Judgment:
S. Rajendra Babu, J.
1. This petition is filed by the assessee and the assessment period with which we are concerned is from April 1, 1983 to March 31, 1984. The notification had been issued by the Government on March 10, 1982, in exercise of its powers under section 8-A of the Karnataka Sales Tax Act, 1957 ('the Act', for short) reducing from 4 per cent to 2 per cent with effect from April 1, 1982, the basic rate of tax payable by any dealer under the said Act on the sale of food and drinks to their customers in a hotel or restaurant. By amendment to the Act, by Act 13 of 1982 with effect from April 1, 1982, the rate of tax was increased to 5 per cent. The question that arises for consideration is whether section 8-A(3-A) of the Act which was in force at the relevant time would be attracted to the facts of the case :
'If the rate of tax payable under this Act in respect of any goods or class of goods gets modified by an amendment to this Act, notification, if any, issued in respect of such goods or class of goods under clause (a) of sub-section (1), shall, with effect from the date from which such amendment comes into force be deemed to be cancelled to the extent it relates to such goods or class of goods.'
The said provision was however, omitted by the Karnataka Act No. 8 of 1984 subsequently.
2. Section 8-A empowers the State Government to notify exemptions and reductions in tax. The State Government in that regard may issue a notification granting exemption or reduction in rate in respect of any tax payable under the Act-(a) on the sale or purchase of any specified goods or class of goods at all points in the series of sales by successive dealers or (b) by any specified class of persons in regard to whole or any part of their turnover. Section 8-A(3-A) refers only to alterations in the rate of tax payable under the Act in respect of any goods or class of goods. Therefore, it is urged on behalf of the petitioner that the amendment effected by Act 13 of 1982 raising the rate of tax from April 1, 1982, has no application to the petitioner and the petitioner is liable to pay tax pursuant to the notification issued on March 10, 1982 to which we have adverted to already. The authorities below and the Tribunal have taken the view that after the amendment with effect from April 1, 1982 to the Act, by Act 13 of 1982, the rate of tax payable by the petitioner is 5 per cent. Therefore, the question for our consideration now is whether the notification continues to be in force even after the amendment to the Act with effect from April 1, 1982.
3. Learned counsel for the petitioner urged that section 8-A which empowers the State to grant exemption and reduction in tax specifies either such exemption or reduction in tax with reference to the rate in respect of specified goods or class of goods at all points in the series of sales by successive dealers or with reference to specific class of persons in regard to whole or part of their turnover and section 8-A(3-A) is applicable to only notification issued under section 8-A(1)(a) of the Act and not in respect of any notification issued under section 8-A(1)(b) of the Act. The notification issued in this case on March 10, 1982, falls under section 8A(1)(b) of the Act.
4. Learned Government Pleader countering the submissions made on behalf of the petitioner urged that the notification issued reduced the rate of tax and therefore it is a notification issued under section 8A(1)(a) of the Act. Consequently, section 8-A(3-A) would be attracted to a case of this nature, even though such reduction may be applicable to a class of persons mentioned in the notification and in this context she strongly relied upon the decision of this Court in [1993] 91 STC 37 [FBI] Shaw Wallace & Co. Ltd. v. State of Karnataka).
5. In order to correctly appreciate the contention advanced on either side, an analysis of the notification granting reduction in tax will have to be made. The notification dated March 10, 1982, reduced the rate of tax payable by the petitioner from 4 per cent to 2 per cent. It is no doubt true that in the notification the hoteliers, restaurateurs are identified as a class of persons to whom the notification is applicable and that notification is applicable in respect of that part of the turnover which is relatable to the sale of food and drinks to their customers in any hotel or restaurant. It could be seen that the description in the notification is twofold : (1) as to the class of dealers to whom the notification is applicable, (2) the rate at which the exemption or the reduction in tax is granted. To put it in other words, it prescribes a lower rate of tax in respect of hoteliers and restaurateurs on the turnover relating to sale of food and drinks to their customers in any hotel or restaurant. If that is so, this notification must be understood not only as a notification issued under section 8-A(1)(a) but also under section 8-A(1)(b) of the Act as it relates to the reduction in the rate of tax applicable to a class of dealers. The reduction of tax is applicable or relatable to section 8-A(1)(a) whereas the class of dealers to whom it is applicable is relatable to section 8-A(a)(b) of the Act. In that view of the matter, we must say that the notification under consideration is one issued as a composite notification under section 8-A(1)(a) and 8-A(1)(b) both. The position in law is very clear that when the Legislature alters the rate of tax it is deemed to be conscious of the fact of all notifications issued by the Government in relation to the tax structure. If the rate of tax is altered it must be deemed that the Legislature was altering the rate of tax in respect of the notification issued under the Act granting reduction or exemption thereto. When once the rate of tax is altered it cannot still be said that a notification issued under the Act reducing or exempting the tax would still be in force even after the variation in the rate of tax by the Legislature for, such an interpretation would be to confer power upon the State which is higher than that of the Legislature which is not envisaged under the statute. This exactly is the view expressed in [1993] 91 STC 37 (Kar) [FB] Shaw Wallace & Co. Ltd. v. State of Karnataka) at para 7 thereof.
6. However, the learned counsel for the petitioner urged that even assuming for purpose of argument that the notification in question is one covered by both clauses (1)(a) and (1)(b) of section 8A of the Act, when sub-section (3A) thereof refers only to clause (1)(a), a notification of the nature with which we are concerned cannot he said to have become ineffective after amendment in relation to the rate of tax arising under section 8A(1)(a). But, this argument ignores an important principle in interpretation of a statutory provision or a statutory notification wherein a composite notification or provision is made if one part of the statute or the notification gets nullified by reason of the amendment unless it can be shown that the other part survives is separable or severable and the other part can be given effect to, then alone it would be correct to say that in spite of the issue of amendment of the law, the notification would survive. In the present case, if there is alteration as to the rate of tax and if there is, as stated earlier, a prescription of a lower rate of tax in respect of a class of dealers and that got altered by reason of the amendment of the law as interpreted by us, the notification in question cannot survive. In that view of the matter, we must hold that the authorities were justified in bringing to tax the turnover of the petitioner at 5 per cent.
7. We have not referred to the view taken either by the assessing authority or the appellate authority or by the Tribunal because the whole matter was presented to us for a fresh consideration by the learned counsel appearing in the case and that was not the approach of any one of the authorities.
8. In the result, this petition is dismissed.
9. Petition dismissed.