Case: Thiru Manickam And Co Vs. The State Of Tamil Nadu

a person who has not himself paid such tax. So far as those observations are concerned, we are of the opinion that the emphasis in the word "refunded" as used in clause (b) of section 15 of the Central Act and the proviso to section 4 of the State Act is on repayment of the amount. A word can have many meanings. To find out the exact connotation of a word in a statute, we must look to the context in which it is used. The context would quite often provide the key to the meaning of the word and the sense it should carry. Its setting would give colour to it and provide clue to the intention of the legislature in using it. A word, as said by Holmes, is not a crystal, transparent and unchanged; it is the skin of a living though and may vary greatly in colour and content according to the circumstances and the time in which it is used. The context in which the word "refunded" is used shows that such repayment need not be to the person who initially paid the tax. It is indeed for the State Legislature to specify the person to whom such amount is to be repaid either in the statute enacted by it or to make a provision for that purpose in the Rules. The State Legislature has made it clear in the proviso to section 4 of the statute that provision in this respect would be made in the Rules. The Rules which have been framed leave no doubt that the amount has to be paid to the dealer who sells the goods in the course of inter-State trade and who has paid the tax under the Central Act in respect of such sale.There is also no anomaly in paying the amount of the sales tax under the State Act to a dealer who sells declared goods in the course of inter-State trade, even though he did not himself pay the tax under the State Act in respect of those goods. The reason for that is that the price charged from such dealer by the person from whom he purchases the goods would normally take into account the sales tax paid by the seller. 5. Assuming that there was some ambiguity in the language of clause (b) of section 15, as it existed at the relevant time, the matter is made clear by the amendment made in the Central Act by the Central Sales Tax (Amendment) Act, 1972 (Act No. 61 of 1972). As a result of the amendment, clause (b) of section 15 of the Central Act reads as under :"(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." 6. The amended provision makes it plain beyond any pale of controversy that the tax levied under the State Act in respect of declared goods has to be reimbursed to the person making sale of those goods in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in the law in force in that State. According to the notes explaining the different clauses appended to the statement of objects and reasons of the Bill, which emerged as the amending Act, the amendment made in clause (b) makes it clear that local sales tax would be reimbursed to the person making the sale in the course of inter-State trade and commerce. The amendment made in clause (b) can thus be taken to be an exposition by the legislature itself of its intent contained in the earlier provision. We are not impressed by the argument of the learned Additional Solicitor-General that the amendment made in clause (b) was intended to mark a departure from the position in law as it existed before the amendment. The fact that the amendment of clause (b) of section 15 was not like some other provisions given retrospective effect, would not materially affect the position. As already mentioned above, the legislature as a result of the amendment, clarified what was implicit in the provisions as they existed earlier. An amendment which is by way of clarification of an earlier ambiguous provision can be useful aid in construing the earlier provision, even though such amendment is not given retrospective effect. We may refer in this context to the observations on page 147 of Craies on Statute Law (Sixth Ed.), which read as under :"...... In Cape Brandy Syndicate v. I.R.C. ([1921] 2 K.B. 403 at 414), Lord Sterndale, M.R., said : I think it is clearly established in Att.-Gen. v. Clarkson ([1900] 1 Q.B. 156), that subsequent legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. I quite agree that subsequent legislation if it proceeded on an erroneous construction of previous legislation cannot alter that previous legislation; but if there be any ambiguity in the earlier legislation, then the subsequent legislation may fix the proper interpretation which is to be put upon the earlier." 7. Looking to all the facts, we are of the view that the appellant-firm is entitled to be paid the amount of sales tax levied under the State Act in respect of the goods sold by it in the course of inter-State trade provided the appellant has paid the sales tax under the Central Act in respect of those sales.

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

Explanation:
1[ds]Section 15 of the Central Act, as it existed at the relevant time, contemplates that every State law in so far as it imposes or authorises the imposition of tax on sale or purchase of declared goods, would be subject to the restriction and condition that the tax payable under that law in respect of any sale or purchase of such gods inside the State, shall not exceed two per cent. of the sale or purchase price thereof and such tax shall not be levied at more than one stage. Clause (b) of that section has a direct bearing and, according to that clause, where tax has been levied under the State law in respect of sale or purchase of declared of declared goods which are subsequently 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 in any law in force in that State. Section 4 of the State Act has been enacted in conformity with section 15 of the Central Act. The proviso to that section deals with the refund of the sales tax levied under the State Act in respect of declared goods when such goods are sold in the course of inter-State trade or commerce. According to that proviso, where a tax has been levied under section 4 in respect of the sale or purchase of declared goods, and such goods are sold in the course of inter-State trade or commerce, the amount of tax shall be refunded to such person in such manner and subject to such conditions as may be prescribed. In pursuance of this proviso, the State Government has framed rule 23 of the Madras General Sales Tax Rules, 1959. According to clause (1) of that rule, the refund of the sales tax has to be made to the dealer who makes the inter-State sale and who has paid the sales tax under the Central Act in respect of such sale. Clause (3) of the rule provides that statement shall be submitted to the assessing authority by the aforesaid dealer not later than three months from the date on which the dealer pays the tax under the Central Act. It may be stated that the Madras General Sales Tax Rules, 1959, had to be placed on the table of both the Houses of the State Legislature under sub-section (5) of section 53 of the State Act. In the face of clause (b) of section 15 of the Central Act, the proviso to section 4 of the State Act and rule 23 of the Madras General Sales Tax Rules, we have to doubt in our mind that it is the appellant who is entitled to get the refund of the sales tax levied under the State Act in respect of the goods in question because it was the appellant who sold the goods in the course of inter-State trade and paid the sales tax under the Central Act on that account.The High Court in turning down the claim of the appellant relied upon its earlier decision in the case of M. A. Khader & Co. ([1970] 25 S.T.C. 104) Perusal of the facts of that case would show that the assessee therein sought a writ of certiorari to quash the assessment made under the Central Act in respect of transactions which were admittedly inter-State sales. The question of asking for the refund of the sales tax paid under the State Act did not arise directly in that case. There were no doubt some observations in the course of that judgment, according to which, refund of the sales tax can be claimed only by the person who himself has earlier paid that tax and not by a person who has not himself paid such tax. So far as those observations are concerned, we are of the opinion that the emphasis in the word "refunded" as used in clause (b) of section 15 of the Central Act and the proviso to section 4 of the State Act is on repayment of the amount. A word can have many meanings. To find out the exact connotation of a word in a statute, we must look to the context in which it is used. The context would quite often provide the key to the meaning of the word and the sense it should carry. Its setting would give colour to it and provide clue to the intention of the legislature in using it. A word, as said by Holmes, is not a crystal, transparent and unchanged; it is the skin of a living though and may vary greatly in colour and content according to the circumstances and the time in which it is used. The context in which the word "refunded" is used shows that such repayment need not be to the person who initially paid the tax. It is indeed for the State Legislature to specify the person to whom such amount is to be repaid either in the statute enacted by it or to make a provision for that purpose in the Rules. The State Legislature has made it clear in the proviso to section 4 of the statute that provision in this respect would be made in the Rules. The Rules which have been framed leave no doubt that the amount has to be paid to the dealer who sells the goods in the course of inter-State trade and who has paid the tax under the Central Act in respect of such sale.There is also no anomaly in paying the amount of the sales tax under the State Act to a dealer who sells declared goods in the course of inter-State trade, even though he did not himself pay the tax under the State Act in respect of those goods. The reason for that is that the price charged from such dealer by the person from whom he purchases the goods would normally take into account the sales tax paid by the sellerAssuming that there was some ambiguity in the language of clause (b) of section 15, as it existed at the relevant time, the matter is made clear by the amendment made in the Central Act by the Central Sales Tax (Amendment) Act, 1972 (Act No. 61 of 1972)The amended provision makes it plain beyond any pale of controversy that the tax levied under the State Act in respect of declared goods has to be reimbursed to the person making sale of those goods in the course of inter-State trade or commerce in such manner and subject to such conditions as may be provided in the law in force in that State. According to the notes explaining the different clauses appended to the statement of objects and reasons of the Bill, which emerged as the amending Act, the amendment made in clause (b) makes it clear that local sales tax would be reimbursed to the person making the sale in the course of inter-State trade and commerce. The amendment made in clause (b) can thus be taken to be an exposition by the legislature itself of its intent contained in the earlier provision. We are not impressed by the argument of the learned Additional Solicitor-General that the amendment made in clause (b) was intended to mark a departure from the position in law as it existed before the amendment. The fact that the amendment of clause (b) of section 15 was not like some other provisions given retrospective effect, would not materially affect the position. As already mentioned above, the legislature as a result of the amendment, clarified what was implicit in the provisions as they existed earlier. An amendment which is by way of clarification of an earlier ambiguous provision can be useful aid in construing the earlier provision, even though such amendment is not given retrospective effectLooking to all the facts, we are of the view that the appellant-firm is entitled to be paid the amount of sales tax levied under the State Act in respect of the goods sold by it in the course of inter-State trade provided the appellant has paid the sales tax under the Central Act in respect of those sales.