1. Dispute over sales tax exemption for textile goods under a notification, specifically whether a proviso regarding excise duties restricts the exemption for goods not subject to such duties. (Para 1 , 2 )
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1963 Supreme(SC) 110
SUPREME COURT OF INDIA.
B.P. SINHA, C.J.I. J.C. SHAH and N. RAJAGOPALA AYYANGAR, JJ.
INNAMURI GOPALAM AND MADDALA NAGENDRUDU AND OTHERS
Versus
THE STATE OF ANDHRA PRADESH AND ANOTHER
Date of decision: 8/4/1963.
Appeal by special leave from the judgment and order dated 18th January, 1961, of the Andhra Pradesh High Court in Writ Petition No. 101 of 1959.
Civil Appeal No. 488 of 1962.
Advocates appeared
N. C. Chatterjee, Senior Advocate (A. N. Sinha and A. K. Nag, Advocates, with him), for the appellants.
A. Ranganathan Chetty, Senior Advocate (P. D. Menon, Advocate, with him), for the respondents.
Fiscal statutes and exemption notifications must be construed strictly according to their plain language. A supposed intention to avoid double taxation cannot override the clear words of an exemption if the taxpayer falls within its literal terms.
Headnote:(A) General Sales Tax Act - Sections 5 and 9(1) - Additional Duties of Excise (Levy and Distribution) Bill - Clause 3 - Exemption from sales tax - Construction of notification - Interpretation of the term "leviable" - Fiscal provisions must be construed according to the plain meaning of the words used - Intention of the notifying authority cannot override the clear language of the exemption.
(B) Taxing Statutes - No room for intendment; the subject is either within the statute or not based on the words of the enactment - If a taxpayer is within the plain terms of an exemption, the benefit cannot be denied by calling in aid a supposed intention of the authority.
Facts of the case:
Dealers in textile goods claimed exemption from sales tax based on a government notification. The notification exempted textiles but included a proviso that where additional duties of excise were "leviable" by the government, the dealer had to prove payment of such duties to claim the exemption. The goods in question were not subject to excise duty because they were not located within the precincts of a factory or warehouse as required by the excise law. The lower court denied the exemption, reasoning that textiles belonged to a "class of goods" that could be leviable and that the notification aimed to avoid double taxation.
Findings of Court:
The term "leviable" in the proviso refers to goods that actually fall within the entirety of the taxing provision, including the requirement of being stored in specified premises. Since the goods were not in such premises, the duty was not leviable, and the proviso did not apply.
Issues: Whether the exemption from sales tax was available to dealers whose goods were not actually liable for additional excise duty, and whether the "class of goods" argument or the objective of avoiding double taxation could restrict the plain language of the exemption.
Ratio Decidendi: In a fiscal provision, there is no equity; the matter is governed wholly by the words of the provision. The operation of a notification is judged by the words employed, not the object the authority may have had in mind. Since the goods were not "leviable" for excise duty due to their location, the restrictive proviso did not operate, and the general exemption applied.
Result: Appeal allowed.
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JUDGMENT
AYYANGAR, J.-The proper construction and legal effect of a notification under section 9(1) of the Andhra Pradesh General Sales Tax Act, 1957 (Andhra Pradesh Act VI of 1957) which for shortness we would call the Act, is the principal question that arises for consideration in this appeal by special leave in which the correctness of the decision of the High Court dismissing a writ petition filed by the appellants is challenged.
Section 5 of the Act is the charging section under which dealers are liable to pay sales tax on their turnover. Under sub-section (3)(a) of this section, read with Schedule II to the Act, cotton textile goods which was the commodity in which the appellants were dealing were liable to tax at a single point. Section 9 of the Act enabled the State Government to exempt the tax leviable under the Act In exercise of the power thus conferred a notification was issued on December 13, 1957, which read :
"In exercise of the powers conferred by sub-section (1) of section 9 of the Andhra Pradesh General Sales Tax Act, 1957 (Andhra Pradesh Act VI of 1957) (hereinafter referred to as the said Act), the Governor of Andhra Pradesh hereby exempts from the tax payable under the said Act, with effect on and from the 14th December 1957, the sale or purchase of any of the goods appended hereto :
Provided that in the case of any class of such goods in respect of which additional duties of excise are leviable by the Central Government under clause 3 of the Additional Duties of Excise (Levy and Distribution) Bill, 1957, read with section 4 of the Provisional Collection of Taxes Act, 1931 (Central Act XVI of 1931), the exemption shall be subject TO the following conditions, namely :-
(1) The dealer shall prove to the satisfaction of the assessing authority that additional duties of excise have been so levied and collected on such goods by the Central Government, in default of which the dealer shall be liable to pay the tax under the said Act in respect of such goods.
(2) Any dealer who is so liable to pay the tax may, at his option pay, m lieu thereof, a lump sum by way of composition determined in the manner specified in condition (3).
...................................................................................."
As nothing turns on the terms of condition" (3) with which the notification ends it is not set out. The appendix which is referred to m the opening paragraph has three clauses the first of which is the only material one and this runs :
"1. All varieties of textiles, viz., cotton, woollen or silken including rayon, art silk or nylon, whether manufactured by handloom, power-loom or otherwise."
Pausing here, it is necessary to set out the terms of clause 3 of the Additional Duties of Excise Bill, 1957, which is referred to in the proviso to the opening paragraph of the notification. Though the Bill was later passed into law and became an Act, we shall refer to the Bill conformably to the phraseology of the notification. Clause 3(1) which is the relevant portion of that clause reads :
"3. (1) There shall be levied and collected in respect of the following goods, namely, sugar, tobacco, cotton fabrics, rayon or artificial silk fabrics and woollen fabrics produced or manufactured in India and on all. such goods lying in stock within the precincts of any factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto, duties of excise at the rates specified in the First Schedule to this Act."
How the matter came before the High Court was briefly this. There was no dispute that the appellants were and are doing business in the purchase and sale of textile goods. They claimed exemption from the payment of sales tax in respect of goods in stock with them on December 14, 1957, relying on the notification set out earlier. The Sales Tax Authorities, however, rejected this claim and as a result a writ petition was filed in the High Court under Article 226 by t
