1983 PLP 32 (PTD)

"Whether for the purpose of allowing deduction from the turnover of sales under clause (ii) of section 8 of the Bombay Sales‑tax Act. 1959, purchases of goods made by a dealer registered under the Bombay Sales‑tax Act, 1959, from a dealer who is registered under the Central Sales‑tax Act, 1956 and who is liable to pay tax under section 4 of the Bombay Sales‑tax Act, 1959 though not registered under the Bombay Sales‑tax Act, 1959 can be said to be purchases of goods made from a registered dealer within the meaning of clause (ii) of section 8 of the Bombay Sales‑tax Act, 1959." We feel that the High Court was not justified in reframing the question as referred. It is nobody's case that Motibhai Gopalbhai Patel, the Baroda dealer from whom the assessee had purchased the goods, had ever paid any tax on the sales effected by him under section 4 of the Act. Nor is there ;any material on record to suggest that any proceedings were started against the Baroda dealer for subjecting the transactions to tax.

8. In answering the reference in the affirmative, in favour of the assessee and against the Commissioner of Sales‑tax, the High Court observes "The result of the foregoing discussion is that having regard to the context, collocation and the object of the expression 'registered dealer' in clause (ii) of section 8 of the Bombay Act and having regard to the policy of the Act, the said expression would also include a dealer registered under the Central Act on whom special liability to pay Sales- tax has been imposed under section 4 of the Act. A dealer who purchases goods from a dealer registered under the Central Act, who is liable to pay sales tax on the sale of the said goods by virtue of the provisions of section 4 of the Bombay Act, would, therefore, be entitled to deduct from his turnover of sales of goods, re‑sales of good's so purchased by him on or after the appointed day if the goods, at the time of their purchase, were goods specified in Schedule 'C'." This conclusion of the High Court can hardly be supported.

9. The short question that falls for determination in the appeal is whether the expression 'registered dealer' in clause (ii) of section 8 of the Act must bear the meaning that is assigned to it in section 2(25) which is the definitional section, or the said expression is capable of bearing an enlarged meaning, in view of the subject and context in which it is used in clause (it) of section 8 of the Act.

10. The decision of the appeal must turn on the construction of clause (ii) of section 8 of the Act, which provides "

8. There shall de levied a Sales‑tax on the turnover of sales of goods specified in Schedule 'C' at the rate set out against each of them in Column 3 thereof, but after deducting from such turnover,‑ (ii) resales of goods purchased by him on or after the appointed day (from a registered dealer if the goods at the time of their purchase were goods specified in Schedule 'C ."

11. In the Act, the expression 'registered dealer' is defined in section 2(25) in these terms "(2) In this Act, unless the context otherwise requires,‑‑ (25) "Registered dealer" means a dealer registered under section 22."

12. The error in the decision of the High Court lies in its misunderstand ing of the scope and effect of section 4 of the Act, which it has tried to project into clause (ii) of section 8 and it reads as follows 4. (1) Notwithstanding anything in section 3, a dealer who is registered under the Central Sales Tax Act, 1956, but who is not liable to pay tax under the said section 3, shall nevertheless be liable to pay tax‑ (a) on sales of goods in respect of the purchases of which he has furnished a declaration under subsection (4) of section 8 of the Central Sales Tax Act, 1956 ; and (b) on sales of goods in the manufacture of which the goods so pur chased have been used and accordingly, the provisions of sections 7 to 12 (both inclusive) shall apply to such sales, as they apply to the sales made by a dealer liable to pay tax under section 3. (2) Every dealer who is liable to pay tax under subsection (1) shall, for the purposes of sections 32, 33, 34, 35, 36, 37, 38, 46, 47 and 48 be deemed to be a registered dealer." Subsection (3) of section 7 reads "in order to ensure that after the date of the coming into force of section 15 of the Central Sales Tax Act, 1956, tax shall not be levied on the sales or purchases of declared goods at more than one stage, it is hereby provided that if under this Act, or any earlier law, any tax has been levied or is leviable on the sale or purchase of such goods, then no further tax shall be levied under this Act on any subsequent sale or purchase thereof ; and accordingly, for the purpose of arriving at the taxable turnover of sales or purchases of a dealer, these shall be deducted from his total turnover of sales, or as the case may be, of purchases, the sales or purchases of such declared goods as have borne tax at any earlier stage."

13. There is no obscurity in the language of clause (ii) of section 8 of the Act. It is clear from the terms of clause (ii) of section 8 that no deduction is claimable in respect of re-sales of goods purchased from a dealer registered under the Central Act, who is not a registered dealer within the meaning of section 2(25) of the Act. It follows that the expression 'registered dealer' in clause (ii) of section 8 of the Act must bear the meaning of that expression as given in section 2(25) of the Act. If the meaning of the section is plain, it is to be applied whatever the result.

14. It is a well‑settled principle that when a word or phrase has been defined in the interpretation clause, prima facie that definition governs when‑ever that word or phrase is used in the body of the statute. But where the context makes the definition clause inapplicable, a defined word when used in the body, of the statute may have to be given a meaning different from that contained to the interpretation clause ; all definitions given in an interpretation clause are, therefore, normally enacted subject to the usual qualification unless there is anything repugnant in the subject or context', or 'unless the context otherwise requires'. Even in the absence of an express qualification to that effect such a qualification is always implied.

15. The expression 'registered dealer' having been defined in section 2(25) of the Act as having a particular meaning, i.e. a dealer registers under section 22 of the Act, it is that meaning alone which must be given to it in interpreting clause (ii) of section 8 of the Act, unless there is anything repugnant to the context. It was not permissible for the High Court to ignore a statutory definition and give to the expression a wider meaning independent of it-There is nothing to suggest that the expression 'registered dealer' is used in clause (ii) of section 8 of the Act in any different sense from that in which it is defined. It is significant to notice that whenever the Legislature wanted that the expression 'registered dealer' should have a different meaning, it has expressly said so. Thus, in subsection (1) of section 4 it mentions of 'a dealer who is registered under the Central Sales Tax Act, 1956'. The distinction between the two clauses of dealers is, therefore, clearly maintained.

16. The High Court was obviously wrong in not interpreting the expression 'registered dealer in the context of clause (ii) of section 8 but with reference to the other provisions of the Act, particularly in the light of section 4 of the Act, to give effect to the so-called legislative intent for the levy of a single point tax. It was in error in making an exposition ex viceribus actus and in relying upon the leading cases of Bywater v. Bradling ((1828) 7 B & C 643) ; Rein v. Lane ((1867) L R 2 Q B 144) ; Jobbins v. Middlesex County Council ((1939) 1 K B 142) Craies on Statute Law, 6th Edn., 12. 99 and Maxwell on interpretation of Statutes, 8th Edn., p. 30.

17. The High Court expresses the view that the legislative intent in enacting clause (ii) of section 8 of the Act is two-fold : (1) to restrict the levy of sales tax to a single point and to avoid multiple levy of Sales tax on goods and (2) that the sales tax should be levied at the stage of the first sale and should be recovered from the registered dealer who affects the first sale and that all subsequent sales of such goods should not be subjected to sales tax over again. In the light of this so-called legislative intention and the policy of the Act, the High Court observes that 'having regard to the context collocation and the object of the ;expression 'registered dealer' in clause (ii of section 8 of the Act', and 'having regard to the legislative intent, namely, to levy a single point tax under subsection (3) of section 7 of the Act', the expression 'registered dealer in clause (ii) of section 8 would also include a dealer registered under the Central Sales-tax Act, 1956, on whom a special liability to pay sales tax has been imposed under section

4. Upon that view, it held that a dealer who purchased goods' from a dealer registered under the Central Act, who was liable to pay sales tax on the sale of such goods by virtue of the provisions of section 4 of the Act, would be entitled to deduct from his turnover of sales of goods, resales of goods so purchased by him on or after the appointed day if the goods at the time of their purchase, were goods specified to Schedule 'C' of the Act. It accordingly held that the meaning of the expression 'registered dealer' in clause (ii) of section 8 was not limited only to a dealer registered under the Act but it was wide enough to also include a dealer registered under the Central Act. l

8. There is no dispute with the proposition that the meaning of a word or expression defined may have to be departed from on account of the Act or context in which the word had been used and that will be given effect to the opening sentence in definition section, namely 'unless the context otherwise requires'. In view of this qualification, the Court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words in a particular section. But where there is no obscurity in the language of the section, there is no scope for the application of the rule ex visceribus actus. This rule is never allowed to alter the meaning of what is of itself clear and explicit. The authorities relied upon by the High Court are, therefore, not applicable.

19. While accepting that subsection (3) of section 7 of the Act was to given effect to clause (a) of section 15 of the Central Act, and therefore cannot control the interpretation of clause (ii) of section 8, the High Court commits the mistake of interpreting the expression 'registered dealer' appearing therein, in the context of section 4 of the Act. The provisions of section 4, subsection (3) of section 7 and clause (ii) of section 8 of the Act operate in three different fields. While section 4 of the Act provides that a registered dealer under the Central Act who may not be liable to pay tax under section 3 of the Act may nevertheless in certain contingencies be liable to pay tax, subsection (3) of section 7 provides for the levy of a single point tax on sales in the course of inter-State trade and commerce of declared goods, to bring the Act in conformity with clause (a) of section 15 of the Central Act. The object and purpose of enacting the provisions of section 8 are entirely different, namely, to lay down the made of computation of the turnover of sales or purchases of a registered dealer fir the imposition of a tax. Clause (ii) of section 8 allows for deduction of sales from the turnover of such registered dealer when the goods are purchased from a registered dealer, i.e. a dealer registered under section 22 of the Act. In effect, section 8 deals with transactions of sale or purchase taking place within the State.

20. There is a fallacy in the reasoning of the High Court seems that the High Court was obsessed with two factors, namely : (1) the concept of a single point tax under subsection (3) of section 7 of the Act, and (2) the fact that a registered dealer under the Central Act who may not be liable to pay tax under section 3 of the Act may nevertheless in certain contingencies be liable to pay tax. It failed to appreciate that clause (ii) of section 8 which allows for deduction of sales by one registered dealer to another, deals purely with inside sales. The expression 'registered dealer' in clause (ii) of section 8 is sought to be given an enlarged meaning by stretching, in effect, the legal fiction contained in subsection (2) of section

4. After observing that the legal fiction in subsection (2) of section 4 is created for a limited purpose, g goes on to observe ; "It would, therefore, have been inappropriate or at any rate wholly inartistic for the Legislature to provide in subsection (2) of section 4 that every dealer who is liable to pay tax under subsection (1) shall be deemed to be a registered dealer for the purpose of clause (ii) of section 8 since the latter section provides for the levy of Sales-tax on I goods of an altogether different dealer after making certain deduction from the turnover of sales of goods of such dealer. The Legislature could have made a specific provision, if any, in this behalf only in clause (ii) of section 8 and not in subsection (2) of section 4.

21. The High Court proceeds on the hypothesis that the transaction in question must have been brought to tax in the hands of the Baroda dealer and, therefore, it became necessary to avoid multiple levy of Sales‑tax. Or; that assumption, it felt that it was necessary to give to the assessee the benefit of section 8 (ii) of the Act although the Baroda dealer was not a registered dealer within the meaning of section 2(25) i.e., registered as a dealer under section 22 of the Act. We regret to say that in reaching that conclusion, the High Court has proceeded on mere conjectures and surmises. For aught we know, the Baroda dealer at the relevant time, might not be engaged in the business of selling goods in the State of Gujrat and was, therefore, not a dealer liable to pay tax at all. Perhaps he was primarily engaged in effecting sales in the course of inter‑State trade and commerce, or it may be that the inside sales effected by him did not exceed the taxable limits. Both the parties proceeded upon the basis that the purchases effected by the assessee were not subjected to tax. It was, therefore, not right for the High Court to hold that the disallowance of deduction claimed by the assessee under clauses (ii) of section 8 of the Act would result it double taxation of the same goods.

22. It is evident that the High Court has completely misdirected itself. The transactions of sales effected by the Baroda dealer to the assessee who was a dealer at Ahmedabad, were clearly aside sales. While it is true that the Baroda dealer being a dealer registered under section 7 of the Central Sales‑tax Act was, in certain contingencies, liable to pay tax under section 4 of the Act, but that circumstance by itself would not make him a registered dealer' within the meaning of section 2(25) of the Act.

23. If the Legislature really intended that the expression `registered dealer' in clause (il) of section 8 should take within its ambit a dealer registered under the Central Sales‑tax Act, upon whom liability to pay Sales‑tax is imposed by section 4 of the Bombay Act, it would have said so in clear words. It would have made necessary provision in that behalf in subsection (2) of section 4 which provides that every dealer liable to pay tax under sub section (1) shall be deemed to be a registered dealer for purposes of certain sections of the Bombay Act viz. sections 32, 33, 34, 35, 36, 37, 38, 46, 47 and 48.

24. It is thus apparent that the legal fiction in subsection (2) of sec tion 4 is created for a limited purpose, namely,. to make section 4 a self -contained code which not only imposes a charge of tax and lays down the rate structure but also provides the machinery for assessment and recovery of tax and penalty. The legal fiction contained in subsection (2) of section 4 of the Act cannot be stretched any further.

25. For these reasons, the judgment of the High Court answering the reference in favour of the assessee is set aside. The question referred by the Tribunal is answered in the negative and in favour of the Revenue. There shall be no order as to costs. Question answered.