Important Point
The word ‘tax’ in Section 4-AA of the West Bengal Sales Tax Act does not include ‘turnover tax’ levied under Section 4-AAA and as such exemption under Section 4-AA does not absolve liability to pay turnover tax.

Headnote:West Bengal Sales Tax Act, 1954-Section 4-AA and Section 4-AAA-Exemption from payment of tax-Word ‘tax’ in Section 4-AA does not include ‘turnover tax’ levied under Section 4-AAA-Legislature referred to two forms of impost-In Section 4 it is referred to as ‘a tax’-In Section 4-AAA it is referred to as ‘a turnover tax’-Exemption granted under Section 4AA does not absolve liability to pay ‘turnover tax’.
       Held : A perusal of the provisions of Sections 4 and 4AAA which are clear and unambiguous, shows that the legislature itself has referred to two forms of impost under the Act differently. In Section 4, it is referred to as ‘a tax’, whereas in Section 4-AAA it is referred to as ‘a turnover tax’. The difference in nomenclature is consistently maintained in the said sections as well as other sections of the Act. Section 4AA opens with a non-obstante clause and provides that despite the provisions of charging Section 4 if the State Government is satisfied that it is in the public interest so to do, it may issue notification in the official gazette directing that no tax shall be payable by the dealer or category of dealers specified therein. Here it may be noticed that the empowerment under this section to notify that no tax shall be payable relates to ‘tax’, levied under Section 4. (Paras 5 & 6)
       From a perusal of the notification, it is evident that the expression used here is, the Governor is pleased to direct that “no tax” shall be payable by a dealer under the said Act which obviously refers to the tax under Section 4 but not to “turnover tax” imposed under Section 4-AAA. Therefore a small scale industrial unit is not entitled to exemption from payment of turnover tax during the period of the validity of the eligibility certificate by virtue of notification issued under Section 4AA. (Para 7)

Judgment

Quadri, J.-The short question that arises in this appeal is: whether the word “tax” in Section 4-AA includes “turn over tax” levied under Section 4-AAA of the West Bengal Sales Tax Act, 1954?

2. The facts giving rise to this question, lie in a short compass and are not in dispute. The appellant-company is carrying on business of the manufacture of lubricating oil and grease. It was granted certificate of registration under the West Bengal Sales Tax Act, 1954 (for short, the Act). A certificate for permanent registration as small scale industry was granted by the Directorate of Cottage and Small Scale Industries, Government of West Bengal. Under the Act, the authorities granted exemption from payment of sales tax for the period commencing from January 14, 1980 to January 14, 1985 by Certificate dated April 1, 1980. Notwithstanding the said certificate of exemption, for the period of four quarters ending on March 31, 1984, the appellant was assessed to turnover tax in a sum of Rs. 1,18,357.66p. and a penalty of Rs. 2,000/- was also imposed under Bengal Finance (Sales Tax) Act, 1941. The appellant filed appeal against the order of assessment before the Assistant Commissioner of Commercial taxes who confirmed the order of the Commercial Tax Officer that the eligibility certificate does not absolve it of the liability to pay turnover tax under Section 4-AAA of the Act. The appellant then assailed the order of the Assistant Commissioner in the West Bengal Taxation Tribunal. By its order dated June 25, 1993, the Full Bench of the Tribunal dismissed the appeal. From the said order of the Tribunal, this appeal is filed by special leave.

3. Mr. Bhaskar Gupta, the learned senior counsel appearing for the appellants, has contended that Section 4 is the only charging section under which the liability assumes two forms-one by way of tax at the rate prescribed under Section 4(3) and the other by way of additional tax at the rate prescribed under Section 4-AAA-and that the only difference between the two is while the burden of ‘tax’ under Section 4 can be passed on to the purchaser, the burden of additional tax under Section 4-AAA cannot be so passed on, therefore, it would be anomalous to think that the exemption granted under Section 4-AA applies to ‘tax’ but not to ‘additional tax’. Such an interpretation of Section 4-AA, submits the learned counsel, would set at naught the very policy of the Government to grant tax holiday to small scale industrial units.

4. The submissions of the learned counsel though appealing, have to be rejected on a plain reading and literal interpretation of Sections 4(1) and 4-AAA(1). We quote the said provisions here in so far as they are relevant for our purpose:

“4. Liability to payment of tax.

(1) There shall be paid by every dealer a tax on his turnover, at such rate not exceeding twenty percent as the State Government may, by notification in the Official Gazette, fix in this behalf, and different rates may be fixed for different classes of notified commodities.”

“S. 4AAA. Liability to payment of turnover tax and rate thereof.

(1) Notwithstanding anything contained elsewhere in this Act,-

(a) every dealer, whose aggregate of the gross turnover under this Act and the gross turnover under the Bengal Finance (Sales Tax) Act, 1941 (Ben. Act VI of 1941) during the last year ending on or before the 31st day of May, 1987, exceeds rupees twenty-five lakhs, shall, in addition to the tax payable by him under Section 4, be liable to pay from the 1st day of June, 1987, a turnover tax at the rate specified in sub-section (3) of such part of his turnover as specified in sub-section (2);

(b) every dealer, other than those referred to in clause (a), whose aggregate of the gross turnover under this Act and the gross turnover under the Bengal Finance (Sales Tax) Act, 1941 (Ben. Act VI of 1941) during any year ending on or after the 1st day of June, 1987, exceeds rupees twenty-five lakhs

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1998 Supreme(SC) 1015

Important PointThe word ‘tax’ in Section 4-AA of the West Bengal Sales Tax Act does not include ‘turnover tax’ levied under Section 4-AAA and as such exemption under Section 4-AA does not absolve liability to pay turn­over tax.

Important Point
The word ‘tax’ in Section 4-AA of the West Bengal Sales Tax Act does not include ‘turnover tax’ levied under Section 4-AAA and as such exemption under Section 4-AA does not absolve liability to pay turnover tax.