STATE OF TAMIL NADU versus M. K. KANDASWAMI ETC. ETC.

Citation: [1976] 1 S.C.R. 38 · Decided: 15-07-1975 · Supreme Court of India · Bench: V.R. KRISHNA IYER · Disposal: Appeal(s) allowed

Cited by 8 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

38 
STATE OF TAMIL NADU 
v. 
M. K. KANDASWAMI ETC. ETC. 
July 1,, 1975 
[V. R. KRISHNA In.11., R. S. SA!l.ll:I!l.IA AND A. C. GUPTA, JJ.] 
lnterprt!tation of Statutes-/'rQl'fsion susceptible of two constructions--Cons-
truction defeatin6 purp~ of provision, if can bl! resorted to. 
Ta1nilnaiu Central Sales-tMX Act, 1959, Stctidn 7-A(l)-Inttrprttation-
Sale or purchc.tSe of certain :o•ds gtnrrally taxable under tht! Act-Act prtscrib-
ing circumstancy,s whe11 no ta:f. b6 ~ttracted-!rovlsions of section charging such 
goods to tax, if workable. 
Section 7-A(J) of Tamilnadu General Sales-tax Act, 1959, provide. 
that 
every d•aler who in the courso of his bu8incss purchases from a re&istered dealer 
or from any other pen;on, uy aoods (th• e:alo. or purchaso of' ~hich is liable 
to tax under thi~ Act) in circumstance:iii in which no tax is payable under sec-
tion 3, 4 or 5, as the case may be~ and cither,-(a)_ consumes such aoods in the 
manufacture of other cood~ for sale or otherwi~; or (b) disposee Of -such good~ 
in any manner other than by way of sale in the State; or (c) de:!!patchei them 
to a place outside the· State except a! a direct result of iile or purchase in the 
course of inter-State trade or C(lmmerce shall pay tax on the turnover relating 
to the purchase aforesaid at the rat• mentioned i~ s. 3, 4 or 5 a!ll the case m:iy 
be whatever be the quantum of such turnover in a yea.r : The proviso to this 
sub-section iexempt! a dealer (other than a casual trader or aient of a non-
resident dealer), if his turnover i'or a. year ie less than Rit. 25,000/-. 
All the respondents are dealers aaainst whom either pre-asgessment proceed-
ings have been initiated or aseeesment' have been made under s. 7-A of the 
Act on the purchaee turnover of 1oods like arecanuts, Gingelly 5t'Cds, butter, 
turmeric anJ. grams and castor ~ede. All the respondentg filed wrjt petition~ 
under Art. 
226 of the Constitution in the Hilh Court of Madra, challenging 
the validity of the i:r ... asseMment 
proceeding<J/assessment~ and tho demand 
notices. The Hi:h Court allowed the writ petitiong and qua,hed the im~gned 
proceedinc~ and assessment!, 
The ,State ha, preferred thi~ appeal on the basi~ 
of the certificate granted by the Hi:h Court under Art. 133 (I) (c) of the 
Constit11,tion. 
It 'vas contended for the appel1ant that tho High Court was wrong in taking 
the view that the expression "good' the tw.le or purchase of which i~ liable to 
t::i:< under this Act" and the phrruie "purchases ..... in circumgtance! in \Vhich 
no to.ix is payable under so:tion 3, 4 or 5" are a contradiction in terms and 
therefore, s. 7-A( 1) beine: far from clear a~ to it" intention, the Joint~Cornmercial 
1'ax Officer wa' not justified in invoking thi, section. 
Ac:epting the contention and allowing 1:he appeal, 
HELD: (i) Section 7-A i::i at once a charging as well as a remedial provision. 
Its n1ain object i~ to plug leakage and prevent evasion of tax. In interpreting 
such a provision, a construction which would defeat its purpo3C and, in effect, 
obliterate it from the statute book, ~hould be e9Chewcd. 
If more than one 
con-:truction i3 
po~:!!ible, that which pre!erVe! its v.·orkability and effi:acy is to 
be preferred to the one which would render it otiose or sterile. [46F-G1 
(ii) The scheme of the Act involve3 three inter-related but distinct concepts, 
namely, taxable pereon', 'taxable good'' and 'taxable event'. 
AU the three 
must be eatisfied before a person can be ~addled with liability under the Act. 
The ingredients of ~ction 7-A(i) are: (1) The person who 
purchases the 
goods ie a dealer : (2) The purcha~ jg made by him in the 
course of his 
business; (3) Such purchase j3 either from "a registered dealer or from anv 
:Other person; ( 4) The goods purchased are goods the sale or purchase o.f 
A 
B 
c 
D 
E 
F 
G 
H 
' • 
• 
). 
1. 
' 
J 
' I 
l'AMIL NADU v. M. K. KANDASWAMI (Sarkaria, J.) 
3!} 
A 
which is liable to tax under this Act." (5) Such purchase i! "in circumstancesr 
in which no «ax is payable under s. 3, 4 or 5 as the case may be", and (6) 
The dealer either (a) consumes such goods in the manufacture of other &ood!· 
for sale or otherwise or (b) despatches all such goods in any manner other 
than by way of sale in the State or (c) despatches them to ..a place outside 
the State except as a direct resul~ of sale or purchase in the course of inter-
state trade or commerce. 
Sectfon 7-A can be invoked only if all the~ 
ingredient

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