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PETITIONER: SALES TAX OFFICER, WARD 2 MORADABAD AND 2 ORS.

       Vs.

RESPONDENT: ORIENTAL COAL CORPORATION MORADABAD.

DATE OF JUDGMENT12/01/1988

BENCH: RANGNATHAN, S. BENCH: RANGNATHAN, S. MUKHARJI, SABYASACHI (J)

CITATION:  1988 AIR  648            1988 SCR  (2) 562  1988 SCC  Supl.  308     JT 1988 (1)   101  1988 SCALE  (1)33

ACT:      Central Sales  Tax Act,  1956: Section  9-Amendment  t- Central Sales  Tax (Amendment)  Act 1976,  Sec-  Effect  of- Whether prospective or retrospective.

HEADNOTE: %      The respondent,  an unregistered firm of coal merchants with its  place of  business in Bihar and an office in U.P., was assessed  to sales tax by the first appellant in respect of the  turnover of coal supplied by the respondent-assessee for the  assessment years  1967-68 and 1968-69. The assessee filed writ  petitions alleging  that the  assessment  orders were without jurisdiction on several grounds.      The High  Court allowed the writ petitions holding that s. 9  of the  Central Sales  Tax Act  as  it  stood  at  the relevant time  cast a liability to tax only on a ’registered dealer’ and not an ’unregistered dealer’.      In the  appeals it  was  contended  on  behalf  of  the Department that  by virtue  of s. 9 of the Central Sales Tax (Amendment) Act,  1976, cl. (b) of the proviso to s. 9(1) of the Central  Sales Tax  Act was deemed to have been in force since 5.1.57  and, therefore, the position was as if the Act had  always   imposed  a   liability  to  pay  tax  even  on unregistered dealers  just as  it  had  originally  done  on registered dealers, and that the amendment only affected the venue of  taxation, and  being procedural  in nature, it was required to be construed retrospectively,      Dismissing the appeals, ^      HELD: 1. Clause (b) of s. 9(1) of the Central Sales Tax Act, 1956 is operative only from 7.9.76. [573]      The instant case is, therefore, governed by the earlier provision, and the respondent-assessee being an unregistered dealer is not liable to pay tax. [573D]      State v.  Kasturi Lal  Har Lal,  [1987] 67  STC 154 SC, relied on. 563      2.1 Where  the statute,  Central Sales  Tax (Amendment) Act, 1976,  on its  face,  clearly  indicates  retrospective effect where intended, there can be no justification to read

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retrospectivity into  the amendment made by cl. (c) of s. /6 of the  Amending Act,  which does  not contain  any words to that effect. [571D]      2.2 The  language of  the  validation  section  clearly concerns only  penalties which are dealt with under s. 9(2). The amending  Act refers  to s.  9 in  general and not to s. 9(2) only  because s. 9(1) also contains a reference to sub- section (2).  From this  circumstance  alone  it  cannot  be inferred that  retrospectivity to  the amendment  of s. 9(1) also is intended. [572C-D]      2.3 The  employment of word "also" cannot be treated as an indication  of intention  by  the  Legislature  that  the amendment of  s. 9(1)  by s. 6 of the Amending Act was to be effective from  5.1.57. If  the Legislature had intended it, the intention could and would have been expressed clearly in cl. (a)  of s.  6 itself as it had been in the other clauses and in  the other  sections. If s. 9(1) of the Amendment Act had been  inserted as  cl. (d) in s. 6 thereof, it could not have changed the prospective effect of cl. (a). The position is not  different merely because this provision is contained in s.  9 and  not s. 6 of the Amendment Act. Section 9(1) of the Amendment  Act talks  only of  reading these extra words into s. 9(1) of the Principal Act between 5.1.57 and 7.9.76. It does not contain any operative words that require s. 9(1) of the  Principal Act being read in the form in which it has been amended by s. 6 during that earlier period. [572E-G]      All that  the provision requires is that for the period 5.1.57 to  7.9.76, the  section is  to be read as if it also included the  additional substantive  provisions referred to therein.  It   was  earlier  not  clear  whether  all  these provisions could be read into the section before 7.9.76, the date when  the  amendment  Act  came  into  force.  So,  the validation section declares that the section should be read, even earlier,  as if  it comprehended also these substantive provisions. It  is in  this context  that the word "also" is used. [572D-E]      2.4 The question whether a charge to tax can be imposed in one  State or another is not a mere question of venue. It may have  an impact  on the rate of tax in certain cases and it also  regulates the  rights inter  se of  States to  levy taxes on such inter-state sales. [573B-C]      The amendment changes the position that an unregistered dealer 564 is not  taxable under  the proviso and imposes a substantive liability on  such a  dealer. It  is also  one which confers jurisdiction on  an officer  in a particular State to levy a tax which  he otherwise  cannot. It  is thus  a  substantive provision. [573B]      The amendment  cannot, therefore,  be treated as purely procedural and hence necessarily retrospective. [573C]      S.T.O. v. Coal & Coke Supplies Corporation JT, [19871 4 S.C. 472;  Khemka v.  State, [1975]  3 SCR 753 and Shiv Dutt Rai v. Union, 119831 3 S.C.C. 529 referred to.

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 953 954 (NT)/ 1975.      From the  Judgment and  order dated  the 15th  February 1974 of  the High  Court of  Allahabad in  Civil Misc.  Writ Petitions Nos. 6904 and 6906 of 1973.      S.C. Manchanda and A.K. Srivastava for the Appellants.      Harish N.  Salve, Mrs.  A.K. Verma,  J. Peres  and D.N.

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Mishra for the Respondent.      The Judgment of the Court was delivered by      RANGANATHAN, J.  These are  two appeals  by certificate from the  common order. dated 15.2.74, of the Allahabad High Court in  Civil Miscellaneous Petition Nos. 6904 and 6906 of 1973. They  can be  disposed of  together since the question raised is  the same.  This common question arises out of the assessment to  central sales tax of the respondent, oriental Coal Corporation  of Moradabad  (hereinafter referred  to as the assessee), for the assessment year 1967-68 and 196869.      2. The relevant facts bearing on the controversy may be briefly stated.  The assessee  is a  firm of  coal merchants with its  place of  business in  Jharia (Bihar State) and an office at  Moradabad (in  U.P.). It is not registered either under the  Central or  the State Sales Tax Act. According to the assessee  it places orders for coal on the collieries at Jharia on  behalf of constituents in Uttar Pradesh, realises the sale  proceeds and  remits the same to Jharia. The Sales Tax officer assessed the assessee to sales tax in respect of the turnover of the coal thus 565 supplied by  the  assessee.  The  assessee  filed  two  writ petitions alleging  that the  assessment orders were without jurisdiction on  several grounds. The High Court allowed the writ petitions  on one of these grounds and hence did not go into the  other contentions.  It referred  to s.  9  of  the Central Sales Tax Act, as it stood at the relevant time, and held that  the provision  cast a  liability to tax only on a registered dealer  and not  an unregistered  dealer like the assessee. It  is the  correctness of  this decision  that is challenged in the present appeals.      3. Section 9 relied upon by the High Court, reads thus:           3. "9.(1) The tax payable by any dealer under this           Act on  sales of  goods effected  by  him  in  the           course of  inter-state trade  or commerce, whether           such sales fall within clause (a) or clause (b) of           section 3,  shall be  levied by  the Government of           India and  the tax so levied shall be collected by           that Government  in accordance with the provisions           of subsection  (2), in  the State  from which  the           movement of the goods commenced.                Provided that, in the case of a sale of goods           during their  movement from  one State to another,           being a  sale subsequent  to  the  first  sale  in           respect of  the same  goods, the  tax shall, where           such sale  does not  fall within subsection (2) of           section 6,  be levied  and collected  in the State           from which  the registered  dealer  effecting  the           subsequent sale  obtained or,  as the case may be,           could have  obtained, the  form prescribed for the           purpose of clause (a) of subsection (4) of section           8 in connection with the purchase of such goods.                (2) Subject  to the  other provisions of this           Act and the rules made thereunder, the authorities           for the time being empowered to assess, re-assess,           collect and  enforce  payment  of  any  tax  under           general sales  tax law  of the  appropriate  State           shall, on  behalf  of  the  Government  of  India,           assess, re-assess,  collect and enforce payment of           tax, including  any penalty,  payable by  a dealer           under this Act as if the tax or penalty payable by           such a  dealer under  this Act is a tax or penalty           payable under  the general  sales tax  law of  the           State; and  for this purpose they may exercise all           or any  of the  powers they have under the general

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         sales tax  law of the State; and the Provisions of           such law, including provi- 566           sions relating to returns, provisional assessment,           advance  payment   of  tax,  registration  of  the           transferee of  any business, imposition of the tax           liability of  a person carrying on business on the           transferee  of   or  successor  to  such  business           transfer of  liability  of  any  fir  n  or  Hindu           undivided family  to pay  tax in  the event of the           dissolution of  such firm  or  partition  of  such           family, recovery  of tax  from third parties, appe           als, reviews,  revisions,  references,  3(refunds,           rebates, penal  ties) compounding  of offences and           treatment of  documents furnished  by a  dealer as           confidential, shall apply accordingly:                Provided that if in any State or part thereof           there is  no general  sales tax  law in force, the           Central Government  may, by  rules  made  in  this           behalf make  necessary provision for all or any of           the matters specified in this sub-section." The High  Court pointed  out that,  under the  terms of  the section, tax  on sales  of goods effected by a dealer in the course of  inter-state trade  or commerce shall be levied in the State from which the movement of the goods commenced: in this case,  the State of Bihar. The proviso, however, carves out an  exception. It  provides that,  if there  is a subseq uent sale  of the same goods in the course of their movement from one  State to  another and  such sale  is effected by a registered dealer,  tax can  be levied  and collected in the State from which such dealer obtained or could have obtained the forms  prescribed under  s. 8(4)(a)  (popularly known as ’the Form’):  in this case, the State of Uttar Pradesh. But, the  High   Court  pointed  out,  the  assessee  was  not  a registered dealer  and so  there was  no scope for his being taxed in  the State  of  U.P.  The  High  Court  accordingly quashed the  assessments in question and hence these appeals by the State.      4. We  may at  once say that the conclusion of the High Court is  unassailable in view of the decision of this Court in State  v. Kasturi  Lal Harlal,  4 J.T.  1987 3  S.C.  234 affirming the view taken on this issue by the Allahabad High Court in  an earlier case Kasturilal Harlal v. State, [1972] 29 STC  495. Shri Manchanda, however, submits that this view can no  longer hold  the field  in view  of a  retrospective amendment of  the Central Sales Tax Act by the Central Sales Tax (Amendment)  Act No. 103 of 1976. Two provisions of this Amendment Act may be extracted:           "6. Amendment  of section  9. In  section 9 of the           Principal Act-(a)  in sub-section (1) for proviso,           the following pro 567           viso shall be substituted, namely. A           "Provided that,  in the  case  of  sale  of  goods           during their  movement from  one State to another,           being a  sale subsequent  to  the  first  sale  in           respect of  the same  goods and  being also a sale           which does  not fall  within  sub-section  (2)  of           section 6, the tax shall be levied and collected-           (a) where  such subsequent  sale has been effected           by a  registered dealer,  in the  State from which           the registered dealer obtained or, as the case may           be could  have obtained,  the form  prescribed for           the purposes  of clause  (a) of  subsection (4) of           section 8  in connection with the purchase of such

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         goods, and           (b) where  such subsequent  sale has been effected           by an  unregistered dealer in the State from which           such subsequent sale has been effected."           (b)  in   sub-section  (2),   before   the   words           "compounding of  offences", the words "charging or           payment of  interest", shall be inserted and shall           be deemed always to have been inserted .           (c) after  sub-section  (2),  the  following  sub-           section shall be inserted, namely:           (2A) All  the provisions  relating to offences and           penalties  (including   provisions   relating   to           penalties in lieu of prosecution for an offence or           in addition  to the penalties or punishment for an           offence but  excluding the  provisions relating to           matters provided  for in  sections 10  and lOA) of           the general  sales tax  law of  each State  shall,           with necessary modifications, apply in relation to           the assessment,  reassessment, collection  and the           enforcement, of  payment of any tax required to be           collected under  this Act  in  such  State  or  in           relation  to   any  process  connected  with  such           assessment,    re-assessment,     collection    or           enforcement of  payment as  if the  tax under this           Act were a tax under such sales tax law.           xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 568           9. Validation  ( 1) The provisions of section 9 of           the principal  Act shall  have effect and shall be           deemed always  to have  had effect  in relation to           the period  commencing on  the 5th day of January,           1957,  and   ending  with   the  date  immediately           preceding the  date of commencement of this Act as           if that section also provided-           (a) that  all the provisions relating to penalties           (including provisions  relating  to  penalties  in           lieu of  prosecution for an offence or in addition           to the  penalties or  punishment on conviction for           an offence  but excluding  the provisions relating           to matters  provided for in sections 10 and 10A of           the principal  Act and  the provisions relating to           offences) of  the general  sales tax  law of  each           State shall,  with necessary  modifications, apply           in relation to-           (i) the  assessment, re-assessment, collection and           enforcement or  payment of  any tax required to be           collected under  the principal  Act in such State;           and           (ii) any  process connected  with such assessment,           re-assessment,  collection   or   enforcement   of           payment, and           (b) that for the purpose of the application of the           provisions  of   such  law,   the  tax  under  the           principal Act shall be deemed to be tax under such           law.           (2)  Notwithstanding  anything  contained  in  any           judgment, decree or order of any court or tribunal           or  other   authority,  all  penalties  under  the           general sales  tax law  of any  State  imposed  or           purporting to  have been  imposed in  pursuance of           the provisions  of section 9 of the principal Act,           and all  proceedings, acts or things taken or done           for  the  purpose  of,  or  in  relation  to,  the           imposition or collection of such penalties, before           the  commencement  of  this  Act  shall,  for  all

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         purposes be  deemed to  be and to have always been           imposed, taken  or done as validly and effectively           as if  the provisions  of sub-section (1) had been           in force  when  such  penalties  were  imposed  or           proceedings or  acts or  things were taken or done           and accordingly,-           (a)  no   suit  or   other  proceedings  shall  be           maintained or  continued in or before any court or           any tribunal or other 569           authority for the refund of any amount received or           realised by way of such penalty;           (b) no  court, tribunal  or other  authority shall           enforce any  decree or  order directing the refund           of any  amount received or realised by way of such           penalty;           (c) where  any amount  which had  been received or           realised by  way of such penalty had been refunded           before the  commencement  of  this  Act  and  such           refund  would   not  have   been  allowed  if  the           provisions of sub-section (1) had been in force or           the date  on which  the order  for such refund was           passed, the amount so refunded may be recovered as           an arrear of tax under the principal Act;           (d) any  proceeding, act or thing which could have           been validly  taken, continued  or  done  for  the           imposition of  such penalty at any time before the           commencement of this Act if the provisions of sub-           section (1)  had then  been in force but which had           not been  taken continued  or done, may after such           commencement be taken, continued or done.           (3) Nothing  in sub-section (2) shall be construed           as preventing any Person-           (a) from  questioning the imposition or collection           of any penalty or any proceedings, act or thing in           connection, therewith or           (b) from  claiming any  refund, in accordance with           the provisions of the principal Act read with sub-           section(1)." Shri Manchanda  contends that,  by virtue  of s.  9  of  the Amendment Act,  clause (b) of the proviso to s. 9 (1) of the Central Sales  Tax Act is deemed to have been in force since 5.1.1957. The position according to him, therefore, is as if the Act  had always  imposed a  liability to pay tax even on unregistered dealers  just as  it  had  originally  done  on registered dealers.      5. We may mention that, while deciding S. T. O. v. Coal & Coke  Supplies Corporation,  JT 1987  4 S.C.  472, we  had assumed the  correctness of  the contention of Sri Manchanda as, in  that case, the above argument that the amendment was retrospective was uncontroverted. 570 Sri Harish  Salve, appearing  for the assessee in this case, however,  contests   the  correctness   of  Sri  Manchanda’s contention. We  have therefore  considered this  aspect  and reached the  conclusion that  Sri Salve is right and that no retrospective operation  to clause  (b) of  s. 9(1)  can  be spelt out as suggested by counsel for the appellant.      6. Act  103/76 received  the assent of the President on 7.9.1976 which  is, apparently,  what is  referred to as the date of its commencement in s. 9(1) of the said Act. The Act amended several sections of the Central Sales Tax Act and it did not when its words when it desired to give any degree of retrospective  effect   to  any  particular  amendment.  The amendments to sections 3 and 4 of the Principal Act thus are

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clearly retrospective:  the provisions  added thereto, it is declared, "shall  be inserted  and shall always be deemed to have been  inserted  w.e.f.  1.4.1964."  The  amendments  to Sections 2,  7, 14 and IS of the Principal Act are obviously intended to  be only  prospective. The  amendment to s. 9 of the Principal  Act, with  which we are at present concerned, presents an  amalgam. s.  6 of  the Amending Act makes three amendments in s. 9 of the Principal Act by its three clauses (a), (b)  and (c).  In clause  (a), there  is no hint of any retrospectivity whereas  the  amendment  by  clause  (b)  is expressed to be fully retrospective from 1956. The amendment by clause  (b)  attracts  the  penal  provisions  (including offences) of  the relevant  State Law  and can,  in view  of Article  20   of  the  Constitution,  only  be  prospective. However,  it   appears  that,  even  under  the  statute  as originally framed,  such penal  provisions had been enforced in  several  cases  and  this  action  needed  retrospective validation (in so far as penalties, other than offences were concerned) in  view of  the decision of this Court in Khemka v. State, [1975] 3 SCR 753. This was the raison d’etre of s. 9 of  the Amendment Act which has been extracted above: (see Shiv Dutt  Rai v.  Union, [ 1983] 3 S.C.C. 529. This is also clear from  paragraph 3  of the  Statement  of  objects  and Reasons of the Amendment Act, which reads:           "Sub-section (2) of section 9 of the Central Sales           Tax Act  empowers the  State sales tax authorities           to assess,  re-assess collect  and enforce payment           of  Central   sales  tax.  The  sub  section  also           authorises the  authorities under  the State sales           tax laws  to exercise  all the  powers which  they           have under  those laws  (including inter  alia the           power to impose penalties) for the purposes of the           Central Sales  Tax  Act  also.  In  Khemka  &  Co.           (Agencies) Private  Ltd. v.  State of Maharashtra,           35 S.T.C. 57 1, the Supreme Court, by a ma- 571           jority of  3:2, held  that the  provisions of  the           State sales  tax laws as to penalties do not apply           for purposes  of the Central Sales Tax. In view of           this judgment,  the State  Governments  are  faced           with the  problem of  having to refund the amounts           collected in  the past  by way  of penalties.  The           judgment has  also  resulted  in  a  vacuum  being           created in  regard to  levy of  penalties, it  is,           therefore, necessary  to amend  section 9  of  the           Central Sales  Tax Act  to provide  expressly that           the provisions  relating to offences and penalties           under the  general sales  tax law  of  each  State           shall.  with  necessary  modifications,  apply  in           relation   to    the   assessment,   re-assessment           collection and  the enforcement  of tax  under the           Central Sales  Tax Act.  It is  also necessary  to           validate the  penalties which  have been levied in           the past.  for the  purposes of  the Central Sales           Tax Act,  on the  basis of  the provisions  of the           State sales tax laws." Where the  statute thus,  on  its  face,  clearly  indicates retrospective  effect   where  intended,  there  can  be  no justification to  read retrospectivity  into  the  amendment made by  clause (a)  of section  6 of the amending Act which does not contain any words to that effect.      7. Counsel  for the  appellant, however,  relied on two circunstances to  say that  such retrospective  effect  must necessarily have  been intended. Firstly, he placed emphasis (a) on the fact that s. 9( l) of the Amendment Act refers to

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section 9 of the principal Act and not merely to S. 9(2) and (b) on  the  use  of  the  words"as  if  that  section  also provided." He  submitted that  this language  can only  mean that the  legislature intended  retrospective effect also to the amendment  effected in  s. 9  by s.  6 of the Validation Act. Secondly,  he submitted  that under s. 6 of the Central Sales Act,  all  dealers  registered  or  unregistered,  are liable to pay tax on sales effected by them in the course of inter-state trade or commerce. S. 9(1) imposes the liability on the  dealer in  the State  from which the movement of the goods  commences  but  this  is  without  prejudice  to  the liability of  dealers who  make subsequent  sales during the course of  such movement.  Such subsequent  sale may be by a registered dealer  or an unregistered dealer. It may be to a registered or  an unregistered  dealer. If  the sale is to a registered dealer  it is exempt under s. 6(2), whether it is by a  registered dealer or an unregistered dealer. Under the proviso to  S. 9(1), as it originally stood, if the sale was by registered  dealer to an unregistered dealer, it would be taxed in the State from which the registered dealer obtained or could have obtained the Forms. When 572 even a  sale by  a registered  dealer is  thus made  liable, counsel argues,  it A  could not  have been the intention of the State to exempt from liability a sale by an unregistered dealer. The  amendment  only  clarifies  this  position.  It imposes no  fresh  substantive  liability.  It  is  only  an amendment of  a procedural nature shifting chargeability, in such cases,  from the  State from  which the goods moves, to the State  in which the subsequent sale takes place. In this view of  the matter,  counsel contends  the  amendment  only affects the  venue of  taxation  and,  being  procedural  in nature, requires to be construed retrospectively.      8. We are unable to accept these contentions. So far as the first point is concerned, the language of the validation section clearly concerns only penalties which are dealt with under s.  9(2). The  amending  Act refers to S. 9 in general and not  to s.  9(2) only  perhaps because  s.  9(  l)  also contains  a   reference  to   sub-section  (2).   From  this circumstance   alone,    it   cannot    be   inferred   that retrospectivity  to   the  amendment  of  s.  9(1)  also  is intended. The  use of the word ’also’ does not also have the result suggested by counsel. All that the provision requires is that,  for the  period 5.1.57 to 7.9.1976, the section is to be read as if it also included the additional substantive provisions referred  to therein.  It was  earlier not  clear whether all  these provisions could be read into the section before 7.9.1976,  the date  when the Amendment Act came into force. So  the validation  section declares that the section should be  read, even  earlier, as  if it  comprehended also these substantive provisions. It is in this context that the word "also"  is used.  The employment  of this  word  cannot therefore be  treated as  an indication  of intention by the legislature that  the amendment  ot s.  9(1) by section 6 of the amending  Act was  to be effective from 5.1.1957. If the Legislature had  intended it,  the intention could and would have been  expressed clearly in clause (a) of s. 6 itself as it had  been in  the  other  clauses  .  and  in  the  other sections. If  s. 9(1) of the Amendment Act had been inserted as clause  (d) in  section 6  thereof,  it  could  not  have changed the  prospective effect  of clause (a). The position is not  different merely because this provision is contained in s.  9 and  not s.  6 of the Amendment Act. S. 9(1) of the Amendment Act  talks only  of reading these extra words into s. 9(1)  of the  principal Act between 5.1.57 and 7.9.76. It

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does not contain any operative words that require s. 9(1) of the Principal  Act being  read in  the form  in which it has been amended  by  s.  6  during  that  earlier  period.  We, therefore, do  not see  in s.  9 of  the  Amending  Act  any support to the contention of the counsel for the appellant.      9.  The   contention  that   the  amendment  is  purely procedural is 573 also  misconceived.   Assuming  the   correctness   of   the contention that  a  A  purely  procedural  amendment  should ordinarily be  construed to  be retrospective, we are unable to agree  that the  present amendment is of such nature. The decision of  this Court in Kasturi Lal’s case, 4JT 1987 3 SC 234 had  held that  an unregistered  dealer is  not  taxable under the  proviso. The  amendment changes this position and imposes a substantive liability on such a dealer. It is also one which confers jurisdiction on an officer in a particular State to  levy a tax which he otherwise cannot. It is thus a substantive provision. That apart, even the question whether a charge  to tax  can be  imposed in one State or another is not a  mere question  of venue. It may have an impact on the rate of  tax in  certain cases  and it  also  regulates  the rights inter  se of States to levy taxes on such inter-state sales. It  is, therefore, difficult to accept the contention that the  amendment should  be treated  as purely procedural and hence necessarily retrospective.      10. In the result, we are of opinion that clause (b) of s. 9(1) of the Central Sales Tax Act, 1956 is operative only from 7.9.1976.  The present  case is, therefore, governed by the earlier  provision and  the decision  of this  Court  in Kasturi Lal’s case, (supra). The appeals therefore, fail and are dismissed. We, however, make no order as to costs. N.P.V.                                   Appeals dismissed. 574