INDIA TOBACCO CO. L1 v. THE COMMERCIAL TAX OFFICER, BHAV ANIPORE & Ors.

Calcutta High Court in E.M.A. No. 135 of 1961. A. K. Sen, M. C. Bhandari, D. Pal, P. Mridul and D. N. Gupta, for the appellant. respondent. B. Sen, P. K. Chatterjee, Leila Seit and G. s. Chatterjee for The Judgment of the Court was delivered by · SARKARIA, J. Whether the sale of cigarettes after the enactment of West Bengal &ales Tax (Amendtp.ent) Act, 1958 (for short, the 1958 Act) is governed by the Bengal Finance (Sales Tax)· Act 1941 (fpr short, the 1941 Act) and, as such, a dealer in the Sta:te of West Bengal is entitled to the benefits under s. 5(2) (a) (ii) of the 1941 Act making purchases free of sales-tax of raw material Md other goods required for use in the manufacture of cigarettes on the strength of ~ch examption entered iB his registration: ceriliicate, is the onfy question .. that falls for determination in this appeal by cerµticate gnmted by tho (b). · of tlacl High Court of Calcuita under A.Jtjcfe-13l(1)(a.) a.ad- Constitutioa 'l 614 SUPREME COURT REPORTS [1975] 3 S.C.R. The appellant, India Tobacco Co. Ltd. Company) was a 'deoaler' within the meaning of 1941 Act carrying on the business of manufacture and sale of cigarettes and smoking tobacco. It obtained the registration certificate No. BH/67B under that Act, and on its basis, became entitled to exemption under s. 5 (2)(a) (ii) in the from payment of sales tax on goods purchased by it for use manufacture of cigarettes. (hereinafter called In 1954, the Legislature of West Bengal enacted the West Bengal Sales Tax Act, 1954 (for shor:t, the 1954 Act) "to impose a tax on the sale of cigarettes an~ other commodities in West Bengal". The 1954 Act took out cigarettes and a de>aler in cigarettes from the purview of the 1941 Act. The Company got itself registered under the 1954 ACt and its registration certificate which it had obtained under the 1941 Act was amended and cigarettes were excluded therefrom. By virtue of provisions of s. 23 of 1954 Act, however, the Company continued to avail of the benefit under s. 5(2) (a) (ii) of the 1941 Act with regard to purchases of goods required for use in the manufacture of cigarettes. In 1957, the Government of India in consultation with the State Governments, decided that an additional duty of excise should be levied on mill-made textiles, sugar and tobacco including manufactured tobacco in replacement of the sales-tax then levied by the State Gov ernments, the net proceeds being distributed runong the States subject to the then income derived by each of the States being assured to it. Before undertaking the necessary legislation for the levy, the President of India made a reference to the Second Finance Commission request ing it to make recommendations as to the principles which should this additional duty govern the distribution of the net proceeds of among the States. Broadly, the recommendation of the Finance Com mission was that the States levying a tax under their State Laws on the sale or purchase of sugar, tobacco and mill-made textile after April 1, 1958 would not be entitled to participate in the distribution of the net proceeds of this additional duty. In accordance with the recommenda tions of the Finance Commission, Parliament enacted the Additional Duties of Excise (Goods of ~pecial Importance) Act, 1957 (Central Act 58 of 1957). This Act c:ame into force on December 24, 1957. It declared the aforesaid three d'l!sses of goods "to be of special impor tance in inter-state trade or commerce". Further, th~ proviso to para. 1 (b) (iii) of the Second Schedule appended to the said Act, gave effect to the recommendation of the Finance Commission with regard to· the distribution of additional duties among the States. Manufactured Tobacco is mentioned under Item 9(11) of the First Schedule of the It further indicates that cigarettes, cigars, cheroots and 1957 Act. bidies all fall under the description of 'manufactured tobacco'. They have been subjected to this additional duty of excise at different rates. Part I of the Second Schedule relates to distribution of these additional duties. A c D F G H INDJA rosAcco oo. LTD. v. c.r.o: (Sarkaria, /.) · 61 s In view of the Central Act 58 of 1957, the State Le8islature passed the 1958 Act. · It received the assent of the President and was there after published in the Calcutta Government Gazette on March 30, 1958. It amended .the 1954 Act. The 1958 Act, substituted for 'flie words "cigarettes and other commodities" occurring in the preamble of the 1954 Act, ,the words "certain notified commodities". It further replaced the word "cigarettes'', wherever. it occurred in the 1954 Act, by the' words "notified commodities". The 1958 Act substituted a new Section 23 for the original Section 23 of the 1954 Act. The . new Section provided that nothing in the 1941 Act shall apply to notified · commodity'from the date on which the said commodity is or was noti fied under s. 25 of the 1954 Act as amended by the 1958 Act. Clause (ii) of the Proviso in this new Section 23 provided that : . "the price of goods sold to a dealer for use by such dealer for manufacturing, making, processing . or packing notified commodities shall be deducted . in calculating taxable turnover under section 5 of the Bengal Fiilance (Sales Tax) Act, 1941." · B c D rile notifications issued by the State Government from time to time under s. 25 in respect of "notified commodities" do not include ciga rettes. Having regard to the enactment of 1958 Act, the Company wrote to the Commissioner of Commercial Taxes, West Bengal, Respondent No. 3, on April 11, 1958, stating that the registration certificate grant ed to it under the 1954 Act, bearing No. BH/l/54B, was liable to be cancelled because the Company ceased to be a dealer as defined It was further contended that the Company as a manu . that Act.- facturer of cigarettes and smoking tobacco was entitled to have its· re- gistration certificate under the 1941 Act suitably amended in order to enable it to purchase. free of tax goods required for use in the manu facture of cigarettes and smoking mixtures· in accordance with the pro viso to s. 5 (2) (a) (ii) of the 1941 Act. Then, the Soales-tax authorities of the State on July 1, 1958, amended the registration certificate of the Company under the 1941 Act specifying cigarettes and smoking mix tures as the goods for the manufacture of which it was entitled to pur chase free of tax raw material, p!oant and machinery. This certificate was further amended by the authorities on July 25, 1958 to include certain .materials under the heading 'consumable stores' which it could· purchase tax-free. On July 30, 1958, the Company wrote to the Additional Commis to confirm sioner of Commercial. Tax (Res. No. 2) requesting him that it was .not liable to pay tax or to file returns either under the 1954 Act or under the 1941 Act. As a consequence, the Additional Com missioner and Commercial Tax Officer, Bhavanipore wrote letters dated September 8, 1958 and September 22, 1958, respectively. The subs tance of these letters was that from December 24, 1957, a dealer or a manufacturer in cigarettes was not liable to pay any sales-tax under the 1941. Act or under the 1954 :Act and was not entitled to benefits of registration certificate under either of the said Acts and that, in the- E F G H - I 616 SUPREMI! COU!tT REPORTS [1975) 3 S.C.R. circumstances, it was proposed to delete the amendment which was made in the registration certificate of the Company under the 1941 Act on July l, 19 5 8 by inclusion of cigarettes and smoking mixtures in the manufacturers' column of such certificate. The ComP'any wrote back on October 31, 1958 contending that the 1941 Act was applicable to cigarettes, and as such, it was entitled to the benefit of s. 5 (2) (a) (ii) of the 1941 Act and the Sales-tax Authorities were not competent to amend the registration ccrtific•ate issued under the 1941 Act. These contentions were rejected by the Commercial Tax Officer who by his Jetter of February 2, 1959 asked the Company again to send its regis tration certificate for amendment and deletion of exemption entry therefrom. · To challenge this action threatened by the S•ales-tax Authorities in their letters of September 8, 1958, S::ptember 22, 1958 and February 2, 1959, the Company filed a writ petition in March 1959 in the High Court of Calcutta under Article 226 of the Constitution. ·On behalf of the Sales-tax Authorities, it was contended before the learned Single Judge, who tried the writ petition, that 'after the enact ment of Central Act of 1957 and 1958 Act, cigarettes no longer form ed the subject matter of tax i:ither under the 1941 Act or the 1954 Act, with the result that the regiistration certificate in respect of ·cigarettes under those Acts became a nullity and the exemption granted in respect of the purchase of goods required for the manufacture of cigarettes under the registration certificate issued under the 1941 Act was incom petent. The learned Single Judge negatived this contention thus : "In my opinion, this is based on an incorrect reading of the law. As will appear from the delineation of the law above mentioned, the provisions contained in section 5 (2) (a) (ii) of the Act, affected a dealer who sold goods to 11. registered dealer, as being intended for use by him in" the manufacture of goods for sale, and there was a corresponding benefit con ferred upon the purchaser; who being a registered dealer acquired the benefit of not having to pay sales tax, when he purchased goods from another dealer for such purposes. The second thing to be borne in mind is that this exemption is not in respect of cigarettes or smoking tobacco, but in res pect of goods intended for use in the manufacture of ciga rettes •and smoking tobaccos, which altogether." is a different The learned Judge further held that cigarettes which became the subject of the Central Act :58 of 1957, did not find any place in the 1958 Act which took away cigarettes from the scope of 1954 Act and there was Mthing in the 1958 Act to take away the right of the Company conferred by the 1941 Act to claim exemption from sale· tax in resoect of goods purchased for use in the manufacture of In the result, the learned Judge made the Rule iabsolute cigarettes. and quashed the impugned notices. He also issued a mandamus A B c D E F G INDIA TOBACCO co. LTD. v. C.T.O. (Sarkar'· /.) 617 /}; directing the Safos-tax Authorities to forbear from the cancellation of th~ enklorsement to the registration certificate of the Company in re . lation to cigarettes and smoking mixtures as made on the 1st July '

#1958. . ' ~gainst the judgment of the learned single Judge, the Revr.nue earned an appeal to a Divisiol). Bench of the. · High Court which accepted the appeal and dismissed the writ petition. B ' The ratio' of the two sepafate but concurrent judgments of the appellate Bench of the High Court Is, that 1954 Act had the effect of completely repe•aiing the 1941 Act in relation to· cigarettes, and the repeal of 1954 Act in relation to cigarettes by the 1958 Act, did not revive the operation of 1941 /Act in regard to cigarettes on the princi the repealed ple "that the repeal of a repealing Act does not rev; Act". Sipce 1941 Act sto, od completely obliterated ft um the statute book in relation to cigarettes, no !ill~s tax would be payable in regard thereto either under the 1954 Act\or under the 1941 Act. Upon these premises it was held that the Company as a dealer in cigarettes and smdking mixtures is not entitled to any certificate of registration under t}le Act of 1941 as it is neither a dealer within the meaning of tllat Acr, nor liable to pay S'ales tax under that Act. Ii It is subject to the appearance of a · TM general rule of construction is that the repeal of a repealing Act d9es not revive anything repealed thereby. But the operation of th1~ Court is not absolute. "differ nt intention" in the repealing statute. Again, such intention may . explicit or implicit. The questions, therefore, that arise for deterdiination are : , Whether in relation to cigarettes, the 1941 Act was r~pealed by the 1954 Act and the latter by the 1958 Act? Whether the 1954 Act and 1958 Act were repealing enactments? Whether there is anvthing in the 1954 Acf and the 1958 Act indicating a revival of the 1941 Act in relation to cigarettes ? It is now well settled that "repe'al" connotes abrogation or oblite ration of one statute by another, from the statute book as completely "as if it had never been passed"; when an Act is repealed, "it must be considered (except as to transactions past and closed) as if it (Per Tindal CJ. in Kay v. Goodwin(") and Lord had never existed". Tenterdon in Surtees v. Ellison( 2 ) cited with approval in State of Orissa v. M. A. Tulloch & Co) (3). Repeal is not a matter of mere from but one of substance, depend ing upon the intention of the Legislature. If the intention, indicated expressly or by necessary implication in the subsequent statute, was to abrogate ot- wipe off the former enactment, wholly or in part, then it would be a case of total or pro tanto repeal. If the intention was merely to modify the former· enactment by engrafting ari exception or granting an exemption, or by super-adding conditions, or by res tricting, . intercepting or suspending its operation, such modification (1) (1830) 6 Bing 576 at p. 582. (2) (1829) 9 B & C 750 at p. 752;. (3) A.J.R. 1964 S.C. 1284. c D E F G H 018 SUPl.EME COURT REPORTS [1975] 3 S.C.R. would not amount to a repeal (see Craies on statute Law, 7th Edn. pp. 349, 353, 373, 374 and 375; Maxwell's Interpretation of Statutes, 11th Edn. p. 164, 390 based on Mount v. Taylor( 1); Southerland's Statutory C.Onstruction 3rd Edn. Vol. I, Paragraphs 2014 and 2022 pp. 468 and 490). Broadly speaking, the principal object of a Repealing and Amending Act is to 'excise dead'matter, prune off super· fiuities and reject clearly im:onsistent enactments-see Mohinder Singh v. Mst. Harbhaian Kaur( 2 ). 'J'bc 'ground having been cleared, we now proceed to examine the effect of. ibe f954 Act and the 1958 Act on tbe 1941 Act in the light of the above principles. A B We will start with the 1941 Act. The preamble indicates that c its purpose is to impose a general tax on the sale of goods in Bengal. 'Goods' arc defined in Oause (d) of s. 2 as "as all kinds of movable property other than actionable claims, stocks, shares or securities, and mcludes all ,~als and c1>mmoQities". · "Dealer" means "any person who carries ~, ibe business of selling goods in West Bengal and in cl\14es the Oovemment". [s. 2(c)]. ~ clmrgin,g provision is in s.4, a~rding to which, every dealer Whb:'.e gross turnover during the preceding year exceeds the taxable qmmtum shall be liable to pay tax under this Act on all sales effected by him after the nqtified date. Sub-~tion ( 5) of s. 4 defines "taxable quantum" to mean "in relation to any dealer who imports for sale any goods into West Bengal or manufactures or produces any goods for sale, 10,000 rupees "and" in relation to any other dealer, 5,0,000 Its rupees." Section 5 of the 1941 Act prescribes the rate of tax. original sub~ection (2) (a) (ii) reads as under : , "(ii) sales to a registered dealer- of goods of the class or classes specified in the certificate of registration of such dealer, 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 of containers or other materials for the paeking of goods of the class or classes so specified : Provided that in the case of such sales a declaration duly filled up and signed by the registered dealer to whom the goods are s9ld and containing prescribed particlj!ars on a prescribed form obtainable from the prescribed authority is furnished in the prescribed manner by. the dealer , who sells the goods,I' It will l1e seen that the definitions of "goods" and "dealer" in 1941 Act are very comprehensive and general. It is not disputed that the wide definitions would cover 'cigarettes' and a dealer in cigarettes. Considered alone, the 1941 Act would take in its sweep cigarettes, (1) (1868) L.R. 3 C.P, 645; (2) (19SS) Cr. L.J. 990. D E F G H A 8 c 0 E F G H INDIA TOBACCO co. LTD. v. C.T.O, (Sarkaria, J.) 619 also; and under its s. S(a)(ii) a dealer would be entitled to purchase free of tax goods required by him for use in the manufacture of cigarettes. The (original) 1954 Act, as stated in its preamble, was an Act "to impose a tax on the sale of cigarettes and other commodities" in West Bengal. As defined ,in its s.2(a), "cigarettes" include smoking. mixtures ready for use in rolling cigarettes or for use in tobacco pipes, but do not include bidis. Under Clause (b) of the same section, "dealer" means "any person who sells cigarettes manufactured, made or processed by him in West Bengal, or brought by him into West Bengal from any place outside West Be!lgal for the purpose of sale in West Bengal.'' Clause 2 ( e) defines "turnover." Section 4 provides that every dealer shall pay a tax at the date of three per centum of his turnover. Section 5 requires dealers under the Act to obtain registration certi ficate. Section 23 of the 1~54 Act runs thus : '~Nothing in the Bengal Finance (Sales Tax) Act, shall apply t()o cigarettes : Provided that- (i) the said Act shall continue to apply in respect of cigarettes sold before the commencement of this Act and in respect of sales of such cigarettes subsequent to the comlliencement of this Act; (ii) the price of goods sold to a dealer as defined in this Act for use by such dealer in manufacturing, making or processing cigarettes shall be deducted in calculating the taxable turnover under s. 5 of the said Act." The Division Bench of the High Court has held that this section repeals the 1941 Act with regard to cigarettes, and that clause (ii) of the above Proviso does not save the operation of s. 5 of the 1941 Act but only makes that provision a part of the 1941 Act. In our opinion, the issues that arise in this case, cannot be correct ly :;tnd completely answered by construing s. 23 of the 1954 Act in this: manner. We would therefore, defer the final answers to the questions posed till the conjoint survey of 1954 Act, 1958 Act and other rele vant enactments, is complete. Suffice it to say, now, on an analysis. of s. 23 of the 1954 Act, that it excepts everything relating to cigarettes from the operation of 1941 Act, save to the extent indicated in ·the Proviso. We are not persuaded that clause (ii) of the Proviso does not save anything in section 5 of the 1941 Act. The words "in calcu lating the taxable turnover under s. 5 of the said Act" in this clause are a clincher. They show beyond all manner of doubt that the cal culation of the taxable turnover from which the deduction of the price of goods sold to a dealer for use in manufacturing cigarettes is to be· ~20 SUPREME COURT REPORTS [1975] 3 s.c.R. (ii) of made, has still to be done under s. 5 of the 1941 Act. Assuming that clause the Proviso incorporates, by reference, section 5 of the 1941 Ac.t in a modified form, then also such incorporation would not per se amount to a r~peal, in the sense of complete obli teration of section 5 of the 1941 Act. We will now take up 1958. This Act amended the 1954 Act In the preamble of the 1954 Act, for the words "cigarettes and other commodities", it substituted the words "certain notified commodities". Further, for the word "cigarettes", wherever occurring in the 1954 Act, it substituted the words "notified commodities". For the original section 23, it substituted this new Section 23. "Nothing in the Bengal Finance (Sales Tax) Act, 1941 shall apply to a notified commodity from the date on which the said commodity is or was notified under section 25 : Provided that- (i) the said Act shall apply in respect of a notified com modity sold before the issue of s9ch notification and in respect of re-sales of such notified commodity subsequent fo the issue of such notification; (ii) the price of goods sold to a dealer for use by such dealer for manufacturing, making, processing or packing notified commodities shall be deducted in turnover under section 5 calculating the of the Bengal Finance (Sales Tax) Act 1941." taxable It also inserted new s. 24A, to the effect: "24A. Notwithstanding anything contained in the West Bengal Sales Tux (Amendment) Act, 1958, this Act shall continue to apply to-- (i) cigarettes sold before the commencement of that Act, (ii) cigarettes in respect of which no additional duties of excise have been levied under the Additional Duties of Excise (Goods of Special Importance), Act, 1957 as if that Act had not been passed." A B c D E F Section 24~A is not very material for this discussion because th1: petitioners are a dealer in cigarettes on which additional duties are G being levied under. the Central Act of 1957 . • The 1958 Act· further substituted this new Section 25 for the ori ginal Section 25 in the 19 5 4 Act : "If the State Government is at any time of opinion that it would be in the public interest that anr commodity which is liable to taX'ation under the Bengal Furance (Sales Tax) Act, 1941, shodd be taxed under this Act, it may, by noti- fication in the Offi.cial Gazette, specify such commodity; H INDIA TOBACCO co. LTD. v. C.T.O. (Sarkaria, !.) 621 and on and from the date of- such notification the Bengal Finance (Sales Tax) 1941 shall cease to apply tO such com-· modity •and this Act shall apply to such commodity." An analysis of this Section 25 would show that the 1954 Act (as amended by the 1958 Act) can be made applicable by a notifica tion under this section, only to a commodity "which is liable to taxa tion upder the Bengal .Finance (Sales Jlax) Act, 1941," and further, that the 1941 Act."shall ~ease t!) apply to such commod_ity'', and 1954 Act shall apply to such commodity, only from the date of such noti- fication. · It is not disputed that cigarettes can be notified as a taxable com It necessa modity under the amended ·section 25 of the 1954 Act. rily implies thatthe 1941 Act would cease to apply to cigarettes, only when the requisite notification in respect thereof under s. 25 of the 1954 Act is issued. There can be little doubt that if such a noti fication were to be issued and later on rescinded, such recission would revive the application of the 1941 Act. The position would be the same, if, as in the present case, no notification under s. 25 specifying cigarettes as a taxable commodity was at all issued. It may further be noted that the 1941 Act was amended by Bengal Act 13 of 1953 'Which was published in the Government Gazette on OCtober 1959. It inter al!a- ap!ended s. 5 of the 1941 Act and pres cribed different rates of tax. In ·obedience to the mandate of s.14 ·of the .Central Sales Tax Act of 1957, it reduced the rate of tax from 5 N.P. in the rupee to 2 per centum of such part of the taxable turn over of a dealer under the 1941 Act as represents sales of goods (including manufactured tobacco, cigarettes) referred to in s. 14 of the aforesaid Central Act. This amendment of the 1941 Act, effected in 1959, also indicates that after the 1958 Act, the operation of the 1941 Act revived in relation to cigarettes. After a conspectus and conjoint reading of the aforesaid enact ments, it seems to us clear that the 1954 Act did not repeal or oblite rate the 1941 Act, but only modified it by excepting ci!!arettes from its operation. During the interregnum between the enactment of the 1954 Act and the 1958 Act, the ·operation of the 1941 Act with re gard to cigarettes was in a state of mere interception, and when. as·, a result of the amendment made by the 1958 Act, that exception or interceptior... was removed, the application of the 1941 Act to cigarettes In any case, definite indications of -such re revived proprio vigore. vival are available in _the language arid scheme of the 1958 Act and the Bengal Act _13 of 1959. For ·reasons aforesitid, we would allow this appeal, set aside the judgment of the Division Bench of the High Court, accept the writ pctitiQn and restore the decision of the ·single Judge of the High Court. There will be no order as·to costs. · A 8 c D E F G H V.P.S. Appeal allow1d.