TaxTMI 
TaxTMI 
1988 (4) TMI 419
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....m prescribed by section 8(4)(a) of the Central Sales Tax Act, from his purchaser. On these facts, the Commercial Tax Officer, Nirmal, included the relevant turnover in a sum of Rs. 1,25,067.40, in the turnover of the petitioner and levied Central sales tax thereon at the rate of 10 per cent. An appeal preferred to the Assistant Commissioner failed, as also a further appeal to the Sales Tax Appellate Tribunal. The Tribunal held, relying upon the language of the proviso to section 9(1) of the Act, that inasmuch as the petitioner has failed to obtain the C form from his purchaser, tax has to be, and can be levied on the sale effected by him (second sale in the course of inter-State trade) and collected by the State of Andhra Pradesh for the reason that the petitioner is a registered dealer within this State. It was observed that the petitioner could have obtained the C form in connection with the purchase of horse-gram from this State and, therefore, this State is the appropriate State to levy the tax. Mr. P. Venkatarama Reddy, learned counsel for the petitioner, contended that inasmuch as horse-gram is exempt from sales tax under the Maharashtra Sales Tax Act, the first inter-Stat....
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....nce with the provisions of sub-section (2), in the State from which the movement of the goods commenced: Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods and being also a sale which does not fall within sub-section (2) of section 6, the tax shall be levied and collected(a) where such subsequent sale has been effected by a registered dealer, in the State from which the registered dealer obtained or, as the case may be, could have obtained, the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods, and (b) where such subsequent sale has been effected by an unregistered dealer, in the State from which such subsequent sale has been effected." Sub-section (2) of section 6 provides that a second sale effected in the course of inter-State trade or commerce shall be exempt from tax, provided the sale is (a) to the Government, or (b) to a registered dealer, other than the Government, if the goods are of the description referred to in section 8(3). This exemption is, however, subject to two ....
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....e, could have obtained, the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods..........." It may be noted that the words "or, as the case may be, could have obtained", were inserted by Amendment Act 28 of 1969. It is indeed these words which fall for consideration in this case. The argument of Mr. P. Venkatarama Reddy, learned counsel for the assessee-which we have already set out hereinabove-is that clause (a) in the proviso to section 9(1) contemplates a situation where it was expected of the second seller to have obtained a declaration in C form in connection with the purchase of the said goods, but not a situation where such a declaration in C form need not be obtained for the reason that the sale in his favour (i.e., purchase of the said goods by him) is exempt from tax by virtue of section 8(2-A). The contention is that where the sale in his favour is exempt, there is no occasion, nor any necessity for him to obtain a declaration in C form. According to him, clause (a) in the proviso contemplates a situation where it is necessary, or possible, to obtain such declaration and a dealer has either obtai....
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.... whole purpose of the proviso is to identify the State which is invested with jurisdiction to tax particular subsequent sales. It is, therefore, reasonable to construe the proviso as that, when it speaks of obtaining the form prescribed for the purposes of clause (a) of sub-section (4) of section 8 in connection with the purchase of such goods, it means that the C form certificate has been obtained in respect of a particular first sale of the goods. The concluding phraseology in the proviso is not used in the abstract; but since the jurisdiction is to be localised with reference to particular transactions, the form spoken of must necessarily relate to such transactions. So much, as it appears to us, is clear from a reading of section 8(4)(a) with the proviso to section 9(1)." The court recognised that the construction it was placing upon the proviso would give rise to a lacuna in the proviso, and that in case of sale of goods which are exempt from tax in the State from which they emanate and consequently in respect of which sale no declaration in C form is obtained, the second sale, even though not exempted under section 6(2), would still be exempted; but, the court was of the o....
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.... words, no doubt, take in a case where the dealer fails to obtain the C form; they also take in, in our opinion, a case where obtaining such a C form is not necessary and hence not obtained. By adopting this interpretation, there will be no lacuna in the provisionthe lacuna pointed out by the Madras High Court. If the said words are capable of being understood in a manner leaving no lacuna, they should be so construed, rather than construing them the other way. This rule is as valid in the case of a taxing statute as in the case of any other statute. We are not adding any words in the statute; we are only construing it in a reasonable manner, i.e., so as to avoid a lacuna in the Act. The object of the proviso to section 9(1), it must be understood, is only to determine or specify the appropriate State competent to tax such second or subsequent sale. For this purpose, even where the sale in favour of a dealer effecting such second or subsequent sale is exempt, one has to see from which State he could have obtained the declaration in C form, had it been necessary for him to furnish such a declaration. Thus, the said words would take in not only a situation where a dealer....
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.... 8(4) of the Central Act because no purpose was to be served by obtaining such form. The Statement of Objects and Reasons also does not help the department because the language of the proviso is clear and there is no ambiguity which may be sought to be resolved by having recourse to the Statement of Objects and Reasons. Moreover, in the Statement of Objects and Reasons it is stated that the tax will be levied and collected in the State where the registered dealer effecting subsequent sales has his place of business. But the language of the proviso is not to that effect........" On the above reasoning, it was held that the proviso is not attracted to the sales effected by the Madhya Pradesh dealers to the dealers in Maharashtra and Madras, and that the State of Madhya Pradesh was not competent to levy and collect tax on such sales. With great respect, we are unable to agree with the reasoning of the Madhya Pradesh High Court. The logical consequence flowing from the ratio of the said decision is that all second and subsequent sales will be exempt from tax where the first inter-State sale of such goods is exempt. If the State of Madhya Pradesh is not competent to tax the....