GOVINDA RAJA RICE MILL Vs. UNION OF INDIA

JUDGEMENT

(1.) THE question we have to answer in this Letters Patent appeal is not an easy one. It is whether the sale of rice, milled out of paddy, which has been subjected to purchase tax under the State law, is liable to be assessed under the Central Sales Tax Act, when it has taken place in the course of inter-State trade. The facts of the matter are neither under dispute nor complicated. The appellant before us brought O. S. No. 17 of 1968 in the Court of the Subordinate Judge, Eluru, to set aside the order of assessment of the Assistant Commissioner of Commercial Taxes dated 16th May, 1967, and to recover a sum of Rs. 15,000 paid in pursuance of the said order. The assessment related to the year 1957-58, i. e. , to the transactions which took place between 1st April, 1957, and 31st March, 1958. The plaintiff was a rice mill contractor and a dealer in paddy and rice. He milled some rice out of paddy which had already suffered sales tax under the Andhra Pradesh General Sales Tax Act. He exported the same to a place outside the State. Shorn of others which are not necessary for the disposal of this appeal, what happened was that the Commercial Tax Officer, by his order dated 4th January, 1967, levied tax under the Central Act on the rice sold in the course of inter-State trade. That was affirmed by the Assistant Commissioner of Commercial Taxes by his order dated 16th May, 1967. The plaintiff paid Rs. 12,776. 91 as per these orders on the sale of rice in question. He has filed the suit to recover the said amount with interest. He rested this claim on the contention that since he had paid the amount under a mistake of law he was entitled to recover it.

(2.) THE second defendant, viz. , the State of Andhra Pradesh, maintained in its written statement that the imposition of the tax was in accordance with the law. The Union of India, which was the first defendant, adopted that written statement. It, however, has not chosen to appear before us and contest this Letters Patent appeal. The trial court held that by virtue of sub-section (1a) introduced in section 6 of the Central Act, by the Ordinance of 1969, the claim for the refund of the amount with interest thereon could not be sustained and the suit was not maintainable. It also found that the notices issued to the defendants were not valid in accordance with section 80, C. P. C. In the result, the suit was dismissed without costs. The plaintiff brought A. S. No. 437 of 1970 to this court against the decision of the trial court. It was dismissed by our learned brother Chinnappa Reddy, J. The only question that was argued before him was that no tax was payable by reason of section 8 (2a) of the Central Act on the ground that the sale of rice, made out of paddy, which had already suffered tax is exempt from tax generally under the State Act. It was pointed out by the learned Judge that the said contention equated non-liability to tax with exemption from tax. In the present case, there was no such exemption. Such rice was made non-liable to tax under the State Act. Consequently, section 8 (2a) of the Central Act is not attracted to the case and the sales are directly governed by section 6 (1a) of the Act. In that view, the appeal was dismissed with costs. This Letters Patent appeal is against that judgment of our learned brother.

(3.) THIS line of argument appears, on the first look, to be attractive and even plausible. But, on a closer scrutiny, it is found to be unacceptable. The contention of the learned counsel, if accepted, would defeat the purpose and intendment of section 6 (1a) of the Central Act. It declares in unequivocal terms that a dealer shall be liable to pay tax under the Act on the sales of any goods effected by him in the course of inter-State trade or commerce, notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State, if that sale had taken place inside the State. Sale of any goods in the course of inter-State trade or commerce is thus made liable to Central tax. Such liability exists, even if no tax either on the sale or on the purchase of the goods is leviable under the State law if the sale has taken place inside the State. The non obstante clause, which follows the declaration of the liability under the Central law on sales of any goods makes the intendment of the Parliament very clear. In so far as the liability to the Central tax is concerned, it is immaterial whether the State law levies any tax on the sale or purchase of the goods or not. In addition to the non obstante clause, the expression "sale of any goods" is of very wide import and permits no exceptions, exemptions or exclusions.