THIRU MANICKAM AND CO. versus THE STATE OF TAMIL NADU

Citation: [1977] 1 S.C.R. 950 · Decided: 26-10-1976 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
c 
D 
E 
950 
THIRD MANICKAM AND CO. 
V. 
THE STATE OF TAMIL NADU 
October 26, 1976 
(H. R. KHANNA AND JASWANT SINGH, JJ.] 
DR. R. D. NAJIAH AND ORS. 
Central Sales Tax .Act, 1956-S. 15(b)-Scope of-Assessee bought dec-
lared goods and paid State sales tax-Sq/e by way of inter-state Safe-If en-
titled to refund of state sales tax. 
• 
Interpretation "refund" meaning of-Subsequem amendment of section-If 
could be used to interpret earlier ambiguous provision. 
Section 15(a) of the Central Sales Tax Act, 1956 as it existed at.the rele-
vant time enacted that tax in respect of any sale or purchase of declared goods 
~nside the State shall not be levied at more thim one stage. According to cl. (b) 
1f these goods were subsequently sold, in the course of inter-state trade, the tax 
so levied shall be refunded to such person as prescribed in the State law. The 
proviso to s. 4 of the Tamil Nadu General Sales Tax Act and r. 23 of the Rules 
provide for the refund of the sales tax in the type of cases mentioned in s. 15 (b). 
The appellant bought cotton yarn from local dealers and sold it by way 
of inter_state sale. It paid the State sales tax and claimed refund under s. 15 
(b) of the1 Central Act. It .succeeded in part at each of the different stages; but 
on second appeal for the balance, the Appellate Tribunal rejected the :.i.ppellant's 
claim and held that it was not entitled to any refund including the relief granted 
by, the Appellate Assistant Commissioner. The High Court rejected its revision 
petition. 
Allowing the ~ppeal, 
HELD : ( 1) The appellant-firm is entitled to be paid the amount of eales 
tax levied under tbe State Act in respect of the goods sold by it in the course 
of inter-State trade provided the appellant has paid the sales tax 
under 
the 
Central Act in respect of those sales. [956 El 
(2) The proviso to s. 4 of the State Actread with the rules leaves na doubt 
J 
that the amount has to be paid to the dealer who sells the goods in the course 
. ..--
of inter-State trade and who has paid the tax under the Central Act in respect 
F 
of such sale. [955 BJ 
G 
H 
(3 )(a) There is no anomaly in paying tbe amount of the sales tax under 
the State Act to a dealer who sells declared goods in the course of inter-State 
trade even tbough he did not himself pay the tax under the State Act in 
respect of those goods. 
The reason for that is the price charged from such 
dealer by ilie person from whom he purchased the goods would normall v take 
into account the sales tax paid by the seller. [955 CJ 
(b) The case of M. A. Khader & Co. v. 
Deputy <Jommercial 
Taxation 
Officer 25 S.T.C. 104 followed by the High Court is distinguishable on fact•. 
The question of asking for refund of the sales tax paid under the State ·.Ac~ 
did not arise directly in that case. The emphasis in the word 'refunded' as 
used in s. 15(b) of tbe Central Act and the proviso to s. 4 of the State 
Act. 
is on repayment of the amount. [954 GJ 
( 4 )(a) A word can have manv meanings. To find out the exact connota-
tion of a word in a statute, one should 
look to the context in which it 
is 
used. 
The context would quite often provide the key to meaning of the word 
and the. sense it should carry. Its seMing would give colour to it and provide 
cue to the intention of the legislature in using it. In the instant 
case 
the 
context in which tbe word "refunded" is used shows that such repayment need 
not be to the person who initially paid the tax. [954 HJ 
I 
THIRU MANICKAM v. TAMIL NADU (Khanna,!.) 
951 
(b) The amended provision makes it plain beyond doubt that 
the 
tax 
levied under the State Act in respect of llec!ared goods has to be reimbursed 
to the person making sale of those goods in the course of inter-State trade or 
co=eree in such inanner and subject to such conditions as may be provided 
in the law in force in that State. According l!O the notes on clauses aooended 
to the statement of objects and reasons of the Bill the amendment made in 
cl. (b) makes it clear that local sales tax would be reimbursed to the person 
making the sale in the course of inter-State trade and commerce. The amend-
ment mado in cl. (b) can thus be taken to be an exposition by the legislaturo 
itself of its intent contained in the earlier provision. [955 G] 
( c) Tho fact that the amendment of cl. (b) of s. 15 was not like some 
other P.rovisions given retrospective effect, would not materially affect the posi-
tion. 
'b1e legi~lature as a r

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