2004 Supreme(SC) 27

2004(5) Supreme 115
Supreme Court of India
(From Tamil Nadu Sales Tax Appellate Tribunal, Chennai)
V.N. Khare, CJI., S.B. Sinha & Dr. AR Lakshmanan, JJ.
Ashok Leyland Ltd. -Appellant
versus
State of Tamil Nadu and Anr. -Respondents
Civil Appeal Nos. 976-979 of 2001
With
Civil Appeal No. 53/2004 @ SLP (C) No. 5579/2001, C.A. No. 943 of 2001, C.A. No. 944/2001, and W.P.(C) No. 195/1999
Decided on 7-1-2004
Counsel for the Parties :
For the Appearing Parties : K. Parasaran, A.K. Ganguli, B. Sen, P.P. Rao, Sr. Advocates, A.T.M. Sampath, V. Balaji, Ms. T.S. Santhi, Ms. Aarthi Radhakrishnan, K.K. Mani, R.L. Ramani, Ms. Manika Pandey, K.V. Vijaykumar, Subramonium Prasad, Ms. Chitra Venkataraman, R. Gopalakrishnan, S.N. Jha, Dilip Sinha, J.R. Das, Guntur Prabhakar, Sanjay R. Hegde, V.G. Pragasam, Ms. Kiran Bharadwaj, K.C. Kaushik, Rajiv Tyagi, Ms. Anil Katiyar, (NP), D.S. Mahra, (NP), Ravindra K. Adsure, Mukesh K. Giri, R.P. Wadhwani, (NP), B.S. Banthia, Naveen Sharma, Sakesh Kumar, Satish K Agnihotri, Ms. Krishna Sarma, Ms. Asha G. Nair, V.K. Sidharthan, Ms. Hemantika Wahi, P.R. Ramasesh, (NP), R.S. Hegde, Chandra Prakash, Devish P., Ms. Savithri Pandey, P.P. Singh, B.B. Singh, (NP), M.N. Shroff, (NP), G. Prakash, (NP), N. Ganapathy, (NP), K. Ram Kumar, (NP), V. Krishnamurthy, (NP), V. Ramasubra­maniam, (NP), Advocates.

Important point
Determination of an issue having regard to legal fiction created in terms of sub-section (2) of Section 6A of the Central Sales Tax Act is conclusive and binding.

Headnote:(i) Central Sales Tax Act, 1956-Sections 6A and 9(2)-Tamil Nadu General Sales Tax Act, 1959-Liability to pay tax on inter-State sales-Burden of proof-Filing of a declaration in Form F by the dealer is compulsory-If the dealer fails and/or neglects to file such a declaration, the transaction would be deemed to be an inter-State sale-Once such a legal fiction is drawn, the same would continue to have its effect not only while making an order of assessment in terms of the State Act but also for the purpose of invoking the power of reopening of assessment.

       Held : Section 6A of the Act although provides for a burden of proof, the same has to be read in the context of Section 6 of the said Act. Section 6 provides for liability to pay tax on inter-State sales. Any transaction which does not fall within the definition of ‘sale’ would not be exigible to tax, the burden whereof would evidently be on the assessee. We have noticed hereinbefore that whereas prior to the amendment in sub-section (1) of Section 6A the dealer had an option of filing a declaration in Form-F; after such amendment, he does not have such option, insofar as in terms of the amended provision, if the dealer fails and/or neglects to file such a declaration, the transaction would be deemed to be an inter-State sale. It is to be noticed that for the aforementioned purpose also, the Parliament advisedly used the expression ‘deemed’. If the expression ‘deemed’ is interpreted differently, an incongruity would ensue. (Para 68)

       In absence of any indication that the Parliament while enacting sub-section (2) of Section 6A did not intend to make the deeming provisions to be a conclusive fact as regard occasion of the transaction having taken place otherwise than as a result of sale, it would have dealt with the matter differently. Section 6A(2) of the Act uses the following expressions which are important : (1) ‘thereupon’; (2) ‘for the purpose of this Act’; (3) ‘the movement of goods to which the declaration related shall be deemed for the purpose of this Act to have been occasioned otherwise than as a result of sale’. Each of them must be given its proper meaning. A statute for the purpose of its interpretation must be read in its entirety. It is to be given a purposive construction. Applying Heydon’s rule, it must be held that the amendment was necessitated not only to make the dealer to file such a declaration imperatively but also to see that such movement of goods becomes inter-State sale by raising a legal fiction, as ‘having been occasioned in course of a inter-State sale’. In other words, if such a declaration is filed and on an inquiry made pursuant to or in furtherance of the particulars furnished are found to be correct by the assessing authority, the result thereof which is evidenced by the expression ‘thereupon’ shall in view of the legal fiction created would be a transaction otherwise than as a result of an inter-State sale. Furthermore, once such a legal fiction is drawn, the same would continue to have its effect not only while making an order of assessment in terms of the State Act but also for the purpose of invoking the power of reopening of assessment contained in Section 9(2) of the Central Act as well as Section 16 of the State Act. (Para 69 to 71)

       (ii) Central Sales Tax Act, 1956-Sections 6A, 9(2) and 34-Tamil Nadu General Sales Tax Act, 1959-Inter State sales-Assessment orders-Validity challenged-Appellants engaged in manufacture of commercial vehicles-They have their factories in States of Maharashtra and Rajasthan for manufacture of popular models of passenger chassis-They are registered under the State Act as also under the Central Act-Appellants have several regional offices throughout the country-Appellants case that they transfer both goods vehicle and passenger chassis to their different Regional Sales Offices for marketing the products which are registered under the Sales Tax laws-Stock of vehicles are transferred to Regional Sales Offices under the cover of stock transfer invoices-Appellants upon transfer of such purported stocks of vehicles filled up forms in terms of Section 6A of the Central Act-Assessing authority issued notices directing appellants to show cause for tax on inter-State sales in Tamil Nadu-Jurisdiction of assessing authority to reopen the assessment.

       Held : In the case at hand it has to be determined whether the sale in question is an interstate one. If through the means of a legal fiction it is determined that this is not an interstate sale, then it amounts to a transfer of stock. This finding is made by a statutory authority who has the jurisdiction to do so and there is no provision for appeal. Therefore, the order made by such authority is conclusive in that it cannot be reopened on the basis that there had been a mere error of judgment. It also cannot be re-opened under another statute, for examples, the Sales Tax Act of the State concerned, when the order had been made under the Central Act. Section 9(2) of the Act is subject to the other provisions of the Act which would include sub-section (2) of Section 6A of the Act. “Subject to” is an expression whereby limitation is expressed. The order is conclusive for all purposes. It can only be re-opened on a small set of grounds such as fraud, misrepresentation, collusion etc. It is also to be borne in mind that no presumption when movement of goods has taken place in the course of inter-State sales may be raised in the case of standard goods but the same is not conclusive. It is only one the factors which is required to be taken into consideration along with others. In a case, however, where the purchaser places order on the manufacturer for manufacturing goods which would be as per his specifications, a presumption that agreement to sell has been entered into may be raised. (Paras 72 and 73)

       An order of assessment is albeit passed under the State Act. But once it is held that the concerned State Act as also the Central Act is not applicable, as a consequence whereof sales tax would be payable under another State Act, it is doubtful as to whether the power to reopen the proceedings under the State Act or the Central Act would be attracted. There does not exist any power in the statute to rectify a mistake. In that view of the matter, mere change in the opinion of the assessing authority or to have a relook at the matter would not confer any jurisdiction upon him to get the proceedings reopened. Discovery of a new material although may be a ground but that itself may not be a ground for reopening the proceedings unless and until it is found that by reason of such discovery, a jurisdictional error has been committed. In other words, when an order passed in terms of Sub-Section (2) of Section 6A is found to be illegal or void ab initio or otherwise voidable, the assessing authority derives jurisdiction to direct reopening of the proceedings and not otherwise. (Para 105)

       For the reasons stated hereinbefore, we are of the opinion that the Appellants would be entitled to move the High Court for ventilating their grievances. However, if the Central Government creates a new forum, it would be open to them to approach the same. (Para 111)

       (iii) Interpretation of Statutes-Purposive construction-Legal fiction-A statute for the purpose of its interpretation must be read in its entirety-Whenever a legal fiction is created by a statute, the same shall be given full effect. (Paras 71 and 65)

       (iv) Words and Phrases-Words ‘thereupon’ and ‘deemed’-Expressions ‘subject to’, ‘for the purposes of the said Act’, ‘determination’-Meanings.

       Held : It has not been disputed before us that all the requisite particulars are to be stated in Form F. Once a determination is made that such statements are correct, the curtain is drawn keeping in view the expression “thereupon”. The said word is of great significance and must be given its full effect. (Para 78)

       The expression “For the purpose of this Act”, unless the context otherwise requires would mean “all the purposes” thereof. (Para 80)

       The expression “for the purpose of the said Act” must also be given effect to. The same would ordinarily mean “for the purpose of all the provisions of the said Act”. (Para 82)

       The word “Determination” must also be given its full effect to, which pre-supposes application of mind and expression of the conclusion. It cannotes the official determination and not a mere opinion of finding. (Para 87)