ORDER
Hegde, J.
1. These are connected matters. They arise out of the same order. But we shall first take up for consideration C.R.P. No. 964/61.
2. The question for consideration in C.R.P. No. 964/61 is whether on the facts and circumstances of that case, the tax liability of the petitioner, under the Central Sales Tax Act, to be referred to as 'the Act' hereinafter, on his inter-State sales can be any more than what it would have been had they been intra-State sales and liable to be taxed under the Mysore Sales Tax Law. The turnover in question relates to sales effected by the petitioner in the course of inter-State trade or commerce during the period commencing form 1st July, 1957, and ending on 31st March, 1958. The disputed turnover relates to sale of textiles manufactured by means of powerlooms. Under the Mysore Sales Tax Act of 1948, those goods were liable to be taxed under section 3(2) read with Schedule 1, entry 2(a), of that Act and under the Mysore Sales Tax Act, 1957, those goods are liable to tax under section 5(3) read with entry No. 7 in Schedule II of the Act had they been intra-State transactions.
3. The charging section in the 'Act', i.e., section 6, came into force on 1st July, 1957. Some of the provisions of the Act were amended on 1st October, 1958. In the course of this order, whenever reference is made to the 'Act' it should be understood as referring to the provisions of the Act as they stood prior to 1st October, 1958 (the amending Act i.e., Act XXXI of 1958, which came into force on 1st October, 1958).
4. Section 6 of the Act says :
'Subject to the other provisions contained in the Act, every dealer shall, with effect from such date as the Central Government may, by notification, in the Official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales effected by him in the course of inter-State trade or commerce during any year on and from the date so notified.'
5. Notification referred to in section 6 was issued on 26th March, 1957, but it came into force on 1st July, 1957.
6. For finding out the rate at which the tax has to be calculated and the manner in which it has to be calculated, on the sale of any goods in the course of inter-State trade or commerce we have to look to section 8 of the 'Act'. For our purpose, the material potions of section 8 are those found in sub-sections (1), (2) and (3).
7. Both the learned Government Pleader and Shri K. Srinivasan, the learned counsel for the petitioner, agree that the transactions in dispute do not fall within the ambit of sub-section (1) of section 8. They are also agree that those transactions come with the scope of sub-section (2) of that section. But they are not agreed as to the true effect of that sub-section, i.e., sub-section (2) of section 8. According to Shri Srinivasan, that sub-section lays down that a 'sale' in the course of inter-State trade or commerce shall be taxed under the 'Act' at the same rate and in the same manner as it would have been taxed, under the appropriate State law, if it had been an intra-State transaction, but without taking into consideration the minimum turnover fixed by the State law for the purpose of determining the liability of the 'dealer' to be assessed under the State sales tax law; whereas according to Shri D. M. Chandrasekhar, the learned Government Pleader, while under section 8(2) the inter-State sales are made liable to be taxed at the rate mentioned in the State sales tax law, for similar intra-State sales, the right of the Central Sales Tax Authorities to tax any sale in the series of sales, is not in any manner controlled by the provisions contained in the State sales tax law.
8. The contention of the learned Government Pleader that the Parliament's power to regulate the levy of sales tax on inter-State sales, is not in any manner limited by the provisions contained in the appropriate State laws, is beside the point. We are not now dealing with the competence of the Parliament. We are merely called upon to interpret some of the provisions in the 'Act'. Therefore, we have only to find out the true effect of the provisions contained in section 8(2).
9. Sub-section (2) of section 8 says :
'The tax payable by any dealer in any case not falling within sub-section (1) in respect of the sale by him of any goods in the course of inter-State trade or commerce shall be calculated at the same rates and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State, and for the purpose of making any such calculation any such dealer shall be deemed to be dealer liable to pay tax under the sales tax law of the appropriate State, notwithstanding that he, in fact, may not be so liable under that law'.
10. The learned Government Pleader thinks that the contention of Shri Srinivasan would have had force if section 8(2) had merely stated :-
'The tax payable by any dealer in any case not falling within sub-section (1) in respect of the sale by him of any goods in the course of inter-State trade or commerce, shall be calculated at the same rate and in the same manner as would have been done if the sale had, in fact, taken place inside the appropriate State.'
11. But because of the remaining portion of that section, i.e., 'and for the purpose of making any such calculation any such dealer shall be deemed to be dealer liable to pay tax under the sales tax law of the appropriate State notwithstanding that he, in fact, may not be so liable under that law', the pattern of taxation is changed while retaining the rate fixed under the sales tax law of the State.
12. In construing sub-section (2) of section 8, we have no bear in mind three separate expressions. They are :
'(i) the tax payable shall be calculated at the same rate and in the same manner as would have been done if the sale had in fact taken place inside the appropriate State;
(ii) for the purpose of making such calculation, and
(iii) notwithstanding that he, in fact, may not be so liable under the law'.
13. There is no controversy as mentioned earlier as regards the 'rate'. But then the calculation of the tax has to be made 'at the same rate and in the same manner as would have been done if the sale had taken place inside the appropriate State'. What is the meaning of the words 'same manner' The learned Government Pleader's contention ignores those words. That is not permissible under the rules of construction of statutes. To get over that difficulty, the learned Government Pleader stated that those words referred to the procedure to be adopted while assessing the 'dealer'. But the juxtaposition of the words 'same manner' coming immediately after the words 'at the same rate' clearly shows that they relate to the calculation of the tax. Therefore, there is no force in the contention that they deal with the procedure to be adopted in the matter of assessment. Then we have the words 'and for the purpose of making any such calculation'. 'Such calculation' refers to the calculation of tax at that rate and in the manner provided earlier.
14. What then the Parliament meant by saying :- 'notwithstanding that he, in fact, may not be so liable under that law'.
15. We have to first notice that that clause refers to the 'dealer' and not to the 'sales' which are the subject-matter of taxation. Sales Tax Act usually provides for three types of exemptions. Some 'dealers' are exempt from taxation. Some goods are exempt from taxation and some transactions are exempt from taxation. The clause referred to above ignores the exemptions given to a dealer under the sales tax law of the appropriate State. For example, under the Mysore Sales Tax Act, 1957, all dealers whose turnover is less than Rs. 7,500 are exempt from taxation. That exemption is taken away by section 8(2) of the Act. The reason for this removal of exemption is obvious. The Central Sales Tax Act imposes tax only on inter-State sales. Inter-State dealings of a 'dealer' would be ordinarily a fraction of his total dealings. Therefore, the reason for fixing the minimum turnover for being liable to be taxed under the State tax law, i.e., being a petty trader, disappears. For the reasons mentioned above, we accept the interpretation placed by Shri Srinivasan on section 8(2).
16. The learned Government Pleader lastly contended that if, for any reason, we think that the language employed in sub-section (2) of section 8 is ambiguous, we should take the aid of section 8(1) in interpreting section 8(2), so as to facilitate a harmonious construction. We would like to make it plain that we found no difficulty in interpreting section 8(2). But yet we shall proceed to consider the contentions raised by the learned Government Pleader as regards the scope of section 8(1) and its bearing on the interpretation of section 8(2). According to him a 'dealer' who complies with the requirements laid down in section 8(1) read with section 8(3) has to pay tax at the rate mentioned in section 8(1), but if our interpretation of section 8(2) is correct then a 'dealer' who does not comply with the requirements of section 8(1) read with section 8(3) would be in a better position. We are not able to find out as to how this could be. Under section 8(1).
'Every dealer who, in the course of inter-State trade or commerce sells to a registered dealer goods of the description referred to in sub-section (3) shall be liable to pay tax under this Act, which shall be one per cent. of his turnover.'
17. Sub-section (3) of section 8 says :
'The goods referred to in sub-section (1)(a) in the case of declared goods, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him; and
(b) in any other case, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for re-sale by him or for use by him in the manufacture of goods for sale or for use by him in the execution of any contract; and in either case include the containers or other materials used for the packing of goods of the class or classes of goods so specified'.
18. It is not shown to us that the burden of taxation under section 8(2) would be less than that under section 8(1). Proviso to section 8(1) makes it clear that the position would be otherwise. That proviso which in effect is an exception to section 8(1) says :-
'Provided that, if under the sales tax law of the appropriate State, the sale or purchase of any goods by a dealer is exempt from tax generally and not in specified cases or in specified circumstances or is subject to tax (by whatever name called) at a rate or rates which is or are lower than the rate specified in sub-section (1), the tax payable under this Act on the turnover in relation to the sale of such goods in the course of inter-State trade or commerce shall be nil or shall be calculated at the lower rate, as the case may be'.
19. Therefore, the tax to be levied under section 8(1) will be wiped out or reduced if the transactions in question come within the proviso, i.e. (1) if, under the sales tax law of the appropriate State the sale or purchase of the goods concerned is exempt from tax generally and not in specified cases or in specified circumstances, then the sale of those very goods in the course of inter-State trade or commerce shall not be subject to any tax; and (2) if the sale of the goods concerned is subject to tax (by whatever name called) under the sales tax law of the appropriate State, at a rate or rates which is or are lower than the rate specified in sub-section (1), the tax payable under the 'Act' on the turnover in relation to the sale of such goods in the course of inter-State trade or commerce is to be calculated at the lower rate. Hence, we see no incongruity between the provisions contained in section 8(1), and the provisions contained in section 8(2) as we have interpreted them.
20. One other facet of the argument of the learned Government Pleader in this connection may also be noticed. He urged that the goods exempted under the proviso to sub-section (1) of section 8 are those goods which are 'generally' exempt from taxation. According to him the word 'generally' found in section 8(1) means 'totally'; in other words, when that section speaks of goods 'generally exempt from taxation' it refers to goods which are totally exempt from taxation as in the case of goods mentioned in Schedule V of the Mysore Sales Tax Act, 1957, and not the goods, the sale of which is taxed at one point or the other. But according to Shri K. Srinivasan the proviso does not deal with goods as such but deals with sales. To us this controversy appears to be pointless. Section 8(1) deals with certain class of sales in the course of inter-State trade or commerce and section 8(2) deals with inter-State sales which do not fall under section 8(1). Assuming, without deciding, that the evasion of the provisions contained in section 8(1) would be beneficial to dealers in certain goods - about which we are far from satisfied - that is no reason to depart from the grammatical construction of section 8(1). In a case like this no question of harmonious construction arises. In Bank of Chettinad Ltd. v. Commissioner of Income-tax, Madras , we find the following passage in Inland Revenue Commissioners v. Duke of Westminster ([1936] A.C. 1) (quoted with approval by Lord Russell of Killowen) which appears to us apposite while dealing with the controversy above noticed :
'I confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a Court's view of what it considers the substance of the transaction, the Court thinks that the case falls within the contemplation or spirit of the statute. The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case. As Lord Cairns said many years ago in Partington v. Attorney-General ([1869] 4 H.L. 100 at page 122) : 'As I understand the principle of all fiscal legislation, it is this; if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be.''
21. For the reasons mentioned by us above, we are of the opinion that the present case comes within the scope of sub-section (2) of section 8, and the disputed transactions are liable to be taxed at the same rate and in the same manner as they would have been taxed if they had been intra-State transactions. Admittedly, they have not been so taxed. Therefore, the case will have to go back to the Mysore Sales Tax Appellate Tribunal for determining the tax due from the petitioner in the light of the directions given by us hereinbefore. The parties will bear their own costs in this Court.
(Civil Revision Petition No. 1393 of 1961).
22. The only question for consideration in this revision petition is whether the licence fee imposed on the petitioner is a 'tax' within the meaning of that expression found in section 8 of the 'Act'. The Tribunal below has opined that the licence 'fee' levied on the petitioner under Mysore Sales Tax Act, 1948, as well as under the Mysore Sales Tax Act, 1957, is not 'tax' as contemplated in section 8 of the 'Act'. For the reasons mentioned by us in our judgment in C.R.P. No. 1533 of 1960 and C.R.P. No. 635 of 1961 (Since reported as C. S. Nagaraja Setty and Another v. Deputy Commissioner of Commercial Taxes, City Division, Bangalore, and Another [1962] 13 S.T.C. 578), we hold that the view of the Sales Tax Appellate Tribunal is not correct.
23. We set aside the order of the Tribunal and remit the case back to that Tribunal for determining the liability of the petitioner on the basis that the license fee levied on him is 'tax' within the meaning of that expression found in section 8 of the 'Act'. No costs.
24. Cases remitted.