Supreme Court of India
Onkarlal Nandlal vs State Of Rajasthan & Anr on 23 September, 1985
Equivalent citations: 1986 AIR 2146, 1985 SCR SUPL. (2)1075, AIR 1986 SUPREME COURT 2146, 1985 (4) SCC 404, 1986 TAX. L. R. 1989, 1987 TAX. L. R. 1989, (1985) 18 STA 478, (1985) 60 STC 314, 1986 60 STC 314, 1986 (18) STA 478, 1986 4 SCC 404, 1986 SCC (TAX) 34, 1986 TAXATION 80 (7) 6, (1986) 1 SUPREME 246
Author: P.N. Bhagwati
Bench: P.N. Bhagwati, R.S. Pathak, Amarendra Nath Sen
PETITIONER:
ONKARLAL NANDLAL
Vs.
RESPONDENT:
STATE OF RAJASTHAN & ANR.
DATE OF JUDGMENT23/09/1985
BENCH:
BHAGWATI, P.N. (CJ)
BENCH:
BHAGWATI, P.N. (CJ)
PATHAK, R.S.
SEN, AMARENDRA NATH (J)
CITATION:
1986 AIR 2146 1985 SCR Supl. (2)1075
1985 SCC (4) 404 1985 SCALE (2)1217
ACT:
Rajasthan Sales Tax Act, 1954, s.2(o) Explanation II -
Interpretation of - Effect of incorporating sub-s.(2) of s.4
of Central Sales Tax Act 1956 in the Explanation - Resale of
goods in the course of inter-State trade of commerce -
Whether it can still be regarded as resale within the State.
Interpretation of Statutes - Rule of incorporation -
Explained.
Practice & Procedure - Appeal directly against an order
by an Officer in the hierarchy - When can be entertained -
Art. 136, Constitution of India.
HEADNOTE:
The Rajasthan Sales Tax Act 1954 (State Act) by Sub-
section (o) of section 2 defines "sale" to mean inter alia
"any transfer of property in goods for cash or for deferred
payment or for any other valuable consideration. Explanation
(ii) of section 2(o) provides that "a transfer of property
in goods shall be deemed to have been made within the State
if it fulfils the requirements of sub-sec. (2) of s. 4 of
the Central Sales Tax Act, 1956 (Central Act). Sub-s.(s) of
sec.2 defines "taxable turn over" to mean "that part" of
turn over which remains after deducting therefrom the
aggregate amount of the proceeds of sale of goods, which
have been sold to persons outside the State for consumption
outside the State. Sub-s.(1) of sec.4 of the Central Act
provides that subject to the provisions contained in sec.3,
when a sale or purchase is determined in accordance with
sub-s.2 to take place inside a State, such sale or purchase
shall be deemed to have taken place outside all other
States. Sub-s.(2) lays down that a sale or purchase of goods
shall be deemed to take place inside a State, if the goods
are within the State in the case of specified or ascertained
goods, at the time the contract of sale is made.
The appellant-assessee, a registered dealer both under
the provisions of the State Act and the Central Act,
purchased poppy seeds against Declarations in Form No.
S.T.17 furnished to the
1076
selling dealers. In the Declarations in Form No. S.T.17 it
was stated that the assessee was purchasing the poppy seeds
for the purpose of "resale within the State". The assessee,
resold the poppy seeds to different buyers under contracts
executed by and between the assessee and the buyers at
Bhawani Mandi. Admittedly, when these contracts were made
between the assessee and the buyers, the poppy seeds forming
subject matter of the contracts were specific goods in
deliverable condition situate in Bhawani Mandi and the
property in the poppy seeds accordingly passed to the buyers
under the contracts in Bhawani Mandi. While completing the
assessment of the assessee to sales tax for the assessment
years 1975-76 and 1976-77, the Commercial Tax Officer
included the purchase price paid by the assessee for the
poppy seeds in his taxable turn over under the provisions of
second proviso to cl.4 of sub-s.(s) of s.2 of the State Act
on the ground that the resales of the poppy seeds effected
by the assessee were sales in the course of inter-State
trade and commerce and were therefore not sales within the
State and hence the poppy seeds purchased by the assessee
were used for a purposed other than that mentioned in the
Declarations.
Aggrieved by the aforesaid order, the assessee
preferred civil appeals Nos. 207 and 208 of 1983 by special
leave directly to Supreme Court. The facts of these appeals
are broadly similar to the facts of the other appeals
comprised in this group. Counsel on behalf of the appellant
contended (i) that thought it was true that the resales
effected by it were sales in course of inter-State trade or
commerce as defined in sub-s.(3) of the Central Act, they
were still sales within the State in accordance with the
principles formulated in sub-s.(2) of sec.4 of the Central
Act; (ii) that the resale by it being sales in the course of
inter-State trade or commerce, were not liable to be taxed
by the State and could be taxed only by the Central
Government under the Central Act but that did not deprive
the resales of their character of sales within the State
which character attached to them by reason of sub-s.(2) of
sec.4 which was incorporated in the State Act by Explanation
II to sub-s.(o) of sec.2 of the State Act and (iii) that
what was incorporated in Explanation II to sub-s.(o) of
sec.2 of the State Act was only sub-s.(o) of sec.2 of the
State Act and not sub-s.(1) of sec.4 of the Central Act and
therefore the opening words in sub-s.(1) of sec.4 had no
impact on the provisions enacted in the Explanation. On the
other hand, counsel for the respondent Revenue argued (1)
that if on an application of the principles set out in sec.3
of the Central Act, a sale was a sale in the course of
inter-State trade or Commerce, it could not possibly be
regarded as a sale within the
1077
State and (2) that since the resales effected by the
appellant-assessee were admittedly sales in the course of
inter-State admittedly sales in the course of inter-State
trade or commerce, they could not be said to be resales
within the State as envisaged in the Declarations in From
No.ST 17.
Allowing the appeals,
^
HELD : 1. It cannot be said that the assessee used the
goods for a purpose other than that mentioned in the
Declarations. The assessee resold the goods within the State
as mentioned in the Declarations in Form No. ST.17 furnished
by him to be selling dealers. The assessments made on each
assessee to the extent that the assessments sought to
include in the taxable turnover the purchase price paid by
the assessee in respect of the goods purchased against
Declarations in Form No. ST.17 furnished to the selling
dealers are set aside. [1090 D-E]
2. There is, no antithesis between a sale in the course
of inter-State trade or commerce and a sale inside the
State. Even an inter-State sale must have a situs and the
situs may be in one State or another. It does not involve
any contradiction in saying that an inter-state sale or
purchase is inside a State or outside it. The situs of a
sale may fall for consideration from more than one point of
view. It may require to be considered for the purpose of
determining its exigibility to tax as also for other
purposes such as the one arising in the present cases. Of
course, a sale which is in the course of inter-State trade
or commerce cannot be taxed by a State Legislature even if
its situs is within the State, because the State Legislature
has no legislative competence to impose tax on sale in the
course of inter-State trade or commerce. That can be done
only by Parliament. If therefore a question arises whether a
sale is exigible to tax by the State Legislature, it may
have to be considered whether it is a sale in the course of
inter-State trade or commerce. The same sale in another
context may have to be examined from a different point of
view for determining where its situs lies and whether it is
a sale inside the State or outside the State. There is
therefore no incompatibility in the same sale being both a
sale in the course of inter-State trade or commerce within
the meaning of sec.3 of the Central Act as also a sale
inside the State in accordance with the principles laid down
in sub-s. 2 of sec.4 of the Central Act. [1086 D-H; 1087 A]
3. It is a recognised cannon of construction that an
expression used in a rule, bye law or form issued in
exercise of
1078
power conferred by a statute must, unless there is anything
repugnant in the subject or context, have the same meaning
as is assigned to it under the statute. The expression
"resale within the State" in Form No. ST17 must therefore be
read in the light of Explanation II to sub-s. (o) of sec.2
of the State Act which lays down as to when a sale shall be
deemed to have been made within the State and this provision
in the Explanation must govern the determination of what is
"resalw within the State" within the meaning of that
expression as used in Forom No. ST17. [1087 C-E]
3.(ii) Explanation II to sub-s.(o) of sec.2 of the
State Act, enacts as to when a sale shall be deemed to be a
sale within the State by reference to sub-s.(2) of sec.4 of
the Central Act. It is only sub-s.(o) of sec.2 which is
incorporated in Explanation II to sub-s.(o) of sec.2 of the
State Act and the Court is called upon to consider as to
what is the effect of such incorporation. The Court is not
concerned with the interpretation of sub-s.(1) or sub-s.(2)
of s.4 in the context of s.3 of the Central Act. The State
Legislature could have very well reproduced the entire
language of sub-s.(2) of sec.4 bodily in Explanation II to
sub-s.(o) of sec.2 but it preferred to employ a simplar
device by incorporating by reference the provisions of sub-
s.(2) of sec.4 in Explanation II to sub-s.(o) of sec.2. The
rule of incorporation is that when a subsequent Act amends
an earlier one in such a way as to incorporate itself, or a
part of itself, into the earlier, then the earlier Act must
thereafter be read and construed (except where that would
lead to a repugnancy, inconsistency or absurdity) as if the
altered words had been written into the earlier Act with pen
and ink and the old words scored out so that thereafter
there is no need to refer to the amending Act at all.
Therefore, Explanation II to sub-s.(o) of sec.2 must be
interpreted as if sub-s.(2) of sec.4 were written out
verbatim in the Explanation and once sub-s.(2) of sec.4 is
written out in the Explanation, there is no occasion or need
to refer to the Central Act from which this incorporation is
made or to its purpose or context. [1087 E-F; 1088 H; 1089
A-C; 1089 C-D]
In re Wood's Estate (1886) 31 Ch. D. 607 & Shamrao v.
Parulekar, District Magistrate, Thana A.I.R. 1952 S.C. 324,
relied upon.
Craies on Statute Law, 5th Edition, page 207, Crawford
on Statutory Construction page 110, referred to.
Commissioner of Sales tax v. Godrej Soap Private Ltd.
23 S.T.C. 489, State of Orissa v. Johri Mal 37 S.T.C. 157
and Georgopoulos v. State of Maharashtra 37 S.T.C. 187,
approved.
1079
M/s. Polestar Electronic (Pvt.) Ltd. v. Addl.
Commissioner Sales Tax and Anr. [1978] 1 S.C.C. 636,
referred to.
In the instant case, at the time when the contracts of
resale were made by the assessee, the goods were specific
ascertained goods lying at Bhawani Mandi inside the State
and if that be so, the resales affected by the assessee must
be deemed to have taken place inside the State on the
principles laid down in sub-s.(2) of sec.4 of the Central
Act as incorporated in Explanation II to sub-s.(o) of sec.2
of the State Act. It did not make any difference to this
position that the resales were sales in the course of inter-
State trade or commerce. The only consequence of the resales
being sales in the course of inter-State trade or commerce
was that they were not taxable under the State Legislation.
[1089 F-G]
Ordinarily the Supreme Court does not entertain an
appeal directly against an order made by an officer in the
hierarchy, when there are other remedies by way of appeal or
revision provided to an assessee under the statute. However,
it would be futile to drive the assessee to the procedure of
appeal and revision and then a Writ Petition to the High
Court when the High Court in another case has already taken
the view that when a resale is made by an assessee which is
in the course of inter-State trade or commerce, it cannot be
regarded as a resale within the State and hence such resale
would constitute a breach of the Declaration given by the
assessee to the selling dealer so as to attract of the
applicability and the purchase price paid by the assessee
would consequently be liable to be included in the taxable
turnover of the assessee. [1081 C-G]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 207-08 Of 1983 etc. From the Judgment and Order dated 22.9.1982 of the Commercial Taxes Officer, Jhalawar for Tax Assessment Year (1) 1982-83.
Soli J. Sorabjee, F.S. Nariman, R.L. Ghieya and S.K. Jain for the Appellant.
Dr. L.M. Singhvi and B.D. Sharma for the Respondents. The Judgment of the Court was delivered by 1080 BHAGWATI, C.J. These appeals by special leave raise a short question of construction of certain provisions of the Rajasthan Sales Tax Act 1954 (hereinafter referred to as the State Act). It is a pure question of law and does not depend for its determination on the distinctive facts of any particular case out of this group of appeals but in order to arrive at a proper determination, it is necessary to consider this question in its proper perspective and therefore the broad constellation of facts in which the question arises may be briefly stated.
We will confine ourselves only to the facts of Civil Appeal Nos. 207-208 of 1983 for the facts of this appeal are broadly similar to the facts of the other appeals comprised in this group. The assessee is a partnership firm which carries on business in grains, oil seeds, poppy seeds etc., in Bhawani Mandi in District Jhalawar in the State of Rajasthan. The assessee is a registered dealer under the provisions of the State Act and is also registered as a dealer under the provisions of the Central Sales Tax Act 1956 (hereinafter referred to Central Act). The assessment year with which we are concerned in this appeal are assessment years 1975-76 and 1976-77. During these two assessment years, the assessee purchased poppy seeds against Declarations in Form No. S.T. 17 furnished to the selling dealers. These Declarations in Form No. S.T. 17 stated that the assessee was purchasing the poppy seeds for the purpose of resale within the State. The assessee, after purchasing the poppy seeds against these Declarations, resold the same to different buyers under contracts executed by and between the assessee and the buyers at Bhawani Mandi. It was not disputed that at the date when these contracts were made between the assessee and the buyers, the poppy seeds forming subject matter of the contracts were specific goods in deliverable condition situate in Bhawani Mandi and the property in the poppy seeds accordingly passed to the buyers under the contracts in Bhawani Mandi. The resale of poppy seeds to the buyers were therefore, according to the assessee, sales within the State and it could not be said that the poppy seeds purchased by the assessee were used by it for any purpose other than the one mentioned in the Declarations furnished by the assessee to the selling dealers. But while completing the assessment of the assessee to sale tax for the assessment years 1975-76 and 1976-77, the Commercial Tax Officers took the view that the resale of the poppy seeds effected by assessee were sales in the course of inter-State trade and commerce and were therefore not sales within the State and hence the poppy seeds purchased by the assessee were used for a purpose 1081 other than that mentioned in the Declarations furnished by the assessee to the selling dealers and consequently the purchase price of the poppy seeds was liable to be included in the taxable turn over of the assessee. The Commercial Tax Officer accordingly passed two assessment orders on 22nd September 1982, one for the assessment year 1975-76 and the other for the assessment year 1976-77 and included the purchase price paid by the assessee for the poppy seeds in the taxable turn over of the assessee. The assessee there upon preferred the present appeal by special leave directly to this Court.
Now at the outset we should like to make it clear that ordinarily we do not entertain an appeal directly against an order made by an officer in the hierarchy, when there are other remedies by way of appeal or revision provided to an assessee under the statute. Here the assessee could have preferred an appeal against the order of assessment made by the Commercial Tax Officer and he could have then gone in revision to the Board of Revenue and thereafter to the High Court under article 226 or 227 of the Constitution and then, if he was aggrieved by the order passed by the High Court, he could come to this Court under Article 136. We would have ordinarily insisted on the assessee going through this hierarchy of judicial process and declined to entertain the petition for special leave directly against the order of assessment made by the Commercial Tax Officer. But we were informed by the learned Advocate appearing on behalf of the assessee, and this was not controverted by the learned advocate appearing on behalf of the Department, that the High Court in another case has already taken the view that when a resale is made by an assessee which is in the course of inter-State trade or commerce, it cannot be regarded as a resale within the State and hence such resale would constitute a breach of the Declaration given by the assessee to the selling dealer so as to attract of the applicability and the purchase price paid by the assessee would consequently be liable to be included in the taxable turnover of the assessee. It would therefore, argued the learned counsel for the assessee, be futile to drive the assessee to the procedure of appeal and revision and then a Writ Petition to the High Court. This contention urged on behalf of the assessee had force and we accordingly granted special leave and entertained this appeal. Similarly we granted special leave in the other cases as well and hence those appeals are placed before us alongwith this appeal.
The short but interesting question that arises for consideration on these facts is : when an assessee Purchases 1082 goods from a selling dealer against a Declaration in Form No. ST 17 starting that the goods are being purchased by him for resale within the State and he then proceeds to resell the goods and such resale is in the course of inter-State trade or commerce, would such resale be liable to be regarded as a sale not within the State for the purpose of the Declaration in Form No. ST 17, merely because it is a sale in the course of inter-State trade or commerce. Would the character of such resale, namely, that it is a sale in the course of inter-State trade or commerce be inconsistent with its being also a sale within the State as contemplated in the Declaration in Form No. ST 17. The determination of this question depends on the true interpretation of a few relevant provisions of the State Act. Section 2 is the definition Section and it defines various terms used in the State Act. Sub-section (o) of Section 2 defines sale to mean inter alia "any transfer of property in goods for cash or for deferred payment or for any other valuable consideration". There are two Explanations to Section 2 sub- section (o). We need not refer to the first Explanation since it has no bearing on the issues arising in these appeals but the second Explanation is material and it may be reproduced as follows :
"A transfer of property in goods shall be deemed to have been made within the State if it fulfils the requirements of sub-section (2) of Section 4 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956.)"
"Sale Price" is defined in Section 2 sub-section (p) to mean inter alia "the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount". Then there is the definition of "turn over" in sub-section (t) of Section 2 and according to this definition, "turn over" means "the aggregate of the amount of sale price received or receivable by a dealer in respect of the sale or supply of goods in the carrying out of any contract." The expression "taxable turn over" is defined in sub-section (s) of Section 2 and it provides inter alia that "taxable turn over" means "that part of turn over which remains after deducting therefrom the aggregate amount of the proceeds of sale of goods, which have been sold to persons outside the State for consumption outside the State". It is clear on a combined reading of these definitions that "taxable turn over" means the aggregate amount of sale price received or receivable by a dealer in respect of sales of goods within the State. It is only sales of goods within the State which can be taxed by the State Legislature Clause (i) of Article 286 of the 1083 Constitution provides inter alia that no law of a State shall impose or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place outside the State and Clause (ii) of that Article empowers Parliament to formulate principles for determining when a sale or purchase of goods can be said to have taken place outside the State. These principles have been formulated by Parliament in Section 4 of the Central Act which reads :
"4. When is a sale or purchase of goods said to take place outside a State - (1) Subject to the provisions contained in Section 3, when a sale or purchase is determined in accordance with sub- section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States.
(2) A sale or purchase of goods shall be deemed to take place inside a State, if the goods are within the State
(a) in the case of specific or ascertained goods, at the time the contract of sale is made; and
(b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation."
Sub-section (2) of Section 4 lays down the principles for determining when a sale or purchase of goods shall be deemed to take place inside the State. Once on the application of these principles set out in sub-section (2) of Section 4, it is determined that a sale or purchase of goods has taken place inside a particular State, both according to general principles as also by the express words of sub-section (1) of Section 4 it must be deemed to have taken place outside all other States. Such sale or purchase can then be fixed only by the State in which it must be deemed to have taken place on the application of the principles set out in sub- section (2) of Section 4 and no other State can impose tax on such sale or purchase by reason of Clause (i) of Article
286. Parliament has also in Section 3 of the Central Act formulated principles for determining when a sale or purchase of goods can be said to take place in the course of inter-State trade or commerce and in Section 5 of the Central Act 1084 principles have been formulated for determining when a sale or purchase of goods can be said to take place in the course of import or export. These principles were necessary to be formulated because a sale or purchase of goods in the course of inter-State trade or commerce cannot be taxed by a State on account of Entry 92A in List I of the Seventh Schedule of the Constitution which sets out the topic of tax on sale or purchase of goods in the course of inter-State trade or commerce within the exclusive legislative competence of Parliament and so far as sale or purchase of goods in the course of import or export is concerned it is also not taxable by a State by reason of Clause (i) of Article 286. It is necessary to mention here that sub-section (1) of Section 4 opens with the words "Subject to the provisions contained in Section 3", but when we turn to Explanation II to sub-section (o) of Section 2 of the State Act we find that what is incorporated in that sub-section is only sub- section (2) of Section 4 and not sub-section (1) of Section 4 nor Section 3 or Section 5 of the Central Act.
Now the Declarations in Form No. ST 17 furnished by the assessee to the selling dealers uniformally stated that the goods were purchased by the assessee for the purpose of resale within the State. The advantage of furnishing a Declaration in Form No. ST 17 is that the selling dealer would not be liable to pay sales-tax on the sale effected by him against the Declaration and the assessee would not therefore have to pay to the selling dealer sales-tax as part of the purchase price nor would the assessee be liable to pay any purchase tax on the purchase made by him on account of the saving enacted in Section 5A of the State Act. But the second proviso to clause (iv) of sub-section
(s) of Section 2 of the State Act provides as to what would be the consequence if an assessee purchases goods without paying any tax on the strength of a Declaration furnished by him and the goods are then used by him for a purpose other than the one mentioned in the Declaration. It enacts the following provision with a view to penalising an assessee who commits a breach of the statement made by him in the Declaration:
"Provided further that when any dealer has purchased any goods without paying any tax on the strength of any declaration furnished by him and the said goods are used by him for any purpose other than the one mentioned in the declaration, the purchase price of such goods shall be included in his taxable turn over."1085
It was on the basis of this proviso that the Commercial Tax Officer sought to tax the assessee on the purchase price paid by it to the selling dealers on the ground that the assessee had not resold the goods within the State but had resold them in the course of inter-State trade or commerce and thus use the goods for a purpose other than that mentioned in the, Declarations in Form No. ST 17. The question is whether this view taken by the Commercial Tax Officer is right.
The principal argument advanced on behalf of the Department was that since the resales effected by the assessee were admittedly sales in the course of inter-State trade or commerce they could not be said to be resales within the State as envisaged in the Declarations in Form No. ST 17 and the goods were therefore used by the assessee for a purpose other than that mentioned in the Declarations. The Department contended that if on an application of the principles set out in Section 3 of the Central Act, a sale was a sale in the course of inter-State trade or commerce, it could not possibly be regarded as a sale within the State and in support of this conention the Department relied on the opening words "Subject to the provisions contained in Section 3" in sub-section (1) of Section 4 of the Central Act. The assessee on the other hand contended that though it was true that the resales effected by it were sales in the course of inter-State trade or commerce as defined in sub- section (3) of the Central Act, they were still sales within the State in accordance with the principles formulated in sub-section (2) of section 4 of the Central Act. The argument of the asessee was that the resales effected by it being sales in the course of inter-State trade or commerce were not liable to be taxed by the State and could be taxed only by the Central Government under the Central Act but that did not deprive the resales of their character of sales within the State which character attached to them by reason of sub-section (2) of Section 4 which was incorporated in the State Act by Explanation II to sub-section (o) of Section 2 of the State Act. The answer given by the assessee to the argument of the Department based on the opening words of sub-section (1) of Section 4 of the Central Act was that what was incorporated in Explanation II to sub-section (o) of Section 2 of the State Act was only sub-section (2) of Section 4 and not sub-section (1) of Section 4 of the Central Act and therefore the opening words in sub-section (1) of Section 4 had no impact on the provisions enacted in Explanation. These rival arguments raised an interesting question of interpretation and though it is res integra so far as this Court is concerned we find that there 1086 are a large number of decisions of various High Courts which have accepted the construction contended for on behalf of the assessee. We may refer only to a few of these decisions namely, Commissioner of Sales Tax v. Godrej Soap Private Limited 23 S.T.C 489, State of Orissa v. Johri Mal 37 S.T.C 157 and Georgopoulos v. State of Maharashtra 37 S.T.C 187.
We may first clear the ground by stating facts which were not in dispute between the parties. There were two basic facts on which there was no dispute. One was that the resales effected by the assessee were sales in the course of inter-State trade or commerce within the meaning of section 3 of the Central Act. The assessee did not dispute the correctness of this position. The second was that at the time when the contracts of resale were made by the assessee, the goods were specific ascertained goods situate in Bhawani Mandi, that is, within the State and on the principles formulated in sub-section (2) of section 4 of the Central Act, the resale effected by the assessee were deemed to take place inside the State. The only question is whether by reason of the resale being sales in the course of inter- State trade or commerce, they ceased to be sales inside the State. We do not think the answer to this question admits to any serious doubt. There is, in our opinion, no antithesis between a sale in the course of inter-State trade or commerce and a sale inside the State. Even an inter-State sale must have a situs and the situs may be in one State or another. It does not involve any contradiction in saying that an inter-State sale or purchase is inside a State or outside it. The situs of a sale may fall for consideration from more than point of view. It may require to be considered for the purpose of determining its exigibility to tax as also for other purposes such as the one arising in the present case. Of course a sale which is in the course of inter-state trade or commerce cannot be taxed by a State Legislature even if its situs is within the State, because the State Legislature has no legislative competence to impose tax on sale in the course of inter-State trade or commerce. That can be done only by Parliament. If therefore a question arises whether a sale is exigible to tax by the State Legislature, it may have to be considered whether it is a sale in the course of inter-State trade or comemerce. The same sale in another context may have to be examined from a different point of view for determining where its situs lies and whether it is a sale inside the State or outside the State. There is therefore no incompatibility in the same sale being both a sale in the course of inter-state trade or commerce within the meaning of Section 3 of the Central Act as also a sale 1087 inside the State in accordance with the principles laid down in sub-section (2) of Section 4 of the Central Act.
Now let us turn to consider the purpose mentioned in the Declarations in Form No. ST 17 furnished by the assessee to the selling dealers. The purpose for which the goods were purchased by the assessee was stated in the Declarations to be "resale within the State". Obviously the expression "resale within the State" in Form No. ST 17 must bear the same meaning it has in the State Act. Form No. ST 17 has been prescribed by the State Government in exercise of the power conferred under Section 26 of the State Act and it is a recognised cannon of construction that an expression used in a rule, by law or form issued in exercise of power conferred by a statute must, unless there is anything repugnant in the subject or context, have the same meaning as is assigned to it under the statute. The expression "resale within the State" in Form No. ST 17 must therefore be read in the light of Explanation II to sub-section (o) of section 2 of the State Act which lays down as to when a sale shall be deemed to have been made within the State and this provision in the Explanation must govern the determination of what is "resale within the State" within the meaning of that expression as used in Form No. ST 17.
That takes us to a consideration of Explanation II to sub-section (o) of Section 2 of the State Act. This Explanation enacts as to when a sale shall be deemed to be a sale within the State by reference to sub-section (2) of Section 4 of the Central Act. If a sale fulfils the requirements of sub-section (2) of Section 4 of the Central Act, it shall be deemed to be a sale within the State and it will be so also for the purpose of the Declaration in Form No. ST 17. It is with reference to the requirements of sub- section (2) of Section 4 that we shall have to judge whether the resales effected by the assessee were sales within the State. But before we do so, it would be convenient at this stage to refer to the argument of the Department based on the opening words "Subject to the provisions contained in section 3" in sub-section (1) of Section 4 of the Central Act. The Department argued that since the enactment in sub- section (1) of Section 4 is expressly made subject to the provision contained in Section 3, the latter provision must over-ride the former and therefore, once it is found on an application of the principles formulated in Section 3 that a sale is in the course of interstate trade or commerce, the provision enacted in Section 4 would have no application and it cannot be said of such a sale that it 1088 is a sale inside the State. This argument of the Department suffers from an obvious fallacy. In the first place, all that the opening words "Subject to the provisions contained in Section 3" intend to convey is that even where a sale is determined in accordance with sub-section (2) of Section 4 to take place inside a State and therefore outside all other States, it would not exclude the applicability of Section 3 and if it satisfies the requirements of that section, it would still be a sale in the course of inter-state trade or commerce taxable under the provisions of the Central Act. Secondly, we are not concerned here with the interpretation of sub-section (1) or sub-section (2) of section 4 in the context of Section 3 of the Central Act. We are concerned only with Explanation II to sub-section (o) of Section 2 of the State Act and that Explanation refers only to sub- section (2) of section 4 and not to sub-section (1) of that section or to section 3. It is only sub-section (2) of Section 4 which is incorporated in Explanation II to sub- section (o) of section 2 of the State Act and we are called upon to consider as to what is the effect of such incorporation. The State Legislature could have very well reproduced the entire language of sub-section (2) of section 4 bodily in Explanation II to sub-section (o) of Section 2 but it preferred to employ a simpler device by incorporating by reference the provisions of sub-section (2) of Section 4 in Explanation II to sub-section (o) of section 2. The doctrine of incorporation by reference has been succintly explained by Lord Esher, M.R. in In re Wood's Estate (1886) 31 Ch. D. 607 in the following words :
"It is to put them into the Act of 1855, just as if they had been written into it for the first time. If a subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to write those sections into the new Act just as if they had been actually written in it with the pen, or printed in it, and, the moment you have those clauses in the later Act, you have no occasion to refer to the former Act at all."
This Court also explained the doctrine of incorporation by reference in similar terms in Shamrao v. Parulekar, v. District Magistrate, Thana A.I.R. 1952 S,C. 324, when Court observed :
"The rule is that when a subsequent Act amends an earlier one in such a way as to incorporate itself, or a part itself, into the earlier, then the earlier Act 1089 must thereafter be read and construed (except where that would lead to a repugnancy, inconsistency or absurdity) as if the altered words had been written into the earlier Act with pen and ink and the old words scored out so that thereafter there is no need to refer to the amending Act at all. This is the rule in England :
see Craies on Statute Law, 5th Edition, page 207; it is the law in America: see Crawford on Statutory Construction, page 110; and it is the law which the Privy Council applied to India in Keshors Poddar v. Nandulal Mallick."
We must therefore proceed to interpret Explanation II to sub-section (o) of Section 2 as if sub-section (2) of section 4 were written out verbatim in the Explanation and once sub-section (2) of Section 4 is written out in the Explanation, there is no occasion or need to refer to the Central Act from which this incorporation is made or to its purpose or context. We need not therefore allow ourselves to be oppressed by the opening words "Subject to the provisions contained in Section 3" in sub-section (1) of Section 4 or by the context in which Section 4 occurs in the Central Act.
We must accordingly read Explanation II to sub-section
(o) of Section 2 of the State Act as if sub-section (2) of section 4 of the Central Act were written into it and then proceed to apply the Explanation to the facts of the present case in order to determine whether the resales effected by the assessee were sales inside the State within the meaning of the Explanation. Now it was not disputed on behalf of the Department that at the time when the contracts of resale were made by the assessee, the goods were specific ascertained goods lying at Bhawani Mandi inside the State and if that be so, the resales effected by the assessee must be deemed to have taken place inside the State on the principles laid down in sub-section (2) of Section 4 of the Central Act as incorporated in Explanation II to sub-section
(o) of Section 2 of the State Act. It did not make any difference to this position that the resales were sales in the course of inter-State trade or commerce. The only consequence of the resales being sales in the course of inter-State trade or commerce was that they were not taxable under the State Legislation. But there is no provision in the State Act which requires that in order that an assessee may be exempt from purchase tax in respect of purchase of goods made by him against a Declaration in Form No. ST 17, he must resell the goods within the State in such a manner 1090 that such resale becomes exigible to tax under the State Legislation. We had occasion to consider a similar question in M/s Polestar Electronic (Pvt.) Ltd. v. Addl. Commissioner, Sales Tax and Anr., [1978] 1 S.C.C. 636, where we pointed out in relation to the Bengal Finance (Sales Tax) Act 1941 as applicable in Delhi that the words "for resale by him" included not only resale in Delhi but also outside Delhi even if no tax was exigible under that legislation on sale outside Delhi. But apart from the fact that it makes no difference that the resales offected by the assessee were not exigible to tax under the State Legislation, it may be possible to contend that such resales were taxable under the Central Act and if that be so, a substantial part of the tax recovered under the Central Act would go to the State to agument its revenues.
We are therefore of the view that the assessee resold the goods within the State as mentioned in the Declarations in Form No. ST 17 furnished by the assessee to the selling dealers and it cannot be said that the assessee used the goods for a purpose other than that mentioned in the Declarations. We must therefore allow these appeals and set aside the assessments made on each assessee to the extent that the assessments sought to include in the taxable turnover the purchase price paid by the assessee in respect of the goods purchased against Declarations in Form No. ST 17 furnished to the selling dealers. The respondents will pay to the assessee in each appeal costs throughout including the costs of the appeal.
M.L.A. Appeals allowed.