LexCOMMISSIONER OF SALES TAX, GUJARAT versus UNION MEDICAL AGENCY
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COMMISSIONER OF SALES TAX, GUJARAT
v.
UNION MEDICAL AGENCY
October S, 1980
[P. N. BHAGWATI, A. P. SEN AND E. S. VENKATARAMIAH, JJ.J
Bombay Sales Tax Act, 1959 as appUcable to State of Gujarat-Interpreta-
tion of the expression "Registered dealer" in section S(il)-Whether it mean&
only a deale1· registered under section 22 of the Act or it also comprises a
dealer registered in the Central Sales Tax Act, 1956-Rule in ex visceribus actus
explained.
Allowing the appeal by special leave and answering against the assessee,
the Court.
,
HELD: Per Bhagwati; J. (Concurring with Sen and Venkataramiah, JJ.)
(1) The expression "Registered dealer" is used in section 8 (ii) in its defi-
nitional sense to mean a dealer registered under section 22 of the Bombay
Sales Tax Act and it does not include a dealer under the Central Sales Tax
Act. [875A]
(2) The o bje:ct of section 8 is to prevent a multiple point taxation on
goods specified in Schedule C and for impos1tion of single point tax on them
under the Act. If a dealer is registered only under the Central Act and not
und((r the Bombay Act, it would mean. that he is not liable to pay tax under
the Bombay Act and in that event, even if he has sold goods specified in Sche-
dule 'C', to a fl!gistered dealer under an intra-State sale, no tax would be
payable by him on such sale and if the purchasing dealer is also to be exempt
from tax in 1'espect of re-sale effected by him, the result would be that the
goods would escape tax altogether and not suffer even single point tax. That
is not the intendment of the legislature in enacting section 8(ii); on the con-
trary it would frustrate the very object of that section. The situation would
be the same even where the sale effected by the dealer registeted under the
Central Act is au inter-State sale.
That sale would undoubtedly be taxable
under the Central Act but there is no reason why the Gujarat State would give
exemption to re-sale of goods in respect of which, at the time of the first sale
tax has been levied under the Central Act of which the benefit has gone to
another State. Moreover, in such a case, the first sale being an inter-State sale,
would be taxable, at a fixed concessional rate under section 8(1Xa) or at the
rate of 7% or at a rate equal to or twice the rate applicable to the sale of such
goods in the State of the selling dealer, under clause (a) or (b) of sub-section
(2) of section :B of the Central Act and if that be so, it is difficult to understand
why the Legislature should have insisted, for attracting the applicability ofl
section 8(ii), that the goods re-sold by the dealer should at the time of their
first sale be goods specified in Schedule 'C'. [873F-G, 874C·G]
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C.S.T., GUJARAT v. UNION MEDICAL AGENCY (Sen, !.)
(3) Sections 4 and 8(ii) of the Bombay Act are distinct and · independent
J>rovisions operating on totally different areas. The legal fiction in sub-section
{I) of section (4) is created for a specific purpose and it is limited by the terms
of sub-section (2) of section 4 and it cannot be projected in section 80i). If a
dealer is not registered under the Bombay Act, it could only be on the basis
that he is not liable to pay tax under the Bombay Act, but ·even so, section 4
sub-section (I) provides that if he is registered under the Central Act, he would
be liable to pay tax under the Bombay Act in· respect of the transactions of
sale set out in that section. This liability arises despite the fact that the dealer,
not being liable to pay tax under section 3 of the Bombay Act, is not regis-
tered under that Act. The dealer not being registered under the Bombay Act,
the machinery of the Bombay Act would not of itself apply for the recovery
of tax from him.
Section 4 sub-section 2, therefore, enacts that every dealer
who is liable to pay tax under sub-section (1) shall, for the purpose of sections
32 to 38 and 46 to 48 be deemed to be a registered dealer. Sections 32 to 38
and 46 to 48 are machinery sections and it is for the purpose of making the
machinery of these sections applicable for recovery of the tax imposed on the
dealer under sub-section (1) of section 4 that an artificial
fiction is created
deeming the dealer to be a registered dealer, that is, a dealer registered under
section 22 of the Bombay Act.
Per Sen, l. (On behalf of himself and Venkataramiah, J.).
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