TaxTMI 
TaxTMI 
TaxTMI 
1985 (9) TMI 314
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...., it is necessary to consider this question in its proper perspective and therefore the broad constellation of facts in which the question arises may be briefly stated. We will confine ourselves only to the facts of Civil Appeals Nos. 207-208 of 1983 for the facts of this appeal are broadly similar to the other appeals comprised in this group. The assessee is a partnership firm which carries on business in grains, oil-seeds, poppy seeds, etc., in Bhawani Mandi in District Jhalawar in the State of Rajasthan. The assessee is a registered dealer under the provisions of the State Act and is also registered as a dealer under the provisions of the Central Sales Tax Act, 1956 (hereinafter referred to as Central Act). The assessment year with which we are concerned in this appeal are assessment years 1975-76 and 1976-77. During these two assessment years, the assessee purchased poppy seeds against declarations in form No. S.T. 17 furnished to the selling dealers. These declarations in form No. S.T. 17 stated that the State. The assessee, after purchasing the poppy seeds against these declarations, resold the same to different buyers under contracts executed by and between the assessee and....
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....s and declined to entertain the petition for special leave directly against the order of assessment made by the Commercial Tax Officer. But we were informed by the learned Advocate appearing on behalf of the assessee, and this was not controverted by the learned Advocate appearing on behalf of the Department, that the High Court in another case has already taken the view that when a resale is made by an assessee which is in the course of inter-State trade or commerce, it cannot be regarded as a resale within the State and hence such resale would constitute a breach of the declaration given by the assessee to the selling dealer so as to attract the applicability and the purchase price paid by the assessee would consequently be liable to be included in the taxable turnover of the assessee. It would therefore, argued the learned counsel for the assessee, be futile to drive the assessee to the procedure of appeal and revision and then a writ petition to the High Court. This contention urged on behalf of the assessee had force and we accordingly granted special leave and entertained this appeal. Similarly we granted special leave in the other cases as well and hence those appeals are pl....
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....nt of the proceeds of sale of goods, which have been sold to persons outside the State for consumption outside the State". It is clear on a combined reading of these definitions that "taxable turnover" means the aggregate amount of sale prices received or receivable by a dealer in respect of sales of goods within the State. It is only sales of goods within the State which can be taxed by the State Legislature. Clause (1) of article 286 of the Constitution provides inter alia that no law of a State shall impose or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place outside the State and clause (ii) of that article empowers Parliament to formulate principles for determining when a sale or purchase of goods can be said to have taken place outside the State. These principles have been formulated by Parliament in section 4 of the Central Act which reads: "4. When is a sale or purchase of goods said to take palce outside a State.-(1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to....
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....e State Act we find that what is incorporated in that sub-section is only sub-section (2) of section 4 and not sub-section (1) of section 4 nor section 3 or section 5 of the Central Act. Now the declarations in form No. S.T. 17 furnished by the assessee to the selling dealers uniformly stated that the goods were purchased by the assessee for the purpose of resale within the State. The advantage of furnishing declaration in form No. S.T. 17 is that the selling dealer would not be liable to pay sales tax on the sale effected by him against the declaration and the assessee would not therefore have to pay to the selling dealer sales tax as part of the purchase price nor would the assessee be liable to pay any purchase tax on the purchase made by him on account of the saving enacted in section 5A of the State Act. But the second proviso to clause (iv) of sub-section (s) of section 2 of the State Act provides as to what would be the consequence if an assessee purchases goods without paying any tax on the strength of a declaration furnished by him and the goods are then used by him for a purpose other than the one mentioned in the declaration. It enacts the following provision with a vie....
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.... by reason of sub-section (2) of section 4 which was incorporated in the State Act by explanation II to sub-section (o) of section 2 of the State Act. The answer given by the assessee to the argument of the Department based on the opening words of sub-section (1) of section 4 of the Central Act was that what was incorporated in explanation II to sub-section (o) of section 2 of the State Act was only sub-section (2) of section 4 and not sub-section (1) of section 4 of the Central Act and therefore the opening words in sub-section (1) of section 4 had no impact on the provisions enacted in explanation. These rival arguments raised an interesting question of interpretation and though it is res integra so far as this Court is concerned we find that there are a large number of decisions of various High Courts which have accepted the construction contended for on behalf of the assessee. We may refer only to a few of these decisions, namely, Commissioner of Sales Tax v. Godrej Soap Private Limited [1969] 23 STC 489, State of Orissa v. Joharimal [1976] 37 STC 157 and Georgopoulos v. State of Maharashtra [1976] 37 STC 187. We may first clear the ground by stating facts which were not in di....
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....id down in sub-section (2) of section 4 of the Central Act. Now let us turn to consider the purpose mentioned in the declarations in form No. S.T. 17 furnished by the assessee to the selling dealers. The purpose for which the goods were purchased by the assessee was stated in the declarations to be "resale within the State". Obviously the expression "resale within the State" in form No. S.T. 17 must bear the same meaning it has in the State Act. Form No. S.T. 17 has been prescribed by the State Government in exercise of the power conferred under section 26 of the State Act and it is a recognised canon of construction that an expression used in a rule, by-law or form issued in exercise of power conferred by a statute must, unless there is anything repugnant in the subject or context, have the same meaning as is assigned to it under the statute. The expression "resale within the State" in form No. S.T. 17 must therefore be read in the light of explanation II to sub-section (o) of section 2 of the State Act which lays down as to when a sale shall be deemed to have been made within the State and this provision in the explanation must govern the determination of what is "resale within....
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....n (2) of section 4 which is incorporated in explanation II to sub-section (o) of section 2 of the State Act and we are called upon to consider as to what is the effect of such incorporation. The State Legislature could have very well reproduced the entire language of sub-section (2) of section 4 bodily in explanation II to sub- section (o) of section 2 but it preferred to employ a simpler device by incorporating by reference the provisions of sub-section (2) of section 4 in explanation II to sub-section (o) of section 2. The doctrine of incorporation by reference has been succinctly explained by Lord Esher, M.R., in In re Wood's Estate (1886) 31 Ch D 607 in the following words: "It is to put them into the Act of 1855, just as if they had been written into it for the first time. If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the new Act just as if they had been actually written in it with the pen, or printed in it, and the moment you have those clauses in the later Act, you have no occasion to refer to the former Act at all." This Court also explained the doc....