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PETITIONER: COMMISSIONER OF SALES TAX,UTTAR PRADESH

       Vs.

RESPONDENT: THE MODI SUGAR MILLS LTD.

DATE OF JUDGMENT: 31/10/1960

BENCH: SHAH, J.C. BENCH: SHAH, J.C. DAS, S.K. HIDAYATULLAH, M. GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA

CITATION:  1961 AIR 1047            1961 SCR  (2) 189  CITATOR INFO :  D          1962 SC 745  (5)  R          1964 SC1594  (4,5,6)  R          1966 SC1385  (11)  RF         1977 SC 513  (4,5,10)  R          1979 SC1495  (10)  RF         1986 SC1518  (8)  R          1989 SC2227  (37)  F          1990 SC 781  (26)

ACT: Sales    Tax    Previous   year   turnover   opted    for assessment--Change  of law and tax rates  during  assessment year-If applicable to previous year turnover-Modification in the  tax  levied-If Permissible-United Provinces  Sales  Tax Act, 1948 (XV of 1948), ss. 3, 3A, 7, 10 and 22-U.  P. Sales Tax Rules, Yule 39-U.  P  Government Notification dated June 8, 1948.

HEADNOTE: The respondent company was a manufacturer of edible and non- edible  oils  and was registered as a " dealer "  under  the United  Provinces Sales Tax Act, 1948.  Its year of  account commenced  on June 1, and ended on May 31 of the next  year. Under  S.  7(1) of the Act read. with rule 39 of  the  rules framed  thereunder  the respondent exercised the  option  of being  assessed  on the turnover of the  previous  year  and submitted its return for the assessment year 1948-49 on  its taxable  turnover of the previous year ending May 31,  1947. The  Sales Tax Officer assessed the turnover in  respect  of edible oil at 3 pies per rupee under S. 3, but in respect of non-edible oil he held that since a notification dated  June 8, 1948, issued under S. 3(A) had come into force from  June 9, of the assessment year providing for the levy of tax at 6 pies per rupee, the assessee was liable to be assessed at  3 pies  per rupee on the turnover during the first 69 days  of the  year and at 6 pies per rupee for the remaining days  of the year.  On appeal by the assessee the appellate authority modified the order and directed that the tax be levied at  a flat  rate  of 3 Pies on both edible  and  non-edible  oils.

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This  order was set aside by the revising authority and  the order of the Sales Tax Officer was restored.  On a direction made  by the High Court the revising authority  submitted  a question for opinion.  The High Court held that the assessee was  liable  to  pay the tax at a flat rate of  3  pies  per rupee.   On  appeal  by the Commissioner  of  Sales  Tax  by special leave, Held (per Hidayatullah, Das Gupta and Sliah, jj.), affirming the view of the High Court, that the assessee who elected to submit  his return on the turnover of the previous year,  is liable  to be assessed to sales-tax at the rate in force  on the  first  day  of  the  year  of  assessment  because  the liability   arises   on  that  date,  and   any   subsequent enhancement of the rate by virtue of a notification under S. 3(A) does not alter that liability. A taxing statute must be interpreted in the light of what 190 is clearly expressed therein and nothing can be implied  nor can  provisions  be imported into them so as  to  supply  an assumed  deficiency. Per S. K. Das and Ayyangar, JJ.-The rate of tax as     applied by the sales tax officer was in accordance with law. Having regard to the scheme underlying the option to   elect for a previous year turnover conferred by s. 7(1) of the Act the change in the law and in the rate of tax effected during the  assessment  year  must apply to  the  turnover  of  the previous  year  which is deemed to be the  turnover  of  the assessment  year and sales effected during that period  have to be assessed at the rate prevailing in that year. Although the notification was prospective and was made  with the  object  of  changing the rate of  taxation  during  the assessment year, the date mentioned therein did not  prevent the  application  of the assessment year rate to  the  opted previous year turnover. It is not correct to say that there is absence of  machinery for reassessment and refund of tax to justify the conclusion that the basis of the tax liablity for an assessment year is that  which  prevailed on the first day of that  year  since there are provisions in the Act such as for instance ss.  10 and   22   which  provide  for   reductions,   refunds   and rectification  of  errors regarding taxation  and  even  for enhancement of the tax already levied. There was no ambiguity in the notification and the principle of resolving ambiguities in favour of the assessee could not be applied in this case.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 443 of 1957. Appeal  by special leave from the judgment and  order  dated April  25, 1955, of the Allahabad High Court in Civil  Misc. Case No. 26/1951. C.   B.  Aggarwala, C. P. Lal for G. Ar.  Dikshit,  for  the appellant. S.   K. Kapur and Mohan Behari Lal, for the respondent. 1960.  October 31.  The Judgment of Hidayatullah, Das  Gupta and  Shah, JJ., was delivered by Shah, J., and the  judgment of Das and Ayyangar, JJ., was delivered by Ayyangar, J. SHAH  J.-Judge (Revisions) exercising authority under s.  11 of  the United Provinces Sales Tax Act XV of 1948 drew up  a statement of case and referred to 191 the High Court of Judicature at Allahabad the follow- question :

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"  Whether the assessee, who is a manufacturer and a  dealer of non-edible oils and who elected the previous year as  the basis  of his assessment in the assessment year 1948-49,  is liable  to be assessed at the flat rate of 3 pies per  rupee on  the  whole  of the turnover of  the  previous  year,  or whether  he is liable to be assessed at the rates of 3  pies per  rupee  and  6 pies per rupee on  the  turnover  of  the previous  year  in proportion to the two  periods  from  1st April to 8th June, 1948, and from 9th June, 1948 to the 31st March, 1949 ?" The High Court answered the question as follows: "  The  applicant  company  is liable to  pay  tax  for  the assessment year 1948-49 on the turnover of the previous year in respect of sales of non-edible oils at the flat rate of 3 pies per rupee." Against  the order of the High Court recording  its  answer, this appeal with special leave is preferred. The facts which give rise to the appeal are briefly these : The Modi Food Products Co., Ltd.-hereinafter referred to  as " the assessee ", manufactures oils edible and non-edible in its  factory at Modinagar, District Meerut, State  of  Uttar Pradesh.  The assessee is registered as a "dealer" under the United  Provinces Sales Tax Act XV of 1948.  The  assessee’s year  of  account commences on June 1, and ends on  May  31, next year.  For the year of account 1946-47, the  assessee’s sales  of  edible  and  non-edible  oils  amounted  to   Rs. 63,02,849-7-7.   The U. P. Legislature enacted  with  effect from April 1, 1948, the United Provinces Sales Tax Act XV of 1948  providing  for the levy of a tax on sales  of  certain commodities.   This act was amended by Act XXV of 1948  with retrospective  operation from April 1, 1948.  By the Act,  " assessment  year " was defined as meaning the twelve  months ending  on  March 31 and " previous year "  was  defined  as meaning  the  twelve months ending on the  31st  March  next preceding  the assessment year, or, if the accounts  of  the dealer had been 192 made up to a date within the said twelve months  in  respect of a year ending on any date other than the said 31st  March then,  at the option of the dealer, the year ending  on  the day  to which his accounts had so been made up. ,Turnover  " was defined as meaning the aggregate of the proceeds of sale by a dealer.  By s. 3, a tax at the rate of 3 pies per rupee of turnover was, subject to certain exceptions, made payable by every dealer in each assessment year whose turn. over  in the previous year exceeded Rs. 12,000 or such larger  amount as may be prescribed; the Provincial Government was  however authorised to reduce the rate of tax on any dealer or  class of dealers on the turnover in respect of any goods or  class of goods.  By s. 3-A, the Government of U. P. was authorised to  introduce  instead  of  the  multiple  point  scheme  of taxation provided by s. 3 a single point system of  taxation and by notification to declare that the proceeds of sale  of any  goods  or class of goods shall not be included  in  the turnover  of any dealer except to such single point  in  the series of sales by successive dealers as may be  prescribed; and if the Government made such a declaration, the  turnover of  the dealer in whose turnover the sale of such goods  was included  was  in respect of such sale to be taxed  at  such rate  as may be specified not exceeding one anna per  rupee. By  s. 7, every dealer whose turnover in the  previous  year was Rs. 12,000 or more was directed to submit such return or returns  of his turnover of the previous year  within  sixty days of the commencement of the assessment year in such form

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and  verified in such manner as may be prescribed.   By  the proviso, the Government was authorised to prescribe that any dealer or class of dealers may submit in lieu of the  return or returns specified in that section, a return or returns of his turnover of the assessment year at such intervals as may be  prescribed.  Provision was made by the Act  for  appeals against  the  order of assessment and revision  against  the order of the appellate authority.  By s. 11, the High  Court of   Judicature  at  Allahabad  was  authorised  to   decide questions  of  law  raised  in any case  in  the  course  of assessment and 193 referred  to it on a statement of the case drawn up  by  the Revising  Authority.  By s. 24. the  Provincial,  Government was  invested  with  power to make rules to  carry  out  the purposes of the Act and in particular in respect of  certain specified matters. In exercise of the powers conferred by s. 24 of the Act, the Government  of  U. P. framed rules.  Rule 39 of  the  U.  P. Sales Tax Rules gave to every dealer an option to submit his return of the turnover of the assessment year in lieu of the return  of the turnover of the previous year.  A dealer  who did  not carry on business during the whole of the  previous year  had no option, but was bound to submit his  return  of the  turnover  of  the assessment year.  By r.  40,  it  was provided that every dealer who elected to submit a return of the turnover of his previous year shall within sixty days of the commencement of the assessment year, submit to the Sales Tax  Officer a return showing his turnover of  the  previous year.   By  r. 41, it was provided that every  dealer  whose estimated  turnover during the assessment year was not  less than Rs. 15,000 and who elected to submit his return of such year shall before the last day of July, October, January and April submit to the Sales Tax Officer, a return of his gross turnover  for  the quarters ending June  30,  September  30, December 31 and March 31. In  exercise of the authority conferred by s. 3-A which  was incorporated  in the Act by Act XXV of 1948, the  Government of U. P. issed the following notification : "  In  exercise  of the powers conferred by s.  3-A  of  the United  Provinces  Sales Tax Act, 1941, as  amended  by  the United  Provinces  Sales  Tax  (Amendment)  Act,  1948,  the Governor is hereby pleased to declare that with effect  from June  9,  1948,  the proceeds of sale of  goods  entered  in column 2 of the schedule hereto shall not be included in the turnover of any dealer except at the point in the series  of sales  by successive dealers mentioned in column  4  thereof under the circumstances shown in column 3 thereof. (2)  The Governor is further pleased to order that 25 194 as  from  June 9, 1948, the rate of tax in  respect  of  the column 5  of the schedule hereto. (3)  Every  dealer by or on whose behalf goods mentioned  in the schedule aforesaid are held at the close of the 8th  day of  June,  1948,  shall  submit  a statement  showing  the quantity  and price of such stock and of the stock  of  such goods held on the 24th day of May, 1948, to the  appropriate assessing authority by the 30th day of June, 1948." To  this notification was appended a schedule which set  out the descriptions of diverse commodities, the  "circumstances under Which the turnover was to be calculated " the point of tax and the rate of tax.  Item 14 of the schedule was " oils of all kinds excluding edible oils but including Vanaspati " and sales thereof by manufacturers in the U. P. were  liable

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to  tax at the rate of 6 pies per rupee.  By virtue of  this notification,  non-edible  oils became liable  to  a  single point  tax as from June 9, 1948, at the time of sale  by  an importer or manufacturer in the United Provinces. The  assessee submitted its return for the  assessment  year 1948-49 on its taxable turnover of the previous year  ending on May 31, 1947, to the Sales Tax Officer, Meerut Range.  On the  assessee’s return, the Sales Tax Officer  assessed  the tax  at Rs. 1,16,238-12-0, holding that sales of  non-edible oils  for the first 69 days out of the year of the  turnover were  to be taxed at the rate of 3 pies, and sales  for  the remaining  296 days were to be taxed at the rate of  6  pies per  rupee.   Against  the order passed  by  the  Sales  Tax Officer, Meerut Range, an appeal was preferred to the  Judge (Appeals), Sales Tax, under s. 9 of the Act.  The  appellate authority  modified the order and directed the  assessee  to pay  tax on non-edible oils on the turnover of the  previous year  at the flat rate of 3 pies per rupee and  reduced  the tax liability-to Rs. 1,08,477-0-3.  This order of the  Judge (Appeals)  was set aside by the revising authority  and  the order  of  the  Sales  Tax  Officer  was  restored.   On,  a direction  made  by the High Court, the  revising  authority drew up a statement of the case and submitted for opinion  a question 195 which in his opinion arose out of the assessment.  The  High Court  re-framed the question as set out  hereinbefore,  and answered it in favour of the assessee. By  s.  3 and s. 3-A, which are the charging  sections,  the liability  to  pay  sales tax in  each  assessment  year  is charged  on the total turnover of a dealer.  By s.  7,  read with  r.  39,  the assessee has the  option  to  adopt   the turnover  of the previous year as the taxable  turnover  for the year of assessment: and if he does so, he has to  submit within sixty days of the commencement of the assessment year returns  showing his turnover for that previous  year.   If, however,  the  assessee adopts the turnover in the  year  of assessment as his taxable turnover, he has to submit returns before the last day of July, October, January and April  his gross  turnover  for each of the four quarters  ending  30th June, 30th September, 31st December and 31st March.  The tax is  evidently levied in respect of the year of assessment  : it  is not levied in respect of the business carried  on  in the previous year.  Again, the rate applicable in  assessing the  tax  is the rate in force in the  year  of  assessment. That  is  clear from the terms of ss. 3 and  3-A.   But  the taxable  turnover for the year of assessment may, except  in certain  cases not material for the purpose of this  appeal, at the option of the tax payer be either the turnover of the previous year or of the year of assessment.  If the assessee adopts the turnover of the previous year, by the  provisions contained in s. 3 and s. 7 and rr. 39 and 40, the  liability to  pay  tax  arises  on  the 1st  of  April  and  the  rate applicable is the rate in force on that date.  The liability of  the  assessee  adopting  the turnover  of  the  year  of assessment arises by virtue of ss. 3 and 7 and r. 41 at  the end of each quarter.  When the taxable turnover is based  on the turnover of the previous year, the tax is assessed on an artificial  turnover not related to the actual sales of  the year of assessment: whereas the levy of tax on a return made on the turnover of the year of assessment is made on  actual sales  of  that year.  The tax paid on the turnover  of  the previous year is not related to the actual sales 196 provision for making adjustments in the liability to  tax on

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ascertainment of the actual turnover at the end of the  year of assessment. The  Government of the United Provinces had by  notification dated June 8,1948, altered the rate of tax  in the matter of various  commodities  including nonedible oils  with  effect from  June 9, 1948.  The Sales Tax Officer was right in  his view  that  the levy of tax at the altered rate was  not  to operate  on sales effected before June 9, 1948.   Initially, when the liability of the assessee to pay tax on edible oils for  the assessment year arose, the rate was  undoubtedly  3 pies per rupee on the turnover, and the question which falls to  be determined is whether by reason of the alteration  of the  rate and its incidence in the course of the  year,  the assessee  became liable to pay tax at the higher rate  on  a part of the turnover of the previous year and if so, on what basis.  A tax payer who adopted the previous year’s turnover bad  under s. 7 and r. 40 to submit his return within  sixty days  of  the commencement of the assessment  year,  and  no provision for submission of any supplementary returns in the case  of alteration of rates in the course of the  year  was made  in the Act or the Rules: nor was any  method  provided for  retrospective modification of an assessment once  made. There  were  under the Act and the Rules  two  distinct  and clear-cut  schemes  to assess sales tax, (1) where  the  tax payer elected to submit his return based on the turnover  of the  previous year and (2) where he elected to or was  bound by  law to submit his return on the turnover of the year  of assessment.   Under these two schemes the points of time  at which  liability arose and the turnover on  which  liability was to be assessed were in their nature not identical.   The tax payers paying tax under the first scheme paid it on  the turnover of the previous year and at the rate in force after the  end of the period and applicable to it.  The tax  payer paying  tax  under the second scheme paid tax  in  quarterly installments based on the previous quarter’s actual turnover and  at  the  rate  or rates prevalent  in  the  quarter  or applicable to it.  Was it intended, when alteration was made in the rate of tax 197 or  its  incidence  during  the  course  of  the  year,   to assimilate these two schemes of taxation so as to, permit of a departure from the one to the other ?  There is no express provision  in the Act or in the Rules in that  behalf.   Nor does  the notification suggest that it was so intended.   In the case of a dealer who adopts the turnover of the year  of assessment for purposes of taxation, the application of  the notification  altering the rate of tax and the incidence  of tax  does  not  present any  difficulty.   The  notification enjoins levy of the tax at the altered rate only in  respect of  sales taking place after the fixed date, and  all  sales which  preceded  that date are to be taxed at  the  original rate.   In the face of the language employed sales  anterior to  the date specified could not be affected.  The  question next  arises:  Is any machinery provided in the Act  or  the Rules   for  projecting  this  division  of  the   year   of assessment, into the previous year, and for apportioning the turnover  of that year ?  Express provision in  that  behalf there  is  none  :  and it is  difficult  to  imply  such  a provision in the Act.  The dates of commencement and closure of  the previous year of a tax payer may vary  according  to the system of accounting adopted by the assessee.  The  year may  commence from any day of any recognised calendar  year, and  the  year may not consist of 365 days.  The  method  of antedating  by one year the date on which the alteration  is made   in   the  rate  or  incidence  will   be   manifestly

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inappropriate.   The  method  of division  of  the  turnover proportionate  to the period of the assessment  year  before the alteration of the rate and after such alteration  though prospective,   must   be   deemed   to   have   been    made retrospectively in the previous year, and on a day which  is removed from the commencement of the year of account by  the number  of days by which the date of alteration of  rate  is removed  from  the commencement of the year  of  assessment. But the adoption of the turnover of the previous year as the taxable turnover for the year of assessment is itself  based on  a fiction and, in the absence of any  express  provision either  in the Act or the Rules or even in the  notification setting out machinery for such 198 a  division  of the year, we are unable to  hold  that  this scheme  of  a fictional division may be projected  into  the previous year to make an artificial division of the turnover for  imprinting  thereon the altered rate of  assessment  as from  the  date of the division.  Counsel for the  State  of Uttar   Pradesh   submitted   several   hypothetical   cases suggesting that by refusing to adopt this method of division of  the previous year of assessment for the  application  of the altered rate, several anomalies may arise in working out the  liability to tax.  He submitted that a person  who  was not  a manufacturer or an importer of goods included in  the schedule  to  the notification under s. 3-A may, if  he  has adopted  the  turnover of the previous year as  his  taxable turnover  be liable even though it was the intention of  the Government to absolve him from liability to pay tax.  But  a tax  payer  adopting the turnover of the previous  year  for payment of tax makes his choice ’voluntarily and subject  to the  advantages and disadvantages which that step  involves. The  fact  that he may have to pay tax  from  which  persons choosing the alternative method of submitting of return  may partially  be exempted, because of an exemption  granted  in the  course  of  the year, may not, in our  judgment,  be  a ground  for not giving full effect to the provisions of  the Act  as  they  stand.  In  interpreting  a  taxing  statute, equitable considerations are entirely out of place.  Nor can taxing  statutes  be  interpreted  on  any  presumptions  or assumptions’.  The court must look squarely at the words  of the statute and interpret them.  It must interpret a  taxing statute in the light of what is clearly expressed it  Cannot imply  anything  which  is not expressed  it  cannot  import provisions  in  the  statutes so as to  supply  any  assumed deficiency. Section   18  el.  (c)  of  the  Act  which   provides   for proportionate reduction of tax when in the case of a  change or  discontinuance  taking  place  in  the  course  of   the assessment  year of a firm which has been assessed for  such year  on the turnover of the previous year does not  support the contention that an artificial divisions of the  turnover of the previous year is intended 199 in cases of alteration of circumstances during the course of the assessment year.  It may be noticed that, the  provision is  limited to changes in or discontinuance of the  business of a firm, in terms it does not apply to individuals.  It is not for us to consider why the Legislature has not chosen to make a similar provision in respect of individuals.  But the fact  that  the Legislature has made  an  express  provision dealing with changes or discontinuance of business of  firms in  the course of the assessment year enabling  a  reduction proportionately  to the tax already paid would be  a  ground indicating that in cases not governed by that provision,  no

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alteration in the liability was permissible when the taxable turnover was based on the previous year’s turnover. It  is not provided that in giving effect to the  alteration of  the rate during the course of the year of assessment  an artificial  division  of the turnover of the  previous  year should,   in  applying  the  altered  rate  be  made.    The Legislature  having failed to provide machinery for  working out   the  liability,  the  attempted   projection   becomes unworkable.  A legal fiction must be limited to the purposes for which it has been created and cannot be extended  beyond its legitimate field.  The turnover of the previous year  is fictionally made the turnover of the year of assessment:  it is  not  the  actual or the real turnover  of  the  year  of assessment.  By the imposition of a different tariff in  the course  of  the  year, the incidence of  tax  liability  may competently   be  altered  by  the  Legislature,   but   for effectuating  that alteration, the Legislature  must  devise machinery for enforcing it against the tax payer and if  the Legislature has failed to do so, the court cannot resort  to a  fiction  which is not prescribed by the  Legislature  and seek to effectuate that alteration by devising machinery not found in the statute. We are therefore of the view that the conclusion of the High Court  is  correct.   The  appeal  therefore  fails  and  is dismissed with costs. AYYANGAR  J.-We  regret  we are unable to  agree   with  the judgment just now pronounced. The facts giving rise to this appeal are briefly 200 these:A  company  called   The  Modi  Food  Products   Ltd.’ (amalgamated with the respondent) which will be referred  to hereinafter  as  the assessee, was during the years  1946  & 1947  a  manufacturer of and dealer in  vegetable  oils-both edible  and  non-edible.   During that  year  there  was  no legislation   imposing  any  tax  on  sales.   The   U.   P. legislature enacted the U. P. Sales Tax Act in 1948 and  the statute  received  the  assent  of  the  Governor  and   was published in the official Gazette on June 5, 1948.   Section 1  (2)  of the Act enacted that it shall be deemed  to  have come  into force on April 1, 1948.  The appeal is  concerned with  the  liability  to  sales-tax under  the  Act  of  the assessee  company in respect of the sale of oil effected  by the assessee during the period June 1, 1946 to May 31, 1947, which  was the account-year of the assessee previous to  the first  assessment year under the Act1948-49.  Section  3  of the  Act, to quote only the relevant words, as it  stood  at the material time, enacted : " Section 3. Liability to tax under the Act.  Subject to the provisions  of this Act, every dealer shall pay on  turnover in each assessment year a tax at the rate of 3 pies a rupee Provided that- (i)  the  Provincial Government may, by notification in  the official Gazette, reduce the rate of tax on the turnover  of any dealer or class of dealers or on the turnover in respect of any goods or class of goods; (ii) a  dealer whose turnover in the previous year  is  less than  Rs. 12,000 or such larger amount as may be  prescribed shall  not be liable to pay the tax under this Act  for  the assessment year." By the U. P. Sales Tax Amendment Act, 1948 (Act XXV of 1948) this proviso was slightly modified and s.    3(A)        was inserted in the Act reading as follows: "  Section 3-A.  Single point taxation. (1)  Notwithstanding anything  contained in Section 3, the Provincial  Government may,  by notification in the official Gazette, declare  that

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the  proceeds of sale of any goods or class of  goods  shall not be included in the turnover of any dealer except at such single point 201 in the series of      sales by successive dealers as may  be prescribed. (2)If  the Provincial Government makes a  declaration  under sub-section (1) of this Section, it may further declare that the  turnover  of the dealer, in whose turnover the sale  of such  goods is included, shall, in respect of such sale,  be taxed  at such rate as’ may be specified not  exceeding  one anna per rupee if the sale relates to goods specified below. (A list of goods was then set out) and nine pies per rupee if it relates to any other goods." Non-edible oil which is the commodity with the sale of which the assessment in the present appeal is concerned is not  in the list of goods set out in s. 3(A) and would therefore  be covered  by the residuary clause of the section.  The U.  P. Government  issued the following notification dated June  8, 1948, under s. 3(A) of the Act: " In exercise of the powers conferred by Section 3-A of  the United  Provinces  Sales-Tax Act, 1948, as  amended  by  the United  Provinces  Sales-Tax  (Amendment)  Act,  1948,   the Governor is hereby pleased to declare that with effect  from June  9,  1948,  the proceeds of sale of  goods  entered  in column 2 of the Schedule hereto shall not be included in the turnover of any dealer except at the point in the series  of sales  by successive dealers mentioned in column  4  thereof under the circumstances shown in column 3 thereof. 2.   The  Governor is further pleased to order that as  from June 9, 1948, the rate of tax in respect of the turnover  of the  aforesaid goods shall be as entered in column 3 of  the Schedule hereto. 3.   Every dealer, by or on whose behalf goods mentioned  in the schedule aforesaid are held at the close of the 8th  day of June, 1948, shall submit a statement showing the quantity and price of such stock and of the stock of such goods  held on  the 24th day of May, 1948, to the appropriate  assessing authority by the 30th day of June, 1948 ". In the Schedule annexed to this notification, nonedible  oil of the type dealt with by the assessee was 202 subject  to  a  tax  @ 6 pies per  rupee  if  the  same  was manufactured in U. P. Section  7 of the Act, as it stood at the date  relevant  to this appeal, enacted : "  Section  7. Determination of turnover and  assessment  of tax.--(1)  Subject  to the provisions of Section  18,  every dealer whose turnover in the previous year is Rs. 12,000  or more  in a year shall submit such return or returns  of  his turnover  of  the  previous year within sixty  days  of  the commencement  of  the  assessment  year  in  such  form  and verified in such manner as may be prescribed: Provided  that the Provincial Government may prescribe  that any  dealer or class of dealers may submit, in lieu  of  the return  or  returns specified in this section, a  return  or returns  of  his  turnover of the assessment  year  at  such intervals,  in such form and verified in such manner as  may be prescribed, and thereupon all the provisions of this  Act shall  apply  as  if such return or returns  had  been  duly submitted under this section. Provided  further  that the assessing authority may  in  his discretion extend the date for the submission of the  return by any person or class of persons ". Rules  were framed by Government inter alia under the  power

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conferred by the 1st proviso just now set out and by rule 39 of  the said rules an option was given to dealers to  submit returns of their turnover of the assessment year in lieu  of the turnover of the previous year. The  assessee exercised the option of being assessed on  the basis of the turnover of the previous year under s. 7(1)  of the  Act and in respect of first assessment year  after  the Act came to force-assessment year 1948-49, it filed a return in respect of the turnover of its previous year June 1, 1946 to May 31, 1947.  The total turnover of the assessee  during this period was Rs. 63,02,849-7-7.  The Sales Tax Officer by his  order  dated March 12, 1949, assessed the  turnover  in respect  of edible oil at 3 pies per rupee.  As regards  the sale  of  non-edible oil, the sales-tax  officer  hold  that since the notification set out above under                             203 s.   3(A)  had  come into force as and from June  9  of  the assessment year, the assessee was liable to be assessed @  3 pies  per rupee on the turnover during the first 69 days  of the year and @ 6 pies per rupee in respect of the  remaining days of the year and he computed the’ tax accordingly.   The assessee preferred an appeal to the Judge (Appeals),  Meerut Range,  Meerut, against the order of the Sales-Tax  Officer. This  officer  allowed the appeal of the assessee  and  held that  the entire turnover was liable to be taxed only  at  a flat  rate of 3 pies per rupee under s. 3(1) of the  Act  on all  oil sold by the assessee---edible or  non-edible.   The reason  assigned for the order was that on the terms of  the notification  the  new rate of tax could not be  applied  to sales effected in the previous year which had been opted for the  purposes of assessment by the assessee and that  so  to apply it would be tantamount to giving retrospective  effect to  the notification which was contraindicated by the  terms of the notification itself.  The department thereupon  moved the  Judge  (Revision)  who  accepted  its  contention   and restored  the  order of the Sales-tax Officer  applying  the provisions  of  the  notification to  the  turnover  of  the assessee.  There. after the assessee made an application  to the Judge (Revision) to state a case for the opinion of  the High Court under s. 11 of the Act as to whether the rate  of tax fixed by the notification could be applied to the  sales of  the  commodity which factually took place on  or  before June  8,  1948.   This petition having  been  dismissed,  an application  was filed before the High Court  for  directing the  reference  and  on this  being  ordered  the  following question (as reframed by the High Court) was referred to  it for determination : " Whether the assessee who is a manufacturer and a dealer of non-edible  oils  and who elected the previous year  as  the basis  of his assessment in the assessment year  1948-49  is liable  to be assessed at the flat rate of 3 pies per  rupee on the whole of the turnover of the previous year or whether he is liable to be assessed at the rates of 3 pies per rupee and 6 pies per rupee on the turnover of the previous year in proportion  to the two periods from April 1 to June 8,  1948 and from to March 31 1949." 204 The  learned Judges answered the question in favour  of  the assessee and held that the notification under s. 3(A)  could not  apply  to  determine the rate of  tax  payable  by  the assessee on his turnover of the previous year.  The  present appeal is against this answer by the High Court. As the arguments before us proceeded on practically the same lines as before the High Court, it will be convenient if  we set out the reasoning by which the learned Judges upheld the

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asssessee’s  contention that the notification under s.  3(A) was inapplicable to determine the rate of tax payable by it. The grounds were mainly five: (1) The assessee could not  be charged  at the rates prescribed by the notification  unless the  new  rates operated retrospectively; (2) that  s.  3(A) which was introduced into the parent Act (Act XV of 1948) by the   Amending  Act  XXV  of  1948  was  not  enacted   with retrospective effect.  Though the charge imposed by s.  3(1) of the Act read with s. 7(1) imposed tax retrospectively  as and  from  April 1, 1948, s. 3(A) did not on  its  terms  so operate  as and from that date.  Hence the liability of  the assessee which had become fixed under Act XV of 1948, as  it originally  stood,  could not be and ’Was not varied  by  s. 3(A) and would not therefore be affected by any notification issued  under  the  last mentioned provision ;  (3)  that  a notification  under  s. 3(A) could  not  have  retrospective effect since s. 3(A) itself did not operate of its own force and merely empowered the Government, ’by a notification,  to effect  changes  in  the law and  hence  such  changes  when notified  could  not operate as from any date prior  to  the date  of the notification ; (4) Section 3(A) which used  the words  " in respect of such sales " contemplated  particular sales  taking place after the notification issued  under  it and  hence the notification issued under that section  could not  alter the rate of levy in respect of sales anterior  to the  date  of the notification ; (5) that the terms  of  the notification  carried out the general scheme of the Act  and negatived retrospective operation and that as on its  langu- age it applied only to sales which took place on or 205 admittedly effected long prior thereto in the previous  year the same could not be affected by the enhanced rate of duty. Before  proceeding further it must be pointed out  that  the learned Judges of the High Court were not right in  thinking that s. 3(A) was not enacted to operate retrospectively from the  commencement of the’ parent Act.  Section 1(2)  of  the Sales-tax Amending Act XXV of 1948 which introduced s.  3(A) enacted: "  It (this Act) shall be deemed to have come into force  on the 1st April, 1948." and  as s. 3(A) was one of the sections  of this  enactment, it   would  have  effect  from  the  earlier   date.    This inadvertent  error,  however, would not affect  the  central point of the reasoning of the learned Judges. Besides elaborating the other points in the judgment of  the High  Court,  learned  Counsel for  the  respondent  further pressed upon us that there was no specific provision in  the Act for refund or reassessment which would have been present if  the  levy  of  a rate  with  retrospective  effect  were contemplated  by the Act as applicable to the assessees  who bad  opted  for  the "  previous-year-turnover  "  basis  of assessment.   He  pointed  out that in  the  case  of  those assessees  who opted for their being assessed in respect  of their  turn.  over  during the  assessment  year,  quarterly returns were submitted along with the payment  provisionally of  the  tax  due on the basis of  that  return,  the  final assessment being completed only after the close of the  year when  the  amount  due for the year was  ascertained  and  a demand  made  for the balance due after  adjustment  of  the amounts  already  paid during the course of the  year  (Rule 41).   Obviously in their case no difficulty could arise  by reason of any change in the law either in the rate or  basis of  taxation  effected  during  the  year,  as  these  would automatically  be given effect to in the  final  assessment. If, however, changes made in the rate of tax payable  during

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the  year  were held applicable to those assessees  who  had opted   for  the  previous-year-turnover  basis,   necessary adjustments  could not be made in their assessment for  lack of specific machinery to achieve the same.  From this 206 he argued that the scheme of the Act was that in the case of the  previous-year-turnover assessees, to use  a  convenient phrase, the tax liability had to be determined on the  state of the law as it prevailed on the 1st day of the  assessment year and that it got fixed and crystallised on that date and remained  unaffected   by any changes in  the  law  effected during the course of the assessment year. In view of these additional submissions, we consider that it would  be  convenient  to examine  the  entire  argument  of learned  Counsel for the respondent under three  heads  into which they naturally fall:  (1) Does the Act, read in conjunction with the Rules framed to give effect to its provisions, contemplate any difference being  drawn  between  the basis of the  tax  liability  (as distinct  from  the  quantum  of  the  turnover)  of   those assessees who have opted for the previous year turnover  and " the assessment-year turnover " assessees. (2)  Is  there any sound basis for the contention  that  the tax liability of the "previous-year-turnover" assessees gets crystallised  on  the 1st of April of the  assessment  year, with  the result that such assessees are unaffected  by  any changes of the law which operate from beyond that date. (3)  If  the  above  two  questions  are  answered  in   the affirmative the construction of the notification dated  June 8,  1948, would not fall for consideration, for even  if  on its  language  it  can apply to the  turnover  of  a  period anterior to its issue, the notification cannot be given such effect  since the same would be against the basic scheme  of the Act.  If, however, the answer to the above two questions were  in  the negative, a further point would  arise  as  to whether   on  the  terms  of  the  notification  now   under consideration the same could on its language apply so as  to affect  the  tax-liability of the  "  previous-year-turnover assessees. We  shall now proceed to examine these submissions.  On  the scheme  of U. P. Sales-tax Act, as of every other  sales-tax legislation  in  the  other Indian  States,  the  total  tax liability of an assessee is the resultant 207 product  of  two factors: (1) the total of the  proceeds  of sales  effected during a given period, universally  a  year, from  which  are  deducted  the turnover  of  the  sales  of commodities which are exempt from tax; for instance under s. 4 of the Act whose provisions will be referred to later; (2) multiplied  by  the  rate of tax applicable  either  to  the entire turnover or where’ different rates are prescribed  on sales  of different articles, such rates in respect of  such turnover.  The best way to appreciate the scheme  underlying the  Act would be to ascertain the position at the time  the Act was enacted.  It received the assent of the Governor and was published in the Gazette on June 5, 1948.  Section  1(2) of the Act further enacted that " It shall be deemed to have come  into force on April 1, 1948 ". Except to that  limited extent,  the  Act  is  prospective.  The tax  is  on  the  " turnover  ",  i.e., on the total of the  sales  proceeds  of taxable  sales  and therefore unless there  were  a  taxable sale,  its proceeds would not enter the pool which  goes  by the  name of " turnover ". As the Act is not  retrospective, the  taxable  turnover would normally be the  total  of  the sales effected after the enactment became operative, i.  e.,

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from  and  after  April  1,  1948,  but  for  the  sake   of convenience  of  assessment, it enacts by s. 7(1),  we  have extracted  earlier,  a  provision  providing  an  option  to dealers  who have been in business in the year  previous  to the taxing enactment, to be assessed either on the  turnover of  the previous year, when owing to the absence of the  Act their  sales were not subject to tax or on the  turnover  of the  current year.  But whichever be the  turnover  adopted, the rate of tax or the determination of the particular  sale proceeds whose total constitutes the taxable turnover, i.e., after the exclusion of the sale proceeds of the  commodities listed  in s. 4, does not vary.  In other words, though  the figure  of turnover might vary between those who have  opted for  the  one  or the other mode of assessment  due  to  the volume of the sales, no difference is maintained in the  Act as  regards  the incidence of the tax, i.e., either  in  the principle  underlying the computation of the total  turnover or in 208 the  rate  or rates applicable to the  sales  of  particular goods  or  on the total turnover.  This can only be  on  the premise  or  implicit  assumption  that  the  sales  of  the previous  year  are treated by the Act for  the  purpose  of computing  tax-liability as the sales of the current year  a projection  forward in point of time.  In other  words,  the entire basis underlying the charging provision s. 3(1)  read with the option provided by s. 7(1) is that the sales of the previous  year are fictionally treated as the sales  of  the current  year for the purpose of the computation of the  tax liability.   It has to be remembered that in cases like  the present,  during the time when the sales were effected,  the Act  was  not  in operation and hence  the  sales  were  not taxable.  But for the purpose of the imposition of the  tax- liability, it is assumed that the sales are taxable and  the goods whose sales become taxable are determined on the basis of the provisions of the Act.  Thus, if in the current  year commodities A, B and C are exempt from tax, they are not  to be included in the turnover of the dealer in respect of  the previous year in the case of those who have opted for the  " previous-year-turnover  "  under s. 7(1), and  the  turnover thus computed is charged at the same rate of tax  applicable to transactions of the current year. So far, therefore, as the express provisions of the Act  go, no difference is made between the basis of the tax liability of the " previous-year-turnover " and the " assessment-year- turnover  " assessees; and though by reason of the terms  of s.  7(1)  the  quantum  of  the  turnover  varies  no  other variation  in  the  law  applicable  to  the  two  types  of assessees is contemplated.  We must therefore start from the premise that the Act does not contemplate any difference  in the  incidence of the tax and the quantum of  tax  liability flowing  from the choice of either the " previous-year "  or the " assessment-year " as the basis of the determination of the  turnover.  We should add that learned Counsel  for  the respondent  has not been able to point out any provision  in the   Act   or   in  the  Rules   pointing   to   any   such differentiation. It was, however, submitted that though the statute 209 might  not say so in express terms, still by reason  of  the provisions  of  the  Act and the Rules under,  which  the  " previous-year-turnover  " assessee had to’ or  could  submit his  return within sixty days from the commencement  of  the assessment   year   and  have   his   assessment   completed immediately thereafter-as compared to the " assessment-year-

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assessee  " whose assessment was completed after the end  of the year, coupled with the absence of any machinery for  re- assessment or refunds in the event of any change in the  law effected  after the commencement of the financial  year,  it had  necessarily  to  be held that the liability  of  the  " previous year turnover " assessee got crystallised as on the 1st of April of the assessment year and that the Act did not contemplate  this being disturbed by any subsequent  changes in  the  substantive law relating to assessment  during  the assessment year.  It was said that the tax liability of  the dealer who had opted for the " previous-year " basis had  to be  determined on foot of two factors and only two: (1)  the turnover  of  the  sales of the previous  year  which  is  a definite  and  known  figure by the 31st  of  March  of  the previous year and (2) the rate of tax on the turnover as  it prevailed on the 1st of April of the assessment year when it was said that there was a "crystallisation" of the liability to  tax.   It was pointed out that it was  possible  for  an assessee  to  submit  his  return on  the  basis  of  the  " previous-year-turnover  "  even on the 1st of April  of  the assessment  year and there being no legal impediment in  the way of the figures returned by the dealer being accepted the assessment  might conceivably be completed and the  tax  due demanded and even paid on the 1st of April, it sell If  this were  done,  it  was urged, there  being  no  machinery  for reassessment  or  refunds such  completed  assessment  would become  final  for  the  year and  could  not  be  disturbed thereafter.  If this were possible or were actually done  in the  case of one dealer who had so opted, it was urged  that it  would  obviously  be anomalous  if  another  dealer  who happened to submit his return later and whose assessment was in 27 210 consequence delayed, should be subjected to a different  law or a different rate of levy. In   our   opinion,  this  argument   breaks   on   critical examination.   Learned Counsel for the respondent, to  start with, asserted that the crystallisation of the tax-liability as  on  the  1st of April of the assessment  year  was  with reference  to the law as it factually was on that  date  and that  changes made subsequently even if  with  retrospective effect to date from the commencement of the year, would  not affect  that  liability.  This was  obviously  an  untenable contention  because  if  the later  enactment  or  rule  was retrospective  it  must be deemed in the eye of the  law  to have  been  in existence and in operation  on  the  earlier date.    Though  learned  Counsel  withdrew   this   extreme argument,  still the concession that changes  effected  with retrospective  effect to date from the commencement  of  the assessment  year would apply to determine the  tax-liability even  of the " previous-year-turnover " assessee  serves  to emphasize  that little importance could be attached  to  the two  bases  on which " the crystallisation  "  argument  was rested,  viz.  :  (1)  the  obligation  or  freedom  of  the previous-year-turnover  assessee  to submit his  return  and have  his  assessment  completed within sixty  days  of  the commencement of the assessment year and (2) the absence of a specific provision for reassessment and refund. Under the proviso (1) to s. 3 which reads: "  the  Provincial Government may, by  notification  in  the official Gazette, reduce the rate of tax on the turnover  of any dealer or class of dealers or on the turnover in respect of any goods or class of goods." the State Government  could reduce  the rate of tax on the turnover of dealers from  the

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standard rate of 3 pies in the rupee under the main part  of s.  3.  It is also not denied that there is nothing  in  the terms  of  the  proviso  to  confine  the  power  to  effect reductions   only   prospectively  as   distinguished   from reductions having retrospective effect.  If a reduction were effected  say  in January or February of  the  year,  having effect  as  and from the 1st April preceding,  on  the  very argument advanced, Counsel for the respondent would 211 have  to  concede, that the reduced rate  would  govern  the liability  of  even those dealers who were assessed  on  the basis of their turnover of the previous year. Let us first take a case where such a reduction in the  rate is  notified to be effective before an assessee submits  his return.  In such a case, the benefit in the reduction of the rate  could not be withheld from the previous  year-turnover dealers  even on the theory of " crystallisation " just  now referred to.  Let us next take the case of a dealer who  has submitted his return of the turnover of the previous year on a date anterior to the notification regarding the alteration of  the  rate.   It might be mentioned that  in  the  return submitted by dealers which has to be in Form IV of  Appendix F  to the rules, only the total of the sale proceeds of  the sales  of the classified items of goods have to  beset  out, but the return does not concern itself with the rate of  the tax  levied.   This  latter  is  a  matter  with  which  the assessing authority is concerned when determining the amount of tax payable.  If the rates are altered subsequent to  the submission  of  the  return but  before  the  assessment  is completed, on the terms of the charging section which  draws no distinction in the incidence of the tax as between the  " previous  year-turnover " group and the  "  assessment-year- turnover  "  dealers, the Sales-Tax Officer  would  have  to afford  every  assessee,  whatever  be  the  basis  of  this turnover-the  benefit  of the tax reduction.   The  position reached  therefore  is that if the change in the  rate (we have assumed it to be by way of reduction, but the  argument would equally apply to variation in any kind), were effected before  the actual assessment, it should be given effect  to in  the  case of every assessee for not merely is  there  no procedural  complication in the shape of a need for  refund- but it would be in accordance with the, law and in fact  one might  go further and say that any other mode of  proceeding would  not be countenanced by the Act, because  the  statute homologises  the  basis of the tax-whether the  turnover  is computed on the previous year’s or the current year’s sales. Next in regard to cases where the change in the law 212 is  effected  after  the completion  of  the  assessment  we consider  that  the  submission  regarding  the  absence  of machinery  for reassessment and refund is not well  founded. It  is  true  that  there are  no  provisions  specially  so designated  to meet this contingency here referred  to,  but that  is  not  the  same thing as saying  that  there  is  a complete absence of machinery.  In the first place, s. 22 of the Act empowers authorities including the assessing officer to  rectify any mistake apparent on the face of  the  record and by such rectification even to enhance the tax liability. If on the premises assumed, the variation in the rate of tax would  on a proper construction of the Act be applicable  to the turnover of the dealer who has opted for the " previous- year rule " but the assessment order does not give effect to it, it would certainly be a case of an error apparent on the face  of the record, which would bring the case  within  the power  of rectification.  On the analogy of the cases  under

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s.  35 of the Income Tax Act, 1922, the  assessment  officer could order rectification in such cases. Even  apart from this, under a. 10(2) of the Act the  dealer or  the  department  as the case may be  may  apply  to  the Revising  authority  for revision of the assessment  on  the ground that the same is not legal, proper or regular.   This section enacts: "  The Revising Authority may in its discretion at any  time suo motu or on being moved by the Commissioner of Sales  Tax or on the application of any person aggrieved, call for  and examine  the record of any order or proceedings recorded  by any appellate or assessing authority under this Act for  the purpose   of  satisfying  itself  as  to  the  legality   or propriety,  of  such order or as to the regularity  of  such proceedings and may pass such order as he thinks fit." The  orders  which the Revising Authority could  pass  might either  be  by  way of enhancement  or  reduction,  and  the subsequent sub-sections provide: .    "10 (4).  The Revising Authority shall not pass any order under sub-section (3) adversely affecting any person  unless an opportunity has been given to such person to be heard. 213 (5)  If the amount of assessment is reduced by the  Revising Authority  under sub-section (3) it shall order  the  excess amount of tax if already realised to be refunded."   It  is,  therefore, not correct to say that  there  is  no machinery for rectifying errors and for making consequential orders for payment of further tax, or for directing refunds, and this argument cannot therefore justify the  construction contended for by the respondent. In the entire discussion up to now we have proceeded on  the assumption that the turnover of " the previous-year " of the dealer  was  a fixed quantity which was  finally  determined once  and for ever on the 31st March of that year  and  that the problem was merely to find the rate of tax to be applied to  this  predetermined  factor.  It will be  seen  from  an examination of the Act that even the factor of the  turnover is subject to variation.  For instance, the first part of s. 4 enacts:    " The provisions of section 3 of this Act shall not apply to  (1)  the  sale of water, salt,  foodgrains,  milk,  gur, electrical energy for industrial purposes, books, magazines, newspapers  and  motor  spirit  as  defined  in  the  United Provinces  Sales  of Motor Spirit Act, 1939, and  any  other goods which the Provincial Government may, by a notification in the official Gazette exempt from time to time." Under  this  power besides the specified  goods,  the  State Government  might from time to time exempt other goods  from among  those whose sale proceeds have to be included in  the turnover.  If an exemption of that type were granted say  in 1948-49,  it  cannot be contended that the turnover  of  the dealer  who  had  opted for the " previous  year  "  has  to include  these sales in the return which he submits in  Form IV,  If  by the date of the submission of  the  return,  the exemption  has been notified, and has effect for the  entire year  of course he need not include these sale  proceeds  in his  return.  The computation, therefore, of the quantum  of turnover of the previous year on which tax has to be  levied is one which is subject to the law 214 in relation to it in the assessment year, and any  change in that law presents the same problems, as the variation in the rate of tax.  Up to now the discussion has proceeded on the basis that  a change  in  the law made in the assessment year  whether  as

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regards the computation of the turnover or as to the rate of levy, is effective throughout that year, i.e., from the  1st April to the 31st March, and it is found that the fact  that the  returns  of  the previous  year  turnover  dealers  are required  to or are submitted within the early part  of  the year,  or  the contention based on the absence  of  specific machinery  for  reassessment or refund are  an  insufficient basis  for  holding that a change in the law  affecting  the basis  of tax-liability would not affect  the  previous-year turnover assessees and that the machinery provided by ss. 10 and 22 are adequate to meet the contingencies arising out of the   changes  being  retrospectively  effected  after   the assessments were completed. We shall next proceed to consider whether the change in  the law  either  as  regards  the  computation  of  the  taxable turnover  or as regards the rate of tax  becoming  operative sometime after the year has commenced makes any  difference. In  the  case of the  "assessment-year-turnover  "  dealers, there  is no problem because the sales effected  during  the course  of the year would be governed by the law  applicable from  time to time.  The entire basis or theory of  the  tax being levied on foot of the previous year’s turnover is that notwithstanding  that factually the sales took place in  the previous year they are to be deemed by fiction to have taken place  in  the  year  of  assessment.   If  that  theory  be discarded  there  could be no legal foundation for  the  tax being levied by the Act even as originally enacted on a sale which  factually  took place before it was  operative.   The only question therefore is the precise scope of that fiction and  its logical implication.  If the sale in  the  previous year  is treated by the Act as a sale in the  present  year, then no principle is contravened, if it were held that sales during  a portion of the previous year are held to be  sales during a corresponding portion of the current 215 year.  If we reject the argument that it is only the law  as prevailed on the 1st April of a year that forms,, the  basis for   the   computation  of  the  turnover   and   for   the ascertainment  of the tax-liability-as not flowing from  the provisions  of the Act, and indeed as contrary to  the  very scheme  underlying  the enactment, the changes  in  the  law effected  during  the  course of the  assessment  year  must operate  even  in respect of the turnover  of  the  previous year, which are deemed to be the turnover of the  assessment year. It  now remains to deal with the question as to whether  the language  employed in the notification by which  only  sales effected  after a date specified in the assessment year  are to be governed by the new levy, precludes the application of the  notified  change  to those  dealers  whose  sales  were actually  effected in the previous year, but who  had  opted for the " previous-year-turnover " basis of assessment. The argument of learned Counsel, which found favour with the learned  Judges  of the High Court was  briefly  this.   The notification expressly states that only sales effected  from and  after  June 9, 1948, were to be charged  with  the  new rates.  In terms therefore, the change in the law is  wholly prospective.   If  so, one cannot by any line  of  reasoning reach  the conclusion that the new rates of levy applied  to sales,  as  by  the present respondent,  more  than  a  year earlier.  So stated the reasoning appears impressive and  it is  true  that  a taxing enactment cannot  be  construed  as levying  a charge unless the words clearly do so.   But  the words  have  always  to be understood  and  more  than  that applied with reference to the underlying basis of the scheme

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of  taxation.   So  applied, it does not  appear  to  us  to support the contention of the respondent.  The change in the rate  of  tax, was no doubt  prospective.   The  phraseology employed merely means that in the case of the "  assessment- year-turnover  "  dealers only the sale  proceeds  of  sales effected  after the specified date would be governed by  the new  rates.  In the case of the "  previous-year-turnover  " dealers, the change operates to determine the amount of  tax during their assessment year-just in the same manner as 216 the  original charge under the Act, of a flat rate of  three pies determined the tax payable notwithstanding that none of the  sales  whose proceeds were included in  their  turnover were  effected during the assessment year.  We have  already pointed  out  that the basic idea underlying  the  provision contained  in  s. 7(1) of the Act ’is that it  projects  the turnover  of  the previous year into  the  assessment  year. Admittedly the Act itself is not retrospective, or  designed to  levy the charge under s. 3(1), on sales effected  before April  1, 1948.  If sales of the previous year  are  brought within  the  taxing provision, it is not because  the  sales when they took place were subject to tax, but because either (a)  the  previous year’s sales are deemed in  law-when  the assessee so opts-as the sales of the current year or (b) the previous year’s turnover being opted, the provisions of  the charging  sections operate on that turnover.   Whichever  of these be the more accurate method of expressing the  result, the  fact is that there is no element of retrospectivity  at all  involved  in  the  application of  the  tax  law  which prevails  in the year of assessment to the turnover  of  the previous  year  when due to the choice of  the  assessee  of being  assessed under s. 7(1), the previous years’  turnover basis  is rendered applicable.  Possibly the matter  may  be tested in this manner.  Section 3(1) of the Act the charging section-imposes  in effect a tax of three pies per rupee  on all sales effected after the commencement of the Act,  i.e., after April 1, 1948.  Sup. pose that section itself, had  by a proviso imposed a tax @ six pies per rupee on all sales of edible  oil  effected on and after June 9, 1948.   Could  it then  be open to argument, that in respect of  the  previous year’s sales, only a three pies tax was payable and that the result  of  the charging provision could  be  ignored.   If, therefore,  we are right so far, the respondent  derives  no advantage  from  the notification specifying  the  dates  of sales effected from and after which they would be subject to the  varied  rate.  The notification had necessarily  to  be worded as it was, in order to fulfil its primary purpose  of effecting  a change in the rate during the assessment  year. The date 217 mentioned  in  the notification as the date from  and  after which  sales  would  be  charged  at  the  new  rates  would therefore  not militate against the new rates being  applied to the turnover of the previous year, since the turnover  of the previous year has to be assessed on the rates prevailing in the assessment year. The  next question is how on the terms of  the  notification which  came  into operation after the  commencement  of  the assessment year and during the course of it, the  proportion of the turnover on the basis of which the tax-liability of a previous-year’s turnover dealer could be computed.   Learned Counsel for the respondent urged that no intelligible  basis could be suggested for distinguishing the two periods in the previous  year  when  the original  rates  and  the  altered notified rates would operate.  Learned Counsel urged that it

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would be impossible to distinguish these two periods  either on  any theory of retrospectivity of the notification or  on any  theory regarding the sales of the previous  year  being attributed  to the corresponding dates of the current  year. There   is  no  doubt  that  this  mode  of  computing   the proportion, viz., to treat the sales which were effected  on various dates of the previous year, as if they were sales on the  corresponding  dates of the current year  and  thus  to compute the two totals of turnover which would be subject to different   rates  of  duty  would  not  be   proper.    The impropriety  would  arise  from the fact  that  the  fiction enacted  by  s.  7(1) is not that each  day’s  sale  in  the previous  year is deemed to be a sale on  the  corresponding date  in the current year, but only that the  total  taxable turnover  of the previous year is deemed to be that  of  the current  year.   The method to which objection is  taken  is however  not  the  manner in  which  the  Sales-tax  Officer computed  the  proportion which was affirmed  by  the  Judge (Revision).   If  the  total of the  sale  proceeds  of  the previous year is deemed to be the total of the current year, there  is  no illogicality or impropriety in  dividing  that total  in accordance with the number of days in the year  in which  the different rates prevailed and that  is  precisely what the Sales-tax Officer did. 28 218 If  as we hold both the computation of the turnover  of  the previous year, as well as the incidence of the tax  leviable on  it,  are to be determined not merely by the  law  as  it stood  on the first day of the assessment year, but  by  the law  applicable to assessments during the entire  assessment year,   the  method  by  which  the  tax-liability  of   the respondent was computed by the Sales-tax Officer is not open to any objection. In connection with the interpretation of the notification  a minor point was suggested to which brief reference might  be made.   It was submitted that as the notification in  effect levied a tax, if it was ambiguous, it should be resolved  in favour of the subject-the tax-payer.  We see no ambiguity in the notification to justify an appeal to this rule.  Besides the   notification  in  effect  frees  dealers  other   than importers and manufacturers of all tax-liability in  respect of  the  sale-turnover  of oil, though in the  case  of  two specified  classes  of  dealers. a single point  tax  at  an enhanced  rate is levied.  In such a situation, the rule  of construction  invoked could hardly be applied, even  if  the condition as to ambiguity were present. We, therefore, hold that the assessment to sales-tax of  the respondent  company by applying to its turnover of the  year 1947-48,  the rate of tax specified in the  notification  of June 8, 1948, as determined by the Sales-tax Officer was  in accordance  with  the law.  We would accordingly  allow  the appeal,  set aside the decree of the High Court and  restore the  assessment  order of the Sales-tax Officer  with  costs here and in the High Court. BY  COURT.-In accordance with the opinion of  the  majority, the appeal is dismissed with costs. 219