GOVERNMENT OF ANDHRA PRADESH AND ANR. versus CORPORATION BANK

Citation: [2007] 4 S.C.R. 530 · Decided: 29-03-2007 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Disposed off

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
GOVERNMENT OF ANDHRA PRADESH AND ANR. 
I 
..-.... 
v. 
r 
CORPORATION BANK 
MARCH 29, 2007 
B 
· [S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.] 
Sales Tax: 
,. ' 
..... 
Andhra Pradesh General Sales Tax Act, 1957: S.2(J)(e), Explanation 
c IV {inserted by Act 27of1996)-Explanation inserted by way of Amendment-
L 
Retrospective or prospective effect-Held, Object of Explanation JV containing 
deeming provision is to expand the meaning of word 'dealer' and therefore 
it cannot be read as a retrospective enactment so as to cover old transactions-
Interpretation of statutes. 
D 
Interpretation of statutes: 
Object of interpretation-Held, is to discover intention of legislature. 
~ 
;,.._ 
Explanation inserted by way of amendment-Object of -Held, Court 
to examine whetlier Explanation inserted by Amending Act was to clear the 
E ambiguity or for expanding the meaning of particular word or to include 
matters which otherwise may not fall within the main provision. 
The respondent-Bank was aggrieved by the demand notice issued for 
recovery of tax on turnover of auction sale of jewellery held on 19.8.1987 
under s.5. r.w. Explanation IV ofs.2(1)(e) of Andhra Pradesh General Sales 
F Tax Act, 1957. They filed writ petition before the High Court challenging the 
i. 
...., 
r 
legality of the notice, contending that the provisions of the 1957 Act are not 
'( 
applicable to banking transactions. High Court allowed the writ petition 
quashing the impugned notices. 
The question before this Court is whether Explanation N to s.2(1)(e) of 
G the Amending Act No. 27of1996 applied retrospectively to the auction sale 
held on 19.8.87. 
Disposing of the appeal, the Court 
HELD: 1. Explanation IV to S.2(1)(e) of Andhra Pradesh General Sales 
y 
H 
530 
-i 
GOVERNMENT OF ANDHRA PRADESH v. CORPORATION BANK 
531 
Tax Act, 1957 would apply to transactions on and after 1.8.1996. 
A 
[Para 18] [539-E] 
2.1. According to Craies on Statute Law, Seventh Edition, a Declaratory 
Act is an Act to remove doubts existing in the common law, or the meaning or 
the effect of any statute. Such Acts are usually held to be retrospective. On 
the other hand Consolidating Acts are Acts enacted to consolidate in one Act B 
the provisions contained in a number of statutes, as for example the Customs 
-{ 
and Excise Act, Income-tax Act, Companies Act etc. [Para 11) [537-A-B) 
• 
2.2. An explan_ation must be read ordinarily to clear up any ambiguity 
). 
in the main section and it cannot be construed to widen the ambit of the 
section. However, if on a true reading of an Explanation it appears to the Court c 
in a given case that the effect of the Explanation is to widen the scope of the 
main section then effect must be given to the legislative intent. In all such 
cases the Court has to.·find out the true intention of the Legislature. Therefore, 
there is no single yardstick to decide whether an Explanation is enacted to 
clarify the ambiguii) or whether it is enacted to widen the scope of the main 
section. [Para 12) [537-D-E] 
D 
Bihta Co-operative Development and Cane Marketing Union Ltd and 
-; 
Anr. v. Bank of Bihar and Ors., AIR [1967] SC 389, relied on. 
_,, 
2.3. Prior to the Amending Act No. 27of1996, there was no Explanation 
covering banks, L.I.Cs. etc. Explanation IV was added by the first time by the 
E 
said Amending Act No. 27 of 1996. The definition of the word "dealer" thus 
stands expanded by the said Amending Act. Therefore, Explanation IV was 
not to clear any doubt or ambiguity. It has been enacted in order to expand the 
definition of the word "dealer" in s.2(l)(e) of the 1957 Act. 
[Para 12) [537-F-G) 
3.1. The object of interpretation is to discover the intention of the F 
)>. 
Legislature. The Court has to examine whether an Explanation inserted by 
r 
the Amending Act was to clear the ambiguity or whether it provided for 
expansion by introducing a deeming provision. The deeming provision 
generally is intended to enlarge the meaning of the particular word or to 
include matters which otherwise may not fall within the main provision. 
G 
[Para 13) [538-A-B) 
Doypack Systems (Pvt.) ltd v. Union of India, [1988) 36 E.L.T. 201, 
relied on . 
._,, 
3.2. Applying the above test, it is seen that in Explanation IV, there is H 
r--
532 
SUPREME COURT REPORTS 
[2007) 4 S.C.R. 
A an in-built deeming provision so as to include L.I.C.s, financial institutions, 
companies and banks mentioned in the Second Schedule to the Reserve Bank 
oflndia Act, 1

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