner as may be prescribed Provided that where any such goods on which tax has been so levied are sold in the course of inter state trade or commerce the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be prescribed
 The proviso to section 6 of the A P Act as amended in 1974 retrospectively with effect from 1 10 1958 Provided that where any such goods on which a tax has been so levied are sold in the course of inter state trade or commerce and tax has been paid under the 
in respect of the sale of such goods in the course of inter state trade or commerce the tax so levied shall be reimbursed to the person making such sale in the course of inter state trade or commerce in such manner and subject to such conditions as may be prescribed
 Sub rule 1 of rule 27 A of the Rules framed under the AP Act as on 30 4 1971 Where any tax has been levied and collected under section 6 in respect of the sale or purchase inside the State of any declared goods and such goods are subsequently sold in the course of inter state trade or commerce the tax so levied and collected shall be refunded to the person in the manner and subject to the conditions specified in sub rules 2 to 4
 Sub rule 1 of the said rule 27A After its amendment 1 8 1974 Where any tax has been levied and collected under section 6 in respect of the sale or purchase inside the State of any declared goods and such goods are subsequently sold in the course of inter state trade or commerce the tax so levied and collected shall be reimbursed to the person in the manner and subject to the conditions specified in sub rules 2 to 4 Provided that the refund shall not be made unless the tax payable under the is paid 1033 Clauses a and b of section 15 of the Central Act as in force on 30 4 1971 15
Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State Every sales tax law of a State shall in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods be subject to the following restrictions and conditions namely a the tax payable under that law in respect of any sale or purchase of such goods inside the State shall be levied only in respect of the last sale or purchase inside the State and shall not exceed two per cent of the sale or purchase price
b where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter state trade or commerce the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State Clause b of section 15 of the Central Act as amended in 1972 retrospectively with effect from 1 10 1958 b where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter State trade or commerce and tax has been paid under this Act in respect of the sale of such goods in the course of inter state trade or commerce the tax levied under such law shall be reimbursed to the person making such sale in the course of inter state trade or commerce in such manner and subject to such conditions as may be provided in any law in force in that State
Section 10 of the 1969 Act makes no reference at all to any tax leviable under the State Act
It concerns itself only with the tax payable under the Central Act which it calls the Principal Act  and says that a dealer shall not be liable to pay any such tax for the period between 10 11 1964 and 9 6 1969 if certain conditions are satisfied
Much reliance has been placed by learned counsel for the appellant on this section which in our opinion however is of no assistance to him
It may be taken for granted that the appellant did not collect any tax under the Central Act on the sale of goods effected by it in 1034 the course of inter state trade during the period 1 4 1969 to 9 6 1969 on the ground that no such tax could have been levied or collected in respect of such sale so that it becomes fully entitled to the benefit of the exemption enacted by the section but that would only mean that Central sales tax cannot be charged from it in respect of such sale
As it is no demand has been made from it for any tax leviable under the Central Act in respect of such sale and we do not see how the appellant could benefit from the said section 10 in the matter of its assessment for the period in question under the AP Act
All that we are concerned with is the liability of the appellant to pay tax on the purchase of cotton which it sold during that period in the course of inter state trade and that is a matter which has to be decided with reference to section 6 of the AP Act rule 27 A extracted above and section 15 of the Central Act
As on 30 4 1971 the provisions of section 6 of the AP Act laid down that if goods were sold in the course of inter state trade or commerce and tax had been levied on the sale or purchase there of under that Act the dealer concerned would be entitled to refund of such tax
As on the date of assessment therefore the appellant was within its rights to claim refund of any tax that it was liable to pay on the purchase of cotton later sold by it in the course of inter state trade and although the section did not talk of any exemption  all that the CTO could have meant by granting the appellant exemption from the tax was that it became liable to pay a tax under the opening para of the section but as it was also entitled to a refund of such tax the same was taken to have been paid by and refunded to it
As the section then stood therefore the assessment order was unexceptionable
This was also the position under clause b of section 15 of the Central Act the language of which is practically the same as of the proviso to section 6 of the AP Act
The matter however does not end there as the amendment of section 15 of the Central Act in 1972 and that of section 6 of the AP Act in 1974 made a real difference which appears to us to be an insurmountable hurdle in the way of the appellant s stand being accepted
As already stated both the amendments were retrospective so as to be effective from the 1st of October 1958
That means that the law to be applied to the assessment finalised through the two orders dated 30th of April 1971 by the CTO was that as modified by the two amendments
Of course we are here concerned only with the order of assessment made under the AP Act
That order would be good if it is in conformity with the provisions of the amended section 6 of the AP Act but not otherwise
Under the amended section the liability to tax 1035 remained unchanged but the entitlement to refund was abolished and was substituted by a right to reimbursement of the tax which arose only if the concerned goods were later on sold in the course of inter state trade or commerce under the Central Act and tax under that Act was paid in respect thereof
Such reimbursement would not be avaialable merely because the goods in question had been sold in the course of inter state trade or commerce when they were not subjected to tax under the Central Act
Admittedly no such tax was paid by the appellant in the course of inter trade on goods regarding the purchase of which reimbursement of the tax leviable under the AP Act is claimed
The proviso to section 6 as amended in 1974 therefore is of no assistance to it
Nor does the amended clause b of section 15 of the Central Act come to the appellant s aid as the language used therein for all practical purposes is the same as that of the amended proviso to section 6 of the AP Act and clearly means that the tax under the AP Act would be reimbursible only to a dealer who has paid tax under the Central Act in respect of the sale of the goods in question in the course of inter state trade or commerce
Faced with the above situation Mr Desai Learned counsel for the appellant pressed into service a novel contention to the effect that the appellant was not asking for any reimbursement or refund that it was the DCCT who had cancelled the order of refund inherent in the exemption  granted by the CTO and that there was no provision authorising the DCCT to force the appellant to return any amount paid to it as a refund
The argument is obviously fallacious
The DCCT has done nothing more than to revise an order of the CTO which has been varied only in so far as it was not in conformity with the law deemed to have been prevailing on the date of the assessment by virtue of the retrospective amendment of section 6 of the AP Act
It is conceded by Mr Desai that the exemption  has to be regarded as a composite order of levy plus refund
That part of it which granted a refund was illegal under the amended proviso to section 6 of the AP Act inasmuch as no reimbursement was due in respect of goods on which tax under the Central Act had not been paid
The DCCT therefore had not only the power but was duty bound to strike down the order of refund as being illegal
The order of the CTO as revised by the DCCT thus is reduced to an order merely of levy of the tax due under the opening paragraph of section 6 of the AP Act so that the appellant becomes liable to pay such tax
The only other argument put forward by Mr Desai in support of the appeal rested on the provisions of rule 27 A above extracted in 1036 its unamended form
The rule can obviously be of no help to him inasmuch as even if it can be construed as laying down something in favour of the appellant it cannot override the provisions of the Act under which it is framed
No amount of argument would make a rule over ride or control the legislative enactment under the authority of which it comes into being and that is why the rule was amended in 1974 so as to conform to the parent statute
It may be stated that at one stage of the argument Mr Desai drew our attention to the fact that by reason of the amendments made in the statute law and the consequent demand by the DCCT for the refunded amount the appellant had been placed under a burden which did not fall on those who collected the Central sales tax from the purchasers and paid it to the Government because they were held entitled to refund of the tax under the AP Act even though they had not paid anything out of their own pocket as tax under the Central Act
However as he did not challenge the constitutional validity of any of the amended sections he did not pursue the matter further and we need take no further notice of it
We might mention here that Daita Suryanarayana and Company s case supra on which the High Court relied in support of the impugned judgment takes a view of the law which is in conformity with the opinion expressed above by us and we unreservedly approve of the same
In the result the appeal fails and is dismissed but with no order as to costs
PBR Appeal dismissed


Summary:
On the ground that the dealers have not charged and collected Central Sales Tax during the period 1st April 1969 to 9th June 1969 the Commercial Tax Officer allowed exemption under section 10 of the Central Sales Tax Act in respect of certain turn over of the appellant which included the price realised on account of inter state sales
In respect of a second set of transactions which involved the purchase value of cotton sold during the year through inter state sales the Commercial Tax Officer held that the appellant was entitled to exemption under the proviso to section 6 of the AP General Sales Tax Act
In 1972 section 15b of the Central Act was amended with retrospective effect from 1st October 1958 and in 1974 section 6 of the State Act was amended with retrospective effect from the same date
The Deputy Commissioner of Commercial Taxes revised the assessment order of the Commercial Tax Officer passed under the State Act on the ground that in view of the provisions of section 6 as amended in 1974 the appellant was not entitled to any exemption during the above period
The Sales Tax Appellate Tribunal dismissed the appellant s appeal on the view that section 6 of the State Act did not talk of any exemption either before or after its amendment in 1974
The High Court dismissed the appellant s appeal holding that the exemption granted by the CTO was patently wrong
Dismissing the Appeal  HELD 1
Section 10 of the Central Act which makes no reference to any tax leviable under a State Act can be of no assistance to the appellant
Granting that the appellant did not collect any tax under the Central Act during the period in question on the ground that no such tax could have been levied or collected so that it becomes fully entitled to the benefit of the exemption enacted by the section that would only mean that central sales tax cannot be charged from it in respect of sales covered by the section
No demand had been made from it for any tax leviable under the Central Act in respect of such sales and the appellant could not derive any benefit from section 10 of the Central Act in the matter of its assessment under the State Act
1033G H 2
In so far as the assessment under the State Act is concerned all that the CTO could have meant by granting exemption was that the appellant became liable to pay a tax under the opening para of the section but that since the appellant was also entitled to a refund of such tax the same was taken to have been paid by and refunded to it
The assessment order made 1029 under the proviso to section 6 of the State Act and section 15 b of the Central Act as they stood then was unexceptionable
1034E F 3
Under section 6 as amended the liability to tax remained unchanged but the entitlement to refund was abolished an was substituted by a right to reimbursement of the tax which arose only if the concerned goods were later on sold in the course of inter state trade under the Central Act and tax under that Act was paid in respect thereof
Such reimbursement would not be available merely because the goods in question had been sold in the course of inter state trade or commerce when they were not subjected to tax under the Central Act
No such tax was paid
The proviso to section 6 as amended in 1974 can be of no assistance to the appellant
1035A B 4
The language of clause b of section 15 of the Central Act is the same as that of the amended proviso to section 6 of the State Act
It clearly means that the tax under the State Act would be reimbursible only to a dealer who has paid tax under the State Act in respect of the sale of the goods in question in the course of inter state trade or commerce
1035C D 5
The argument that the Deputy Commissioner had no power to cancel the order of refund is fallacious
He has done nothing more than to revise an order of the CTO which has been varied only in so far as it was not in conformity with the law deemed to have been prevailing on the date of the assessment by virtue of the retrospective amendment of section 6 of the State Act
The Deputy Commissioner had not only the power but was duty bound to strike down the order of refund as being illegal
1035F G 6
Rule 27A can be of little help to the appellant inasmuch as even if it can be construed as laying down something in its favour the rule cannot override the provisions of the Act
1036A Daita Suryanarayana and Company vs State of Andhra Pradesh 39 STC 500 approved