DEPUTY COMMISSIONER OF COMMERCIAL TAXES TIRUCHIRAPALLI DIVISION TIRUCHIRAPALLI Vs. DHANALAKSHMI TRADING COMPANY

JUDGEMENT

(1.) THE State is the petitioner herein. It is aggrieved against the decision of the Sales Tax Appellate Tribunal, Madras, holding that the assessee is entitled to the benefits of the provision in section 3(3) of the Tamil Nadu General Sales Tax Act. THE Tribunal purported to follow the decisions in Commercial Tax Officer v. Mettur Chemical & Industrial Corporation and Krishnaswami Naidu & Sons v. State of Madras wherein this court expressed the view that when groundnut oil is used for manufacture of vanaspati, the groundnut oil, being a component part which went into the production of vanaspati, section 3(3) stood attracted in the case. After the filing of this tax case, the Supreme Court has also rendered the decision in State of Madras v. R. M. Krishnaswami Naidu confirming the view taken by this court in the aforementioned two cases. THE decision of the Supreme Court was to the effect that if a component is capable of identification by a chemical or other test as a component of a finished product falling within the First Schedule to the Tamil Nadu General Sales Tax Act, 1959, it would be an "identifiable constituent" within the meaning of the explanation to section 3(3) and that the sale of such component would qualify for the concessional levy of tax under section 3(3).

(2.) SUBSEQUENT to the decision of the Supreme Court aforesaid, the Madras Legislature has enacted Madras Act 27 of 1970 with a view to make its intention clear. Under that Act, it purports to amend the "explanation" to section 3(3) in a slightly different manner. The "explanation" before amendment and the "explanation" after its amendment by Act 27 of 1970 are set out below :------------ BEFORE AMENDMENT AFTER AMENDMENT--- BEFORE AMENDMENT AFTER ----------- "For the purposes of this" For the purposes of this sub-section, component part sub-section, 'component part' means means article which forms an an article which forms an identifiable constituent of the identifiable constituent of the finished product and which finished product, which along along with others goes to make with others goes to make up the up to finished product.

(3.) WE are of the view that the scope and object of the present "explanation" is to give the benefit of concessional rate of levy under section 3(3) only to sales of components which are identifiable visually and capable of being separated by any mechanical process from the finished product. The amendment having been brought into force retrospectively from the date of the commencement of the principal Act, we have to treat the "explanation" as having been in existence from the date of the commencement of the principal Act. It is well-established that in deciding the true legal effect of a "retrospective" provision in an amending Act, the intention of the Legislature cannot be ignored and the amended explanation, by a legal fiction, has to be deemed to have been included in the principal Act as from the date of commencement of the principal Act. As pointed out by Lord Asquith of Bishopstone in East End Dwellings Co. Ltd. v. Finsbury Borough Council "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of those in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs."