M AYYASWAMI NADAR Vs. STATE OF MADRAS

JUDGEMENT

(1.) THIS revision case is directed against the order of the sales Tax Appellate Tribunal in T. A. No. 753 of 1959. The petitioner, who is the assessee, was assessed for the year 1956-57 originally on a turnover of Rs. 7, 30, 000 and odd. Subsequently, the Sales Tax Authorities recovered the regularly kept account books of a broker in sugar by name N. Krishnaswami.

(2.) THE broker's accounts showed that a turnover of Rs. 5, 07, 600 in sugar, referable to the assessee, had been effected through the broker. THEreupon, relying on the provisions with regard to the assessment of escaped turnover, the Joint commercial Tax Officer revised the assessment and fixed the net turnover of the assessee at Rs. 12, 38, 000 and odd. THE assessee appealed to the Appellate assistant Commissioner disputing the turnover of Rs. 5, 07, 600 representing the addition in the revised assessment, but that appeal was dismissed. THE further appeal to the Sales Tax Appellate Tribunal by the assessee was also dismissed. Now the assessee has come before us in revision.

(3.) OUR attention was also drawn to a recent decision of the supreme Court in State of Madhya Pradesh v. Bhailal Bhai That decision far from supporting the contention of the petitioner is in favour of the department. In that case the Madhya Bharat Government exercising powers under Madhya Bharat sales Tax Act of 1950 issued a notification that tobacco leaves, manufactured tobacco for eating and smoking, and tobacco used for beedi manufacture were liable to levy of sales tax at a certain rate at the point of sale by the importer in Madhya Bharat. The validity of this notification was challenged as unconstitutional and infringing Article 301 of the Constitution and not saved by the provision in Article 304 (a ). This objection was upheld by the High Court and this judgment was affirmed by the Supreme Court on appeal by the State of madhya Pradesh. The Supreme Court held that the tax payable at the point of sale by the importer in the State of Madhya Bharat directly impeded the freedom of trade and commerce guaranteed under Article 301 of the Constitution. On behalf of the State the argument was advanced that the notification came within the limits of Article 304 (a) on the ground that the notification did not make any discrimination or distinction between a sale by an importer of the imported tobacco and the sale by a dealer of the tobacco locally manufactured and produced in the State. It was also urged that the intention of the Government in issuing the notification was to apply alike the rule to sales of imported tobacco as well as sales of tobacco manufactured and produced in the State, but that the authority had excluded the latter from levy of sales tax on a mistaken interpretation of the law. The Supreme Court did not accept this argument either with regard to the factual position or with regard to the interpretation of the notification in question. The following observations of the Supreme court in repelling the argument of the State would show that the Supreme Court would have upheld the validity of the notification if it made no discrimination between sales of imported tobacco and sales of the other category : "an attempt was made on behalf of the State before the High Court and also before us to construe the notification mentioned above to mean that not only the tobacco imported from other States but also similar goods manufactured or produced in Madhya Bharat were subject to this tax and at the same rate. It was argued that a dealer in these goods who was an importer and so sold goods imported by him into Madhya Bharat would also be selling goods not so imported but manufactured and produced in the State. We are prepared to agree that that may well be so. What we are unable to see however is that in respect of sales of such other goods this person would be liable to any tax under the notifications. We are informed that in fact where importers dealt with in goods other than imported goods the sales of such other goods were in fact excluded from tax. The learned Advocate-General of Madhya Pradesh who appeared before us in support of these appeals suggested that that was done by the State Sales Tax Authority on a mistaken interpretation of the law. We do not think so. In our opinion, the only reasonable interpretation of the notification as it stands, viz. , that tax on tobacco leaves, manufactured tobacco and tobacco used for bidi manufacturing would be payable at the point of sale by the importer, is that only the sale of goods which the importer had imported would be liable to tax and not sale of any other goods by him. If the intention had been as suggested by the learned Advocate-General that though the tax is payable at the point of sale by an importer the sale by the same person of goods manufactured or produced in Madhya Bharat would also be liable to tax, the word'importer'would not have been used in column (3) but the word 'dealer'would have been used and the point of sale would have been indicated by some other words as the'first sale in Madhya Bharat'or'the sale to the retailer in Madhya Bharat'as the rule-making authority chose. " *