M/S. HIRALAL RATTANLAL V. STATE OF U.P. (1973) 1 SCC 216

 

M/S. HIRALAL RATTANLAL V. STATE OF U.P.

(1973) 1 SCC 216

RELEVANT THEORY

Words are the skin of language. Language gives its own meaning and interpretation of the law. It does so by employing appropriate phraseology to attain the object that the legislative policy seeks to achieve. Here, when the language of the statute is plain and unambiguous it would not be open to the courts to adopt a hypothetical construction on the ground that such a construction is more consistent with the alleged object and policy of the Act. But where such a plain reading leads to anomalies, injustices and absurdities, the court may look into the purpose for which the statute was enacted and try to interpret it so as to adhere to the purpose of the statute. It further mentions that if words are to be added by the court in order to repair an omission in the Act, it should be possible to state with certainty that these words would have been inserted by the draftsman and approved by the legislature had their attention been drawn to the omission before the Bill had passed into a law.

FACTS

The Appellants dealt in foodgrains including cereals and pulses especially split or processed foodgrains and dal. Under the Sales Tax Act as it originally stood, the purchases of split or processed foodgrains and dal by dealers were sought to be brought to lax under Section 3-D of the principal Act read with the notification issued. The validity of the levy was challenged by Tilock Ghand Prasan Kumar, the Appellant in Civil Appeal No. 1625 of 1971 in respect of the assessment made on him for the assessment year 1966-67 by assessment order.

ISSUE

The issue in the current case pertained to whether the government was competent to levy sales tax on the purchases made by the Appellants of split or processed food grains and dal under the provisions of the United Provinces Sales Tax Act, 1948 as amended by the Uttar Pradesh Sales Tax (Amendment and Validation) Act, 1970.

 

RULES

Section 2(c) of the Uttar Pradesh Sales Tax (Amendment and Validation) Act, 1970 defines a “dealer”. It states that “a Dealer’ means any person or association of persons carrying on the business of buying or selling goods in Uttar Pradesh, whether for commission, remuneration or otherwise, and includes any firm or Hindu Joint family and any society, club or association which sells goods to its members and also includes any department of the State Government or the Central Government which carries on such business and any undertaking engaged in the generation or distribution of electrical energy or any other form of power.” Section 3 provides for the levy of multi point tax. It states that “Subject to the provisions of this Act, every dealer shall, for each assessment year, pay a tax at the rate of two naye paise per rupee on his turnover of such year, which shall be determined in such manner as may be prescribed......” Section 3-D states that “Except as provided in sub-Section (2), there shall be levied and paid, for each assessment year or part thereof, a tax on the turnover, to be determined in such manner as may be prescribed, of first purchases made by a dealer or through a dealer, acting as a purchasing agent in respect of such goods or class of goods, and at such rat s, not exceeding two paise per rupee in the case of foodgrains, including cereals and pulses, and five paise per rupee in the case of other goods and with effect from such dare, as may, from time to time, be notified by the State Government in this behalf.”

DECISION OF THE HIGH COURT

The High Court of Allahabad struck down the levy as the dal purchased by the Petitioner before it could not be said to be a commodity essentially different from the arhar dal purchased by the dal mills and accordingly, the purchases affected by the Petitioner could not be regarded as the first purchases.

JUDGEMENT AND ANALYSIS

1. It was observed that while construing the statutory provision, the first and foremost rule that should be followed was that of literary construction. If the provision is unambiguous and if from that provision and the legislative intent is clear, the rule of literal construction is followed. The other rules of construction are called into aid only when the legislative intention is not clear. It was also necessary to point out that normally, a proviso to a Section is intended to take out a part of the main Section for special treatment. It isn’t expected to enlarge the scope of the main Section. But scenarios have arisen wherein the court has held that despite the fact that a provision is called proviso, it acted as a separate provision that already had or had the power to substantially alter the main Section.
2. The legislation is able to levy taxes on the goods as the Constitution has given it authority via Entry 54 of the List II of the Constitution. Subject to Constitution restrictions, the power to legislate includes the power to legislate both, prospectively and retrospectively. Further, it must be considered that the primary purpose of the levy of all taxes is to raise funds for public good. Which person should be taxed, what transaction should be taxed or what goods should be taxed, depends upon social, economic and administrative considerations. In a democratic set up it is for the Legislature to decide what economic or social policy it should pursue or what administrative considerations it should bear in mind.
3. It was examined by this Hon'ble court that the Legislature had the power and authority to define the nature of the goods, the sale or purchase of which should be brought to tax. Legislature was not incompetent to separate the processed or split pulses from the unsplit or unprocessed pulses and treat the two as separate and independent goods. The court also referred to the judgement Jagannath v. Union of India and observed that there was no basis for the contention that the Legislature cannot, for the purpose of tax under the Act, separate the split or processed pulses from the unsplit or unprocessed. The legislature’s power to specify the nature of the goods the sale or purchase of which it will bring to tax was very wide.
4. The court observed that if on a true reading of an explanation, it appears that it has widened the scope of the main Section, effect should be given to the legislative intent notwithstanding the fact that the Section identified that part as an explanation. In all these matters, the court was required to find the true intent of the legislature. Section 3-D as it originally stood dealt with food grains and pulses and not with the unprocessed or unsplit food grains and pulses as a separate item. But due to explanation II it was required to read the expression “foodgrains” as  containing foodgrains unprocessed and unsplit or processed and split. It was true that the explanation wasn’t properly worded but the intent was clear and unambiguous. The notification in question was issued under Section 3-D. Section 3-D generally referred to foodgrains but because of Explanation II, it was imperative that  the expression “foodgrains' 'was read as  containing two different items, processed or split foodgrains and unprocessed or unsplit foodgrains. Consequently while reading the expression “foodgrains'' in the notification also, it was important that such an approach must be adopted.