IMPORTANT POINTS
Strict rule of interpretation applies to penal statutes and taxing statutes.
Total turnover cannot be read as taxable turnover.

JUDGMENT :

AJAY RASTOGI, J.

1. The present appeals have been preferred against the impugned judgment dated 17th April, 2007 passed by the High Court of Karnataka disposing of the Sales Tax Revision Petition examining the applicability of the turnover tax as defined under Section 6B(1) by the Karnataka Sales Tax Act, 1957(hereinafter being referred to as “KST Act”).

2. The brief facts of the case which may be relevant for the present purpose are that the appellant is a manufacturer and registered dealer of the cashew kernels cashew shell oil, etc. Assessments were made for the years 1990-91 to 1999-2000 by the respective assessing authorities under Section 12(3) of the Act. Against the assessment orders of the assessing authorities, appeals/revision petitions were preferred before the appellate/revisional authority and the contention advanced by the learned counsel for the appellant was that levy of tax under Section 6-B of the Act, on the total turnover is a misconstruction of the provision and it has to be on the “taxable turnover” which may be in conformity with Article 286 of the Constitution of India but that was neither accepted by the assessing authority nor at the appellate/revisional stage against which the present appeals have been preferred impugning the assessments made for the years 1990-91 to 1999-2000 in the instant appeals.

3. The main thrust of the submission of Mr. Mohit Chaudhary, learned counsel for the appellant is that Courts below have manifestly erred in appreciating that the ‘total turnover’ as defined under Section 6-B(1) for the purpose of levy turnover tax can in no event include the ‘turnover’ with reference to which the State has no power to levy tax under the constitutional scheme and the submission proceeds that the levy of tax under Section 6-B can be on the ‘taxable turnover’ alone. Though the first limb of the Section has adopted the word ‘total turnover’ but it is only for the limited purpose of identifying the dealers and further submits that the ‘turnover’ which is not liable to tax under the provisions of the Act, cannot be included in the calculation of ‘total turnover’ for the purpose of assessment of turnover tax and that is according to him the basic error which has been committed in interpreting Section 6-B(1) of the KST Act.

4. Learned counsel submits that the interpretation which has been advanced by the respondent State if taken at its face value, would amount to permitting the State to indirectly levy turnover tax on part of a dealer’s total turnover which is non exigible to intra sales tax and indeed would be beyond the legislative competence of the State.

5. Learned counsel further submits that although the constitutional validity of the provision has been upheld but still open to the Court to read down the provision in a manner that it do not offend the Constitutional scheme. The concept of ‘total turnover’ has been incorporated under Section 6-B(1) for the purpose of identification of the dealers and for prescribing rate/slabs and the actual levy is intended only on intrastate turnover by reason of the proviso, it may be within the competence of the State Legislature. In support of submission, learned counsel has placed reliance on the decision of this Court in Indra Das Vs. State of Assam 2011(3) SCC 380 and Rakesh Kumar Paul Vs. State of Assam 2017(15) SCC 67.

6. Per contra, Mr. Devadatt Kamat, learned AAG appearing for the respondent State submits that the issue in the instant appeals stands conclusively answered by this Court in M/s. Hoechst Pharmaceuticals Ltd. and Others Vs. State of Bihar and Others 1983(4) SCC 45 and further submits that once the constitutional validity of Section 6-B has been upheld by the jurisdictional High Court in the series of decisions, wherein the challenge to Section 6-B(1) offending Article 14 and 19(1)(g) of the Constitution of India regarding the classification of dealers being repelled and it was held that the inclusion of interstate export and i