STATE OF MYSORE versus YADDALAM LAKSHMINARASIMHAIAH SETTY AND SONS

Citation: [1965] 2 S.C.R. 129 · Decided: 10-11-1964 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

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129 
Sl'ATE OF MYSORE 
v. 
YADDALAM LAKSHMINARASIMHAIAH SETIY AND SONS 
November 10, 1964 
[K. SUBBA RAO, J. C. SHAH ANDS. M. Srroo, JI.] 
Celflral Saks Tax Act (74 of 1956), ••· 6, 8(2) and 9 and Mysore 
Sales I'ax Act (25 of 1957), s. 5(3)(a)-lnter-State sale of power/oom 
textllu-A.ssessee rwt the first or earliest deakr in Stato--Liability to 
tax. 
'The MSessec wa. a dealer in Mysore dealing in powerloom textiles. 
HiJ turnover in the course of inter-state trade was assessed and taxed by 
the Commercial Tax Officer, under s. 9 of the Central Sales Tax Act, 
1954, before its amendment in 1958. 
The order was upheld by the 
Deputy Commissioner of Commercial Taxes and the Sales Tax Appellate 
Tribunal. 
The High Court, in revision, held that the sales were not 
"first sales" within the State, and that not being exigible to tax under 
the State Sales Tax Act (Mysore Act 25 of 1957), no tax was payable 
under the Central Act. 
The State appealed to the Supreme Court and 
contended that the asscssee was liable to be taxed because of s. 6 of tho 
Central Act. 
HELD : (Per Subba Rao and Sikri, JJ.) Though s. 6 of the Central 
Act is the charging section the liability to pay tax is subject to the other 
provisions in the Act. Section 8(2) provides that tax shall be calculated 
at the same rates and in the same manner as would have been done if 
the sale bad in fact, taken place inside the appropriate State, and s. 9 
proyides that, under the Central Act, tax shall be levied in the same 
manner as the tax on the sale or purchase of goods, under the general 
sales tax law of the State is assessed, paid and collected. 
The word 
"levied" means "impooed" and since s. 5(3) (a) of the Mysore Sales Tax 
Act, read with Schedule II of that Act provides that the tax shall be 
levied, in the case of powerloom goods on the first or tho earliest of 
auccessive dealers in the State, and tho assessee was not such a dealer, 
oo tax could be levied on him in respect of the disputed turnover. Such 
a construction avoids the anomaly of tho State collecting tax on powerloom 
textiles only at a single point and the Centre, through the agency of the 
State authorities, collecting the said tax for and on behalf of the State 
at multi-points. [131 A; 132 G; !33 B, D-F, H] 
Per Shah, J. (dissenting) : Tho High Court was in error in regardins 
saleo other than the first sales as exempted from liability to pay tax under 
the Central Act, when the sales sought to be taxed, were in the course of 
inter-91ate trade or commerce. 
[138 C-D] 
Section 6 of the Central Act charges inter .. tato transactions to tax. 
The function of a. 8 ( 2) is to prescribe the rate and the manner of cal-
culation ot tax : it i.o not intended to incorporate the entire procedural and 
wbotantive State law relating to tax. Section 9(1) and (2) establish that 
the machinery of assessment, collection and enforcement of liabilitv pres-
cribed by the State statute alone is incorporated in the Central Act. 
Neither 1. 8(2) nor 1. 9 cut down the plenary charge impOl!cd by 1. 6, nor 
130 
SUPREME COURT REPORTS 
[1965] 2 s.c. 
do they attract any exemptions from tax prescribed by the State law. [136 
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B-E] 
CML APPELLATE JURISDICTION: Civil Appeal No. 165 of 
1964. 
Appeal by special leave from the judgment and order dated 
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January 22, 1962, of the Mysore High Court in Civil' Revision 
Petition No. 964 of 1961. 
S. V. Gupte, Solicitor-General, M. S. K. Sastri and 
B. R. G. K. Achar, for the appellant. 
R. Gopa/akrishnan, for the respondent. 
The Judgment of Sobba Rao and Sikri 11. was delivered by 
Sikri J. Shah J. delivered a dissenting Opinion. 
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Sikri, 1. 
This is an appeal by special leave directed against 
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the judgment of the Mysore High Court accepting the revision 
petition of the respondent before us, hereinaftet referred to as the 
assessee. 
The relevant facts are these. The assessee is a dealer in power-
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loom and handloom textiles, both within the Mysore State and in 
the course of inter-State trade. For the year 1957-58, the Com-
merical Tax Officer, Bangalore, assessed and taxed the turnover 
relating to powerloom textiles under s. 9 of the Central Sales Tax 
Act (LXXIV of 1956), hereinafter referred to as the.Central 
Act, as it stood before its ;imendment by the Central Sales Tax F 
(Second Amendment) Act, 1958 (XXX of• 1958). 
This was 
upheld by the Deputy Commissioner of Commercial Taxes. The 
Mysore Sales Tax Appellate Tribunal a

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