Case: State of Kerala Vs. Pothen Joseph and Sons

empowered to assess, collect and enforce payment of any tax under the general sales tax law of the appropriate State shall, on behalf of the Government of India and subject to any rules made under this Act, assess, collect and enforce payment of any tax, including any penalty, payable by a dealer under this Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected; and for this purpose they may exercise all or any of the power they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, appeals, reviews, revisions, references, penalties and compounding of offences, shall apply accordingly."The question which came up for decision in Yaddalam L. Settys case ([1965] 16 S.T.C. 231) was the true import and meaning of the expression "in the same manner" in section 9(2) as it stood before the enactment of Amending Act 31 of 1958, and which was in the same terms as sub-section (3) of section 9. This is what was said in the majority judgment in that case :"The expression in the manner may give rise to two conflicting views, namely, (i) it is concerned only with the calculation of the tax, and (ii) it deals not only with the calculation of the rates but also the manner of levy of the tax. But section 9(1) dispels the ambiguity for it says that the tax payable by any dealer under the Central Act shall be levied and collected in the appropriate State by the Government of India in the manner provided in sub-section (2); and sub-section (2) of section 9 empowers the appropriate State authorities to assess, collect and enforce payment of any tax payable by any dealer under the Central Act in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected."4. Referring to the provisions of section 5(3)(a) of the Mysore Sales Tax Act, 1957, it was observed that under that section tax was to be levied in the case of sale of any of the goods mentioned in column 2 of the Second Schedule by the first or the earliest of successive dealers in the State who was liable to tax under that section. The conclusion was that "when section 9(1) says that under the Central Act tax shall be levied in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is assessed, paid and collected, it is reasonable to hold that the expression levied in section 9(1) of the Central Act refers to the expression levied in section 5(3)(a) of the State Act."It is common ground that the assessee was entitled to deduction on account of payment of excise duty etc. under rule 7 of the General Sales Tax Rules, 1950. By virtue of the above decision of this court rule 7 would become applicable because under sub-sections (1) and (3) of section 9 of the Act the tax shall be levied and collected in the same manner as the tax on the sale or purchase of goods under the general sales tax law of the State is so paid and collected. The High Court while referring to the judgment of this court in Yaddalam L. Settys case ([1965] 16 S.T.C. 231) understood the observations in the majority judgment to uphold the contention raised on behalf of the assessee that in all respects the tax must be levied as envisaged by the general sales tax law of the State. The Madras High Court in S. Mariappa Nadar v. State Madras ([1962] 13 S.T.C. 371) had gone elaborately into the question of the applicability of the general sales tax law of the State in such circumstances and had held that the phrase "in the same manner" in section 9(3) did not make applicable all the incidents of the local sales tax law to the assessment under the Act and what was contemplated was that the procedure of making an assessment, collection of tax etc. should be the same as laid down in the general sales tax law. In other words, according to the Madras High Court it was only the machinery of the procedural provisions of the local law which was made applicable by section 9(3) of the Act. In the decision of this court, in the majority judgment, no reference was made to the Madras decision but in the minority judgment the Madras case was discussed. In these circumstances it would be legitimate to conclude that although Mariappa Nadars case ([1962] 13 S.T.C. 371) was cited before this court but in the majority judgment a different view was taken. As we are bound to follow the majority judgment we find no escape from the conclusion, after applying the ratio therein, that the general sales tax law of the State which would include the rules framed thereunder governed the levy and assessment of the tax in the matter of inter-State sales.The learned Attorney-General has greatly stressed the conflict which may arise if we follow the view expressed in the majority judgment; for instance, it is pointed out that if in the rules it is expressly provided that no deduction would be permissible on account of payment of excise duty whereas such a deduction is allowable under the rules framed under the general sales tax law of the State, a question would immediately arise which enactment or set of rules is to prevail. If and when such a situation arises, the matter can be considered but for the purpose of the present case we are satisfied that the decision of the majority of this court in the aforesaid case would govern the determination of the question which was resolved in favour of the assessee by the High Court.

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

Explanation:
0[ds]The Madras High Court in S. Mariappa Nadar v. State Madras ([1962] 13 S.T.C. 371) had gone elaborately into the question of the applicability of the general sales tax law of the State in such circumstances and had held that the phrase "in the same manner" in section 9(3) did not make applicable all the incidents of the local sales tax law to the assessment under the Act and what was contemplated was that the procedure of making an assessment, collection of tax etc. should be the same as laid down in the general sales tax law. In other words, according to the Madras High Court it was only the machinery of the procedural provisions of the local law which was made applicable by section 9(3) of the Act. In the decision of this court, in the majority judgment, no reference was made to the Madras decision but in the minority judgment the Madras case was discussed. In these circumstances it would be legitimate to conclude that although Mariappa Nadars case ([1962] 13 S.T.C. 371) was cited before this court but in the majority judgment a different view was taken. As we are bound to follow the majority judgment we find no escape from the conclusion, after applying the ratio therein, that the general sales tax law of the State which would include the rules framed thereunder governed the levy and assessment of the tax in the matter ofral has greatly stressed the conflict which may arise if we follow the view expressed in the majority judgment; for instance, it is pointed out that if in the rules it is expressly provided that no deduction would be permissible on account of payment of excise duty whereas such a deduction is allowable under the rules framed under the general sales tax law of the State, a question would immediately arise which enactment or set of rules is to prevail. If and when such a situation arises, the matter can be considered but for the purpose of the present case we are satisfied that the decision of the majority of this court in the aforesaid case would govern the determination of the question which was resolved in favour of the assessee by the High Court.