RALLIS LNDIA LTD v. STATE OF ANDHRA PRADESH

Citation: [1980] 2 S.C.R. 1028

Court: Supreme Court of India

Bench: R.S. PATHAK, A.D. KOSHAL

Case summary

was challenged by the appeallant in an appeal which was diSmissed by the Sales Tax Appellate Tribu'nal, Andhra Pradesh (hereinafter called the Tribunal) on the 30th of August, 1976, mainly on the ground that section 6 of the AP....

Judgment text

RALLIS lNDIA LTD: v. STATE OF ANDHRA PRADESH February 12, 1980 [R. S. PATHAK AND A. D. KOSIIAL, JJ. ] Central Sales Tax Act 1956-Section 15(b)-Scope of. On the ground that the dealers have not charged and collected Central' Sales Tax during the period ! st April, 1969 to 9th June, 1969 tho Commercill on granted by the C. T. O. 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· 133(1)(c) of the co·nstitution of India read with section 109 of the Code of Civil Procedure. 4. In ord•"r to appreciate the contentions raised on behalf of the ~I" appellant it is necessary to examill'e the various relevant legislative ( :provisions which are set out below : Section JO of the Central Sales Tax (Amendment) Act, 1969 (hereinafter referred to as the 1969 Act). "10. Exemption from liability to pay tax in certain . cases.

(1) Where any sale of goods in the course of interstate 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 bee·n levied or collect·ed in respect of such sale or any portion of the turn-over pelating to such sale ahd no such tax could have been J. cvied or ·collected if the amendments made in the principal Act by this Act had not bc•cn made, then, notwithstandi'ng anything contained in section 9 on the said amendments, the dealer shall not be liable to pay any tax under the principal Act, as ame'nded by this Act, in f'~spect of such sale or -such part of the turn·over velating to such sale.

(2) For the purposes of sub-scction(l), the burden of proving that no tax was collected under the principal Act in respect of any sale referred to in sub-section (I) or in respect of any portion of tho turn-over relating to such sale shall be o'. n 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 5ection 5, the sale or purchase of declared goods by a dealer shall be liable to tax at the rate, and only at th~ point of sale or purchase, specified against (I) 50 S. T. C. 176. (2) 39 S. T. C. 500. each in the Third Scheduk, on his tur"n-over of such sales or purchases for each year irrespective of the quantum of his turn-over in such gocic:! s; !

lnd 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 5old in the course of inter-state trade or commerce, the tax so levied shall be refunded to such, person, in such manher and subject to such conditions as. may be prescribed. " The proviso to section 6 o/ the A. P. Act as amended in· \- 1974 retrospectively wi·th effect from 1-l0-1958. "Provided that whene 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 Central Sales Tax Act, 1956. in respect of the sale of such goo~s in the course of inter-stat•e 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 (I) of rule 27-A of the Rules framed under the A. P.

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 int•er. ,;tate 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 (I) of the said rule 27A after its amendment 1-8-1974 "Whef'e any lax has been levied ahd 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 ccurse 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 cohditions specified· iu sub-rules (2) to (4) : Provided that the refund shall not IJ. o made unless the tax payable under ! hoc Central Sales Tax Act 1s paid. " • RALLIS INDIA LTD. r. ANDHRA PRADESH (Koshal, J.

) 10 33 Clauses (a) and (b) of section 15 of the Central Act av in force on 30-4-1971 "15. Restrictions and conditions in regard to tax 011 sale or purchase of declared goods within a State-Every sales tax law art' 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 Slate shall be ( levied only i"n respect of the last sa1c or purchase inside the State and shall not exceed two per cent c of the sale or purchase price. (b) where a tax has be•cn levied under that law in respect of the sal•c 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 kvied shall be refunded to such person in such manner D• and subject to such conditions as may be provided in any law in force in that State.

" Clause (b) of section 15 of the Ce11tral Act as amended in 1972 retrospectively with effect from 1-10-1958 "(b) where a tax has been levied under that law in res- E pect of the sale or purchas•c inside the State of any declared goods and such goods are sold in the course of inter-State trade or commorce, and tax has been paid under this Act in respect of tho sale of such goods in the course of inter-s~atc trade or con1metce, 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 i"n that State. " 5. Section 10 of the 1969 Act makes no reference at all to any G, 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 sayc, that a dealer shall not be liable to pay any such tax for the period between 10-11-1964 and 9-6-1969 if certaih conditions arc satisfied. Much reliance has been placed by learned counsel for the appellant on this section which, in our opinion, however, is of no aSJSistance to H him. It may be taken for granted that the appellant did not collect any tax uhder the Central Act on the sale of goods effected by it in • 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 B leviable under the Central Act in respect of such sale and we do not see how the appel;ant could benefit from the said section 10 in the matter of its assessment for the period in question under the A. P. Act. All tha:t 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 into::r-state trade and that is a matter which has to be decidc ed with reference to section 6 of the A. P. Act, rule 27-A extracted above and section 15 of the Central Act. 6. As on 30-4-1971 the provisions of section 6 of the A. P. Act laid down that if goods were sold in the course of inter-state trade or c01mnerce and tax had been levied on the sale or purchase there- 'D of uuder 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 i"nter-state trade; and although the section did not talk of any 'exemption', all that the C. T. O. 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 e"ntitled to a refund of such tax, the same was tak•cn 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 Ul)Cfor clause (b) of . / F section 15 of the Central Act the language of which is practically the same as of the proviso to section 6 of the A. P. Act. 7. The matter however docs not end there as the amendment of section 15 of the Central Act in 1972 and that of section 6 of the' A. P.

Act in 1974 made a real difference which appears to ns to be an insur- ·G mountable hurdle in the way of the •appellant's stand being accepted. As already stated, both the amendments were retrospective so as ta 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 C. T. O. was that as modified by the two amendments. Of course we are here concerned only with the order of assess- :n ment made under the A. P. Act. That order would be good if it is in conformity with the provisions of the amended section 6 of the A. P. Act but not otherwise. Under the amended section the liability tb tax - remained unchanged but the entitlement to refund was abolished and A .

, 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 avaia! able merely because the goods in question had been sold in the course of in- R ter-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 , reimbnrsement of the tax leviable under the A. P. Act is claimed. The '. '1" proviso to section 6 as amended in 1974 therefore is of no assistance _. ill.. to it. c ~-J 8. 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 A. P.

Act and clearly means that the tax under the A. P. Act would be reimbursibk only to a dealer who has paid tax under • D the Central Act in respect of the sale of the goods in question m the course of inter-state trade or commerce. • 9. 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 --: 1 was the D. C. C. T. who had cancelled the order 0! refund (inherent in E the 'exemption' granted by the C. T. 0. ) and that there was no provision authorising the D. C. C. T. to force the appellant to return any amount paid to it as a refund. The argument is obviously fallack>us. The D. C. C. T. has done nothing more than to revise an order of the C. T. O.

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 assess- F ment by virtue of the retrospective amendment of section 6 of the A. P. 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 A. P. Act inasmuch as no reimbursement was due in respect of goods on which tax under the Central Act had not been paid. The D. C. C. T. G therefore had not only the power but was duty-hound to strike down the order of refund as being illegal. The order of the C. T. 0. as revised by the D. C. C. T. thus is reduced to an order merely of levy of the tax due under the opening paragraph of section 6 of the A. P. Act so that the appellant becomes liable to pay such tax. H 10. The only other argument put forward by Mr.

Desai in support •f the appeal rested on the provisions of rule 27-A above extracted in - \ its un-amended form. The rule can obviously be of no help to him inasmuch as even if it can be construed as laying down something in . · kvour of the appellant it cannot override the provisions of the Act under which it is framed. No amount of argument would make a rule override 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. 11. It may be stated that at one stage of the argument Mr. D~ai drew our attention to the fact that by reason of the amendments made in the statute law and the consequent demand by the D. C. C. T. for the refunded amount the appellant had been placed under a burden which ·C 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 tke A. P.

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. 12. We mighl.. mention here that Daito Suryanarayana <1nd Com- • pany's case (supra) on which the High Court rclied i11 support of the impugned judgment takes a v. iew of the law which is in conformity with the opinion expressed above by us and we unreservedly approve of the same. 13. In the result the appeal fails and is dismissed but with no order as to costs. Appeal dismissed.