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Judgment
Ramachandra Iyer, J.—The petitioner owns a factory at Erode wherein cloth is manufactured with the aid of nine power-looms. Originally
cloth manufactured on power-looms and sold by a dealer was liable to sales tax at the general rate fixed in Section 3(1)(b) of the Madras General
Sales Tax Act, 1939. Act XX of 1954, which came into effect from 23rd August, 1954, imposed an additional Tax of Re. 0-1-3 on every rupee
of the turnover on certain varieties of cloth, namely ""cloth, whether of silk, artificial silk, wool, flax, or any other material not being cotton, made in
mills, in which the count of warp yarn employed (excluding the border) is 17s or finer (whether single or folded)."" It will be noticed that the
additional tax levied under the provisions of the Amending Act XX of 1954 was in respect of mill products where the warp yarn employed was
above 17s or finer. Cloths manufactured by power-looms are not specifically mentioned in the section. Prima facie they appear to have been
excluded from the operation of the section. This Act was later amended by Act XL of 1954 which substituted the following in the place of the one
above extracted :
Mill cloth (whether of silk, artificial silk, wool, flax, or any other material), which is not made wholly of cotton and in which the count of warp yarn
employed (excluding the border) is 17s or finer (whether single or folded).
The amended section came into effect from 23rd August, 1954, itself. By Act III of 1956, the State Legislature further amended the aforesaid
provision. In the place of the provision which I have extracted above, it brought to tax the following goods :
Cloth (other than cloth woven on handlooms, whether of silk, artificial silk, wool, flax, or any other material) which is not made wholly of cotton.
A comparison of the three provisions which I have set out above shows that in the latest of the enactments, the qualification of the cloth being a
mill cloth had been removed. It would follow that any cloth other than those exempted by the provision would attract the tax. Power-loom
products would therefore be included by virtue of Act III of 1956 even if it were not included under the previous provisions. Section 1(2) of Act
III of 1956 states that it should be deemed to have come into force on 23rd August, 1954. The result will be that additional tax would be leviable
in respect of sales of cloth manufactured on power-looms as and from that date. It is obvious that if the dealers in power-loom cloth were not
subject to additional tax under Act XX of 1954 or Act XL of 1954, the retrospective operation of Act III of 1956 would act harshly on such of
them that did not collect tax from their customers thinking that their turnover was not liable to tax under the then existing law. In order to relieve this
hardship, the Government passed G. O. Ms. No. 275, Revenue, dated 19th January, 1957, whereby they waived the collection of the additional
sales tax leviable in Section 3(2) of the Madras General Sales Tax Act for the period from 23rd August, 1954, to 27th March, 1956. The relevant
provision of the G.O. so far as it applies to the present case is that contained in Clause (b) thereof.
(b) Cloth (other than handloom cloth woven on handlooms) whether silk, artificial silk, wool, flax or any other material, which is not made wholly
of cotton, if the dealer adduces proof that the additional sales tax had not actually been collected on the ground that according to the
manufacturer''s invoices, the sale of the cloth was not liable to the additional sales tax.
For the year 1954-55 the Deputy Commercial Tax Officer assessed the petitioner to sales tax. The assessment was made on 31st May, 1956.
By that time Act III of 1956 had come into force, the President''s assent having been given on 24th March, 1956. The enactment being
retrospective in its operation the power-loom goods sold in 1954-55 would also come within its ambit. That the Deputy Commercial Tax Officer
made the assessment on the basis of Act III of 1956 is clear from the order of assessment itself. He made a specific reference to the relevant
words contained in Act III of 1956. The petitioner was duly assessed in respect of his turnover for the relevant year and the additional tax payable
was Rs. 2,653. The petitioner unsuccessfully appealed to the Commercial Tax Officer against the order of assessment and a further appeal
therefrom to the Appellate Tribunal proved equally futile. The order of the Tribunal upholding the assessment was made on 19th February, 1957.
As I stated, the Government had passed a G.O. giving relief to the dealers who satisfied certain conditions from the operation of the
retrospective provisions of the enactment even a month earlier. The petitioner presumably was not aware of the G.O. when his appeal was
disposed of. On coming to know of it later, he applied to the Tribunal for review of its order. The Tribunal held that as the relief under the G.O.
was granted by an administrative direction, it would not be open to the petitioner to claim it as of right before it. In that view it rejected his
application. The petitioner appears to have filed earlier a petition to the Commercial Tax Officer clamming relief under the G.O. The Commercial
Tax Officer refused to entertain the petition on the ground that as the assessment had already become final, no question of relief could at all arise.
There is an obvious fallacy in the view of the Commercial Tax Officer. It is because the assessment had become final the question of relief under
the G.O. arose. He was therefore not right in rejecting the petitioner''s claim on the ground that the assessment had become final. Not taking failure
easily, the petitioner filed an application to the Board of Revenue seeking relief by way of refund of Rs. 2,653 out of the tax paid on the basis of
the assessment. The Board of Revenue forwarded the application to the Commercial Tax Officer for disposal. The Commercial Tax Officer has
rejected the application and in so doing stated :
In the case of the applicant this concession is not applicable as manufacturers cannot be heard to say that they did not know the count of warp of
the cloth produced by them. Further it was made clear in the Press Note No. 74 dated 5th November, 1954, that power-loom cloth of the
description falling under items (i) and (ii) of Section 3(2) of the Act is liable to additional tax. Therefore the applicants were not entitled to the
concession provided in G.O. 275 Rev. dated 19th January, 1957.
The reason given by the Commercial Tax Officer is thus two-fold :
(1) that the yarn employed by the petitioner in the manufacture of cloth being of a count higher than 17s, he was, at no time, entitled to a reduced
taxation. Act XX of 1954 would apply to the sales thereof ;
(2) that Act XX of 1954 included within its ambit power-loom manufactured cloth was made clear by the Press Note issued by the Government.
It is contended for the petitioner that the Commercial Tax Officer was labouring under a misapprehension in regard to the Government Order.
The learned counsel contends that under Act XX of 1954 two categories of goods were not brought to additional tax: (1) goods manufactured by
power-loom and (2) mill goods whose warp count was less than 17s. Act III of 1956 brought to tax both the above categories for the first time.
Relief under the G.O. was granted to both of them. The Commercial Tax Officer in rejecting the claim for refund on the ground that the goods
manufactured and sold were of a higher count than 17s, committed an error in that he ignored the fact that the power-loom products were not at all
liable to tax under Act XX of 1954. As the G.O. gave him relief in regard to such goods his claim for refund could not be rejected on the ground
that the cloth manufactured was above the count of 17s. I am of opinion that the argument is well-found. Implicit in the order of the Commercial
Tax Officer is the view that there is no distinction between mill and power-loom products. He held that the power-loom products would be
covered by Act XX of 1954 itself, and unless the petitioner were able to show, that the yarn employed by him was less than the count of 17s, he
would not be entitled to exemption. Reliance was placed by the Officer for the view he took on the press note issued by the Government. I cannot
see how the officer could take note of the press note in construing a statutory provision like the one contained in Act XX of 1954. A statute has to
be construed on its terms. A construction placed by the executive of the Government on a statute cannot obviously bind a judicial or a quasi-
judicial tribunal. This is particularly so in a taxing enactment. No person would be liable to tax unless he is brought within the terms of the taxing
statute. The question whether the power-loom yarn would come within Act XX of 1954 will have to be decided on the terms of the statute and not
on the basis of the press note issued by the Government.
Section 2(b) of Act XX of 1954 only refers to cloth etc. made in mills. In the affidavit filed in support of the petition, it is stated that a power-
loom is not a mill and the cloth produced on power-looms would not be liable to the additional tax. No counter affidavit has been filed
controverting this statement that a power-loom is not a mill. The learned Additional Government Pleader contended that mill goods would include
power-loom goods, as the essential element in both of them would be employment of machinery. I cannot agree. Mill cloth is a familiar variety of
cloth and everybody knows what a mill is. In popular language, a power-loom cloth is never associated with a mill cloth. I am therefore of the
opinion that when Section 2(b) of Act XX of 1954 enacted that mill cloth would be liable to additional tax, it did not include power-loom cloth.
The learned counsel for the petitioner referred to the statement of objects and reasons for the enactment of Act III of 1956 to show that the
legislature itself was alive to the distinction between the two. A section in an enactment cannot be construed in the light of the statement of objects
and reasons. But it is a familiar principle of interpretation that in order to ascertain the true scope of a statute, it will be open to the Court to look at
the state of law as it existed before and the mischief which was intended to be remedied by the subsequent statute. Therefore for the purpose of
ascertaining the scope of Act III of 1956 and the necessity for the legislation or the mischief it intended to rectify the Court could look into the
statement of objects and reasons. Adverting to the previous law it states,
It has been pointed out that all kinds of cloth mentioned in Section 3(2) of the Act can be made in power-looms run in places other than mills, and
that power-loom cloth made in a mill cannot be distinguished from that made in a place other than a mill.
What is implicit in this passage is that a power-loom cloth is distinct and differently understood from the mill cloth. I am of opinion that the object
of the legislature while enacting Act III of 1956 would indicate that the enactment was necessary to bring into the taxation scheme the power-loom
cloth which till then escaped taxation. That would support the view come to earlier namely, that the word ""mill"" used in Act XX of 1954 did not
include a ""power-loom.
The learned Additional Government Pleader then contended that this Court would have no jurisdiction to issue a writ of certiorari, as what the
Commercial Tax Officer did was merely to decline the granting of a refund in respect of which the petitioner had no statutory right. A similar
argument was advanced on behalf of the Government in W.P. Nos. 832 to 834 of 1958 and a Bench of which I was a member rejected that
contention. When the Board of Revenue directed the Commercial Tax Officer to dispose of the application of the petitioner for relief under the
terms of the G.O. the officer should be held to have been entrusted with a public duty and if he, by an erroneous view, declined to perform that
duty it would be open to this Court to correct it under Article 226 of the Constitution. The learned Additional Government Pleader advanced a
further contention namely that the ''Government Order was only an administrative direction, and on the analogy of the cases decided under the
Motor Vehicles Act, he contended that a disregard or a wrong construction of such administrative direction would not be justiciable and that
therefore no relief could be given to the petitioner under Article 226 of the Constitution. There is however a distinction between the case under the
Motor Vehicles Act and the present case; the principle of those decisions will not apply to the present case. Under the Motor Vehicles Act the
tribunal is vested with statutory authority; in performing its quasi-judicial duties, it could rely upon certain administrative directions issued by the
appropriate authority. A disregard of its administrative direction by the quasi-judicial authority under the statute was held not to attract the writ
jurisdiction of this Court. Here the Commercial Tax Officer is not exercising any independent or statutory jurisdiction of his own. He, as a
subordinate of the Government, was directed to do a public duty and if he failed to do that duty on a misapprehension of the scope of the very
direction given to him it should be open to this Court to issue an appropriate writ.
The rule nisi is therefore made absolute. The result will be that the Commercial Tax Officer will have to dispose of the petitioner''s claim for
refund afresh. The petitioner will be entitled to costs. Advocate''s fee Rs. 100.