ORDER OF REFERENCE

The matter coming up in the first instance before Subba Rao, C.J., and Bhimasankaram, J., the following question was referred to a Full Bench :-

"Whether the deduction referred to in sub-rule (2) of rule 18 of the Turnover and Assessment Rules framed under the Madras General Sales Tax Act is conditional upon the assessee complying with the requirement contained in sub-rule (3) of that rule."

OPINION OF THE FULL BENCH

The Opinion of the Full Bench was delivered by

SATYANARAYANA RAJU, J. - The following question has been referred to us :

"Whether the deduction referred to in sub-rule (2) of rule 18 of the Turnover and Assessment Rules framed under the Madras General Sales Tax Act is conditional upon the assessee complying with the requirement contained in sub-rule (3) of that rule ?"

The answer to this question depends on the construction of the relevant provisions of the Madras General Sales Tax Act (hereafter referred to as "the Act"), which, by reason of section 53 of the Andhra State Act, is in force in the territory now forming part of the State of Andhra. The descriptive title of the Act is "An Act to provide for the levy of a general tax on the sale of goods in the State of Madras."

The provisions of the Act, so far as they are now relevant, run as follows :-

Section 2(b) : "'Dealer' means any person who carries on the business of buying or selling goods."

Section 2(i) : "'Turnover' means the aggregate amount for which goods are either bought by or sold by a dealer whether for cash or for deferred payment .............................."

Section 3 provides that the turnover for all purposes of the Act shall be determined in accordance with, and the tax shall be assessed, levied and collected in such manner and in such instalments as may be prescribed by the rules made by the State Government in that behalf. Every dealer whose turnover is Rs. 10,000 or more for a year shall submit such return or returns of his turnover in such manner and for such periods as may be prescribed under sub-section (1) or sub-section (2) of section 3.

There is a proviso to section 3(5) which contains the following clauses :-

"(i) in respect of the same transaction of sale, the buyer or the seller, but not both as determined by such rules as may be prescribed, shall be taxed;

(ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him."

Section 5 provides for exemptions and reduction of tax in certain cases. Section 6 empowers the Government to make an exemption or reduction in rate, in respect of any tax payable under the Act, on the sale of any specified class of goods at all points or at a specified point or points in the series of sales by successive dealers. Section 15 provides for offences and penalties, among which is wilful submission of an untrue return or failure to submit a return as required by the provisions of the Act or the rules made thereunder. Section 19 empowers the State Government to make rules to carry out the purposes of the Act, and requires that all rules made under the section shall be published in the Gazette, which, upon such publication, shall have effect as if enacted in the Act.

Under section 3(2), the State Government made rules which are called "The Madras General Sales Tax (Turnover and Assessment) Rules, 1939", and under section 19, further rules which are called "The Madras General Sales Tax Rules, 1939". These rules are of an elaborate and comprehensive character, and by reason of sections 3(4), 3(5) and 19(5) they have statutory force.

None of the provisions in the Madras General Sales Tax Rules is relevant for our present purpose, but some of the provisions of the Turnover and Assessment Rules require to be noticed.

They are :

"4. (1) Save as provided in sub-rule (2) the gross turnover of a dealer for the purposes of these ru

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