Caltex (India) Ltd., Raipur Vs Bales Tax Officer, Raipur and another

@JUDGMENTTAG-ORDER

P. K. Tare, J.

This order shall also govern the disposal of Miscellaneous Petition No, 363 of 1967 [Caltex (India) Ltd, Raipur v. 1. The Sales Tax Officer and 2 The Appellate Assistant Commissioner of Sales Tax, Raipur]. By these petitions the petitioner challenges the orders of assessment passed by the respondents. In the present petition we are concerned with the order of the first respondent, dated 31 5-1966 {Petitioner''s Annexure- ''A'') u/s 9 (2) of the M, P. Sales of Motor Spirit and Lubricants Taxation Act, 1957 (No 4 of 1958) as affirmed by the order of the second respondent, dated 30-4-1967 (Petitioner''s Annexure- ''B''). In the present petition the period of assessment is the financial year 1960-61, i. e. from 1-4-1960 to 31-3-1961; while in the connected case (i.e. M. P. No. 363 of 1967) the assessment period is from 1-4-1961 to3I 3-1962. In the present case the Sales Tax Officer has assessed the tax payable by the petitioner at Rs. 60,201.52 paise and on appeal that assessment was confirmed. In the connected case the petitioner had been assessed at Rs. 365,294.24 ps. The appellate authority reduced it by Rs. 7,200.

The petitioner had effected sales of petrol in large quantity during the relevant period to M/s Anand Transport Company, Raipur, and Raipur Transport Company, Raipur, who according to the petitioner were the registered dealers. During arguments the learned counsel for the petitioner fairly conceded that the Raipur Transport Company Raipur, not being a registered dealer, he would not press the petition with respect to the sales effected to that Company, but he would concentrate on the sales effected to M/a. Anand Transport Company, Raipur.

Before considering the questions involved in these petitions it is necessary to take note of the relevant taxing provisions as contained in the Madhya Pradesh Sales of Motor Spirit and Lubricants Taxation Act, 1957. Section 2, sub-section (c) of the Act defines the dealer as follows:-

S. 2 (c).-''dealer'' means any person who carries on the business of selling, supplying or distributing motor spirit, directly or otherwise, whether for cash, or deferred payment, or for other valuable consideration and includes-

(i) the Central or a State Government or any of their departments, a local authority, a company, an undivided Hindu family or any society (including a co-operative society), club, firm or association which carries on such business;

(ii) a society (including a co-operative society), club, firm or association which sells, supplies or distributes goods to its members;

Sub-section (d) of section 2 of the Act defines the ''general sales-tax law'' as follows:-

S. 2 (d)--"general sales-tax law" means the law for the time being in force in any region which provides for die levy of tax on the sale or purchase of goods generally;" Sub-section (k) of section 2 defines "retail dealer" as follows;-

S. 2 (k).-"retail dealer" means any person who, on commission or otherwise, sells or keeps for sale motor spirit or lubricant for the purpose of consumption by the person by whom or on whose behalf it in or may be purchased.

Sub-section (n) of section 2 defines ''wholesale dealer'' as follows:-

S. 2 (n).-"Wholesale dealer" means any person who sells motor spirit or lubricant, or keeps motor spirit or lubricant for sale, to retail dealers for the purpose of trade."

Sub-section (1) of section 2 defines ''retail sale'' as follows: -

S. 2(1).-''retail sale'' means a sale by a retail dealer or motor spirit or lubricant to a person for the purpose of consumption by the person by whom or on whose behalf it is or may be purchased and includes the consumptions by a retail dealer himself or on his behalf of motor spirit or lubricant sold to him for retail sale;

It is relevant to note that the definition of ''retail dealer'' and ''wholesale dealer'' as provided by sub-sections (k) and (n) were deleted as per the Madhya Pradesh Sales of Motor Spirit and Lubricants Taxation (Amendment) Act, 1961 (No. 19 of 1961). The said Amendment Act came into force with effect from 1-6-1961. As such, the present petition will be wholly governed by the unamended Act; while the connected petition would be partly governed by the un-amended Act for the period upto 31-5-1961 and for the remaining period of assessment from 1-6-1961 to 31-3-1962 it will be governed by the provisions as amended by the Madhya Pradesh Sales of Motor Spirit and Lubricants Taxation (Amendment) Act, 1961 (No. 19 of 1961).

Section 3 of the un-amended Act, which was the charging section, provided for imposition of tax as follows:-

S. 3 (1).-Subject to the provisions of this Act, there shall be levied on all retail sales of motor spirit and lubricants effected after the commencement of this Act. a tax at the rate specified in the table below:-

S. 3 (2).-Where any retail dealer obtains his supplies of motor spirit or lubricant from an importer or a wholesale dealer, it shall be open to the State Government by agreement with the importer or wholesale dealer, to levy from him in advance that tax on sales of such motor spirit or lubricant payable under sub-section (1) by the retail dealer, and the provisions of this Act relating to the assessment and recovery of tax shall, subject to such conditions as may be agreed upon, apply to the importer or wholesale dealer accordingly.

S. 3 (3).-No tax shall be levied under this Act on the sale of any motor spirit or lubricants in respect of and to the extent to which sales tax has been paid under any law relating to sales-tax in force in the State before the commencement of this Act.

It may be noted that the liability of a wholesale dealer for payment of tax payable by the retail dealer could be the subject-matter of an agreement between the wholesale dealer and the State Government, in the present case it is not the case of either of the parties that there was any such agreement. Therefore, section 3, sub-section (2) of the un-amended Act would not at all be attracted. Section 4 of the Act provided for registration of dealers and the registration could be either as an importer or as a wholesale dealer or as a retail dealer or if a person or a firm carried on the business, it could get itself registered in all the three categories, In view of these provisions of the law the transactions in question at the relevant time were clearly sales by a wholesale dealer to a retail dealer. They cannot be construed to be in any other manner. It is also relevant to note at this stage that as per section 3 (1) of the Act the tax could be levied on all retail sales only and the liability for payment of those sales was that of the person effecting the retail sales.

In Bhopal Sugar Industries Ltd. v. D. P. Dube, Sales Tax Officer (1963) 14 S.T.C 406 , their Lordships of the Supreme Court had an occasion to construe the meaning of ''retail sale'' as provided by section 2 (1) of the un-amended Act. Their Lordships laid down that consumption by an owner of goods in which he deals would not be a ''sale'' within the meaning of the Indian Sale of Goods Act, 1930, and, therefore, it would not be ''sale of goods'' within the meaning of Entry 54, List II, Schedule VII, of the Constitution of India. Their Lordships observed that the legislative power for levying tax on sale of goods being restricted to enacting legislation for levying tax on transactions which conform to the definition of ''sale of goods'' within the meaning of the Indian Sale of Goods Act, 1930, the extended definition which includes ''consumption by a retail dealer himself or on his behalf of motor spirit or lubricants sold to him for retail sale'' would be beyond the competence of the State Legislature. As such, in the opinion of their Lordships, section 2 (1) of the un-amended Act was partly un-constitutional and as it was severable from the rest of the definition that clause alone was declared invalid and accordingly struck down.

It was after the said pronouncement of their Lordships of the Supreme Court that the State Legislature amended the Act by enacting the Madhya Pradesh Amendment Act No. 19 of 1961. The provisions of the amending Act retained the definition of a ''dealer'' provided by section 2 (c), as also the definition of ''general sales tax law'' as provided by section 2 (d). But the definitions of ''retail dealer'' and ''wholesale dealer'' as provided by sections 2(k) and 2 (n) of the un-amended Act were deleted and section 2 (1) of the unamended Act defining the ''retail sale'' was substituted by the definition of ''sale'' as follows:-

S. 2 (1).-''sale'' with all its grammatical variations and cognate expressions means transfer of motor spirit for cash or deferred payment or for other valuable consideration and includes transfer of motor spirit by a society or club or any association to its members, but does not include a mortgage, hypothecation, charge or pledge.

Two more explanations were added to the said definition as follows:-

Explanation I.-Consumption of motor spirit by a dealer himself or on his behalf shall be deemed to be a ''sale''.

Explanation II.-A sale of motor spirit deemed to be a sale inside the State within the meaning of sub-section (2) of section 4 of the Central Sales Tax Act, 1956 (74 of 1956), shall also be deemed to be sale inside the State for the purposes of this clause.

Section 3 of the un-amended Act was amended by the M. P. amendment Act No. 12 of 1961, whereby the entire base of taxation was altered. The amended provision stood as follows:-

S. 3.-Levy and payment of tax.-Subject to the provisions of this Act there shall be levied on the point of first sale of motor spirit in the State as tax at the rate specified in the Table below:

Provided that the burden of proving that the sale effected by a dealer is not liable to tax under this section shall be on dealer.

This section was later on amended by the M. P. Amendment Act No. 13 of 1966. But, we are not concerned with the subsequent amendments. There can be no doubt that as per section 3 of the Act, as amended by the M. P. Amendment Act No. 12 of 1961, the petitioner would be liable to pay sales-tax with effect from the date the said Amendment Act came into force. As such, even the petitioner does not challenge its liability to pay the tax for the period subsequent to 1-6-1961, but as already indicated earlier, the liability of the petitioner to pay such tax till 31-5-1961 will have to be ascertained with reference to the un-amended provision of the original Act.

The learned counsel for the petitioner urged that tax was leviable on retail sales only and the phrase ''retail sale'' had been defined by the original Act and by no stretch of imagination could the transactions between the petitioner and the Anand Transport Co. be construed to be retail sales. But, on the other hand, according to the learned counsel, they were sales by a wholesale dealer to a retail dealer and such transactions on a wholesale basis were not at all taxable under the un-amended Act.

As against this the contention of the learned counsel for the respondents is that as the sale by a retail dealer by the process of consumption by himself could not be taxed according to the pronouncement of their Lordships of the Supreme Court in Bhopal Sugar Industries Ltd. v. D. P. Dube, Sales Tax Officer, the first sale effected by the wholesale dealer to the retail dealer should now be construed to be a retail sale. In our opinion, this is an absolutely untenable contention. If the transactions in question fell within the purview of sales by a wholesale dealer to a retail dealer as per the provisions of the un-amended Act, we are unable to appreciate the logic and the rationale of this suggestion that those transactions should after the pronouncement of their Lordships of the Supreme Court now be construed to be retail sales. We may observe that this suggestion, if accepted, would be contrary to all interpretations and constructions of statutory law The nature of the transactions will have to be determined with reference to the provisions of the un-amended Act and it will not change merely because their Lordships of the Supreme Court struck down a part of section 2 (1) of the original Act and as a result of it, the respondents were unable to levy tax on the Anand Transport Co. It is an admitted fact that the Anand Transport Co. had purchased all the petrol for consumption by itself. But, according to the definition of ''sale'' as prevailing then, it was deemed to he a retail dealer and for that reason, it had got itself registered as a retail dealer. Therefore, any sale by the Anand Transport Co. would be taxable. But consumption by itself would not be taxable according to the pronouncement of their Lordships of the Supreme Court. In order to over-come that difficulty the taxing authorities now want to convert the transactions, which were indisputably sales by a wholesale dealer to a retail dealer, into the retail sales. We have indicated that such a contention would be wholly untenable and opposed to all principles of interpretation of statutes.

It was contended by the learned counsel for the petitioner that the Anand Transport Co. was itself a registered dealer and in view of the production of the registration certificate, the petitioner was not called upon to inquire into whether the Anand Transport Co. would effect sales to consumers or would itself consume the purchased goods. The mere production of a certificate was sufficient and, therefore, the transactions as entered into between the petitioner and the Anand Transport Co. ought to be construed to be sales by a wholesale dealer to a retail dealer. As to the question of inquiry to be made by the wholesale dealer, the learned counsel invited our attention to the pronouncement of their Lordships of the Supreme Court in The State of Madras v. Radio and Electricals Ltd. (1966) 18 S. T. C. 222. We do not think it necessary to consider that aspect, as, in our opinion, the transactions as per the provisions of the un-amended Act were clearly sales by a wholesale dealer to a retail dealer and by no stretch of imagination can a wholesale dealer be converted into a retail dealer and what were wholesale transactions cannot be allowed to he similarly converted into retail sales. In the view that we take, the petitioner''s liability for payment of tax as per section 3 of the un-amended Act did not and could not at all arise and, in our opinion, the interpretation sought to be put by the taxing authorities on the provisions of the un-amended Act would be an indefensible interpretation not warranted by the principles of interpretation of statutes, but on the other hand wholly contrary to such principles.

As a result, we quash the impugned orders passed by respondents and further we issue a writ of mandamus prohibiting the respondents from recovering any sales-tax on the sales effected by the petitioner to the Anand Transport Co. upto 31-5-1961. However, this writ shall not affect the petitioner''s liability to pay tax according to the amended provisions subsequent to 1-6-1961.

As a result, the orders impugned are quashed and these petitions are allowed wholly and partly respectively, with costs. Counsel''s fee in this Court shall be Rs. 250 in each case, if certified. The security deposited by the petitioner shall be refunded to it.