DEPUTY COMMISSIONER OF SALES TAX ETC. ETC. versus AYSHA HOSIERY FACTORY (P) LTD. ETC. ETC.

Citation: [1992] 1 S.C.R. 140 · Decided: 16-01-1992 · Supreme Court of India · Bench: S. RANGANATHAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
DEPUTY COMMISSIONER OF SALES TAX ETC. ETC. 
v. 
AYSHA HOSIERY FACTORY (P) LTD. ETC. ETC. 
JANUARY 16, 1992 
B 
[S. RANGANATHAN, V. RAMASWt\MI AND N. D. OJHA, JJ] 
Central Sales Tax Act, 1956. 
Sections 6(1-A), 8, 9: Tax on sale of goods in inter-state trade-
Liability of dealer-Rate of tax-Whether applicable under the local Act at 
C the particular point of time. 
Kera/a General Sales Tax Act, 1963 [l] Kera/a Additional Sales Tax 
Act, 1978 : 
Additional levy imposed under the 1978 Ac1--Whether amounts to 
D amending the Sales tax Act-Such levy-Whether could be applied to inter-
state sales. 
The Kerala Additional Sales Tax Act, 1978 sought to impose an 
additional sales tax at 10% of the rate of tax already imposed under the 
E 
Kerala General Sales Tax Act, 1963, on all taxable sales and purchases 
in the State. 
F 
G 
The assessees challenged before the High Court, the levy of addi-
tional sales tax in respect of their inter-state sales on the ground that the 
said levy could not be considered as a levy under the sales tax law of the 
appropriate State within the meaning of Section 8(2-A) of the Central 
Sales Tax Act, and for the purpose of levying Central Sales Tax only the 
rate of tax as per the original Kerala General Sales Tax Act, 1963 shall 
be taken into account. It was also contended that the rate of tax on inter-
state sales payable under Section 8 of the Central Sales Tax Act cannot 
be increased by any amendment or legislation by the State. 
The High Court having upheld the challenge, the State has pre-
ferred the present appeals by special leave. 
On the question whether the additional tax levied could also be 
considered as sales 'ax under the Sales tax law of the State, for the 
H purpose of Central Sales Tax levy. 
140 
,)--... 
---.--
DY. COMMISSIONER v. AYSHA HOSIERY 
141 
1 
Allowing the appeals, this Court, 
A 
HELD :1.1 The definition provided by Section 2(i) of the Central 
sales Tax Act does not say that the sales tax law or the general sales tax 
law which levies taxes on sale or purchase of goods shall be under a 
single enactment. What is relevant is whether the tax partakes the 
character of sales tax or purchase tax. Any other construction would B 
restrict the applicability of Section 8(2-A) of the Central Sales Tax Act 
to the sales tax law that was in force in 1956 when the Central Sales Tax 
Act came into force and any amendment to the local law would not have 
any effect on the applicability of that provision. If a particular intra-state 
sale transaction in a particular assessment year is subjected to a particu-
lar rate of tax that automatically gets reflected in and had to be taken c 
into consideration for finding the ·rate and the applicability of Section 
8(2-A) or section 8(2) (b) of Central Sales Tax Act. [146F-G; 147-A] 
1.2 Instead of an additional Sales Tax Act, if the legisfature has 
simply amended the Kerala General sales tax Act by varying, the rate, 
D 
automatically that will come in for consideration and application of the 
~. provision of Section 8(2) (b) and 8 (2-A) of the Central Sales Tax Act. 
) For this purpose amendment of the State Act is not considered as an 
amendment of the Central Sales Tax Act. But since the rate applicable 
to the intra-state sales at a particular point of time is a relevant consid-
eration for finding out the rate of tax on inter-state sale the amendment 
E 
of the State Act automatically has the effect of changing the rate 
provided under Section 8 of the Central Sales Tax Act. That is not to say 
that the Central Act is amended by the State Legislature. The rates of • 
tax in certain cases under the Central Act are linked to the rates fixed 
under the local Acts and that is how the amendment of the local Acts 
affects the rates under the Central Act. It is still the Central Act that is 
F 
applied but only for purposes of fixing the rate of tax leviable under the 
~· 
Central Sales Tax Act, the provisions of the local Act are looked into. So 
"'r 
construed there is not doubt that in all cases where the rate of tax under 
the local law is less than four per cent that will be the rate applicable to 
the inter-state sales of the same commodity if the provisions of Section 
8(2-A) of the Central Sales Tax Act are applicable. The dealer undoubtedly G 
would be paying at the rate as enhanced by the Additional Sales Tax Act 
and therefore that will be the rate that is including the additional tax, 
that is to be taken into considera

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