RALLIS lNDIA LTD v. STATE OF ANDHRA PRADESH

In the year 1972, clause (b) of section 15 of the Central Act was amended retrospectively so as to be effective from 1st Octo ber, 1958. Two years later, section 6 of the A.P. Act was also amonded and made effective from the same date. On the 21st of August, 1974, the Deputy Commissio'ner (Commercial Taxes) here inafter called the D.C.C.T.) issued a notice to the appellant calling the 'exemption' granted to it by the upon it to show cause why C.T.O. should not bo cancelled. After !€ceiving appellanfs reply, the D.C.C.T. revised the assessment order dated 30th of April, 1971, passed under the A.P. Act and held that in vi·ew of the provi sions of section 6 thereof as amended in 1974 the appella'nt was not entitled to any 'exemption' in respect of the purchase price (amount ing to Rs. 23,00,057/-) of cotton sold by it in the course of inter the period 1-4-1969 to state trade 8-6-1969. The order of the D.C.C.T. was challenged by the appeal lant 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. Act did not talk of any 'exemption' either before or after its amendment in 1974. The appellant sought a revision of the Tribu nal's order by the High Court nnder section 22 (I) of the A.P. Act but remained unsuccessful as the High Court was of the opinion (for for Rs. 26,61,166/- during RALLIS INDIA LTD. v. ANDHRA PRADESH (Koshal, !.) 1031 which it relied upon Vadivelu Chetty v. Commercial Tax Officer, Tirupathi(') and Daita Suryanarayana and Company v. State of that the exempt>on granted by the C.T.O. was Andhra Pradesh( 2 ) '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 sec tion 109 of the Code of Civil Procedure.

In ord•"r to appreciate the contentions raised on behalf of the appellant it is necessary to examill'e the various relevant legislative : provisions which are set out below : ~I" i( 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 state 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 any thing 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.

Section 10 of the 1969 Act makes no reference at all to any G, It concerns itself only with the tax tax leviable under the State Act. 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 It may be taken for granted that the appellant did not collect him. any tax uhder the Central Act on the sale of goods effected by it in 1034 SUPREME COURT REPORTS • [1980) 2 S.C.R. 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 bene fit 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 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 decid- ed with reference to section 6 of the A.P. Act, rule 27-A extracted above and section 15 of the Central Act. "'

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 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 'exemp tion· 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 the assessment order was it. As the section then stood therefore unexceptionable. This was also the position Ul)Cfor clause (b) of ./ 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. B c 'D F

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 amend ments. 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 RALLIS INDIA LTD. v. ANDHRA PRADESH (Koshal, !.) 1035 - _.ill.. ~-J • • --: 1 ., • 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 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 R to it. c

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 sec- tion 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 the Central Act in respect of the sale of the goods in question m the course of inter-state trade or commerce .

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 was the D.C.C.T. who had cancelled the order 0! refund (inherent in the 'exemption' granted by the C.T.0.) and that there was no provi the D.C.C.T. to force the appellant to return any sion authorising 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 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 re garded 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. 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.

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 D E F G H - 1036 SUPREME COURT REPORTS [1980] 2 s.c.R. \ 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 over ride 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. ·C

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 did not fall on those who collected the Central sales tax from the pur chasers 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. How ever, 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.

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.

In the result the appeal fails and is dismissed but with no order as to costs. Appeal dismissed. .· • •