Case: Commissioner of Sales Tax, U.P., Lucknow Vs. Madan Lal Dayal Chand

his business dealings. So far the legal position is clear. But sub-section (4) of section 18 provides that on the basis of the average monthly turnover of a dealer who has commenced business during the course of any year, the assessing authority shall fix the turnover of the dealer for the next succeeding year, and shall tax him accordingly. The provision is mandatory, both as to the method of computation of the turnover and as to the assessment of tax on the turnover; it is not subject to any exception expressly enacted. 7. Counsel for the State, however, contended that having regard to the scheme of the proviso to section 7(1) and rules 40 and 41, sub-section (4) of section 18 is subject to an implied exception or reservation. Counsel says that sub-section (1) of section 7 alone and not the proviso thereto is subject to the provisions of section 18, and therefore when under the rules framed by the Government it is prescribed that a dealer or class of dealers may submit a return or returns of his turnover of the assessment year, and if the dealer avails himself of that option, sub-section (4) of section 18 has no application. In other words, the argument is that a dealer commencing business during the course of an assessment year is liable to be assessed in that year on the monthly statements of his turnover under section 18(3)(b) and (c), and the right to claim that his turnover be determined in the next succeeding year, in the manner provided by section 18(4) can only be exercised where the dealer has not opted to submit his return of turnover for the year of assessment. This, counsel says, is implicit in the scheme of the Act which gives an option to the dealer to elect to submit a return of turnover either for the previous year or of the assessment year; to hold that section 18(4) is mandatory and is not subject to any implication is to make the option to submit returns of the turnover for the assessment year futile, when the dealer has commenced business during the course of the previous year. Counsel says that the State had given an option to the respondents in respect of the year 1950-51 and they had exercised that option and submitted their returns for that year quarterly as provided by rule 39 and once that option was exercised for the year 1950-51 the tax had to be assessed under section 7(2) read with rule 4(5) on the turnover returned by the respondents.We are unable to agree with the contentions raised by counsel for the State. It appears that when the Act was originally enacted, it was intended that sales tax shall be levied on a dealer on his turnover of the previous year. Provision was also made in section 18 for determining the turnover of a dealer who commenced business during the course of an assessment year. Otherwise the dealer commencing his business during the course of an assessment year would have escaped liability to pay tax altogether, and even in respect of the next succeeding year he would have been liable to pay tax wholly unrelated to his true turnover of that year. In order to provide against these contingencies, section 18 was enacted. The scheme of the Act, as it stood originally enacted, was consistent and practical. But when the Legislature added the proviso to sub-section (1) of section 7 by Act 25 of 1948 giving an option to the dealer to submit in lieu of his return of the previous year the return of turnover of the current year, the significance of section 18(4) in the altered set up was apparently forgotten. Sub-section (4) of section 18 became inconsistent with the scheme of assessment of a dealer who exercised an option under rule 39(1) to submit his turnover of the assessment year. We may assume that it may not have been intended by the Legislature that a dealer who has exercised an option to submit his turnover for the year of assessment instead of the previous year, should still for the year immediately following the year in which he has commenced business be assessed to tax on a notional turnover. But if the Legislature has failed to make an adequate provision enabling assessment to be made in the light of the option, it cannot be assumed that section 18(4) became subject to such an implied limitation. The Court in construing a taxing statute must look at what is clearly expressed, and cannot make assumptions as to the intention of the Legislature. The Court will not introduce by interpretation in a taxing statute a provision which if the Legislature had appreciated the true position under the statute as enacted might have made, but has not made.The scheme of the Act as it stood at the relevant time was, that a person commencing business as a dealer in a particular year was liable to be assessed under section 18(3), clauses (b) and (c), and he was also liable to be assessed in the next year immediately following on the turnover equivalent to twelve times the monthly average of the turnover in the year in which he commenced business. If the Legislature chose to impose an obligation upon the assessing authority to compute the turnover in the manner prescribed and made no exception in the matter of determination of tax, it would be difficult to hold that when the assessee exercised an option under rule 39 his turnover and the assessment to tax were brought within the pale of rule 41(5). 8. Rule 41(5) cannot be read so as to modify an express provision of the Act. The statutory obligation imposed upon the authority to tax the dealer under sub-section (4) of section 18 remains absolute for the year following immediately the year in which the business was commenced by the dealer, and the method prescribed for determination of the turnover must be applied.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Ordinarily a dealer is required by section 7(1) of the Act to submit his return of turnover for the previous year. But that rule is subject to two exceptions. The dealer may elect under rule 39(1) to return his turnover for the assessment year. Again a dealer who commences business as a dealer in the course of an assessment year is enjoined to submit monthly statements of his turnover during that year. It the dealer elects to make a return of the turnover for the assessment year, instead of the previous year, he will be assessed to tax under section 7(2) and (3) read with rule 41(5). If the dealer has commenced a new business during an assessment year, he is liable to be assessed under section 18(3)(b) and (c). He cannot in the year in which he has commenced business seek to submit the return of his turnover of the previous year, for he has no previous year qua his business dealings. So far the legal position is clear. Butn (4) of section 18 provides that on the basis of the average monthly turnover of a dealer who has commenced business during the course of any year, the assessing authority shall fix the turnover of the dealer for the next succeeding year, and shall tax him accordingly. The provision is mandatory, both as to the method of computation of the turnover and as to the assessment of tax on the turnover; it is not subject to any exception expressly enactedWe are unable to agree with the contentions raised by counsel for the State. It appears that when the Act was originally enacted, it was intended that sales tax shall be levied on a dealer on his turnover of the previous year. Provision was also made in section 18 for determining the turnover of a dealer who commenced business during the course of an assessment year. Otherwise the dealer commencing his business during the course of an assessment year would have escaped liability to pay tax altogether, and even in respect of the next succeeding year he would have been liable to pay tax wholly unrelated to his true turnover of that year. In order to provide against these contingencies, section 18 was enacted. The scheme of the Act, as it stood originally enacted, was consistent and practical. But when the Legislature added the proviso ton (1) of section 7 by Act 25 of 1948 giving an option to the dealer to submit in lieu of his return of the previous year the return of turnover of the current year, the significance of section 18(4) in the altered set up was apparently forgotten.n (4) of section 18 became inconsistent with the scheme of assessment of a dealer who exercised an option under rule 39(1) to submit his turnover of the assessment year. We may assume that it may not have been intended by the Legislature that a dealer who has exercised an option to submit his turnover for the year of assessment instead of the previous year, should still for the year immediately following the year in which he has commenced business be assessed to tax on a notional turnover. But if the Legislature has failed to make an adequate provision enabling assessment to be made in the light of the option, it cannot be assumed that section 18(4) became subject to such an implied limitation. The Court in construing a taxing statute must look at what is clearly expressed, and cannot make assumptions as to the intention of the Legislature. The Court will not introduce by interpretation in a taxing statute a provision which if the Legislature had appreciated the true position under the statute as enacted might have made, but has not made.The scheme of the Act as it stood at the relevant time was, that a person commencing business as a dealer in a particular year was liable to be assessed under section 18(3), clauses (b) and (c), and he was also liable to be assessed in the next year immediately following on the turnover equivalent to twelve times the monthly average of the turnover in the year in which he commenced business. If the Legislature chose to impose an obligation upon the assessing authority to compute the turnover in the manner prescribed and made no exception in the matter of determination of tax, it would be difficult to hold that when the assessee exercised an option under rule 39 his turnover and the assessment to tax were brought within the pale of rule 41(5)8. Rule 41(5) cannot be read so as to modify an express provision of the Act. The statutory obligation imposed upon the authority to tax the dealer undern (4) of section 18 remains absolute for the year following immediately the year in which the business was commenced by the dealer, and the method prescribed for determination of the turnover must be applied