http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 12  

PETITIONER: AMRIT BANASPATI CO.  LTD. & ANR.

       Vs.

RESPONDENT: STATE OF UTTAR PRADESH AND ORS.

DATE OF JUDGMENT: 27/07/1964

BENCH: DAYAL, RAGHUBAR BENCH: DAYAL, RAGHUBAR GAJENDRAGADKAR, P.B. (CJ) HIDAYATULLAH, M. GUPTA, K.C. DAS SHAH, J.C.

CITATION:  1965 AIR  560            1964 SCR  (8) 313

ACT: Sales  Tax-Sales  tax  levied at the rate of  one  anna  per rupee-New decimal coinage introduced by Act No. 31 of  1955- Effect on calculation of sales tax-Sales tax to be levied at the rate  of one 314 anna  or six Naya Paisa-Indian Coinage Act, 1906 as  amended by Act No. 31 of 1955. s. 14(3), (2).

HEADNOTE: For the assessment years 1956-57 and 1957-58, the  appellant was,  assessed to sales tax in respect of Vanaspati and  oil under  the  U.P.  Sales Tax Act, 1948.   By  a  notification issued on March 31, 1956 under s.  3-A(2),  the rate of  tax on Vanaspati was fixed at one anna per rupee at   the  point of sale by the manufacturer. The  appellant  and  S.  P. Bhasin,  a  shareholder  of  the company, filed a writ petition in the High Court challenging the validity of the U.P. Sales Tax Validation Act, 1958  and also  prayed for the quashing of the assessment order  dated October  15, 1960 and the order dated February 1,  1961,  of the  Sales Tax Judge (Appeals), Meerut, in  connection  with the  assessment  of tax on the sale of Vanaspati  and  other articles  both on the ground that the sale tax was  assessed at a higher rate than was permissible under a valid law  and that  the tax had been assessed at the rate of one anna  and not  at  6  Naya Paisa per rupee.   The  writ  petition  was dismissed  by  a  single Judge of the  High  Court  and  the Letters Patent Appeal was also dismissed by High Court.  The appellant came to this Court by special leave. The  only  point urged before this Court was  that  the  tax should have been calculated at the rate of 6 Naya Paisa  per rupee and not at the rate of one anna per rupee as laid down in the relevant provisions of the U.P. Sales Tax Act and the notice issued under its provisions.  Dismissing the  appeal, Held  (per P, B. Gajendragadkar, C.J., M.  Hidayatullah,  K. C.  Das Gupta and Raghubar Dayal, JJ.): The High  Court  was right in construing the provisions of sub-s. (3) of s. 14 of Indian Coinage Act to mean that references to values in  any

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 12  

enactment,  notification, rule or order under any  enactment or in any contract, deed or instrument, expressed in   old coins  should  be  construed  to  be  references  to  values expressed in   new coins by converting the old values at the rate of16 annas, 64 pice  and  192 pies to 100  Naya  Paisa. The values expressed in new coins  must    be     absolutely equivalent to the value of the, old coins. Per Shah,   J.- The  liability  for  sales tax after the  amendment  of  the Coinage  Act  will be at the rate of 6 new coins  for  every rupee  of sale price and not one anna.  By the  notification issued on March 31, 1956, the liability for payment of sales tax was to be computed at the rate of one anna in a rupee of the turnover.  By virtue of s. 14(3), for an anna  mentioned in the notification, 6 1/4 new coins are to be  substituted. As the substituted rate involves a fraction, by the  process of  rounding  off  at the rate specified in  s.  14(2),  the fraction of new coins has to be omitted and the nearest  new coins, i.e., 6 new coins are to be deemed to be  substituted in the statute. J.   K.   Jute  Mills Co. Ltd. v. State  of  Uttar  Pradesh, [1962]  2 S.C.R. 1, Ram Kishan Sunder Lal v. State of  Uttar Pradesh, 13 S.T.C. 923, 315 M/s.   Mangalore  Ganesh  Beedi Works v.  State  of  Mysore, [1963] Supp.  1 S.C.R. 275, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 887 and  888 of 1963.  Appeals by special leave from the judgment and order  dated October  23,  1961, of the Allahabad High Court  in  Special Appeals Nos. 483 and 484 of 1961. S.   K.  Kapur, B. L. Khanna, S. Murty and K. K.  Jain,  for the  appellants. C.   B. Agarwala and C. P. Lal, for the respondent. July 27, 1964.  The Judgment of the Court was delivered by : RAGHUBAR  DAYAL, J.The appellant, Amrit Banaspati Co.  Ltd., hereinafter  called the company, a joint-stock company,  and S.  P.  Bhasin.  a shareholder of the  company,  filed  writ petition no. 1003 of 1961 in the High Court of Judicature at Allahabad,  challenging the validity of the U.P.  Sales  Tax Validation  Act, 1958 (Act XV of 1958),  hereinafter  called the  Validation  Act, and praying for the  quashing  of  the assessment order dated October 15, 1960 and the order  dated February 1, 1961, of the Sales Tax Judge (Appeals),  Meerut, in  connection  with the assessment of tax on  the  sale  of vanaspati  and  other articles both on the ground  that  the sales-tax was assessed at a higher rate than was permissible under a valid law and that the tax had been assessed at  the rate  of  1  anna and not at 6 naye paise  per  rupee.   The learned  Single Judge of the High Court dismissed  the  writ petition  as  the  Validation Act  validating  the  relevant provision  of the U. P. Sales Tax Act and  the  notification enhancing the rate of tax had been held valid by this  Court in  J. K. Jute Mills Co. Ltd. v. State of  Uttar  Pradesh(-) and as the contention about the calculation of tax to be  at the rate of 6 naye paise per rupee and not at the rate of  1 anna had been repelled in earlier decisions of the Allahabad High Court, one such decision being Ram Kishan Sunder Lal v. State  of Uttar Pradesh(1).  A special appeal to a  Division Bench of the High Court was dismissed (1) [1962] 2 S.C.R. 1. (2) 13 S.T. C. 92

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 12  

316 in  view  of the decision of this Court in the  Jute  Mills’ Case(1).   It  appears that the second  question  about  the alleged  error in calculating the tax at the rate of I  anna instead of 6 naye paise per rupee, was not raised before the Division Bench.  Civil Appeal No. 887 of 1963 has been filed by special leave against this order of the High Court. The other appeal no. 888 of 1963 is filed against the  order of  the  Division Bench confirming the order of  the  Single Judge dismissing the writ petition by the appellant  company against the assessment order for the years 1955-56,  1956-57 and 1957-58.  The only point urged for the appellant in this writ petition had been that the Validation Act was  invalid. The orders of the two Courts below repelled the  contention, in  view  of the decision of this Court. in the  Jute  Mills Case(1). We did not allow the apellant to urge the grounds  attacking the  validity of the Validation Act in view of the  decision of  this Court in the lute Mills’ Case(1).  The ,only  point which  is  urged before us now is that the tax  should  have been  calculated at the rate of 6 naye paise per  rupee  and not  at  the rate of 1 anna per rupee, as laid down  in  the relevant  provisions  of  the U.P. Sales  Tax  Act  and  the notification issued under its provisions.  The contention is based  on  the provisions of the Indian  Coinage  Act.  1906 (Act  III of 1906), hereinafter called the Coinage  Act.  as amended  by Act XXXI of 1955.  It is urged that in  view  of the provisions of sub-ss. (2) and (3) of s. 14 of the  Coin- age Act, as amended reference to 1 anna in the relevant  Act and notification issued thereunder should be construed to be reference to 6 naye paise and that the wrong calculation  by the  Sales Tax Authority has resulted in over-assessment  of tax.  To appreciate the real contention urged. it is  neces- sary to refer to the relevant provisions of the Coinage Act. Section  13’ provides the extent up to which the tender  ,of the  various  coins would be considered legal  tender.   Its relevant portions read:               "13. (1) The coins issued under the  authority               of  section  6  shall be  a  legal  tender  in               payment or               (1)   [1962] 2 S.C.R. 1.               317               on account.-               (a)   in  the  case of a rupee coin,  for  any               sum.               (b)   in  the case of a half-rupee  coin,  for               any sum not exceeding ten rupees:               (c)   in  the case of any other coin, for  any               sum R not exceeding one rupee: Porvided that the coin has not been defaced and has not lost weight  so  as to be less than such weight as may  be  pres- cribed in its case. (3)  All nickel, copper and bronze coins which may have been issued  under this Act before the 24th day of January,  1942 shall continue as before to be a legal tender in payment  or on account for any sum not exceeding one rupee." Section  14,  after the amendment  introducing  the  decimal system of coinage, reads:               "14.  (1) The rupee shall be divided into  one               hundred  units and the new  coin  representing               such  unit  may be designated by  the  Central               Government,  by notification in  the  Official               Gazette, under such name as it thinks fit, and               the rupee, half-rupee and quarter-rupee  shall               be  respectively  equivalent to  one  hundred,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 12  

             fifty  and  twenty-five  such  new  coins  and               shall, subject to,   the  provisions  of  sub-               section (1 ) andsub- section    (2)    of               section 13 and to theextent    specified               therein. be a legal tender inpayment   or on               account accordingly.               (2)   All coins issued under the authority  of               this  Act in denominations of annas, pice  and               pies shall, to the extent specified in section               13, be a legal tender in payment or on account               at the rate of sixteen annas, sixty-four  pice               or  one  hundred and ninety-two  pies  to  one               hundred new coins. referred to in  sub-section               (1),  calculated            in respect of  any               such  single  coin or number  of  such  coins,               tendered at one transaction, to the               318               nearest new coin, or where the new coin  above               and  the new coin below are equally  near,  to               the new coin below.               (3)   All  references in any enactment  or  in               any  notification,  rule or  order  under  any               enactment  or in any contract, deed  or  other               instrument  to any value expressed  in  annas,               pice and pies shall be construed as references               to that value expressed in new coins  referred                             to in sub-section (1) converted theret o at  the               rate specified in subsection (2)." The  various  factors  determining the  application  of  the provisions of sub-s. (2) for the purposes of calculating the equivalent  value  of annas, pice and pies tendered  at  one transaction  are several.  The first requisite is  that  the amount taken into consideration is the amount which is  ten- dered  at  one transaction.  The other is  that  the  amount tendered  in any of those coins should be within the  extent of  legal tender mentioned in s. 13.  When these two  condi- tions are present, those coins would be legal tender in pay- ment  or on account at the rate of 16 annas, 64 pice or  192 pies to 100 naye paise which is the new coin referred to  in sub-s.  (1) of s. 14.  This means that the number of  annas, or  pice  or pies tendered have to be  multiplied  by  100/, 100/64  and  100/192  respectively, to  get  the  equivalent number of new coins.  In such arithmetical calculation there is the possibility that the equivalent number of naye  paise be not an exact number and be a mixed number consisting of a whole  number  and  a fraction.  There is  no  coin  of  the equivalent to a fraction of a naya paisa in value.  In  such cases, there is not going to be payment of the amount due in full,  if for the amount tendered in payment or  on  account there  is  no  full equivalent of naye paises  at  the  rate specified  in sub-s. (2).  It is for such contingency  of  a payment  being  not a full payment that sub-s.  (2)  further provides  that the coins tendered will be legal  payment  at the  specified  rate calculated to the nearest new  coin  or where the new coin above or new coin below are equally near, to  the new coin below.  The significance of this  specified mode  of  calculation  would be  apparent  from  a  concrete example.                                    319 7  annas, 6 annas and 5 annas, calculated at  the  specified rate,  would  be  equal to 43 3/4, 37 1/2 and  31  1/2  naye paise.   According to the artificial calculation, they  will however  be  ,,deemed to be legal tender for 44, 37  and  31 naye  paise  s  respectively, as 44 and 31  naye  paise  are

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 12  

nearest to the calculated equivalent of 7 annas and 5  annas and  37 naye paise is the next coin below 37 1/2 naye  paise which  are  equally ’below 38 naye paise and above  37  naye paise  and  the artificial mode of calculation  directs  the equivalents  to be fixed, in such circumstances, to the  new coins below.  It is to be noted that each coin of one  kind, tendered,  is not considered as a unit for the  purposes  of calculation, but all the Coins of the denomination are to be treated  as  one unit for this purpose.  This is  to  ensure payment of the amounts due as fully as possible.  This  will again be clear on a concrete example.  Seven one-anna pieces are  tendered, say, at one payment.  If each separate  piece be  taken  to be valid payment for 6 naye paise,  the  seven one-anna pieces will be good payment for 42 naye paise only, but  if taken as a whole, they would be good payment for  44 naye  paise.  Similarly, five one-pice pieces will  be  good payment  for  8 naye paise only and not for  10  naye  paise which  would be the case if each one-pice piece was  treated as  good payment for 2 naye paise, its equivalent, if it  be converted singly to naye poise. It  is  therefore  clear that the  provisions  of  sub-s.(2) provide for the conversion of old coins into new at the time of payment or of accounting, and then too for the conversion of  the  old coins within the limit of the extent  to  which they are legal tender, which means that one cannot insist on paying a total sum of several rupees in naye paise  calcula- ted in the manner laid down in sub-s. (2) of s. 14 and  that two  factors affect the determination of the number of  nave paise  equivalent in value to the value of the old  coin  of annas, pice or pies tendered, the two factors being the rate specified and the artificial way of calculation.  The result of  the  artificial  way of calculation  is  that  sometimes equivalent  number  of naye paise is less  than  the  actual value  of the old coins at the specified rate and  sometimes it is higher, the difference being, however, very small. 320 Sub-section (3), however, deals with a different matter.  It has nothing to do with the actual payment of any amount.  It provides a rule for construing values expressed in old coins as  values  expressed  in new coins or naye  paise,  and  to achieve this object, the only factor necessary to specify is the  rate  at  which the value of the old  coins  is  to  be converted  into the value of the new coins.  The  object  of the  provision is to provide a measure for arriving  at  the equivalent  value in terms of new coins and not  to  provide how  any amount due in terms of old coins is to be  paid  in terms.  of  new  coins.  Sub-section  (3)  therefore  simply provide&  that references, in any of the documents  referred to  in  that sub-section, to any value expressed  in  annas, pice and pies shall be construed as references to that value expressed  in  new  coins  converted  thereto  at  the  rate specified  in  sub-s. (2).  Sub-s. (2) specifies  the  rate. The rate specified in sub-s. (2) is 16 annas,     64 pice or 192 pies to 100 new coins or naye paise. It is this rate which is referred to in sub-s. (3). There    is  nothing  in sub-s.  (3) which can be taken to refer o that part of  sub- s.(2)  which relates to the actual calculation for  arriving at  the number of new coins deemed equivalent in value to  a certain number of annas, pice or pies, coins tendered within the limits of legal tender.  The provisions of sub-s. (3) of s.  14 provide for the conversion of the value of old  coins into  that of new coins at the rate specified in sub-s.  (2) and  do not provide for conversion to be in accordance  with the  provisions of sub-s. (2).  The other  expression  would have  been preferable if the legislature had  intended  that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 12  

the references of values expressed in old coins be construed as  references to values in new coins according to the  mode of  artificial  calculation  mentioned  in  sub-s.(2).   The provisions  deal  with  the method of  construction  of  the expression  of  the  value  in  documents,  be  the  private documents  or be they enactments or notifications, or  rules or orders.  The object was to determine the equivalent value which may be taken to replace the value as expressed in  old coins.   If  the  contention  urged  for  the  appellant  be accepted,  the values expressed in annas, pice or pies  will not,  on  conversion, be precisely equivalent but  could  be very much divergent and would adversely, affect                             321 the  interests  of the persons to whom money be  due  or  in certain circumstances, the interests of the person from whom it  be  due.  This could not have been contemplated  by  the legislature.   The  futility of the  appellants’  contention that the provisions of sub-s. (3) not only refer to the rate specified   in  sub-s.  (2)  but  also  to  the  method   of calculation mentioned in that sub-section, is apparent  from the anomalies which would arise if it be accepted.  This can be illustrated from the various facts of these appeals. It  is the appellants’ contention in writ petition no.  1003 of 1961 that the sales tax calculated at the rate of 6  naye paise  and not at I anna per rupee on the whole turnover  of Rs.  1,40,18,170.84  would reduce the tax  demanded  by  the Sales Tax Officer by Rs. 34,355.  This means that if the tax is calculated at the rate of 1 anna per rupee, as  expressed in  the relevant provision of law or at 6.25 naye paise  per rupee, the amount of tax due from the appellant would be Rs. 34,355  more than the amount of of the same tax on the  same turnover  calculated at an equivalent value of 6 naye  paise per  rupee.   In the other writ petition, no  reference  was made by the appellants to the manner of calculating the tax, the  manner of calculation adopted by the  taxing  authority being  the  same  as  in the other  writ  petition,  as  the appellants’ claim for refund, if determined at the values of one  anna and nine pies calculated in accordance  with  sub- section (2) of s. 14, would have been much reduced.  It will be sufficient to state that in clause (e) of para 16 of  the writ  petition,  the figures for the years 1956-57  for  the amount paid at one anna per -rupee and the amount payable at 9  pies per rupee would then vary the amount  refundable  to the appellant in a way as to make it much less.  The figures would stand thus : ------------------------------------------------------------                                              RS.a. P. Total amount paid at I anna per rupee      8,05,726106 Amount payable at 9 pies                   6,03,16753                                        ---------------------- Amount refundable, and therefore which the petitioner company could detain    2,00,559    53 ------------------------------------------------------------- If the amount payable be calculated at the rate of five naye poise in place of 9 pies, the amount refundable would be 51 S.C.-21. 322 -------------------------------------------------------------- much less as shown below                            Rs.UP. Total amount paid at  anna per rupee            8,05,726 65 Amount payable at 5 naya paise                  6,44,661 32 Amount refundable                               1,61,065 33 The  appellant stood to lose by calculating the tax  payable in  terms of naye paise and therefore made up an account  at the old coin rates.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 12  

The  legislature could not have intended, by the  provisions of  sub-section (3), that a mere provision for  working  out the  value  in  old coins into values in  new  coins  should provide scope for such huge variations in the actual amounts to  be paid or received.  The process of conversion  is  not meant  or designed to be a process for gaining more or  less than  what  is rightfully due under a provision  of  law  or under  any  contractual term.  The conversion  is  a  simple process  necessitated  by the exigency of payment to  be  in currency different from the one in which the payment was  to be. We are therefore of opinion that what sub-section (2) of  s. 14  requires  is that references to any value  expressed  in annas,  pice  and  pies will be  construed  to  such  values ,expressed in new coins which would be absolutely equivalent to the value of the old coins when their value is  converted at  the rate of 16 annas, 64 pice and 192 pies to  100  naye paise. Great reliance is placed for the appellants on the decisions of  this Court in M. G. Beedi Works v. State  of  Mysore(1). Apparently  some  observations of this Court  in  that  case support  the  appellants’ contention.  But,  when  they  are considered in the context of that case, they do not  support the  contention  as the Court had not to deal in  that  case with the actual contention now raised before us. In  the Beedi Works Case the sales tax was to be  levied  at the rate of 3 pies for every rupee of turnover. The (1)  [1963] Supp. 1 S.C.R., 275. 323 amount  of tax calculated at 3 pies per rupee worked out  to Rs. 91,690 and, calculated at the rate of two naye paise the equivalent  value of 3 pies, when calculated in  the  manner laid  down  in  sub-section (2) of s. 14, worked  out  to  a figure  higher by Rs. 25,038.  The tax was assessed  at  two naye  paise  per rupee in view of the  provisions  of.,  the Mysore Existing Laws (Construction of References to  Values) Act,  1957 (Mysore Act XII of 1957).  Section 3 of that  Act said :               "3.  Construction  of  references  to  certain               values in existing laws.               In  every existing law, all references to  any               value expressed in annas, pice and pies, shall               be  construed at references to that value  ex-               pressed in new coins referred to in subsection               (1)  of section 14 of the Indian Coinage  Act,               1906  (Central  Act III  of  1906),  converted               thereto  at the rate specified in  sub-section               (2) of section 14 of the said Act." The assessee, by his writ petition, questioned the  validity of the enactment which led to such a result in the amount of tax  assessed.  The contention raised was not that the  rate of calculation was wrong, but was that the law providing for the assessing of tax at the rate of 2 naye paise instead  of 3 pies per rupee was invalid as it amounted to enhancing the tax  by an Act which was not enacted in accordance with  the procedure laid down in the Constitution.  This is clear from what was stated at p. 277, it being-               "The  grievance  of  the  appellant  was  that               according  to the Mysore Sales Tax Act he  was               liable to sales tax at the rate of 3 pies  for               every rupee on the turnover and calculated  on               that  basis  the amount of tax  would  be  Rs.               91,690, but after the amendment of the  Indian               Coinage  Act (Act 3 of 1906) by  the  Amending               Act 31 of 1955 the rate of sales tax which was

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 12  

             levied  on the appellant’s Bee" was  -02  nPs.               per rupee               324               and thus the appellant was called upon to  pay               Rs. 25,038, more than he would have paid if he               had  been charged at the rate, of 3 pi-Is  per               rupee.   It  was contended on  behalf  of  the               appellant in the High Court and before us that               this amounted to enhancement of tax which  was               illegal because the tax had not been increased               in the manner provided under the  Constitution               and thus it was a breach of Article 265 of the               Constitution and was therefore void and  ille-               gal."                This Court further said, at p. 279:               "Two objections were, taken to the validity of               the  tax : Firstly it was argued that  by  the               substitution  of 2 naye paise in place 3  pies               there was a change in the tax exigible by  the               Mysore  Sales Tax Act and this could  only  be               done   if  that  enactment  had  been   passed               according to the procedure for Money Bills  in               the  manner provided by Articles 198, 199  and               207  of the Constitution and as no such  Money               Bill   was  introduced  or  passed   for   the               enhancement  of the tax, the tax  was  illegal               and invalid.". It is clear that the contention was not that the tax  should be  calculated  at a rate equivalent to 300/192  naye  paise i.e., 19/16 naye paise and not at 2 naye paise.  It was  not urged  that  the assessment could not have been  at  2  naye paise in view of the provisions of s. 3 of the Mysore Act of 1957.   What  was contended was that the assessment  at  the rate of 2 naye paise per rupee, instead of 3 pies per rupee, amounted  to assessment of tax at an enhanced rate and  that the Mysore Act, due to procedural defect, was not valid law. This  Court dealt with these two objections and simply  said with  respect to the contention about the provision  of  law amounting to a provision enhancing the rate to tax (p.  279) :               "In our opinion by substitution of new coinage               i.e.,  naye paise in place of annas, pice  and               pies no enhancement of tax was enacted but  it               was               325               merely  a  substitution  of  one  coinage   by               another of equivalent value." This  Court expressed the opinion that a law  providing  for substitution  of new coinage in place of old coinage in  the expression  of  values  does not amount to  a  provision  of enhancing  the tax.  The pith and substance of the  Act  was substitution  in  terms of new coinage and not  varying  the rate of tax. On  p.  278,  however, this Court, after  referring  to  the provisions  of  sub-sections  (1) and (2) of s.  14  of  the Indian  Coinage Act about the division of a rupee  into  100 naye paise and the old legal tender in annas, Vice and  pies remaining  legal tender in naye paise and referring  to  the mode  of calculation specified in sub-section (2) of s.  14, said:               "Sub-section (3) provides that all  references               under  any  enactment to annas, pice  or  pies               have to be construed as references to the  new               coin referred to in sub-section (1).  In other               wards  wherever  the old legal  tender,  i.e.,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 12  

             annas,  pice  and  pies  is  mentioned  in  an               enactment  it  is to be  converted  into  naya               paisas   and  the  naya  paisas  are   to   be               substituted  in place of the old legal  tender               calculated  in  the manner laid down  in  sub-               section (2)." Stress  is  placed on the last sentence but this  cannot  be taken as the decision of the Court on the question that sub- section (3) of s. 14 made reference not only to the rate  of conversion  but  also to the mode of  calculation,  as  that question  had not been considered in any manner.   The  last sentence  was a sort of a paraphrase of what had  been  said earlier  in the quotation with respect to the provisions  of sub-section  (3).   This is clear from the  facts  that  the provisions  of subsection (3) have not been stated in  full, and  have been referred to upto the stage of reference--  to the new coin referred to in subsection (1) and that the last portion   of  the  provisions  of  sub-section  (3),   i.e., ’converted thereto at the rate specified in sub-section  (2) has not been mentioned.  It is thus that the latter part  of the observa- 326 tions happened to refer to the method of calculation and not to the rate specified in subsection (2).  The Court was,  at the  time, thinking of the value of 3 pies in terms of  naye paise  as  calculated according to the  provisions  of  sub- section (2), there being no contest before it that the value substituted  to the equivalent of 3 pies for  assessing  the tax  was not a correct value for substitution in place of  3 pies.   We therefore do not construe the  expression  relied upon  by learned counsel for the appellant to be a  decision of  the Court on the construction of the provisions  of  sub section  (3) of s. 14 and are therefore of opinion that  the observations  in that case cannot be taken to be a  decision of  this  Court on the actual point  for  determination  now before us. We therefore hold that the High Court is right in construing the  provisions of sub-section (13) of s. 14 of  the  Indian Coinage  Act  to  mean  that references  to  values  in  any enactment,  notification, rule or order under any  enactment or  in  any contract, deed or instrument, expressed  in  old coins should be construed to be references to values expres- sed  in new coins by converting, the old values at the  rate of  16 annas, 64 pice and 192 pies to 1 00 naye  paise.   We accordingly dismiss the appeals with costs. SHAH,  J.I am unable to agree with the view expressed by  my learned brother Raghubar Dayal, J., about the interpretation of  s.  14 which was incorporated by Act 31 of 1955  in  the Coinage Act III of 1906. For  the assessment years 1956-57 and 1957-58 the  appellant was  assessed  to sales tax in respect  of  "Vanaspati"  and "oil" under the U.P. Sales Tax Act XV of 1948, as amended by the U.P. Act XXV of 1948.  By a notification issued on March 31, 1956 under s. 3-A(2) the rate of tax an "Vanaspati"  was fixed  at  one anna per rupee, at the point of sale  by  the manufacturer.  Validity of that imposition was challenged by the  appellant,  but  the question is not  now  open  to  be canvassed  in  view of the decision of this Court in  J.  K. Jute Mills Co. Ltd. v. State of Uttar Pradesh(1).  The  only question which survives is about the (1)  [1962] 2 S.C.R. 1                             327 quantum   of   liability   of  the   appellant   under   the notification, in terms of the new decimal coinage introduced by  Act  31  of 1955.  The appellant has  claimed  that  its

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 12  

liability  computed in the light of s. 14(3) of the  Coinage Act  would be Rs. 34,385, less than the amount  demanded  by the  Taxing Authorities.  Section 13 of the Coinage Act  III of  1906  (which was substituted by Act 28 of 1947  for  the original  sections  13 and 14) in so far as it  is  material provides:               "(1)  The coins issued under the authority  of               section  6 shall be a legal tender in  payment               or on account,-               (a)   in  the  case of a rupee coin,  for  any               sum;               (b)   in  the case of a half-rupee  coin,  for               any sum               not exceeding ten rupees;               (c)   in  the case of any other coin, for  any               sum not exceeding one rupee:               (2)  *  *  *"               Section  14  which  added by Act  31  of  1955               provides:               "(1)  The  rupee  shall be  divided  into  one               hundred  units and the new  coin  representing               such  unit  may be designated by  the  Central               Government,  by notification in  the  Official               Gazette, under such name as it thinks fit, and               the  rupee, halfrupee and quarter-rupee  shall               be  respectively  equivalent to  one  hundred,               fifty  and  twenty-five  such  new  coins  and               shall,  subject  to  the  provisions  of  sub-               section (1) and sub-section (2) of section  13               and  to  the extent specified the-rein,  be  a               legal   tender  in  payment  or   on   account               accordingly.               (2)   All coins issued under the authority  of               the  Act in any denominations of  annas,  pice               and  pies  shall  to the  "tent  specified  in               section 13, be               328               a legal tender in payment or on account at the               rate of sixteen annas, sixty-four pice or  one               hundred and ninety-two pies to one hundred new               coins  referred  to in  sub-section  (1)  cal-               culated in respect of any such single coin  or               number of such coins, tendered at one transac-               tion,  to the nearest new coin, or  where  the               new  coin  above and the new  coin  below  are               equally near to the new coin below.               (3)   All  references in any enactment  or  in               any  notification,  rule or  order  under  any               enactment  or in any contract, deed  or  other               instrument  to any value expressed  in  annas,               pice and pies shall be construed as references               to that value expressed in new coins  referred               to in sub-section (1) converted thereto at the               rate specified in sub-section (2)." Sub-section (1) of s. 14 declares a rupee as equivalent to a hundred  new coins, and a half-rupee and a  quarterrupee  as equivalent  to  fifty new coins and  twenty-five  new  coins respectively.   These  new coins are made  legal  tender  in payment  or on account as provided in s. 13 of the Act.   By sub-section (2) all coins issued under the authority of  the Act  in  denominations of annas, pice and pies  also  remain legal  tender  in  payment or oil account  at  the  rate  of sixteen annas, sixty-four pice or one hundred and  ninetytwo pies  to one hundred new coins.  An anna is  therefore  made legal tender for 2514, a pice for 25116, and a pie for 25148

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 12  

new coins.  But this involves adjustment of fractions of new coins, and the Legislature has, instead of issuing fractions of  new coins a step which would have involved the issue  of coins  of  insignificant value--provided  for  rounding  off fractions  of  new coins, when to discharge  an  ascertained liability in a single transaction payment is made in  annas, pice or pies.  This table of equivalence prescribed by  sub- section  (2), however, applies only when payment is made  in old coins to discharge liability under a single transaction. Sub-section  (3) is an interpretation clause.   Where  under any law, contract or instrument, reference is made               329 to annas, pice or pies, liability arising in any transaction governed  thereby  will be construed in terms of  new  coins converted  at the rate specified in sub-section  (2).   This conversion involves two steps: substitution of the value  in terms of new coins by the application of rates mentioned  in sub-section  (2),  and rounding off the fractions,  if  any, resulting from such application.  When there is in any  law, ,contract  or instrument a reference to any value  expressed in  terms  of annas, pice or pies, by  sub-section  (3)  the reference  has to be construed as if the value is  expressed in terms of new coins at the rates specified in  sub-section (2). Liability to pay an amount in one transaction ascertained in terms of new coins may be discharged under subsection (2) by tender  of  annas, pice or pies according to  the  table  of equivalence  and the fractions may be rounded off.   But  in the  ascertainment  of liability under a  transaction,  sub- section  (2)  does not come into play.   Liability  under  a transaction  is ascertained under the general law, and  sub- section  (3) comes in aid as an interpretation  clause  when the  value is expressed in some law, contract or  instrument governing  a transaction not in terms of new coins,  but  of annas,  pice or pies.  Sub-section (3) does not attract  the rule of rounding off at the stage of discharge of  liability under  any  concrete transaction: it merely  prescribes  the value  which shall be deemed to be substituted in  any  law, contract  or instrument when the value is specified  therein in  terms  of  annas, pice or pies.  It  is  attracted  when liability  declared  in  annas,  pice  or  pies  is  to   be ascertained  in terms of new coins whereas  sub-section  (2) operates in considering whether a certain payment in  annas, pice or pices discharges an ascertained liability. There is nothing in the statute which supports the view that what  the Legislature intended by enacting  sub-section  (3) was computation of liability in terms of old coins and  then conversion and rounding off of the total liability in  terms of new coins.  To interpret clause (3) in that manner  would be  to  denude it of its true purpose as  an  interpretation clause,  and  to  render it practically  nugatory.   If  sub section (3) is merely intended to serve as determinative of               330 total  liability under a transaction, the purpose  is  amply served by sub-section (2). The view I have expressed also finds support from a judgment of  this Court in M/s.  Mangalore Ganesh Beedi Works v.  The State of Mysore and another(1).  In that case, sales-tax was imposed  under  the Mysore Sales Tax Act 6 of  1948  at  the -rate of three pies for every rupee of the turnover’ On  the application of s. 14 of the Indian Coinage (Amendment)  Act, 1955, sales-tax leviable under the Mysore Sales Tax Act  was computed  at  the  rate of two new coins per  rupee  of  the turnover,  and  a demand for RS. 1,16,72-44 was  made.   The tax-payer  contended  that he was liable to pay  Rs.  91,690

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 12  

only being the amount of total tax liability computed at the rate  of  3 pies per rupee of turnover.  He  challenged  the additional demand by a petition in the High Court of  Mysore on  the plea that the Act which altered the incidence was  a taxing  measure  and could only be enacted  after  complying with  the  provisions  of  Arts. 198, 199  and  207  of  the Constitution  relating  to  money  bills,  and  the   Mysore Existing  Laws (Construction of Reference to Values) Act  12 of 1957 which gave effect to the amendment made by Act 31 of 1955.  dealt  with "coinage and legal tender", and  was  not within the competence of the State Legislature.  In  dealing with these contentions, this Court summarised the scheme  of clauses (1),(2)     and (3) of s. 14 and observed:               "Sub-section (3) provides that all  references               under  any  enactment to annas, pice  or  pies               have  to be construed as reference to the  new               coin referred to in sub-section (1).  In other               words,  wherever the old legal  tender,  i.e.,               annas,  pice  and  pies  is  mentioned  in  an               enactment  it  is to be  converted  into  naya               Paisas   and  the  naya  Paisas  are   to   be               substituted  in place of the old legal  tender               calculated  in  the manner laid down  in  sub-               section (2)." The Court rejected the claim of the tax-payer that he was liable to pay tax computed at the rate of three pies per (1)  [1963] Supp. 1 S.C.R 275. 331 rupee only.  If sub-section (3) of s. 14 was susceptible  of the interpretation submitted on behalf of the State of Uttar Pradesh,  it  was  wholly  unnecessary  to  enter  upon  the question of the vires of the provisions, because between the computation  of  sales-tax  on  a  total  turnover  of   Rs. 58,36,422.25 nPs at 2 naye Paise, and at the rate of 3  pies per rupee in the manner suggested, there would have resulted no  discrepancy at all, and the contention of the  tax-payer that  he  was liable to pay Rs. 91,690 had to  be  accepted. But this Court upheld the claim of the Sales Tax  Department that the computation had to be made by substituting two naye Paise  in  the section of the Mysore Sales  Tax  Act,  which imposed  liability for payment of tax, and the total  demand for  tax  computed on the footing of that  substitution  was properly made.  If the interpretation which is now suggested on  behalf  of  the  State  be  accepted,  the  assessee  in Mangalore Ganesh Beddi Works’ Case(1) was bound to  succeed. In the present case by the notification issued on March  31, 1956,  the  liability  for payment of sales-tax  was  to  be computed at the rate of one anna in a rupee of the turnover. By virtue of s. 14(3) of the Indian Coinage Act, for an anna mentioned   in  the  notification  61  now  coins  will   be substituted.   But as the substituted rate involved a  frac- tion by the process of rounding off at the rate specified in sub-section  (2), the fraction of new coins will be  omitted and the nearest new coins i.e., six new coins will be deemed to  be substituted in the statute.  Liability for  sales-tax after  the amendment of the Coinage Act will, therefore,  be at the rate of 6 new coins for every rupee of sale price.                        ORDER BY COURT In  view  of the judgment of the majority,  the  appeals  we dismissed with costs. (1) [1963] SUPP.  1 S.C.R. 275. 332