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PETITIONER: M/S. MATHRA PRASHAD AND SONS.

       Vs.

RESPONDENT: STATE OF PUNJAB

DATE OF JUDGMENT: 05/12/1961

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. SINHA, BHUVNESHWAR P.(CJ) KAPUR, J.L. SHAH, J.C. MUDHOLKAR, J.R.

CITATION:  1962 AIR  745            1962 SCR  Supl. (1) 913

ACT:      Sales   Tax-Exemptions-Notification    issued after  commencement   of  financial   year-Whether effective  from   date  of  notification  or  from commencement of financial year-East Punjab General Sales  Tax   Act,  1948   (E.  P.  of  1948).  ss. 4,5,6,10,11-Notification dated September 27, 1954.

HEADNOTE:      Section 6(1) of the East Punjab General Sales Tax Act,  1948, provided  that  no  tax  shall  be payable on  the sale  of goods  specified  in  the Schedule to  the Act  and  that  no  dealer  shall charge sales  tax on  the sale of goods which were "declared tax-free from time to time". Sub-section (2) of  s. 6  empowered the  State  Government  by notification  to   add  or   to  delete  from  the Schedule.  On   September  27,   1954,  the  State Government issued a notification under s. 6 (2) 914 adding item 51 relating to manufactured tobacco to the Schedule.  The appellant  contended that sales tax was  a yearly  tax and  hence  the  exemption, whenever given  during the  financial year, became operative as from the beginning thereof. ^      Held, (per  Sinha, C.  J., Hidayatullah, Shah and Mudholkar JJ., Kapur, J., dissenting) that the exemption operated  for the entire financial year. The tax  was a  yearly tax  levied on  the taxable turnover of  a dealer  every year  though  it  was collected in some cases at the end of the year, in some cases  quarterly and  in other cases monthly. If the exemption operated for the period for which the tax  was payable according as it was annually, quarterly or  monthly the  tax would  be different for different persons; those paying annually would get exemption  for the whole year but those paying quarterly or  monthly would get the benefit in the

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quarter or  month of  the notification and not for earlier quarters  or months.  This could  not have been intended.  The exemption whenever it came in, in  the  year  for  which  the  tax  was  payable, exempted sales  throughout the  year,  unless  the notification fixed  the date  for the commencement of the exemption.      Commissioner of  Sales Tax, U. P. v. The Modi Sugar Mills  Ltd., [1961]  2 S.C.R.  189, referred to.      Per Kapur,  J.-The exemption became operative only from  the date  of the  notification. The tax was not  a yearly  tax. The use of the words "tax- free from  time to  time" in  s. 6 (1) showed that the exemption  could be  given at  any time during the year  and that  it would operate from the date of the  notification and not from the beginning of the financial  year. Otherwise, an exemption given or an  imposition made  near the  end of  the year will both  operate from the beginning of the year. This was never intended

JUDGMENT:      CIVIL APPELLATE  JURISDICTION:  Civil  Appeal No. 9 of 61.      Appeal from  the judgment and order dated May 7, 1959, of the Punjab High Court in L.P.A. No. 86 of 1956.      M.C.  Setalvad,  Attorney-General  of  India, S.N. Andley,  Rameshwar Nath  and P.L.  Vohra, for the appellants.      S. M.  Sikri, Advocate-General,  Punjab, B.K. Khanna and P.D. Menon, for the respondents. 915      1961. December,  5.  The  Judgment  of  Sinha C.J., Hidayatullah,  Shah and  Mudholkar JJ.,  was delivered by Hidayatullah, J. Kapur, J., delivered a separate judgment.      HIDAYATULLAH, J.-The appellants are a firm of general merchants  which sells,  among other goods manufactured tobacco  as  defined  in  the  Punjab Tobacco Vend  Fees Act,  1954 (12  of 1954), which came into  force in the State of Punjab from April 1, 1954.  The firm  is also  a  registered  dealer under s.  7 of  the East  Punjab General Sales Tax Act, 1948  and till  the end  of March,  1954, was paying sales  tax on  manufactured  tobacco  also. Indeed, the  firm paid  sales tax  on manufactured tobacco, also  for the next quarter ending on June 30, 1954,  but  did  not  pay  in  the  succeeding quarter in  view of  certain events,  to  which  a detailed reference  will  be  made  presently.  On September 27,  1954, the State Government issued a Notification (No. 4556-E & T (Ch)-54/957) by which the schedule of exemptions under s. 6 of the Sales Tax Act  was amended  by the inclusion of item 51, which reads as follows:      "51. Manufactured tobacco  as defined  in the           Punjab Tobacco Vend Fees Act, 1954." This Notification  was preceded  by a Notification of May  7, 1954  (No. 427-E  & T  (Ch)-54/369), by which the  State Government  had given  notice, as required by  law, of its intention to add the said

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item in the schedule of exemptions. In June, 1954, the State  Government issued a Press Note by which it was  intended to  convey to  the  dealers  that though the  Tobacco Vend  Fees Act  had come  into force from  April 1,  1954, it was not intended to levy both the sales tax as well as the fee for any period. The Press Note reads as follows:           "There is  some misapprehension  in  the      minds of  dealers in  manufactured tobacco as      to whether  sales tax  is also  chargeable in      respect of manufactured tobacco after the 916      1st April,  1954, in  addition to the license      fees  under   the  Tobacco   Vend  Fees  Act.      Government would  like to  make it clear that      although the  Tobacco Vend  Fees Act has come      into force  with effect from 1st April, 1954,      no license  fees for  dealers have  yet  been      prescribed under the Act. Therefore, the levy      of sales  tax continues  till  the  Vend  Fee      licences come  into operation.  It is  to  be      clearly understood  that the Vend Fee will be      proportionately  reduced   for  the   current      financial year to adjust the period for which      sales   tax    will   have    been   charged.      Manufactured tobacco  will be  exempted  from      sales tax simultaneously with the enforcement      of the Vend Fees."      On  August  2,  1954,  the  State  Government issued another  Press Note,  in which the decision was altered. The Press Note said:           "Government recently announced through a      press note  that the  levy of  Sales  Tax  on      manufactured tobacco  would be continued till      the Vend Fee Licences came into operation and      that the  Vend Fee  would be  proportionately      reduced for  the current  financial  year  in      respect of  the period  for which  Sales  Tax      would have  been charged.  In order  to avoid      double  taxation,   Government   have   since      reconsidered  the   matter   and   have,   in      supersession  of   the   previous   decision,      decided that the Sales Tax, if any, recovered      from the  dealers would  be refunded and that      no Sales  Tax would  be  charged  during  the      current financial year in respect of sales of      tobacco which  fall under  the  Tobacco  Vend      Fees Act. Tobacco Vend Fees will be recovered      at full  rates for the whole year as and when      rules under  the Punjab Tobacco Vend Fees Act      are finalised." It appears  that the  Rules under the Tobacco Vend Fees Act were not promulgated; nor were the forms 917 and licences  prescribed during the financial year ending on  March 31,  1955. In  the meantime,  the appellants, as  already stated,  paid sales tax on sales  of   manufactured  tobacco  for  the  first quarter ending June 30, 1954, and the Notification exempting manufactured  tobacco from sales tax was issued on  September 27,  1954. The appellants had made  enquiries   from  the  Excise  and  Taxation Commissioner, Punjab,  about  the  Press  Note  of August 2,  1954, and  had been  assured  that  the Notification as  printed  in  the  Newspapers  was

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accurate,    and    that    Government    intended implementing the Press Note.      On January  23, 1956, the appellants received a notice  from the  Excise and  Taxation  Officer, Rohtak, calling upon them to produce their account books. The  appellants as well as other dealers of manufactured  tobacco   similarly  affected,  made representations on  the basis of the Press Note of August  2,   1954,  but   without   success.   The appellants  then  filed  on  February  8,  1956  a petition under  Art. 226  of the  Constitution for substantially three  reliefs.  They  were:  (a)  a declaration  that   the  levy   of  sales  tax  on manufactured tobacco  upto September  26, 1954 was illegal; (b)  refund of  the sales  tax paid by it for the  quarter ending  June 30, 1954; and (c) an order in  the nature  of  a  writ  of  Prohibition against  the  proposed  levy  of  sales  tax  till September 26, 1954. It remains to mention that the sales tax  authorities were  acting in  conformity with a Press Note issued in August, 1955, by which the State  Government went  back upon  the  policy declared in August, 1954 and reaffirmed the policy stated in  the  Press  Note  of  June,  1954.  The following extract  from the  Press Note of August, 1955 may be read here:   "2.     In conformity with the press note issued      in June,  1954, and  in  view  of  the  facts      explained above,  Government have now decided      that sales tax on tobacco shall be levied for      the year  1954-55 before  the 27th September,      1954 918      only, the  date on which tobacco was included      in the schedule of exemptions appended to the      General Sales  Tax Act.  This  amounts  to  a      handsome  concession   to  the   dealers  and      Government  except  that,  in  return,  every      cooperation shall  be shown by the dealers of      the assessing  authorities in  the matter  of      the assessment of the tax."      The petition  under Art.  226 was  heard by a learned Single Judge of the Punjab High Court, who held that  the orders  of Government were entirely in accordance with law, that the East Punjab Sales Tax Act,  in so  far as  it related to the sale of manufactured  tobacco  was  not  repealed  by  the Tobacco Vend  Fees Act,  and  that  sales  tax  on manufactured tobacco  was payable  from  April  1, 1954 to  September 26,  1954, in  view of the fact that the exemption was made on September 27, 1954, and would  operate from  the latter  date. Against the decision  of the  learned Judge dismissing the writ petition,  an appeal under Letters Patent was filed.  The  Divisional  Bench,  which  heard  the appeal, agreed  with the  judgment appealed  from, and  dismissed  the  appeal.  A  certificate  was, however, granted to the appellants and the present appeal has been filed.      Two contentions  were raised in the forefront before the  High Court,  by  the  appellants.  The first was  that the  Punjab Tobacco  Vend Fees Act had pro  tanto repealed  the East  Punjab  General Sales Tax  Act, and that sales tax on manufactured tobacco could  not be  levied after April 1, 1954.

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The second  was that  the State  Government by its assurance in  the Press  Note of August, 1954, had estopped itself  from  reversing  its  policy  and claming the  sales tax  up  to  the  date  of  the Notification.  These  points  were  not  seriously pressed upon us, because there can be two taxes on the same  commodity or  goods without  the one law repealing the  other. No  repeal can  be  implied, unless there 919 is an  express repeal  of an  earlier Act  by  the later Act,  or unless  the two  Acts cannot  stand together.  The   first  argument  was,  therefore, rightly rejected  in the  High Court.  The  second argument is  also without  force. There  can be no estoppel against  a statute.  If the  law requires that a  certain tax  be collected,  it  cannot  be given up,  and any  assurance that it would not be collected, would  not bind  the State  Government, whenever it choose to collect it.      The question  which is  now  raised,  and  of which there  is but  a trace  in the High Court is the real  one to  decide, and it may be formulated thus; Did the exemption in the Notification issued on September  27, 1954 have effect from that date, or from  the beginning  of the financial year ? We are not  concerned with  the question  whether, in the absence of rules and forms, the Punjab Tobacco Vend Fees  Act, 1954  could operate  from April 1, 1954. Whether  it did  or did  not,  can  make  no difference to  the sale  tax, because  the  Punjab Tobacco Vend  Fees Act,  1954 did not abrogate the Sales Tax  Act. If  sales Tax  was not payable, it would be  because of  the exemption,  and the only question thus  is  when  the  exemption  began  to operate. The  Notification does  not say from what date   the    exemption   operates.   Taking   the Notification by  itself, it cannot be said that it comes into  force from an earlier date. Both sides have thus  called in  aid provisions  of the  East Punjab General  Sales Tax  Act and  the  Rules  to determine the date from which the exemption can be said  to   operate.  Reference  was  made  by  the appellants to  a decision  of this  Court  in  The Commissioner of  Sales Tax, U.P. v. The Modi Sugar Mills Ltd.(1),  where  a  notification  increasing sales tax  on edible  oils issued in the middle of the year  1948  was  held  not  to  apply  to  the assessee in  that year,  inasmuch as its liability to tax had become fixed on April 1, earlier, as it had elected  to pay  tax on  the turnover  of  the previous 920 year. The  scheme of taxation under the U.P. Sales Tax Act,  1948 (15  of 1948)  and the  Rules under that Act  is so  vastly different  from  the  East Punjab General  Sales Tax  Act and the Rules under it, that a detailed reference to that case may not be necessary.      The question  thus  must  be  viewed  in  the setting of  the East  Punjab Sales Tax Act and the Rules under  it. We shall refer to them shortly as the  Act  and  the  Rules  in  the  rest  of  this judgment. The  Act was  passed in  1948, and  came into force on November 15, 1948. Previous to this,

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sometimes licence  fee under  an  earlier  Tobacco Vend Fees  Act and  sometimes sales tax also under an earlier  Sales Tax  Act had been levied but not side by side in the Province. The history of these earlier Acts  was brought to our notice during the course of the argument, but nothing turns upon it.      The sales  tax under  the Act continued to be levied up  to April 1, 1954, and none has disputed that it  could be levied. On that date, the Punjab Tobacco Vend  Fees Act  came into  force. We  have already said  that the  latter Act  did not repeal pro tanto the earlier. The liability for sales tax in this appeal is for two quarters ending June 30, 1954, and  September 30, 1954. There is no dispute that after  September 27, 1954 sales tax could not be levied,  in view of the inclusion of item 51 in the schedule  exempting manufactured  tobacco from the operation  of the  Act. We  must  now  examine those provisions  of the  Act which are claimed by the rival  parties to  indicate the moment of time from  which   the   exemption   granted   by   the Notification began to operate. "Turnover" has been defined in the Act to include the aggregate of the amounts of  sales and parts of sales actually made by  any  dealer  during  the  given  period,  less certain allowances, and "year" means the financial year. Sections  4 and  5  read  together  are  the charging sections,  the  first  dealing  with  the incidence of  the tax,  and the  second, with  its rate. Section 6 (1) provides for exemptions on the sale of 921 goods which  are specified in schedule to the Act. Under s.  6 (2),  the State  Government  has  been given the  power to  add to  or delete  from  that schedule. Section  10 deals  with  the  making  of returns  and   payment  of  the  tax.  Section  27 empowers the  State Government  to make  rules for carrying out  the purposes of the Act. This is the general scheme  of the  Act, in  so far  as we are concerned; but  a somewhat detailed examination of these sections  is  necessary  to  understand  the rival contentions.      Section 4  consists of five sub-sections. Sub Section (1),  which is a subject to the provisions of ss. 5 and 6, says that every dealer, except one dealing exclusively  in  goods  declared  tax-free under s.  6, whose  gross turnover during the year immediately preceding  the commencement of the Act exceeded the  taxable quantum,  shall be liable to pay tax  under the Act on all sales effected after the coming  into force  of this  Act. A proviso is added, which is not relevant. Sub-section (2) says that every  dealer who  is liable to pay tax under the first sub-section shall be liable to pay it on the expiry  of 30 days after the date on which his gross turnover  first exceeds the taxable quantum. Sub-sections (3) and (4) deal with the continuance of the  liability  of  the  dealer  under  certain circumstances, and  are not  relevant  here.  Sub- section (5)  then  defines  "taxable  quantum"  in relation to  different kinds of dealers, and fixes a certain  amount as  the lowest  limit. Since, in the present case, the taxable quantum is above the limit applicable  to the  appellants and  they are

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also admittedly  dealers, a  detailed reference to the  provisions  of  sub-s.  (5)  is  unnecessary. Section 5,  which deals  with the  rate of tax, is made subject  to the  other provisions of the Act, and the first sub-section says that there shall be levied on  the taxable  turnover every  year of  a dealer a tax at such rates (not exceeding two pice in  a  rupee)  as  the  State  Government  may  by notification direct. "Taxable turnover" 922 is then  defined by the second sub-section to mean that part  of a dealer’s gross turnover during any period which  remains after  deducting  therefrom, inter alia his turnover during that period of tax- free sales,  sales to registered dealers, sales to any undertaking supplying electrical energy, sales to dealers  outside Punjab and other sales, as may be prescribed.  With none  of these  deductions we are concerned in this case.      Now,  the   appellants  emphasise  the  words "gross turnover  during the  year" in  s.4 (1) and the  words  "taxable  turnover  every  year  of  a dealer" in  s. 5  (1), and  argue that  the tax is computed  year-wise,   and  the   exemption  must, therefore, operate  for the  whole of  the year in which it  is made,  irrespective of  the  date  on which the  Notification is  made. The respondents, on the  other hand,  emphasise  the  words  "gross turnover during  any  period"  and  "his  turnover during that period" occurring in s. 5, and contend that the  tax is  not year-wise but accrues, so to speak, from  day to day or at least from period to period within  a  year,  and  the  exemption  thus operates not  from the  whole of the year, but for the period  within which  it is granted, and refer in aid of this argument, to ss. 6 and 10. Sections 4 (1)  and 5 (1) are subject to s. 6, s. 5 (1), to other sections  of the  Act and  so, s. 10, and we have to  see what  they provide.  Section 6 (1) is brief, and may be quoted in extenso. It reads:           "6 (1).  No tax  shall be  payable under      this Act  on the  sale of  goods specified in      the first  column of the Schedule, subject to      the conditions  and exceptions,  if any,  set      out in  the corresponding entry in the second      column there  of and  no dealer  shall charge      Sales Tax  on the  sale of  goods  which  are      declared tax-free  from time  to  time  under      this section." The respondents  emphasise the words "from time to time" in the first sub-section, and say that 923 they also  show  that  exemptions  may  be  given, withdrawn, or  given again and again several times during the  year in respect of the same goods, and the exemptions,  therefore, begin  to operate when they are given and cease, when they are withdrawn. But,  the  appellants  contend  that  these  words merely indicate that the power may be exercised as often as needed, and do not indicate the time from which the operation of the exemption commences and the period  during which  it lasts. Section 10 (1) provides that  the tax payable under the Act shall be paid  in the manner provided at such intervals, as may be prescribed. Two Rules framed under s. 27

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provide for such intervals. Rule 20 reads:           "Every  registered   dealer  other  than      those referred  to in  rules 17,  18 and  19,      shall furnish  returns in  Form  S.T.VIII  or      S.T. XXIII,  if so permitted quarterly within      thirty days from the expiry of each quarter."      (words underlined were introduced on June 28,      1955). Rule 23:           "Notwithstanding the provisions of rules      20  and   21,   the   appropriate   Assessing      Authority may,  for reasons to be recorded in      writing, fix  monthly returns  for a  dealer,      who would  otherwise be  required to  furnish      quarterly or annually under these rules." Section 10  and Rules  20 and  23 clearly  provide that returns  may be  made annually,  quarterly or monthly. The  forms, S.  T. VIII  and S.T.  XXIII, also are forms of returns of sales tax payable for the  year,   quarterly  or  monthly.  It  is  thus possible that  some dealers pay tax annually some, quarterly, and some, monthly.      The contention of the appellants is that s.10 read with  Rules 20  and 23  merely  provides  for making of returns at prescribed intervals and the 924 collection of  tax is for a period falling between those  intervals,   but  the   tax  is   the   tax appropriate  to   the  whole  year’s  result.  The respondents contend that the effect of the section and the  two Rules  is that  the tax  due for  the period of  the return  is separate  from any other tax for  any other  period. Each period, according to them, must be viewed separately and not as part of a  year. Thus,  if exemption  is granted during the second  quarter, according  to the respondents it affects  that quarter  and subsequent  quarters but not  the first quarter, because tax is payable on the turnover of a period and at such intervals, as may be applicable to an assessee.      We cannot  help saying  that the  Act and the Notification could  have been  framed  to  obviate such unnecessary questions by providing clearly in them the  time from  which such  exemptions  would begin to  operate. Similarly,  if the  rules under the Punjab  Tobacco Vend  Fees Act had been framed in time  and the  Tobacco Vend  Fees Act  together with the  Rules under  it and the exemptions under the  Sales   Tax  Act   were  brought  into  force together, a  considerable amount  of time  to  the Department and  the Courts  would have been saved, as also  trouble to the tax-payer. The Rules under the Punjab  Tobacco Vend  Fees Act were not framed during the  whole of  the financial year, 1954-55. Contradictory  Press   Notes  were  issued,  which showed that  the State  Government itself  was not sure of  the true  legal  position,  thus  causing great confusion  and distrust  in the minds of the tax-payers.      There is  no doubt  that the  tax is a yearly tax. It  was payable,  in the first instance, by a dealer whose  gross turnover  during the financial year immediately  preceding May 1, 1949, was above the taxable  quantum. The  tax is  to be levied on the taxable  turnover of  a dealer every year. The

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difference  between  gross  turnover  and  taxable turnover is  this, that  to arrive  at the taxable turnover of 925 any period some deductions have to be made for the same period.  This clearly  shows that  the tax is for  a  year.  The  method  of  collection  allows collection of tax at intervals; in some cases, the tax is  collected at  the end of the year; in some others, the  tax is  collected  quarterly  and  in still other  cases, even monthly. If the exemption can be  said to  operate for that period for which the tax  is payable  according as  it is annually, quarterly or  monthly, the  tax would be different for different  persons. Those  who are  paying the tax annually  would get  exemption for  the  whole year; but  those who  are paying  it quarterly  or monthly would  get benefit  in the  quarter or the month of  the Notification  but  not  for  earlier quarters  or   months.  It  could  not  have  been intended  that   the  exemption   was  to  operate differently in  the case of dealers with different intervals of assessment.      The exemption  thus must  operate either from the  date   of  the   Notification  or   from  the commencement of  the  financial  year.  Here,  the nature of the tax, as disclosed in ss. 4 and 5, is decisive. In  s. (5), the tax is made leviable "on the taxable  turnover every year of a dealer". The divisions of  the year  and the  taxable  turnover into  different   parts  are   to  make  easy  the collection of  tax, and form part of the machinery sections. If  the tax  is yearly and is to be paid on the  taxable turnover  of a  dealer,  then  the exemption, whenever  it comes  in, in the year for which the  tax is  payable, would  exempt sales of those goods  throughout the  year, unless  the Act said that  the Notification  was not  to have this effect, or the Notification fixed the date for the commencement of  the  exemption.  In  the  present case, the  Notification did  not fix the date from which  the  exemption  was  to  operate,  probably because the  Act omitted  to make  such provision, enabling the  State to  do so,  and the  exemption must,  therefore,  operate  for  the  whole  year, during which it was granted. 926      The case  of this  Court, to  which  we  have referred earlier,  dealt with  an Act  under which the taxpayer  could elect  to pay  the tax  on the turnover of  either the  previous year or the year of assessment. A notification in the middle of the assessment  year  was  considered,  and  was  held inapplicable in  those cases  where a  dealer  had elected to pay tax on the turnover of his previous year. The  majority view  on that occasion pointed out  that  it  was  not  possible  to  divide  the assessment year  in two portions, in which the tax was levied  at one  rate in  one part  and another rate in  another part.  The case was confined to a dealer who  had elected  to pay the tax for a year different from  that in  which the  exemption  was granted. Those facts do not exist here; but if the case is  considered at  all relevant,  it supports the appellants rather than the respondents.

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    In the  result, the  appeal succeeds,  and is allowed with costs.      KAPUR, J.-The  facts of  this case  have been set out  in the  judgment of  my  learned  brother Hidayatullah J., which I have had the advantage of reading and  as I  am unable  to  agree  with  the conclusion that  the effect of the exemption given by Notification  No. 34556-E & T. (CH)54/957 dated September 27,  1954, issued  under s.6(2)  of  the Punjab General  Sales Tax  Act (Act  16 of  1948), hereinafter called  the "Act",  on  unmanufactured tobacco becomes effective as from the beginning of the financial  year, I  proceed to give my reasons for the same.      The period  in regard  to which  the disputed amount of  sales tax  is sought  to be  levied was from  April.   1,  1954  to  September  27,  1954. Previous to  the issuing  of the  notification  of September 27, 1954, the Punjab Government issued a notification required  under s.6(2) of the Act for the purpose of information of persons likely to be affected thereby 927 and to  give  them  an  opportunity  to  file  any objections or suggestions in regard to the same. A press note  was issued  on August  4, 1954 stating that no sales tax will be leviable on manufactured tobacco for the financial year 1954-55.      In order  to resolve  the controversy  as  to whether  the   exemption  is  effective  from  the commencement of  the financial  year or  from  the date of  the notification it is necessary to refer to the  scheme of  the  Act  and  the  rules  made thereunder. The  East Punjab General Sales Tax Act (Act 46  of 1948)  as amended,  made provision for the levy of general sales tax on the sale of goods in the  Punjab and  repealed the General Sales Tax Act  of   1941.  Section   2  of   the  Act  gives definitions and  cl.(d) defines  a "dealer"  as  a person.. engaged  in the  business of  selling  or supplying goods.  In cl.(i) "Turnover" was defined to include-           "the aggregate  of the  amount of a sale      and parts  of the  sale actually  made by any      dealer during  the given  period less any sum      allowed  as   cash  discount   according   to      ordinary trade practice...." Sections 4  and 5  are the  charging sections, the former makes  the tax  leviable prospectively  and the  latter   prescribes  the  rate  of  tax.  The relevant portions  of these  sections when  quoted are as follows: S.4(1)    "Subject to the provisions of sections 5      and  6,   every  dealer  except  one  dealing      exclusively in  goods declared tax-free under      section 6  whose gross  turnover  during  the      year immediately  preceding the  commencement      of this  Act  exceeded  the  taxable  quantum      shall be  liable to pay tax under this Act on      all sales  effected  after  the  coming  into      force of this Act.      (2)  Every dealer  to  whom  sub-section  (1)      does  not   apply  or   who  does   not  deal      exclusively in 928

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    goods declared to be tax-free under section 6      shall be  liable to pay tax under this Act on      the expiry  of 30  days after  the date which      his gross  turnover first exceeds the taxable      quantum." "Taxable quantum"  mentioned in sub-section (2) is defined in sub-section (5) of s. 4.      Thus a  dealer is  liable to sales tax if his sales in  the year  preceding the  commencement of the Act  are more  than the  taxable  quantum  (s. 4.(1) or subsequently becomes so during any year. S. 5.(1)  "Subject to  the provisions of this Act,      there shall be levied on the taxable turnover      every year  of a  dealer a  tax at such rates      not exceeding  two pice  in a  rupee  as  the      State Government may by notification direct:           Provided   that    Government   may   by      notification in  the Official Gazette declare      that in  respect of  any goods  or  class  of      goods the dealer may pay such lump-sum by way      of composition  of the tax payable under this      Act as the Government may notify from time to      time.      (2)  In  this  Act  the  expression  "taxable      turnover" means that part of a dealer’s gross      turnover  during  any  period  which  remains      after deducting therefrom.                (a) his turnover during that period on                (i)  the  sale  of  goods  declared                     tax-free under section 6;                (ii)............................... .                (iii).............................. " Section  6   which  makes   provision  for  giving exemption is as follows:- S.6(1)    "No tax  shall be payable under this act      on the  sale of  goods specified in the first      column 929      of the Schedule subject to the conditions and      exceptions,  if   any,   set   out   in   the      corresponding  entry  in  the  second  column      thereof, and no dealer shall charge Sales Tax      on the  sale of goods which are declared tax-      free from time to time under this section. (2)  The  State   Government,  after   giving   by      notification  not  less  than  three  months’      notice of its intention so to do, may by like      notification  add   to  or  delete  from  the      Schedule and  thereupon the Schedule shall be      deemed to be amended accordingly." Section 10 deals with payment of taxes of returns. Clause (1) of s. 10 provides:- S.10 (1) "Tax payable under this Act shall be paid      in the  manner hereinafter  provided at  such      intervals as may be prescribed." Section   11   is   the   section   dealing   with assessments. It  provides that  if  the  Assessing Authority is  satisfied that the returns furnished are correct  and  complete  he  shall  assess  the amount of tax due and if he is not so satisfied he can require  the production  of evidence which may be  necessary  and  provision  is  also  made  for

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default in carrying out the notice issued. Section 27 gives  the Government  the power to make rules. The relevant  portions of this section are clauses (h) and (i) which were as follows:-      (h)  "the return  to be  furnished under sub-           section (3)  of section 10, and dates by           which and  the authority  to which, such           returns shall be furnished;      (i)  the date by which returns for any period           are to be furnished and the procedure to           be followed for assessment under section           11." Under the rule making power rules have been framed by the Punjab Government and reference may be made to Rules 20 and 23. Under the 930 former rule every registered dealer is required to furnish returns  in Form ST-VIII or ST-XXIII if so permitted quarterly  within thirty  days from  the expiry of  each  quarter.  Under  the  latter  the Assessing Authority  is given the power to tax the returns to be made monthly in the case of a dealer who would  otherwise be  required to  furnish them quarterly or annually.      It was  argued that  the tax  under s.5 was a yearly tax  and therefore  whenever the  exemption may be given during a financial year the effect of the exemption  will become  operative as  from the beginning of  the financial  year and emphasis was laid on  the words  "there shall  be levied on the taxable turnover  every year  of a dealer a tax.." The argument  was that  it was a yearly tax on the turnover and  not that  every year a tax was to be levied on  the taxable  turnover i.e. aggregate of the sales  made during a given period. It was also argued that  if the  exemption of the turnover was to operate  for the quarter in which the exemption was notified,  the consequence  will be  absurd as those who  pay the  tax on  quarterly  returns  or monthly returns  will  not  be  able  to  get  the advantage of  the exemption  whereas those who pay on yearly returns will be so entitled.      I am  unable to  agree that the effect of the collection of  the words  in s. 5 and particularly of the  words "shall  be  levied  on  the  taxable turnover every  year......  a  tax"  is  what  was argued by  the appellants i.e. it was a yearly tax like the  income tax. Section 6 which provides for exemption specifically  envisages the  declaration from time  to time of exemption of goods which are to be  tax-free. The  use of  the words  "tax-free from time  to time", in my opinion, means that the exemption may be given at any time during the year but it  does not  suggest that  the exemption will operate from  the beginning  of the  year and  not from the time that the exemption is given. If this were not  so the  the imposition  of sales  tax by excluding an 931 article exempt  from tax  from  the  schedule  say about the  end of  the financial year would render the dealer  liable to sales tax for the whole year even though  he may  not have  collected any sales tax from  his customers  which under  the  law  he would be  entitled to  do if the article is not in

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the schedule.  It will  be an  imposition which is not envisaged  by the  general scheme of the Sales Tax Act  because the  tax is  exigible on  taxable turnover in every return made monthly or quarterly or yearly  as the  case may be. It appears that it is for  that reason  that in the definition of the word "turnover"  the legislature  has  chosen  the word "during the given period" i.e. the period for which the tax is leviable and is levied. Similarly in subsection  (2) of  s. 5  where  sales  tax  is levied on the taxable turnover of a dealer the use of the  word "during any period" is again repeated and in cl.(a) of that section reference is made to deduction from  his turnover during that period of the sale of goods declared tax-free under s. 6 and that is  for a  good reason  because s.  6  itself mentions the  declaration of  tax-free goods  from time to  time indicating  that whenever during the year or at any time during the year when goods are notified to be tax-free.      That the  intention of the legislature was to give exemption  from the  date of the notification or such  date as  is mentioned in the notification is further  supported by  the provisions of ss. 10 and 11  of the  Act. Under  s. 10  a dealer may be required to  furnish his  return at such intervals as may be prescribed and when he makes a return it must necessarily  be of  the goods on which during that period  sales tax  was exigible.  Under  sub- s.(4) of  s.10 the  dealer is required to pay into the Government  treasury the  full amount  of  tax according  to   his  return.   Under  s.   11  the assessment of  the tax either on the acceptance of the return or after production of such evidence as may be required is to be made. From the provisions of a 11, it does 932 not appear  that returns  are to be scrutinised at the end  of the  year like in income tax cases and assessment  made   on  the   income  of  the  year preceding the assessment year. It is to be made in regard to  each return  whenever according  to the rules the return has to be and is made. The tax is also paid  for that  period i.e.  on  the  taxable turnover for  the period  for which  the return is made and  which  becomes  the  subject  matter  of assessment. When  the assessment has been made and the tax  assessed is  paid the assessment for that period  is   completed  and  all  proceedings  and liabilities and  subjected to what is stated as to escaped periods.      This is  further clear  from the  rules which have been  made  in  regard  to  registration  and furnishing  of   returns.  In   the   registration certificate it  has to  be mentioned  as  to  what goods are  free of tax. Returns are required to be made in  the Forms  which are given i.e. Form VIII or Form  XXIII. A  return under  Form VIII  may be monthly, quarterly  or yearly. A return to be made also provides  for mentioning the turnover of tax- free goods and goods which are exempted from sales tax.  If  the  contention  of  the  appellants  is correct, then  after all  the  returns  have  been filed, the  amount of  sales tax  according to the returns assessed  and payments  made,  there  will

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have to be proceedings for reassessment, remission or refund  as the  case may  be in regard to those periods, if  any goods  are added  to the schedule exempting them from sales tax after the assessment or any  goods are  deleted from  the schedule thus making them  liable for sales tax and that will be for  the  periods  of  which  the  assessment  had already been completed and finished. That does not seem to  be the  scheme of  the Act.  It does  not envisage reassessment for the purpose of refunding the tax  assessed and  paid on articles which were assessable at the time the assessment was made but became exempt  later nor  is it  envisaged in  the case of 933 articles excluded from the schedule. Section 11(6) which deals  with reassessments  at  the  relevant time provided:           "If upon information which has come into      his possession  the  Assessing  Authority  is      satisfied that  any dealer has been liable to      pay tax  under this  Act in  respect  of  any      period has  failed to apply for registration,      the Assessing  Authority shall.........assess      to the  best of  his judgment  the amount  of      tax.......due from the dealer." The  scheme   of  the   Act  and  the  rules  made thereunder do  not, in  my opinion,  show that the exemption becomes  operative for  the  whole  year whenever  during  the  year  the  notification  of exemption is  issued even  though it may be on the last day of the financial year.      I would  therefore dismiss  this appeal  with costs.      By Court.  In accordance with the judgment of the  majority,  the  appeal  stands  allowed  with costs.