# ASHOK SERVICE CENTRE & ANOTHER ETC v. STATE OF ORISSA

- **Citation:** [1983] 2 S.C.R. 363
- **Court:** Supreme Court of India
- **Decided:** 1983-02-18
- **Bench:** A.P. Sen, Venkataramiah, R.B. Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ashok-service-centre-another-etc-v-state-of-orissa-8825
- **Pages:** 21

## Headnote

Orissa Sa/eJ Tax Act, 1947-Section 8-0ri1sa Additional Sa/eJ Tax Act,
1975 as amended in 1979-Section 3(2)-Levy of tax ander tht amending Act of
. C
1979 subject to section 8 of the 1947 Act-Section 3(2) ·provided that provisions of
1947 Act apply mutatis mutandis in relation to additional tax as if they apply in
relation to the tax payable under the Principal Act-The two Acts, if should be
read together.
Interpretation-mutatis mutandis-Meaning of-Words in an Act are clearlf open.to court to go in search of the intention of the Legislature-Later of two
D
Acts provides that the two are to be read together·-Whether every part of each
Act must be con3trued as if the two Acts had been one.
Words and phrases: Muta/is mutandi~Meaning of.
The proviso to section 8 of the Orissa Sales Tax Act, 1947 (Principal Act)
~ lays dowil that' the same goods cannot be taxed uader it" at more than one point
in the same series of sales or purchases by successive dealers. In 1975 the State
Legislature enacted the Oris~a Additional Salos Tax Act (the Act) levying additional sales tax on certain· classes of dealers. In 1979 the State Legislature
amended the Act by the Orissa Additional Sales Tax (Amendment) Act, 1979 by
which sections 2 and 3 of the Act were substituted by new sub·sections 2 and 3.
After the· amendment section 3 of the Act provided that every dealer shall, in
addition to the sales tax payable by him for a year under the said Act be liable
to pay additional ·ta1 at such rate not exceeding one per cent of his gross turnover (excluding-the gross turnover which relates to sale and purchase of declared
goods) for that year as may be notified from time to time by the State Govern ..
meat. . By a notification the State Government notified the rates of additional
tax payable under section 3 of the Act as amended in 1979 at one half per cent
of the annual gross turnover. Sub·section (2) of section 3 1nade it clear that the
provisions of the Principal Act would fnutatis mutandis apply ia relation to the
additional tax as if they apply in relation to the tax payable under the Principal
Act.
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Construing section 3 of the Act arter its amendment, the State Government
took' the view tbat the new levy was in the natrire of a multi point tax and that
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every dealer was liable to pay additional tax on his annual gross h,1rnoy(lr irre·spective of its taxobility under the Principal Act,
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[1983] 2 S.C.R,
In a number of writ petitions filed before the High Court by dealers it was
contended that section 8 of the Principal Act which prohibited the levy of tax at
more than one point in the same series of sales or purchases by successive
dealers was applicable to the additional tax leviable under the Act as amended
in 1979.
Without referring to the effect of the provisions of section 3 of the Act the
High Court held that since the Principal Ac:t and the Act as amended in 1979
had been passed by a competent legislature providing for a different base and
for a different scheme it was not open to the assessee to rely upon any of the
provisions of the Principal Act relating to incidence and levy of tax.
In appeal to thls Court it was contended on behalf of tho appellants that
wherever there was no express provision to the contrary in the Act the provisions
of the Principal Act, including those relating to the incidence and levy of tax
should apply to tho additional tax also.
The Department on the other hand contended that section 3(2) of tho Act
was intended only to make those provisi1ons of the Principal Act relating to
assessment and collection of tax applicable to proceedings under the Act and no
part of section 3B to section 8 of the Principal Act would be applicable to tho
levy of additional tax.
Allowing tho appeals,
HELD : If the contention of tho Department that only the machinery
provisions of the Principal Act become.applicable to the proceedings under tho
Act is accepted it would lead to many anomalies

## Text

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363
A
ASHOK SERVICE CENTRE & ANOTHER ETC.
v.
STATE OF ORISSA
February 18, 1983
[A.P. SEN, E.S, VENKATARAMIAH AND R.B. MISRA, JJ.]
Orissa Sa/eJ Tax Act, 1947-Section 8-0ri1sa Additional Sa/eJ Tax Act,
1975 as amended in 1979-Section 3(2)-Levy of tax ander tht amending Act of
. C
1979 subject to section 8 of the 1947 Act-Section 3(2) ·provided that provisions of
1947 Act apply mutatis mutandis in relation to additional tax as if they apply in
relation to the tax payable under the Principal Act-The two Acts, if should be
read together.
Interpretation-mutatis mutandis-Meaning of-Words in an Act are clearlf open.to court to go in search of the intention of the Legislature-Later of two
D
Acts provides that the two are to be read together·-Whether every part of each
Act must be con3trued as if the two Acts had been one.
Words and phrases: Muta/is mutandi~Meaning of.
The proviso to section 8 of the Orissa Sales Tax Act, 1947 (Principal Act)
~ lays dowil that' the same goods cannot be taxed uader it" at more than one point
in the same series of sales or purchases by successive dealers. In 1975 the State
Legislature enacted the Oris~a Additional Salos Tax Act (the Act) levying additional sales tax on certain· classes of dealers. In 1979 the State Legislature
amended the Act by the Orissa Additional Sales Tax (Amendment) Act, 1979 by
which sections 2 and 3 of the Act were substituted by new sub·sections 2 and 3.
After the· amendment section 3 of the Act provided that every dealer shall, in
addition to the sales tax payable by him for a year under the said Act be liable
to pay additional ·ta1 at such rate not exceeding one per cent of his gross turnover (excluding-the gross turnover which relates to sale and purchase of declared
goods) for that year as may be notified from time to time by the State Govern ..
meat. . By a notification the State Government notified the rates of additional
tax payable under section 3 of the Act as amended in 1979 at one half per cent
of the annual gross turnover. Sub·section (2) of section 3 1nade it clear that the
provisions of the Principal Act would fnutatis mutandis apply ia relation to the
additional tax as if they apply in relation to the tax payable under the Principal
Act.
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Construing section 3 of the Act arter its amendment, the State Government
took' the view tbat the new levy was in the natrire of a multi point tax and that
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every dealer was liable to pay additional tax on his annual gross h,1rnoy(lr irre·spective of its taxobility under the Principal Act,
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SUPREME COUR1' REPORTS
[1983] 2 S.C.R,
In a number of writ petitions filed before the High Court by dealers it was
contended that section 8 of the Principal Act which prohibited the levy of tax at
more than one point in the same series of sales or purchases by successive
dealers was applicable to the additional tax leviable under the Act as amended
in 1979.
Without referring to the effect of the provisions of section 3 of the Act the
High Court held that since the Principal Ac:t and the Act as amended in 1979
had been passed by a competent legislature providing for a different base and
for a different scheme it was not open to the assessee to rely upon any of the
provisions of the Principal Act relating to incidence and levy of tax.
In appeal to thls Court it was contended on behalf of tho appellants that
wherever there was no express provision to the contrary in the Act the provisions
of the Principal Act, including those relating to the incidence and levy of tax
should apply to tho additional tax also.
The Department on the other hand contended that section 3(2) of tho Act
was intended only to make those provisi1ons of the Principal Act relating to
assessment and collection of tax applicable to proceedings under the Act and no
part of section 3B to section 8 of the Principal Act would be applicable to tho
levy of additional tax.
Allowing tho appeals,
HELD : If the contention of tho Department that only the machinery
provisions of the Principal Act become.applicable to the proceedings under tho
Act is accepted it would lead to many anomalies. (377 F]
Section 8 of the Principal Act which begins with a non-obstante clause is
given an over-riding effect over the rest of the provisions of the Principal Act.
Levy of tax at a single prescribed point and prohibition against levy of tax at
more than one point is an _important characteristic of the scheme of the Principal
Act. [370 C·D]
The Act was virtually in tho nature of an amendment of tho Principal Act,
The additional sales tax payable by doalen1 specified in section 2(a), (b) and (c)
as originally enacted was in the nature of an enhancement oftheir liability to
pay tax under the Principal Act by specified percentages but they were prohibited
from passing on the incidence of additional tax to the purchasers. (372 E-F]
Although the provisions of the Act could have been incorporated in the
Principal Act itself, by the, introduction of sections 2 and 3 in the Principal Act1
the State Legislature passed a separate Act. But it was made clear by section
3(2) of the Act that the provisions of the Principal Act would mutat/1 mutandis
apply in relation to the additional tax as they apply in relation to the tax payable
. under the Principal ~ct. The two Acts, i.e., the· Principal Act and tho Act as
originally enacted had to be read together in order to make the provisions contained in the Act effective. This position c:ontinued upto the coming into force
of the Amending Act on April I, 1979 by which sections 2 and 3 of tho Act were
eubslituted by new sections 2 and 3. [373 G-H, 374 A-CJ
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ASRO!r SERVICE v. OR!SSA
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With the substitution of section 3(2) in 1979 the prohibition of passing of
the additi.onal tax, which existed formerly was removed. Secondly the addi~
tional tax, instead of being an enhancement of the tax payable by a dealer by a
certain percentage, became a percentage of the annual turn over of a dealer. Both
the statement of objects and reasons and the Amending Act were silent on the
question whether the additional tax payable after the amendment was a multi
point levy or a single point levy:as also on the classes of dealers liable to pay
additional tax. [375 F-H]
2. The view of the High Court that. th~ two Acts were independent of each.
other was not correct. It is necessary to read and to construe the Principal Act
and the Act together as if the two we.re one. and while doing so to give effect to
the provisions of the Act. which is a later on~ in preference to the provisions of
the Principal Act wherever the Act has manifested an intention to modify the
Principal Act. [377 B-C]
The definition of mutatis mutant/is given in legal dictionaries is ''with the
necessary changes in points of detail meaning that matters or things are generally
the same~ but to be altered when necessary" as to names, ·offices and the like.
[378 E-FJ
Extension of. an earlier Act mulatis mutandis to a later Act brings in the
idea of adaptation,'. but so far only as it is necessary for the purpose, making a
change without altering the essential nature of the thing changed, subject to
express provisions made in the later Act.
[378 H, 379 A]
In the instant case section 3(2) of the Act shows that the State Legislature
intended not to depart substantially from the Principal Act except with regard
to matters in respect of which express provision had been made in the Act.
Though the Act had the usual features of a statute, it could not be considered
as an independent statute but must be read together with ttae Principal Act to
be effective. [379 A-CJ
Earl Jowitt's The Dictionary of English Law (1959) ; Black's Law Dictionary (revised 4th edn. (1968) Bouvier's Law Dictionary (3rd Revision) Vol. II,
referred to.
The additional tax levied under the Act could be passed on to consumer
after the amendment. The object of the amendment made in 1979 as set out in
the statement of objects and reasons was to rationalise tb.e scheme of additional
sales·tax and to introduce flexibility in the implementation of the Act. If the
object of the amendment was to make the additional tax a multi·point levy,
nothing was easier than using the appropriate words in the Act by excluding the
application of section ·s of the Principal Act expre!:isly in section 3(2) of the Act.
In the absen~ of any such words in the Act, by reason of section 3(2) of the
Act section 8 of the Principal Act must be
con~trued as being applicable to the
levy of an additional tax also. The gross turn.over referred to in section 3(1)
should, therefore, be understood as that part of the gross turnover which is
taxable under the Principal Act. [380 A-G]
If section 3(1) is read as "every dealer (who is liable to pay tax under the
principal Act) shall in addition to the tax payable by him for a year under lb•
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iUPl.BlllB COURT REPORTS
( 1983) 2 s.c.R.
said Act, be liable _to pay addition.al tax at such rate not exceeding one per cent
of his gross turnover (which is taxable under the Principal Act) for that year as
may be notified from time to time by the State Govt ........ there would not be
any anomaly. On the other band it would effectuate the intention of the
legislature. (381 A·B)
It is true that if the words used in a statute are clear it is not open to the
Court to go in search of the intention of the legislature and to arrive at a
me~ning dilferent from what the words of the statute convey. When the Act is
read as a whole it becomes inevita.ble that it has to be read together with the
Pfincipal Act. It is a well settled principle of construction that where the later of
the two Acts provides that the two are to be read together every part of each
Act must be construed as if the t·wo Acts had been one. unless there is some
manifest discrepancy making it necessary to bold that the later Act has. to some
extent, modified the provisions of the earlier Act. When section 3(1) of the Act
is read in the light of sub-section 2 thereof, section 8 of the Principal Act which
prescribes a single point levy becomes immediately attracted. [381 C·F]
The argument that since section 8 of the Principal Act opens with the words
"notwithstanding anything to the contrary in 'this Act" the operation of that
section should be confined to the tax payable undef the Principal Act and could
not be extended to the additional tax payable under the Act has bo force. When
the Principal Act was enacted, sec:tion 8 could apply only to the liability under
the Princip81 Act, but by reason of section 3(2) of the Act, section 8 has been
made applicable to the levy, assessment and collection of additional tax under
the Act. If this argument is accepteQ. many provisions of the Principal Act
wb_ich are necessary for making the levy under the Act effective would become·
inapplicable, as for example section 13 relating to the machinery for recovery of
tax and penalty. [381 F-H, 382 A)
The second proviso to section 3(1) of the Act does not in any way curtail
the effect of section 3(2) of the Ac:t which forms an integral part of the charging
section. Consequently any exemption granted under sections 6 and 7 ot the
Principal Act would also be applicable in the case of levy of additionai tax under
the Act. (382 C·D]
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CIVIL APEELCATE JURISDICTION: Civil Appeal Nos. !408-16.. ...•
2650-67, 2498-2524, 2640-47, 1874-79, 2127-38 and 3255 of 1982.
4
Appeals by special leave from the Judgments and Orders dated
the 4th and 5th February, 1982 of the Orissa High Court in
Original Jurisdiction Case Nos. 1391of1979, 218, 320/1981, 2060,
2051/80, 35/81, 525/80, 1567 and 1569/80, 1196, 319, 1194, 1162, 1658,
337, 2044, 1905, 1168, 1766, 1165, 1166, 336, 1659, 1662, 1884, 1161,
and 1159of1981, 694, 1031, 945, 944, 400, 617, 375, 697, 616/81,
2015 and 2016/80, 118, 1935, 2803, 1646, 1647,2831,2167, 59, 1637,
602, 603, 695, 1224, 1195, 1230, 60, 1360, 1359, 1393, 1394, 604,
~152 Of 1981, 846/80, 57/81, 1464/80, 595, 797, 1538, 1537 of 1981,
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ASHOK SERVICE •• ORISSA (Venkataramiah, J.)
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1584/80, 676, 677 of 1981, 1008/80, 1009/80, 2379/ 81, 1915/80,
235/81, 236/81, 1837/80, 1839/80, 1533/79, 1649/81 and 535 of 198!.
A.B. [Divan, A.K. Sen, Shankar Ghose,
P.R. Mridul and
S.T.
Desai,
Talat
Ansari,
Ashok Sagar, · Sandeep Thakore,
Ms.
Rainu Walia,
D.N. Mishra,
D.P. Mukherjee,
J.R. Das
M.C. Dhingra, Laxmi Kant Pandey, B.R. Agarwala, Miss, Vijaya-
/akshmi Menon, U.P. Singh, B.B. Singh, B.S. Chauhan, Anil Kumar
Sharma, Praveen Kumar,
A.T. Patra, Vineet Kumar, A.K. Jha, ·
M.P. Jha, R.S. Sodhi, Hardev Singh, A. Minocha, Mrs. lndu Goswamy
S.K. Sinha, Vinoo Bhagat, P.N. Mishra, K.K. Jain and Pramod Dayal,
for the Appearing Appellants.
K. Parasaran, Sol. Genl. C. Rath, Advocate General for the
State of Orissa, S. Rangarajan and M.C. Bhandari, F.S. Nariman,
CSS Rao, Pramod Swarup, R.B. Mahto, U.S. Prasad, A.K. Panda and
R,K. Mehta for the appearing Respondents.
the Judgment of the Court was delivered by
VBNKATARAMIAH, J. The usual complaint against some of the
modern fiscal statutes is that they are unduly Jong and therefore
complex. But here we have an Orissa Act which is very short but
clarity is not certainly its virtue.
The only point for determination in these appeals by special
leave is whether the levy of additional tax under the Orissa Additio·
nal Sales Tax Act, 1975 (Orissa Act 24 of 1975) (hereinafter referred
to as 'the Act') as amended by the Orissa Additional Sales Tax
(Amendment) Act, 1979 (hereinafter referred to as 'the Amending
Act') is a single point levy or a multi point levy.
In order to understand the contentions of the parties it is
necessary to give briefly the legislative history of the sales tax law
'°f the State of Orissa and to refer to some of its salient points.
The Orissa Sales Tax Act, 1947 (Orissa Act XIV of 1947) (here·
inafter referred to as 'the Principal Act') was enacted and brought
into force in the year 1947. It bas continued to remain in force even
now, although a number of changes have been introduced into it by
successive legislative amendments. It is a law intended for levying tax~s
on the sale or purchase of goods other than. newspap5rs, ·subject to
.the provisions of Entry 9f-,A., pf List I of the Seventh Schedule to th~
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Constitution. Section 3•B,4, 4·A, 5, 6, 7 and 8 of the Principal Act together lay down the extent of the charge Section 4 (I) of the Principai
Act reads:
"4 (l) Subject to the provisions of sections 3-B, 5, 6,
7 and 8 and with effect from such date as the State Government may, by notification, in the Gazette, appoint, being
not earlier than 30 days after the date of the said notification, every dealer whose gross turnover during the year
immediately preceding the date of commencement of the
Orissa Sales Tax
(Amendment) Act, 1981
exceeding
Rs. 50,000 shall be liable to pay tax under this Act on
sales and purchases effected after the date so notified."
This provision imposes the liability to pay tax in accordance
with the provisions of the Principal Act on every dealer whose gross
turnover (during a fiscal year exceeds Rs. 50,000 According to
section 2(dd) of the Principal Act 'gross turnover' means the total of
'turnover of sales' and 'turnover of purchases', 'Turnover of sales' is
defined in section 2 (i) of the Principal Act a1 the aggregate of the
amounts of sale prices and tax, if any, received and receivable by a
dealer in respect of sale or supply of goods other than those declar·
ed under section 3-B of the Principal Act and 'turnover of purchases'
is defined in section 2 (j) of the Principal Act as the aggregate of the
amounts of purchase prices paid and payable by a dealer in respect
of the purchase or supply of goods or classes of goods declared
under section 3-B of the Principal Act.
Sub-sections (2) to (5) of
section 4 of the Principal Act deal with the poini of time at which
such dealer would become liable to pay tax, the period during which
he would remain liable to pay the tax and the time at which he
would cease to be liable to pay tax after his annual gross turnover
has failed to exceed Rs. 50,000.
Unless he is a casual dealer as
defined in section 2 (bb) of the Principal Act who is liable to pay
tax irrespective of his gro<s turnover a; provided in section 4-A of
the Principal Act, every dealer would become liable to pay tax under
the Principal Act only when his groH turnover exceeds Rs. 50,00o,
otherwise not. The· expression 'dealer' is defined in section 2 (c) of
the Principal Act as a person who carries on the business of purchasing, selling, supplying or distributing goods, directly or otherwise,
whether for cash, or for deferred payment or for commission,
remuneration or other valuable consideration and includes others
Jpentioned in that clause. It may be noted that this definition does
μot specify the extel\t of the ·gross turnover of such persou as a
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ASHOK SERVICE v. OR!SSA ( Venkataramiah, J.)
369
qualification for being treated as a dealer. Every person who carries
on the activities specified in section 2 (c) of the Principal Act is a
dealer for purposes of the Principal Act. Section 2(f) of the Principal
Aci defines the expression 'registered dealer' as a dealer registered
under it. Section 9 of the Principal Act imposes the obligation on
every dealer who is liable to pay t:rx under section 4 of that Act to
register himself and to obtain a registration certificate. On such
registration he becomes a registered dealer. Section 9-B (!) (a) of the
Principal Act lays down that no person who is not a registered
dealer shall collect in respect of any sale by him any amount by way
of tax under the Principal Act and a registered dealer can collect
such tax only in accordance with the said Act and Rules made
thereunder. Section.9-A of the Principal Act, however, provides for
voluntary registration of a dealer . whose annual gross turnover
exceeds Rs. I 0,000 even though he is not liable to pay tax under
section 4 of that Act and every such dealer on such registration is
entitled to collect tax under that Act and to pay it to Government
as long as such registration remains in force. There are corresponding provisions made -in section 9·C of the Principal Act for provisional registration of certain other kinds of dealers. Section I 0 of
the Principal Act provides for the publication of the list of registered
dealers.
Any other dealer cannot collect tax from bis customers.
There are other provisions in the Principal Act providing for the
machinery for assessment and recovery of the tax due under it.
Before proceeding further it is necessary to quote section 8 of !he
Principal Act. It reads:
"8. Power of the State Government to
prescribe
points at which goods may be taxed or exempted.
Notwithstanding anything to the contrary. in this Act,
the State Government may prescribe the points in the
series of sales or,purchases by successive dealers at which
any goods or classes or descriptions of goods may be taxed
or exempted from taxation and in doing so may direct that
sales to or purchases by a person other than a registered
dealer shall be exempted from taxation :
Provided that the same goods shall not be taxed at
more than one point in the same series of sales or purchases by successive dealers.
Explanation-Where in a series of sales, tax is prescribed to Qe levied at ti!ll first point, su~h point, in respect of
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[1983] 2 S.C.R,
goods despatched from outside the State of Orissa shall
mean and shall always be deemed to have meant the first
of such sales effected by a dealer liable under the Act after
the goods are actually taken delivery of by him inside the
State of Orissa."
The proviso to section 8 of the Principal Act which is of
considerable significance in these cases clearly lays down that the
same goods cannot be taxed under the Principal Act at more than
one point in the same series of sales (or purchases) by successive
dealers. Section 8 of the Principal Act which begins with a nonobstante clause is given·. an over-riding effect over the rest of the
provisions of the Principal Act and the proviso found in it also
naturally has a similar over-riding effect. Levy of tax at a single
prescribed point and prohibition against levy of tax at more than
one point is an important characteristic of the scheme of the Principal Acl ·and such prescription was introduced deliberately by the
State Legislature to prevent hardship to consumers which would be
caused by .the gradual increase of prices as the goods pass from
dealer to dealer before they reach the consumer whicfi would be the
natural result of a multi-poimt levy of sales tax and also to make
collection of sales tax more convenient. Even though the language of
section 8 of the Principal Act by itself was sufficient to prevent a
multi-point levy and to prescribe a single point levy in order to
emphasise the principle of single point levy of tax, section 4 (!) of.
the Principal Act was expressly made subject to secti0n 8.
When such was the position, with a view to augmenting the
resources of the State Government, the Orissa Legislature enac_ted
the Act in the year 1975 levying additional sales tax on certain
classes of dealers. The Act as it was originally passed read thus :
"OR!SSA ACT 24 OF 1975
THE ORISSA ADDITIONAL SALES TAX ACT, 1975
AN ACT TO PROVIDE FOR LEVY OF ADDITIONAL
TAX ON SALE OR PURCHASE
OF GOODS IN
ORISSA
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Be it enacted by the Legislature of the State of Orissa
in the Twenty-Sixth Ye~r of tp~ Republic of India! a~
follows ;
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ASHOK SERVICE v. ORISSA (Venkataramiah, J.)
311
I. (I) This Act may be called the Orissa Additional
Sales Tax Act. 1975.
(2) It shall extend to the whole of the State of Orissa.
(3) It shall be deemed to have come into force on the
1st day of April, 1975.
2. (I) The tax payable by a dealer for a year under
the Orissa Sales Tax Act, 1947 (hereinafter referred to as
the said Act) shall be increased by an additional tax at the
rate'of -·
(a) two percent of the tax, if his gross turnover for
that year does not exceed one lakh of rupees;
(b) three percent of the tax, if his gross turnover for
that year exceeds one lakh of rupees but does not
exceed five lakhs of rupees;
(c) five percent of the tax, if his gross turnover for
that year exceeds five lakhs of rupees -
Provided that where in respect of declared goods the
tax payable by such dealer under the said Act togethedwith
the additional tax . payable under this sub·section exceeds
the maximum -percentage of the sale or purchase price
thereof specified, from time to time, under clause (a) of
section 15 of the Central Sales Tax Act, 1956, the rate of
additional tax in respect of such goods shall be reduced to
such an extent that the tax and the additional tax together
shall not exceed such maximum percentage of the sale or
purchase price of such goods.
Explanation-"Declared goods" shall have reference
to declared goods as defined in the Central Sales Tax Act,
1956.
(2) The ·provisions of the said Act shall, mutatismutandis apply in relation to the said additional tax as they
apply in relation to the tax payable under the said Act.
(3) Notwithstanding anything contained in the said
Act, no dealer referred to in sub-section (I) shall be entitled
to collect the additional tax payable under this Act,
"
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3. (I) Any dealer who collects the additional tax payable under this Act, in contravention of the provisions of
sub-section (3) of section 2 shall be punishable with fine
which may extend to one thousand rupees.
(2) No Court inferior to that of a Judicial Magistrate
of the first class shall try an offence under this Act.
4. (I) The State Government may make rules for
carrying out the purposes of this Act.
(2) All rules made under this Act shall, as soon as may
be after they are made, be laid before· the State Legislature
for a total period of fourteen days which may be comprised
in one session or in two or more successive sessions and if
during the said period the State Legislature makes modifications, if any, therein, the rules shall thereafter have effect
only in such modified form; so, however, that such modifications shall be without prejudice to the validity of anything
previously done under the rules."
A reading of the Act . shows that it was virtually in the nature
of an amendment of the Principal Act. It, however, followed the
pattern of the Tamil Nadu Additional Sales Tax Act, 1970, the
validity of which arose. for consideration in S. Kodar v. State of
Kera/a(').
The additional sale:s tax payable by the dealers specified
in clauses (a), (b) and (c) of section 2 of the Act as it was originally
enacted was in the nature of an enhancement of their liability to
pay tax under the Prindpal A:~t by the specified percentages but they
were prohibited from passing on· the incidence of additional tax to
the purchasers. The Statement of Objects and Reasons attached to
the Bill which was latter on enacted as the Act read thus :
"STATEMENT OF OBJECTS AND REASONS
To mobilise additional resources for the Plan, it has
been proposed to impose an additional sale< tax in addition
to the sales tax payable by dealers under the general sales
tax law of the State. This additional sales tax may be said to
be in the nature of surcharge on the State sales tax payable
by dealers.
(I) [1975] l S.C.R. 121. ·
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ASHOK SERVICE v. ORISSA (Venkataramiah, J.)
373
2. The proposed legislative measure contains a provision that the incidence of the tax cannot be passed on to
consumers. Perhaps, a view may be taken that the proposed additional tax would be added to the price of goods sold
and thereby jack up prices. But as this additional sales tax
would be on a graded scale and a specific provision is
proposed to be made in the Act debarring dealers to pass
on the incidence to consumer, it will be difficult for
dealers to pass on the incidence of this tax to consumers. It may not be possible to increase the price of
goods by an amount equivalent to the amount of additional
sales tax as there is statutory price control in respect of
certain goods and where there is no statutory price control,
there is keen competition between dealers for sale of goods.
Moreover, the rate of the additional sales tax on big
dealers will be more than that in the case of small dealers.
To meet the competition from the small dealers, the big
dealers cannot increase the price of goods so as to recoup
themselves, of the amount of additional sales tax paid by
them. Moreover, if dealers increase the price of goods so as
to recoup themselves, they will be liable to pay more sales
tax under the general sales tax law of the State and their
turnover will also increase as a result of which the rate of
additional sales tax may be more, Besides, if they increase
the price exceeding the amount of additional sales, their
profit will
increase as a result of which they will
be liable
to pay more
income
tax. It may
not,
therefore, be a pragmatic step to pass on the incidence of
this new tax to consumers.
3. The Bill seeks to achieve the above objective."
The contents of the above Statement of Objects and Reasons
show the concern of the mover of the Bill regarding the likely increase in the burden on the consumers by reason of the probable
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escalation in the prices of goods as a result of the new levy.
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The provisions of the Act set out above could have very well
been incorporated in the Principal Act itself by the introduction of
sections 2 and 3 set out above in the Principal Act. But the State
Legislature following the pattern of the· Tamil Nadu Act referred to
abcYc p~sscJ a separate .Act. It was, however, made clear by section
2 (2) thereof that the provisions of the Principal Act would mutatis
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mutandis apply in relation to the additional tax as they apply in
relation to the tax payable under the Principal Act. The additional
tax thus levied being only an enhancement of the tax payable under
the Principal Act by a specified percentage, it did not affect the
general scheme of the Principal Act including the principle of single
point levy contained in section 8 of the Principal Act. The two Acts
i.e. the Principal Act and the Act as it was originally enacted had to
be read together in order to make the provisions contained in the
Act .effective. This position continued upto the coming into force of
the Amending Act on April I 1979 by which sections 2 and 3 of the
Act were substituted by new sections 2 and 3. After such Amendment, sections 2 and 3 of the Act read thus -
"2. In this Act, unless the context otherwise requires-
(a) "declared goods" shall have the same meaning as in
clause (c) of section 2 of the Central Sales Tax Act,
1956;
(b) words and expressions used but not defined shall have
the same meanings as are respeciively assigned to then
in the Orissa Sales Tax Act, 1947 (hereinafter referred
to as the said Act).
3. (I) Every dealer shall, in addition to the tax payable
by bim for a year under the said Act, be liable to pay
additional tax at such rate not exceeding one percent of his
gross turnover for that year, as may be notified, from time
to time, by the State Government;
Provided that no additional tax as aforesaid shall be
payable on that part of the gross turnover which relates to
sale and purchase of declared goods :
Provided further that ·the State Government may, by
notification, subject to such conditions and restriction, if
any, exempt any class of dealers or the turnover relating to
any goods or class of goods from the levy of the additional
tax and likewise withdraw any such exemption.
(2) The provisions of the said Act shall, mutatis
mutandis apply in relation to the said additional tax as they
apply in relation to the tax payable under the said Act,"
1.
ASHOK SERVICE v. ORISSA (Venkataramlah, J.)
375
Sections I and 4 of the Act however remained as before. After
the above amendment, section 2 took the form of the interpretation
clause of the Act: Clause (a) of section 2 defined the expression
'declared goods' and clause (b) provided that the words and expressions used but not defined shall have the same meanings as are
respectively assigned to them in the Principal Act. Section 3, however, altered the pattern of levy of additional sales tax from what
it was when the Act was passed in 1975. The object of the alteration
is set out in the statement of Objects and Reasons attached to the
Bill which later became the Amending Act. It read thus :
'STATEMENT OF OBJECT AND REASONS
With a view to rationalising the scheme of additional
sales tax it is proposed to amend the Orissa Additional
Sales Tax Act, 1975 to .facilitate wider application of first
point levy and introduction of flexibility in the implemen-
. ta ti on of the Act.
2. The Bill seeks to aciiieve the above obj~ctives".
Section 3 of the Act after the amendment provided that every
dealer shall, in addition to the tax payable by him for a year under
the said Act, be liable to pay additional tax at such rate not exceeding one percent of his gross turnover (excluding the gross turnover
which relates to sale and purchase of declared goods) for that year
as may be notified from time to time by the State Government. By
a notification dated March 23, 1979, the State Government notified
the. rate of additional tax payable under section 3 of the Act as
amended in 1979 at one-hii'lf percent of the annual gross turnover.
The prohibition of the passing of the additional tax which existed
formerly was removed. One significant change which was brought
about by the amendment was that the additional tax insiead of being
an enhancement of the tax payable by a dealer by a certain percentage became a percentage of the annual turnover of a dealer. Both
the Statement of Objects and Reasons and the Amending Act were
however, silent on the question whether the additional tax payable
after the amendment was a multi-point levy or single point levy.
They were also silent on the class of dealers who were liable to pay
additional tax. Controversies arose between the Department and
many of the assesssees on the construction c,f section 3 of the Act
·after its amendment. The stand of the State Government was that
every dealer was liable to pay additional tax on his annual gross
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turnover irrespective of its taxability under the Principal Act. The
State Government claims that the new levy was in the nature of a
multi point tax.
A number of writ petitions were filed before the
High Court of Orissa raising a number of contentions including
some relating Ip the constitutionality of the amended Act.
All the
petitions were dismissed by the High Court. The main judgment
was delivered in O.J. Case No. 1391 of 1979, filed by M/•. Ashok
Service Centre. Following that judgment, the other writ petitions
were dismissed. These appeals are filed against the decision of the
High Court w.ith the special leave of this Court.
In these appeals, the only contention pressed before us relates
to the applicability of section 8 of the Principal Act which prohibits
the levy of tax at more than one point in the same series of sales or
purchases by successive dealers in the State of Orissa to the additio·
nal tax leviable under the Act as amended in 1979. The High Court
negatived the said contention on the ground that since both the
Principal Act and the Act as amended in 1979 had been passed by a
competent legislature providing for a different base and for a diffe·
rent scheme and because they happened to be two independent Acts,
it was not open to the assessees to rely upon any of the provisions of
the Principal Act relating to incident and levy of tax in support of
their contention. The High Court observed in para 8 of the judgment
thus:
"8. On an analysis of Section 3 (I) of the Act it is also
clear that the legislative intention is to raise a tax in
addition to the liability under the 1947 Act. If the liability
under the 1947 Act in respect of a dealer is taken as 'X'.
Section.3 (I) of the 1975 Act creates an additional liability
which ·has to be within one percent of the gross turnover
for that year (the State Government at present has prescribed half percent which may be taken as 'Y'). 'Y' is an
additional liability and, therefore, has been nomenclatured
as additional tax. Under the 1947 Act, the dealer's liability
to sales tax is on the basis of his taxable turnover which is
determined in the manner prescribed by that Act. Under
the 1975 Act, the liability of the dealer is with reference to
his gross turnover of the year. It was competent for the
sovereign
Legislature to adopt either of the methods for
raising sales tax.
While sustaining the scheme under the
1947 Act, it could also raise an additional tax on the gross
ASROlt SERVICE v. ORISSA (Venkataramiah, J.)
377
turnover and combine the two for the purposes of computation as also recovery. In the premises, the submission of
Mr. Agarwala on this score has also no force."
The High Court was of opinion that the Act being an independent Act it could not be read subject to the provisions of the.
the Principal Act. It may, however, be noticed that there is no
reference in the judgment of the High Court to the effect of the
provisions of section 3 (2) of ~the Act which forms part of the charging section and provides that the provisions of the Principal Act
shatl mutatis mutandis apply in relation to the additional tax levied
under the Act as they apply in relation to the tax payable under the .
Principal Act. There is also no reference in th~ judgment of the High
Court to section 8 of the Principal Act.
It is urged on behalf of the appellants before us depending
upon section 3 (2) of the Act that wherever there is no express provision to the contrary in the Act, the provisions of the Principal Act
including those relating to incidence and levy of tax. should apply
to the additional tax also. On behalf of the State Government, it
is urged that section 3 (2) of the Act is intended only to make those
provisions of the Principal Act relating to the assessment and
. collection of tax applicable to the proceedings under the Act and no
part of sections 3-B, 4, 4-A, 5, 6, 7 and 8 of the Principal Act would
be applicable to the levy of additional tax.
We may straight away say that the contention of the Depart·
ment leads to some anomalies. Section 3 (I) of the Act states that
every dealer shal,I, in addition to the tax payable by him for a year
under the Principal Act liable to pay additional tax at such rate not
exceeding one percent of his gross turnover for that year as may be
notified from time to time by the State Government. If as stated in
section 2 (b) of the Act, we define the expression 'dealer' in section
3 (I) of the Act· as provided in section 3 (c) of the Principal Act,
and we do not apply the qualification of the minimum annual gross
turnover of Rs. 5U,000 stipulated in section 4 (I) of the Principal
Act, then itrespective of his annual gross turnover every person who
carries on the business of purchasing, :felling, supplying or distributing goods directly or otherwise would become liable to pay
additional tax even though he ma~ not be liable to pay any tax
under the Principal Act. If he is not registered as a dealer on
account of bis annual gross turnover being less than the prescribed
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minimum, he would not be able to collect the additional tax in view
of section 9-B of the Principal Act which says that no person other
than a registered dealer shall realise any amount by way of tax.
under the provisions of the Principal Act. That could never have
been the intention of the State Legislature. Tne 'dealer' referred to
in section 3 (l) of the Act should be understood as a 'dealer' 'who is
·liable to pay tax under the Principal Act as provided in section 4 (I)
of the Principal Act.
Next 'gross turnover' means the total of
'turnover of sales' and 'turnover of purchase'. If under section 3 (I)
of the Act, liability to pay additional tax just on the 'gross turnover'
a dealer has to pay additional tax on the aggregate of the purchases
of goods declared under section 3-B of the Principal Act and also on
the turnover of sales of other goods. To determine the gross tnr11-
-0ver it becomes necessary to read section 3-B of the Principal Act
into the Act although the said section deals with the liability of
certain class of goods to tax under the Principal Act. These anomalies show that the contention of the Department that only machinery
provisions of the Principal Act become applicable to the proceedings
nnder the Act cannot be accepted.
Section 3 (2) of the Act which makes the provisions of the
principal Act mutatis mutandis applicable to the levy of additional
tax is a part of the charging provision of the Act and it does not say
that only those provisions of the Principal Act which relate to
assessment and collection of tax will be applicable to the proceedings
under the Act. Before considering what provisions of the Principal
Act should be read as part of the Act, we have to understand the
meaning of the expression 'mutatis mutandis'. Earl Jowitt' s 'The
Dictionary of English Law (1959)' defines 'mutatis mutandis' as
'with the necessary changes in points of detail'. Black's Law
Dictionary (Revised 4th Edn. 1968) defines 'mutatis mutandis' as
'with the necessary changes in point of detail, meaning that matters
or things are generally the same, but to be altered when necessary.
as to names, offices, and the like.
Houseman v. Waterhouse, 191
App. Div.