Madras High Court
A.T.A. Nataraja Chettiar & Company And ... vs State Of Tamil Nadu on 30 September, 1980
Equivalent citations: [1982]49STC53(MAD)
JUDGMENT Ismail, C.J.
1. Tax Cases Nos. 490 and 493 of 1979 are by the same assessee, one dealing with the tax payable under the Tamil Nadu General Sales Tax Act, 1959, and the other dealing with the tax payable under the Tamil Nadu Additional Sales Tax Act, 1970. Tax Case Nos. 491 and 492 of 1979 have been preferred by a different assessee (Lakshmi Jewellery House, Karaikudi), the former dealing with the tax payable under the Tamil Nadu General Sales Tax Act, 1959, and the latter dealing with the tax payable under the Tamil Nadu Additional Sales Tax Act, 1970. However, the point involved in both the sets of cases is the same.
2. As far as T.C. No. 490 of 1979 is concerned, the assessee purchased old jewels from non-dealers in the State of Tamil Nadu for a sum of Rs. 17,40,988.20 and sold them at Bombay as standard gold after conversion. The assessee also purchased old jewels on a turnover of Rs. 1,46,161.06 from non-dealers in the State, converted them into new jewels and sold them locally. As far as T.C. Nos. 491 and 492 of 1979 are concerned, the assessee purchased old jewels from non-dealers in the State of Tamil Nadu for a sum of Rs. 8,12,770.80 and sold them at Bombay as standard gold after conversion. The assessee also purchased old jewels on a turnover of Rs. 40,012.11 from non-dealers in the State, converted them into new jewels and sold them locally.
3. The question that came to be considered by the Tribunal with reference to these two turnovers was whether they were liable to purchase tax under section 7-A of the Tamil Nadu General Sales Tax Act, 1959. As far as the turnover of Rs. 1,46,161.06 in T.C. Nos. 490 and 493 of 1979 is concerned the case is covered by our judgments dated 23rd September, 1980, in K. Chennakesavalu v. Commissioner, Board of Revenue (Commercial Taxes), Chepauk, Madras-5 (T.C. No. 152 of 1979) [1981] 47 STC 403 and Bapalal and Co. (Manufacturing), Madras-3 v. State of Tamil Nadu represented by the Joint Commercial Tax Officer, Madras-1 (T.C. No. 301 of 1979) [1982] 49 STC 20 the former dealing with the case of purchase old silver jewellery and conversion thereof into new silver jewellery and sale thereof within the State, and the latter being concerned with the purchase of old gold jewellery, conversion thereof into new gold jewellery and sale thereof in the State. We held that the transaction came within the scope of section 7-A(1)(a) of the Act, as old jewellery was consumed in the process of manufacture of new jewellery. Admittedly this decision will govern the point in the present case in respect of the turnover of Rs. 1,46,161.06 in T.C. Nos. 490 and 493 of 1979 and the turnover of Rs. 40,012.11 in T.C. Nos. 491 and 492 of 1979.
4. Then there remains the next question regarding the liability to tax on the turnover of Rs. 17,40,988.20 in one case and Rs. 8,12,770.80 in the other case under section 7-A of the Act. Section 7-A(1)(c) of the Act, omitting the provisos, which are not relevant for the purpose of deciding the question involved in the case, reads as follows :
"7-A. (1) Every dealer who in the course of his business purchases from a registered dealer or from any other person, any goods (the sale or purchase of which is liable to tax under this Act) in circumstances in which no tax is payable under section 3, 4 or 5, as the case may be, and either,
(c) despatches them to a place outside the State except as a direct result of sale or purchase in the course of inter-State trade or commerce, shall pay tax on the turnover relating to the purchase aforesaid at the rate mentioned in section 3, 4 or 5, as the case may be, whatever be the quantum of such turnover in a year."
5. The Tribunal held that both the turnovers were covered by section 7-A(1)(c) of the Act. As the extract from the section shows, the expression used in the section is "despatches them to a place outside the State". In this particular case, the finding is that the dealer himself carried the old jewellery to Bombay, converted them as standard gold and sold them in Bombay. On that finding the Tribunal held that the carrying of the gold by the dealers from this State to Bombay would constitute "despatch of the goods" under section 7-A(1)(c) of the Act and that therefore the petitioners were liable to tax on the purchase turnover. The Tribunal states in its order :
"It is contended that as the goods were taken in person by the appellants to Bombay there was no 'despatch' of the goods to a place outside the State. The Appellate Assistant Commissioner had held that there was no basis for the interpretation that 'despatch' can only mean sending of goods by some transport vehicle. The Chambers's 20th Century Dictionary refers to 'despatch' (dispatch) as 'send away hastily'; 'send out of the world'; 'to put to death'; 'to dispose of'; 'to perform speedily'; 'to make haste'.
The interpretation on behalf of the appellants that the goods cannot be said to have been despatched when the sender himself accompanies the goods does not fit in with the meaning given in the dictionary. In State of Tamil Nadu v. M. K. Kandaswami [1975] 36 STC 191 at 198 (SC), in dealing with the interpretation and scope of section 7-A of the Tamil Nadu General Sales Tax Act, it was pointed out (at page 198) that in the case of arecanuts, gingelly seeds, turmeric and grams purchased from agriculturists, if the purchasing dealers transported these goods outside the State for sale on consignment basis their case would also be covered by clause (b) or (c) of section 7-A(1) and that such dealers would be liable to tax on the purchase of these goods. It was further held :
'It may be remembered that section 7-A is at once a charging as well as a remedial provision. Its main object is to plug leakage and prevent evasion of tax. In interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book, should be eschewed. If more than one construction is possible, that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile.' It seems to us that the word 'despatch' mentioned in the section refers to transportation of the goods only and there is no warrant to make a distinction between the transport of the goods through a carrier and the same by the dealer in person. We are, therefore, in agreement with the authorities below that the purchase turnover relating to old jewels which had been transported to Bombay and sold as standard gold after conversion attracts the levy under section 7-A, notwithstanding the circumstance that the dealer had transported the goods in person to Bombay."
6. We are of the opinion that the decision in State of Tamil Nadu v. M. K. Kandaswami did not deal with the interpretation of the word "despatches" occurring in section 7-A(1)(c) of the Act and, therefore, the Tribunal erred in relying on the same as confirming its view that the present case fell within the scope of section 7-A(1)(c) of the Act. The word "despatch" is a very simple word and has a definite connotation. The meaning of this word given in the Shorter Oxford English Dictionary is : "the sending off (of a messenger, letter etc.)" (page 530). The meaning for the word given in the Webster's Third New International Dictionary is : "to send off or away (as to a special destination) with promptness or speed often as a matter of official business" (page 653). Consequently the meaning of the word contemplates the sending of a thing from one place to another, and certainly that will not take in a person carrying the gold, that he had purchased, along with him in person from one place to another. Therefore, on the finding of the Tribunal itself in this case that the dealer carried with him in person the articles in question from Madras to Bombay, it cannot be held that the articles in question were despatched from the State of Tamil Nadu to Bombay. If so, section 7-A(1)(c) of the Act has no application to the transaction in question, with the result that the said turnover, has to be excluded from the taxable turnover. After excluding this turnover, the Tribunal will have to decide the liability of the petitioners to payment of sales tax under the Tamil Nadu General Sales Tax Act, 1959, and under the Tamil Nadu Additional Sales Tax Act, 1970. For the purpose of working out this liability on the basis of our conclusion in this behalf, the matter will stand remanded to the Sales Tax Appellate Tribunal (Additional Bench), Madurai. There will be no order as to costs in any of these cases.
7. Ordered accordingly.