Case: Ashok Service Centre &amp; Another Etc Vs. State Of Orissa

The usual complaint against some of the modern fiscal statutes is that they are unduly long and therefore complex. But here we have an Orissa Act which is very short but clarity is not certainly itsonly point for determination in these appeals by special leave is whether the levy of additional tax underthe Orissa Additional Sales Tax Act, 1975 (Orissa Act 24 of 1975) (hereinafter referred to as the A ct) as amended by the Orissa Additional Sales Tax (Amendment) Act, 1979 (hereinafter referred to as the Amending Act) is a single point levy or a multi pointorder to understand the contentions of the parties it is necessary to give briefly the legislative history of the sales tax law of the State of Orissa and to refer to some of its salientOrissa Sates Tax Act, 1947 (Orissa Act XIV of 1947) (hereinafter referred to as the Principal Act) was enacted and brought into force in the year 1947. It has continued to remain in force even now, although a number of changes have been introduced into it by successive legislative amendments It is a law intended for levying taxes on the sale or purchase of goods other than newspapers subject to the provisions of Entry 92-A, of List I of the Seventh Schedule to the Constitution. Section 3-B, 4, 4-A, 5, 6, 7 and 8 of the Principal Act together lay down the extent of the charge Section 4 (1) of the Principal Act(1) Subject to the provisions of sections 3-B, S, 6, 7 and 8 and with effect from such date as the State Government may, by notification, in the Gazette, appoint, being not earlier than 30 days after the date of the said notification, every dealer whose gross turnover during the year immediately preceding the date of commencement of the Orissa Sales Tax (Amendment) Act, 1981 exceeding Rs. 50, 000 shall be liable to pay tax under this Act on sales and purchases effected after the date soprovision imposes the liability to pay tax in accordance with the provisions of the Principal Act on every dealer whose gross turnover during a fiscal year exceeds Rs 50, 000 According to section 2(dd) of the Principal Act gross turnover means the total of D, turnover OF sales and turnover of purchases,  turnover of sales is defined in section 2 (i) of the Principal Act a, the aggregate of the amounts of sale prices and tax. if any, received and receivable b, a dealer in respect of sale or supply of goods other than those declared under section 3-B of the Principal Act and turnover of purchases is defined in section 2 (j) of the Principal Act as the aggregate of the amounts of purchase prices paid and payable by a dealer in respect of the purchase or supply of goods or classes of goods declared under section 3-B of the Principal Act. Sub-sections (2) to (5) of section 4 of the Principal Act deal with the point of time at which such dealer would become liable to pay tax, the period during which he would remain liable to pay the tax and the time at which he would cease to be liable to pay tax after his annual gross turnover has failed to exceed Rs. 50, 000. Unless he is a casual dealer as defined in section 2(bb) of the Principal Act who is liable to pay tax irrespective of his gross turnover as provided in section 4- A of the Principal Act, every dealer would become liable to pay tax under the Principal Act only when his gross turnover exceeds Rs. 50, 000, otherwise not. The expression dealer is defined in section 2 (c) of the Principal Act as a person who carries on the business of purchasing, selling, supplying or distributing, goods, directly or otherwise, whether for cash, or for deferred payment or for commission, remuneration or other valuable consideration and includes others mentioned in that clause It may be noted that this definition does not specify the extent of the gross turnover of such person as a qualification for being treated as a dealer. every person who carries A on the activities specified in section 2 (c) of the Principal Act is a dealer for purpose s of the Principal Act. Section 2(f) of the Principal Act defines the expression registered dealer as a dealer registered under it. Section 9 of the Principal Act imposes the obligation on every dealer who is liable to pay tax under section 4 of t hat Act to register himself and to obtain a registration certificate. On such of registration he becomes a registered dealer. Section 9-B (l) (a) of the Principal Act lays down That no person who is not a registered dealer shall collect in respect of any sale by him any amount by way of tax under the Principal Act and a registered dealer can collect such tax only in accordance with the said Act and Rules made thereunder. Section 9-A of the Principal Act, however, provides for voluntary registration of a dealer whose annual gross turnover exceeds Rs 10, 000 even though he is not liable to pay tax under section 4 of that Act and every such dealer on such registration is entitled to collect tax under that Act and to pay it to Government as long as such registration remains in force. There are corresponding provisions made in section 9-C of the Principal Act for provisional registration of certain other kinds of dealers Section IO of the Principal Act provides for the publication of the list of registered dealers Any other dealer cannot collect tax from his customers. There are other provisions in the Principal Act providing for the machinery for assessment and recovery of the tax due under it. Before proceeding further it is necessary to quote section 8 of the Principal Act. ItPower of the State Government to prescribe points at which goods may be taxed or exempted.Notwithstanding anything to the contrary in this Act, the State Government may prescribe the points in the series of sales or purchases by successive dealers at which any goods or classes or descriptions of goods may be taxed or exempted from taxation and in doing so ma y direct that sales to or purchases by a person other than a registered dealer shall be exempted from taxation:Provided that the same goods shall not be taxed at more than one point in the same series of sales or purchases by successive dealers.Explanation-Where in a series of sales, tax is prescribed to be levied at the first point, such point, in respect of goods despatched from outside the State of Orissa shall mean and shall always be deemed to have meant the first of such sales effected by a dealer liable under the Act after the goods are actually taken delivery of by him inside the State of Orissa."

Reasoning: If section 3 (1) is so read there would not be any anomaly but on the other hand it would effectuate the intention of the State Legislature. We are aware of the principal that a statute has to be interpreted according to the words used therein and if the word used therein are clear it is not open to the Court to go in search of t he intention of the Legislature and to arrive at a meaning different from what the words of the statute convey. When the Act is read as a whole it becomes inevitable that it bas to be read together with the Principal Act. Craieson Statute Law (7th Edn ) says at page 223 that where the later of two Acts provides that the Who are to be read together every part of each Act must be construed as if the two Acts had been one, unless their is some manifest discrepancy making it necessary to hold that the later Act has to some extent modified the provisions of the earlier Act. When section 3 (1) of the Act read in the light of subsection (2) thereof, section 8 of the Principal Act which prescribes a single point levy becomes immediately attracted. It was, however, argued on behalf of the Department that since section 8 of the Principal Act opened with The words notwithstanding anything to the contrary in this Act, the operation of section 8 should be confined to the tax payable under the Principal Act and could not be extended to the additional tax payable under the Act. We do not find any merit in this submission, since the words this Act were used in section 8 because when the Principal Act was enacted section 8 could apply only to the liability under the Principal Act. Now by reason of section 3 (2) of the Act, section 8 has been made also applicable to the levy, assessment and collection of the additional tax under the Act. If we accept the argument of the Department even section 13 of the Principal Act which provides for the machinery for ff recovery of tax and penalty would become unavailable for collecting the additional tax under the Act as section 13 also uses the words tax payable under this Act. Likewise, many other provisions of the Principal Act which are necessary for making the levy under the Act effective will become inapplicable. The above contention has therefore to be rejected.Lastly it was contended on behalf of the State Government that section 3 (1) of the Act should be construed as a complete and self-contained code on the charge created by the Act in view of the second proviso contained in it which conferred powers o f exemption OD the State Government. That proviso only empowers the State Government to exempt certain dealers or transactions pertaining to certain goods from the levy of additional tax. It does not in any way curtail the effect of sub-section (2) of section 3 of the Act which forms an integral part of the charging section. Consequently any exemption granted under section 6 and section 7 of the Principal Act will also be applicable in the case of levy of additional tax under the Actview of the foregoing, we hold that any dealer is not liable to pay tax under the Principal Act either by reason of his not having sufficient gross turnover or by reason of exemption given under section 7 of the Principal Act, is no t liable to pay additional tax under the Act. If a dealer is exempted by the State Government under the second proviso to section 3(1) of the Act he is also not liable to pay the additional tax under the Act. If the turnover of a dealer relating to an y sales or purchases of goods is exempted under section 6 of the principal Act, such turnover cannot be subjected to any levy of additional tax under the Act by virtue of section 3 (2) of the Act. The Government Notifications S.R.O.. No. 410/79 dated March 23, 1979 issued under the second proviso to section 3 (1) of the Act exempting the turnover relating to goods whose turnover is exempted from payment of tax under section 6 of the Principal Act from payment of additional tax under the Act is, therefore, redundant. The turnover in respect of goods whose sales or purchases are not taxable under the Principal Act in the hands of any dealer by reason of section 8 of the Principal Act is not liable to the payment of addition al sales tax under the Act. The turnover in respect of sales and purchases of declared goods is not taxable under the Act by reason of the first proviso to section 3 (1) of the Act. Any other turnover which is exempted by the State Government under the second proviso to section 3 (1) of the Act is also not taxable under the Act. The levy of the additional tax on the gross turnover of a dealer under section 3 of the Act is subject to these conclusions.In the result the appeals succeed. The judgment of the High Court in each of these cases is set aside. It is hereby declared that the additional tax under the Act can be levied and collected under section 3 of the Act in accordance with our conclusions set out in the previous paragraph