COMMISSIONER OF SALES TAX, U.P. vs. BIJLI COTTON MILLS, HATHRAS

CIVIL APPEAL No. 546/1962Supreme Court[1964] 7 S.C.R. 38320 March 1964Bench: 5 JudgesAuthor: P.B. GAJENDRAGADKAR, K.N. WANCHOO, J.C. SHAH, N. RAJAGOPALA AYYANGAR, S.M. SIKRI8 pages
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What did the Supreme Court hold?

The Supreme Court held that the law incorporated in Section 31 by the Amending Act III of 1963 would apply to the present case. The Court reasoned that when a question is referred to the High Court and the law is subsequently amended with retroactive operation, it is the duty of the High Court to apply the amended law. By taking notice of the substituted provision, the High Court gives effect to the legislative intent. This is permissible provided the question referred is of sufficient amplitude to cover an inquiry in light of the amended law and does not necessitate the investigation of fresh facts. The Court distinguished this situation from cases where the amendment is not retroactive or where the question referred is too narrow. The Court found that the legislative provision (Section 31) was in force at all material times, superseding the previous law declared in Modi Sugar Mills Ltd.'s case. Therefore, the Court was applying a law that was deemed to be in operation at the time of the transaction. The appeal was allowed, and the question was answered in the affirmative, meaning the amended law applied.

What were the facts?

The respondent, Bijli Cotton Mills, a manufacturer of cotton yarn, was registered as a dealer under the U.P. Sales Tax Act, 1948. Initially, sales tax on cotton yarn was 3 pies per rupee. A notification effective June 9, 1948, increased the rate to six pies per rupee. The assessee opted to be assessed on the turnover of the previous year. The Sales Tax Officer applied the 3 pies rate for the first 69 days of the assessment year 1948-49 and the 6 pies rate for the remainder. This was affirmed by the Judge (Revisions) Sales Tax after an appeal. The High Court, in a reference, held that the 3 pies rate applied for the entire assessment year 1948-49, based on its previous judgment in Modi Food Products Ltd. Subsequently, the Uttar Pradesh legislature enacted Section 31 of the U.P. Sales Tax Act by Act III of 1963, which retroactively applied altered rates to the previous year's turnover for pending or closed assessments. The appeal to the Supreme Court concerned whether this amendment applied to the present assessment.

What were the issues?

1. Whether the amended legislation, specifically Section 31 of the U.P. Sales Tax Act enacted by Act III of 1963, which has retroactive operation, applies to the present assessment for the year 1948-49, despite the High Court's earlier decision based on the law then in force. Assessee's Contentions (implied from the High Court's initial ruling and the nature of the appeal): The assessee contended, and the High Court initially held, that the rate applicable for the assessment year 1948-49 should be based on the law in force during the previous year, as the assessee had opted for assessment on the previous year's turnover. They relied on the judgment in Modi Food Products Ltd. v. Commissioner of Sales-tax, U.P. Revenue's Contentions: The revenue argued that the subsequent amendment to the U.P. Sales Tax Act (Act III of 1963), which introduced Section 31 with retroactive effect, should be applied. This amendment effectively made the altered rates applicable to the previous year's turnover, superseding the prior legal interpretation. The revenue contended that the High Court, and by extension this Court, should apply the law as it stands after the amendment, even if it means revisiting a question already decided based on the previous law, provided the question referred has sufficient amplitude and does not require fresh fact-finding.

Which sections of the Income-tax Act were involved?

Section 3A,Section 31,Section 7

AI-generated summary — verify with the full judgment below

78.

C.R. SUPRE:ME COURT REPORTS 383 COMMISSIONER OF SALES TAX, U.P. v. BIJLI COTTON MILLS, HATHRAS IP. B. GAJENDRAGADKAR, C.J., K. N. WAINCHOO, J. c. SHAH, N. RAJAGOPALA AYYANGAR AND S. M. SIKRI, JJ.] Sales Tax-Reference under Act pending before High Court -Impugned !egis!ation in relation to the matter in reference amended-High Court whether can take cognisance· of am•nded legis!ation-U.P. Sa!es Tax Act, 1948 (U.P. Act 15 of 1948), ss. 3A,

31.

The respondent is a manufacturer of cotton yarn and is registered as a dealer under the U.P. Sales Tax Act, 1948. This act came into force on April 1, 1948. Under this Act, sales tax was payable on sales of cotton yarn at a uniform rate of 3 pies in a rupee. Under s. 3(A) of the Act the Government of U.P. issued a not'fication declaring that with effect from June 9, 1948, the Sales Tax would be charged at the rate of six pies per rupee in respect of sales of the cotton yarn. In the present case, the assessee had opted under s, 7 of the Act to be assessed on the turnover of previous year. The Sales Tax Officer held on the basis of the notification dated June 9, 1948, that the rate of three pies per rupee in r~spect of s

The order continues below.

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