Citation Codes

Equivalent Citations

citation codes

Case Number

Tax Case No. 142 of 1972

Advocates

For the Appellant: K. Mani for V. Ramachandran, V. Narayanaswami, Advocates.
For the Respondent: The Addl. Govt. Pleader.

Judges

P.S Kailasam, C.J
V. Ramaswami
Balasubrahmanyan, JJ.

Acts

Section 13(5) of the Tamil Nadu General Sales Tax Act, 1959, hereinafter referred to as the Act.
Section 13(5) of the Tamil Nadu General Sales-tax Act, 1959 (hereinafter called the Act),
5-A (b) (i) of the Tamil Nadu General Sales tax Rules, 1959, hereinafter referred
provision similar to R. 5-A (1) (b) of the Tamil Nadu General Sales-tax Rules.
Nadu General Sales Tax Rules, 1959 (hereinafter called the Rules).
Section 13(5) of the Tamil Nadu General Sales-tax Act, 1959.2.
6(1) (b) (i) of the Andhra Pradesh General Sales Tax Rules, 1957,
Section 13(5) of the Tamil Nadu General Sales-tax Act, 1959.
Nadu General Sales-tax (Second Amendment) Act, 1972,
1959 Act, after the inclusion of S. 13(5)
Nadu General Sales-tax Act.
Section 13(5) in the Act,
Madras Act 15 of 1964.
other.39. Section 13(5)
Sales-tax Act of 1939,
5-A (b) (i) of the Rules
Nadu Act 15 of 1964,
Nadu Act 31 of 1972,
Sales-tax Act
Rule 5-A (b) (i)
Section 13(5),

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Smart Summary

Full Bench Summary: Scope of Section 13(5) — Tamil Nadu General Sales-tax Act, 1959

Factual and Procedural Background

The case before the Full Bench arose from the petitioner-assessee's sale of medicine (Metol) for Rs. 69,640 by invoice dated 3‑3‑1966. The customer returned the goods on 2‑9‑1966, and the assessee issued a credit note and accounted for the return on that date. In the monthly return for September 1966 (filed on 25‑10‑1966) the assessee claimed an adjustment/refund of the tax relating to that sale. The assessing authority rejected the claim on 25‑1‑1969. The Appellate Assistant Commissioner and thereafter the Tribunal also rejected the claim on the ground that it was made beyond the six‑month period specified by Section 13(5) of the Tamil Nadu General Sales‑tax Act, 1959. The assessee pursued revision against the Tribunal's order, and the matter was referred to a Full Bench for determination of the scope of Section 13(5).

Legal Issues Presented

What is the scope and effect of Section 13(5) of the Tamil Nadu General Sales‑tax Act, 1959—in particular, whether it constitutes a complete code that confines a dealer's right to claim adjustment or refund of tax arising from returned goods to a period of six months from the date of sale.
Whether Rule 5‑A(b)(i) of the Tamil Nadu General Sales‑tax Rules, 1959 (relating to amounts refunded in respect of goods returned by purchasers) operates independently to permit deduction of refunded amounts in the assessment year in which the refund is made even if that refund occurs more than six months after the date of sale, thereby permitting relief outside the six‑month limit in Section 13(5).

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Madras Radiators and Pressings v. State of Tamil Nadu, 37 STC 123 : (1976 Tax LR 1533 (Mad))	The earlier Division Bench held that S.13(5) and R.5‑A(b)(i) dealt with different rights of a dealer, and that R.5‑A(b)(i) could be applied so as to permit exclusion of refunded amounts outside the six‑month period.	The Full Bench (majority) concluded that the decision was erroneous and unsupportable after the introduction of S.13(5); it therefore overruled that prior view to the extent it permitted R.5‑A(b)(i) to be read so as to negate the six‑month bar in S.13(5).
Devi Films (P) Ltd. v. The State of Madras, (1961) 12 STC 274 (Mad)	Interpreted a turnover/rules provision (R.5(1)(b) or its equivalent) to allow deduction only in the year in which an allowance was made (i.e., year of return), and that the deduction is limited to the real extent of the allowance (e.g., unpaid instalments in hire‑purchase).	The Full Bench recited the decision, noted it was rendered before S.13(5) was introduced, and held that it therefore could not be treated as an authority for permitting relief contrary to S.13(5)'s six‑month bar.
State of Andhra Pradesh v. Vauhini Pictures (P) Ltd., (1962) 13 STC 847 (Andh Pra)	The Andhra Pradesh High Court construed a rule similar to R.5‑A(b)(i) as not confining deduction to a particular period and allowed deduction in the assessment year in which refund occurred even for sales effected in the previous year.	The Full Bench expressly disagreed with that view, observing that the decision was rendered before S.13(5) and that it could not be accepted once S.13(5) was enacted.
Commissioner of Income‑tax v. Bhogilal Lalchand, 25 ITR 50 : AIR 1954 SC 155	Authority cited for the proposition that marginal notes of a statute (marginal note left unaltered after amendment) are not a proper basis for statutory construction.	The court relied on this precedent to reject the argument that the marginal note limited the section's applicability to provisional assessments; the Full Bench treated the words of S.13(5) as clear and controlling.
Commissioner of Income‑tax v. Ahmedbhai Umarbhai & Co., 18 ITR 472 : AIR 1950 SC 134	Also cited for the same point about marginal notes not being decisive for statutory construction.	Used alongside Bhogilal Lalchand in support of the proposition that marginal notes do not control the statutory meaning; the Full Bench relied on the textual clarity of S.13(5).

Court's Reasoning and Analysis

The Full Bench considered competing constructions of Section 13(5) and Rule 5‑A(b)(i) and arrived at distinct views (majority and minority). The court's analysis, as reflected in the opinions, proceeded from the statutory text, the scheme of the Act (charging provision, definitions and explanations), the rules framed under the Act, and the legislative history (Statement of Objects and Reasons for the 1964 amendment).

Majority Reasoning (Kailasam, C.J. and Balasubrahmanyan, J.)

Statutory Scheme and Charging Section: The Act charges tax on sales and aggregates sales into a yearly turnover (Section 3 and definitions in Section 2). The turnover concept is oriented to the financial year, and the rules and explanations operate to determine what is included/excluded in turnover for that year.
Role of Explanation (2)(iii) and Rule 5‑A: Explanation (2)(iii) to Section 2(r) and Rule 5‑A(b)(i) permit non‑inclusion of amounts refunded for goods returned by customers, but these provisions relate to turnover for the year and the normal operation is to exclude refunded amounts from the turnover of the year in which the sale and return occur.
Problem Addressed by Section 13(5): Where sale occurs near the end of a financial year and refund/return happens after the year ends, the dealer could not, under the then existing rules, exclude the refunded amount from the earlier year's turnover. Section 13(5) (introduced by Madras Act 15 of 1964) was enacted to permit a dealer to claim deduction/adjustment or refund of tax in respect of such sales, but only within a six‑month window from the date of sale (later modified by the 1972 amendment to allow prescribed periods and rule 5‑B clarifications).
Section 13(5) as a Complete Code on Sales‑Return Relief: The words of Section 13(5) were read as setting an inexorable time‑limit (six months) for claiming adjustment/refund of tax referable to a particular sale, making the provision a self‑contained code governing relief for sales returns. Accordingly, relief could not be obtained beyond that statutory time‑bar by invoking R.5‑A(b)(i), since a rule cannot override a statutory bar.
Effect on Madras Radiators: The majority concluded that the earlier Division Bench decision in Madras Radiators (which had read R.5‑A(b)(i) as permitting exclusion outside the six months) was erroneous and unsupportable after Section 13(5) was enacted; the rule could not be construed so as to defeat the legislative time‑limit.
Illustration and Policy: The majority illustrated the fiscal consequence of allowing refunded amounts in a later year's turnover (it could have the effect of excluding some other sale of that later year from taxation), reinforcing that exclusion must be confined to the year to which the original sale pertains as controlled by Section 13(5).

Minority Reasoning (V. Ramaswami, J.)

Practical Structure of Assessment Rules: The minority reviewed the mechanics of monthly (R.18) and annual returns (R.15), how provisional monthly returns are finally aggregated and assessed for the year, and the function of R.5‑A(b)(i) as a rule prescribing conditions under which refunded amounts may be treated for turnover computation.
Interpretation of 'Shall not be included' as Deduction: The minority construed Explanation (2)(iii) to Section 2(r) and R.5‑A(b)(i) to mean that refunded amounts are to be deducted from the turnover of the year in which the refund is effected — the fact of the refund and the date of refund are decisive for the allowance, not the date of the original sale.
Pre‑existing Authority and Rule Construction: The minority relied on earlier decisions (Devi Films, Vauhini Pictures) which held that deduction is claimable in the year in which refund/allowance occurs; those decisions predated Section 13(5), but the minority considered that they illustrated the rule's ordinary meaning and did not support overruling Madras Radiators.
Effect of Section 13(5): The minority read Section 13(5) as directed to a particular purpose—enabling a dealer to claim deduction of refunded amounts from the turnover of the year in which the sale took place where the refund occurs after that year—but did not accept that this displaced the ordinary operation of Explanation (2)(iii) and R.5‑A(b)(i) for refunds actually made in a later year. The minority thus disagreed with the majority's view that the earlier Division Bench decision was erroneous.
Rule of Beneficial Construction: The minority noted the canon that ambiguous fiscal provisions should be construed in favour of the assessee and concluded that the earlier decision did not require reconsideration; however, the minority acknowledged the majority reached the opposite conclusion.

Holding and Implications

Holding (core ruling): Madras Radiators and Pressings v. State of Tamil Nadu (37 STC 123 : 1976 Tax LR 1533 (Mad)) has been held to be erroneously decided (opinion of the majority). The Full Bench (by majority) held that Section 13(5) of the Tamil Nadu General Sales‑tax Act, 1959 operates as a complete code imposing a statutory time‑limit (originally six months from the date of sale) for claiming adjustment or refund of tax in respect of sales returns, and that Rule 5‑A(b)(i) cannot be read so as to permit a claim beyond that statutory time‑bar.

Direct consequences and implications:

The assessee's revision was dismissed; the tax case was dismissed and there was no order as to costs. (Direct effect on the parties: the claim for adjustment/refund in this matter failed.)
The Full Bench majority expressly disapproved the earlier Division Bench decision in Madras Radiators to the extent it permitted reliance on R.5‑A(b)(i) to evade the six‑month bar in S.13(5). Thus, after this decision the majority view is that Section 13(5) controls and limits the time for relief in respect of sales returns.
Where the opinion does not discuss broader implications beyond the statutory construction and overruling noted above, the immediate practical effect is the denial of the particular refund/adjustment claimed by the assessee; the Full Bench majority treated S.13(5) as the governing code for sales‑return relief.

Summary prepared exclusively from the text of the provided Full Bench opinion. No information not contained in the opinion has been added.

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M/S. Traders And Traders, Importers And Exporters And Manufacturers, Representatives Madras v. State Of T.N .

The Judgement of the Court was delivered by

P.S Kailasam, C.J (Majority View):— This case is referred to a Full Bench by Ismail and Sethuraman JJ., for determination as to the scope of Section 13(5) of the Tamil Nadu General Sales-tax Act, 1959.

2. The petitioner-assessee sold medicine (Metol) worth Rs. 69640 by invoice No. 42688 on 3-3-1966 to the customer. The customer returned the goods on 2-9-1966 and it was brought to account on the same day. A credit note was also issued. On 25-10-1966 the assessee claimed refund in his monthly return for September 1966. On 25-1-1969, the assessing authority rejected the claim. On appeal by the assessee, the Appellate Assistant Commissioner also rejected the claim on the ground that the claim was made beyond six months, as provided for under Section 13(5) of the Tamil Nadu General Sales Tax Act, 1959, hereinafter referred to as the Act. The Tribunal also dismissed the appeal of the assessee. Hence the revision by the assessee against the order of the Tribunal.

3. The sale was on 3-3-1966 and the return of the goods by the customer was on 2-9-1966. In the monthly return for the month of September filed on 25-10-1966, in relation to assessment year 1966–67, an adjustment of tax was claimed. Section 13(5) of the Act, introduced by the Tamil Nadu Act 15 of 1964, before its amendment by Tamil Nadu Act 31 of 1972, ran as follows:

“Where a dealer has refunded the price of articles returned by customers together with the tax collected from such customers in respect of the sale of such articles and where the amount representing the price refunded by the dealer is included in his turnover, the dealer shall be entitled to claim deduction of the tax levied in respect of such sale, within a period of six months from the date of sale by adjustment in the assessment and the final assessment shall be completed accordingly, but such dealer shall not be entitled to claim any adjustment or refund of tax in respect of the sale of such articles after the expiry of the said period of six months.”

4. This sub-section was further amended by the Tamil Nadu Act 31 of 1972, whereby for the words ‘within a period of six months from the date of sale’ the words ‘within such period as may be prescribed and for the words’ the said period of six months’ the words ‘the period so prescribed’ were substituted. The amendment by Act 31 of 1972 is not relevant for our discussion and need not be taken any further note of. If the case is to be decided on a reading of S. 13(5) alone, the dealer shall be entitled to claim deduction of the tax only within a period of six months from the date of sale. The deduction of the tax levied may be by adjustment in the assessment and the final assessment may be completed accordingly. But the dealer shall not be entitled to claim any adjustment or refund in respect of sale of articles after the expiry of the period of six months. On the ground of failure to satisfy this condition, the claim for deduction has to be dismissed. From the subsection it is also clear that the claim for deduction may be by adjustment in the assessment and the final assessment shall be completed accordingly. This would mean that the return had been submitted, but the final assessment had not been made. But, on no ground, the dealer will be entitled to claim any adjustment, or refund of the tax, after the expiry of six months from the date of sale. As the section in very positive terms denies any claim for deduction after six months from the date of sale and emphasises that no adjustment or refund of tax can be made after the expiry of a period of six months from the date of sale, in the concluding portion of the sub-section, no refund is allowable in the present case.

5. But the reference to a Full Bench is necessitated as a Bench of this court in Madras Radiators and Pressings v. State of Tamil Nadu, 37 STC 123 : (1976 Tax LR 1533 (Mad)), after referring to the provisions of the Act and the scope of R. 5-A (b) (i) of the Tamil Nadu General Sales tax Rules, 1959, hereinafter referred to as the Rules, observed as follows (at p. 1537 of Tax LR).

“Thus S. 13(5) and R. 5-A (b) (i) deal with different rights of a dealer”. One of the learned Judges who heard the revision felt that because of the express provisions of S. 13(5), the view that the two provisions, S. 13(5) and R. 5-A (b) (i) referred to different rights of the dealer might not be correct. The learned Judge was also of the view that the restriction of a period of six months could not be got rid of by reference to a rule and that in the event of there being a conflict, the rule being a subordinate legislation, would have to yield to the statutory provisions itself.

6. We will now proceed to refer to the necessary provisions in the Act and the Rules and the decision in Madras Radiators and Pressing v. State of Tamil Nadu, 37 STC 123 : (1976 Tax LR 1533 (Mad)). Section 2 (p) defines taxable turnover. Section 2 (q) defines total turnover and S. 2 (r) defines turnover. S. 3 is the charging section. It provides for levy of tax on sales or purchase of goods. Explanation 2 (iii) to S. 2 (r) provides that:

“Subject to such conditions and restrictions, if any as may be prescribed in this behalf any cash or other discount on the price allowed in respect of any sale and any amount refunded in respect of articles returned by customers shall not be included in the turnover”.

7. The rule as prescribed under Explanation (ii) to S. 2 (r) is R. 5-A of the Rules. That rule provides that the amount specified in the clauses in the rule shall not be included in the total turnover of the dealer. Rule 5-A (b) (i) provides that all amounts refunded to purchasers in respect of goods returned by them to the dealer when the goods are taxable on the amount for which they have been sold shall be excluded in the total turnover of a dealer provided that the accounts show the date on which the goods were returned and the date on which the the amount for which refund was made or credit was allowed to the purchaser.

8. Section 3 refers to total turnover for a year of a dealer and a casual trader, whatever be his turnover for the year, shall pay tax for each year. The year is defined in S. 2 (t) as meaning the financial year. Therefore, when a total turnover, or turnover, or tax is mentioned, it is only for the financial year. In calculating the turnover, Explanation 1-A to S. 2(r) provides that any amount collected by a dealer by way of tax under the Act shall not be included in the turnover. Under Explanation 2 (iii) any amount refunded in respect of articles returned by customers shall not be included in the turnover. So in arriving at the turnover for the year, under Explanation 2 (iii) the amount refunded shall not be included. If the sale and the refund are in the same year, in computing the turnover, the amount refunded is not included, that is, the amount for which the property was originally sold, is excluded. As the sale has proved to be abortive, the sale as well as the refund is excluded in the turnover for the year. Explanation 2 (iii) is subject to rule prescribed in this behalf. The rule prescribed is R. 5-A. That rule states that “in pursuance of Explanation (2) to S. 2 (r) of the Act, the amounts specified in the following clauses shall not, subject to the conditions specified therein, be included in the total turnover of a dealer.” Amongst the amounts that are not to be included in the total turnover is one contained in R. 5-A (b) (i) which states:

“all amounts refunded to purchasers in respect of goods returned by them to the dealer when the goods are taxable on the amount for which they have been sold, provided that the accounts show the date on which the goods were returned and the date on which and amount for which refund was made or credit was allowed to the purchaser.”

9. The rule which is in pursuance of Explanation (2) to S. 2 (r) enables a dealer not to include the amounts refunded to the purchasers. As the turnover for the purpose of taxation under S. 3 is to be for the year, the non-inclusion is for the year. That is, S. 2 (r), Explanation (2) (iii) and B. 5-A (b) (i) all relate to the turnover for the year. If both the transactions are not in the same year, that is, if the refund is in the subsequent year the refund cannot be included in the turnover for the year. As it was felt that the dealer should not be deprived of the refund of tax which he had paid for the sale, the Legislature intervened and introduced S. 13(5). That section was added by Act 15 of 1964. The objects and reasons for introducing S. 13(5) are stated as follows:

“Under Explanation (2) to the definition of ‘turnover’ in S. 2 (r), any amount refunded in respect of articles returned by customers shall not be included in the turnover of a dealer. But when such articles are sold by a dealer at the close of a financial year and customers return those articles and obtain refund of the price from the dealer some time after the close of that year, the dealer is unable to exclude the amount of price so refunded by him from his turnover before he furnishes his return for that year. It is considered necessary that he should be enabled to claim deduction of the tax included in his assessment in respect of the sale of such articles. It is not however considered necessary that a dealer should have the benefit of claiming such deduction of tax or refund of such tax for any indefinite period. It is accordingly proposed to amend Section 13 of the said Act, to allow adjustment of the amount of such tax in the assessment only if the dealer makes his claim within a period of six months from the date of sale”. The objects and reasons above extracted clearly show that as Explanation (2) to S. 2 (r) and the rules framed thereunder would not enable a dealer to exclude the amount refunded by him after the close of that year, it was considered necessary that he should be enabled to claim deduction of the tax included in the assessment. Six months' time was granted under S. 13(5). He could claim deduction of tax levied in respect of such sale within a period of six months from the date of sale. This can be done by adjustment in the assessment and the final assessment can be completed accordingly. After the final assessment had been completed, he could ask for a refund of the tax in respect of the sale of such articles, but only within six months from the date of sale. This right to get an adjustment in the assessment will not be available after six months from the date of sale.

10. Whatever doubts there might have been before the enactment of S. 13(5) in 1964, the introduction of this sub-section made it clear that after its introduction reliance could not be placed on the rules to achieve the end of obtaining a tax deduction so far as the amount refunded was concerned. On this ground alone, it is safe to state that the dealer is not entitled to a refund of tax on the price refunded by him.

11. We will now proceed to examine the purport of R. 5-A (b) (i) which a Bench of this court in Madras Radiators and Pressings v. State of Tamil Nadu, 37 STC 123 : (1976 Tax LR 1533 (Mad)) held dealt with different rights of a dealer than S. 13(5). The rule is framed, as already stated, in pursuance of Explanation (2) of S. 2 (r) and deals with the contents of a turnover and permits a dealer to exclude from his turnover any amount refunded. The turnover, we are of the opinion, is for the purpose of levy of tax under S. 3 and it is for the financial year. Normally, it could not be understood as enabling a dealer to exclude the amount in the subsequent year. The rule does not advance the contention that it confers a different right. The rule enables a dealer not to include in his total turnover the amount refunded to purchasers. Not included in the total turnover would necessarily mean the turnover submitted for the year. This was realised by the Legislature and S. 13(5) was enacted to remedy this defect and not for conferring any separate right. We do not see any reason for holding that R. 5-A (b) (i) confers a different right that is the right to exclude the amount refunded in the subsequent year's return though the refund was not within a period of six months from the date of sale.

12. Two decisions were relied on by the Bench in Madras Radiators and Pressings v. State of Tamil Nadu, 37 STC 123 : (1976 Tax LR 1533 (Mad)), for coming to the conclusion that different rights were conferred on the dealer. It may at once be stated that both the decisions were rendered when S. 13(5) had not been introduced. In Devi Films (Private) Ltd., Madras v. The State Of Madras., (1961) 12 STC 274 (Mad), a Bench of this Court was dealing with a sale under a hire purchase agreement. The machinery was sold to four purchasers for Rs. 68275 by assessee under a hire purchase agreement. The sales were in 1949, 1950 and 1951. The aggregate amount due under each of those agreements were taken into account in computing the taxable turnover of the assessee in the year of transaction. The transactions being in the form of hire purchase agreements the sale price was payable in instalments. The agreements provided that in default of payment of the instalments due, the assessee was entitled to a return of the goods.

13. It was further provided that when the goods were returned to the assessee, the liability of the purchaser to pay the remaining instalments ceased. In the assessment year 1955–56 four of the purchasers defaulted payment. The aggregate of the unpaid instalments on all these four transactions was Rs. 21191-1-6. The assessee claimed that the entire amount of Rs. 68275 which had suffered tax in the previous years should be deducted from its gross turnover in the assessment year 1955–56 during which the agreements were terminated and the goods were returned to the assessee. The Court held on a construction of R. 5(1) (b) of the Turnover and Assessment Rules, which provided that in determining the net turnover, all amounts allowed to purchasers in respect of goods returned by them to the dealer shall be deducted, that if an allowance is made against the goods returned, the deduction can be claimed only in the year in which that allowance has been made and to the real extent of that allowance independent of the date of the sale. The court also held that the date of the sale decides the inclusion in the assessee's assessable turnover and the date of allowance determines the exclusion from the gross turnover under R. 5(1) (b).

14. It may be noted that what had been really allowed to purchasers in that case was the amount of the unpaid instalments of the sale price. The court held that the assessee is not entitled to claim that the entire sale price has been allowed within the meaning of R. 5(1)(b). The court proceeded to explain that in the case of a transaction of a sale in the form of a hire purchase agreement, where the goods themselves are returned to the seller and the unpaid instalments of the purchase money ceased to be payable under the terms of the agreement, the seller is entitled to claim under R. 5(1) (b) the total of the unpaid instalments as an allowance made within the meaning of R. 5(1) (b). In the circumstances of that case, the amount was included as an allowance. The facts disclose that the unpaid instalments cannot be included in the sale at all. Further as we observed at the outset, this decision was rendered before S. 13(5) was enacted and therefore it cannot be treated an authority for the proposition with which we are dealing.

15. The next case that was referred to is the decision of the Andhra Pradesh High Court in State of Andhra Pradesh v. Vauhini Pictures (P) Ltd., (1962) 13 STC 847 (Andh Pra). Construing R. 6(1) (b) (i) of the Andhra Pradesh General Sales Tax Rules, 1957, the court observed that the rule does not state that the deduction claimed for refund of price in regard to the return of goods should be confined only to a particular period and held that a refund in the assessment year in respect of sales effected in the year previous to the assessment year would also be within the purview of that rule. This decision was rendered in the absence of S. 13(5). We are unable to agree with this view.

16. In Madras Radiators and Pressings v. State of Tamil Nadu, 37 STC 123 : (1976 Tax LR 1533 (Mad)), the Bench has taken the view that there is no reason to restrict the operation of R. 5-A (b) (i) to a case of refund within the assessment year itself, as the rule does not state that the amounts refunded shall be excluded from the total turnover of the year in which the sale took place. We are unable to accept this view as the turnover is required to be submitted for the financial year according to the charging section, Section 3. Read in the context of S. 2 (r) and Explanation (2), the purport of the rule is clear in that it only enables the refunded amount to be excluded from the turnover of the year. This was how the definition S. 2 (r), Explanation (2) to the definition and the rules were understood and the Legislature came forward with the amendment enabling the refund of the tax paid within a period of six months from the date of sale. The wording of R. 5-A (b) (i) is significant in that it talks of the refunded amount to be excluded from the total turnover, which would mean that the refunded amount shall not be treated as part of the total turnover and that the refund must be relatable to the transaction which took place in that year. Though R. 5-B was introduced by a subsequent amendment in the year 1973, it also makes the position clear that no claim for adjustment or refund of the tax under sub-sec. (5) of S. 13 be entertained, if it is not made within a period of six months from the date of sale. This should clearly mean that an adjustment of refund cannot be obtained after six months from the date of sale and R. 5-A (b) (i) cannot be read in a manner which is inconsistent with this rule.

17. We are satisfied that the decision in Madras Radiators and Pressing v. State of Tamil Nadu, 37 STC 123 : (1976 Tax LR 1533 (Mad)) is erroneous. In any event, after the introduction of Section 13(5), the construction put forward by the Bench in the above decision is un-supportable.

18. V. Ramaswami, J. (Minority View):— I have had the advantage of reading the judgment of my Lord, the Chief Justice. Having given my careful and anxious consideration, I regret my inability to agree with the conclusion reached by the learned Chief Justice.

19. The assessee is a dealer who has opted for assessment under R. 18 of the Tamil Nadu General Sales Tax Rules, 1959 (hereinafter called the Rules). He had sold under bill No. 4268 dated 3-3-1966 medicine (Methol) for Rs. 69640. This sale was included in the taxable turnover in the monthly return for the month of March 1966 relating to the assessment year 1965–66 and the tax of Rs. 1741 relating to the said sale was also remitted along with the return for the month. The goods sold under this invoice were returned to the assessee on 2-9-1966 and the assessee refunded the entire value of Rs. 69640 plus sales tax of Rs. 1741. In the monthly return relating to September 1966, which was filed in time on 25-10-1966, the assessee claimed adjustment of the tax paid on this sale. The assessing officer, however, in the final assessment under R. 18(6) relating to the assessment year 1966–67 rejected this claim for adjustment on the ground that under Section 13(5) of the Tamil Nadu General Sales-tax Act, 1959 (hereinafter called the Act), the assessee would not be entitled to claim any adjustment of refund of the tax in respect of the sale of such articles after the expiry of the period of six months from the date of sale and that the assessee had claimed the adjustment only in the monthly return filed on 25-10-1966 in respect of the turnover relating to September 1966 and that therefore the adjustment was not made within six months from the date of sale, namely, 3-3-1966. This order of the assessing authority was confirmed in appeal by the Appellate Assistant Commissioner and the Sales-tax Appellate Tribunal also agreed with this view.

20. Under R. 15, every dealer who is liable to submit a return unless he has elected to be assessed under R. 18, shall on or before the 1st day of May every year submit to the assessing authority a return in form A. 1, showing the actual total and taxable turnover in respect of the previous year. Under the Sales-tax Act the assessment year is the financial year, that is the year ending with 31st March. On receipt of such return, the assessing authority, if he is satisfied that the return is correct and complete, finally assesses on the basis of the return and determines the tax payable. In cases where he considers the return to be incorrect or incomplete he makes assessments according to ‘best judgment’ basis. In cases where the assessee had opted to be assessed by the method described in R. 18, the assessee had to submit a return in form A-2, on or before the 25th of every month in respect of the turnover for the preceding month. It may be seen from Form A. 2 and the relevant rules that the return should specify the total turnover, the turnover on which exemption is claimed, the taxable turnover, the tax due on the taxable turnover, the amount actually collected by way of tax and the tax paid. Along with this return, the assessee shall also send a cheque or postal order for the amount of tax due as per his return or a receipt for payment of the tax in a Government treasury.

21. The return so filed for each month is provisionally accepted under Cl. 3 of R. 18. For the monthly return so submitted without a treasury receipt or cheque for the full amount of tax payable, the assessing authority shall provisionally assess tax payable for the month on the basis of the return and shall serve upon the dealer a notice in Form B-2, and the dealer shall pay the sum demanded therein. After the close of the year in which the said monthly provisional assessment has been made, the assessing authority shall, after such scrutiny, as he considers necessary and satisfying himself that the monthly returns filed are correct and complete, finally assess under a single order on the basis of the returns and determine the tax or taxes payable under the Act for the year to which the returns relate. The provisions relating to the refund of any amount in respect of goods returned by customers will have to be understood with reference to this scheme of assessment.

22. Prior to the introduction of Section 13(5) in the Act, the legal position as per the provisions of the Act and the rules and as understood by this court in respect of the amount refunded for articles returned by the customers may now be noticed. Under Section 3 of the Act every dealer shall pay tax for each year at a certain percentage of his taxable turnover. Turnover means the aggregate amount for which the goods are bought and sold and the taxable turnover means the turnover on which the dealer shall be liable to pay tax as determined by the provisions of the Act and the rules. Taxable event is the sale and the levy of tax is on the ‘amount’ for which the goods are bought or sold. Once a sale takes place the amount for which the goods are sold becomes thus taxable. But the Act provided for certain relief in cases where the dealer had to refund any amount in respect of articles returned by the customers. Explanation (2) (iii) to the definition of ‘turnover’ in S. 2 (r) of the Act provides that, subject to such conditions and restrictions, if any, as may be prescribed in this behalf, any amount refunded in respect of articles returned by customers shall not be included in the turnover. In pursuance of this Explanation, R. 5-A specifies the conditions and restrictions.

23. The relevant portion relating to refund is R. 5-A (b) (i). Under this provision, all amounts refunded to purchasers in respect of goods returned by them to the dealer when the goods are taxable on the amount for which they have been sold shall not be included in the total turnover provided that the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made or credit was allowed to the purchaser. Neither the Explanation to S. 2 (r) nor R. 5-A (b) made the sale of the article which was the subject matter of the return later on not a taxable sale by reason of such return only. Nor the definition of ‘sale’ in S. 2 (n) excluded such sales. Therefore, once a sale takes place the entire amount paid or payable in respect of the same is liable to be included in the turnover. Under the Explanation read with R. 5-A (b), the amount refunded in respect of articles returned by customers ‘shall not be included’ in the turnover.

24. In cases where the assessee has opted to be assessed under R. 18, as already stated, he has to submit a return in form A-2 for every month on or before the 25th of the succeeding month and has also to remit the tax payable as per the return. Thus, when a sale takes place in any particular month, he had to include that sale in the taxable turnover in the monthly return and pay tax on it. If the return of the article was in any period subsequent to the sale but within the same assessment year the assessee would be entitled to deduct the same from the total turnover on which he is finally assessed under a single order for the assessment year under R. 18(6), irrespective of the fact that the return was within six months or beyond the period of six months from the date of sale. No question of excluding the sale itself from the original monthly return could arise. In respect of an assessment under R. 18, the words ‘shall not be included in the turnover’ in Explanation (2) to S. 2 (r) and R. 5-A will, therefore, have to be understood only as a deduction from the total turnover.

25. In cases where the sale and return were in the same assessment year, when a dealer submits his return under R. 15, the amount for which it was sold is included in the turnover and the amount refunded is deducted from the same before arriving at the total turnover of the dealer because the sale is still a taxable sale in spite of the refund made on return of the article. In such a case, it is also immaterial whether the return of the article and the refund of the money was within a period of six months from the date of sale. Thus, even in respect of the assessment under R. 15, the words ‘shall not be included in the turnover’ will have to be understood only as a deduction from the total turnover.

26. As already stated under Section 3 of the Act, every dealer shall pay tax at a certain percentage of his taxable turnover. Turnover is the amount for which goods are sold or purchased and taxable turnover is determined after certain deductions from the total turnover as per the rules. The amount refunded is excluded not because of the sale and return took place in the same year but because Section 2 (r) Explanation (2) allowed the amount refunded in respect of any goods returned to be deducted from the turnover of that year. The deduction from the turnover was not conditioned upon the inclusion of the amount for which the goods were sold in the turnover, but conditioned upon factual refund made on return of the goods and to the extent of amount refunded. Thus, what was relevant under Explanation (2) to S. 2 (r) and R. 5-A (b) is the date of return of the article and refund of the money and not the date of sale. It may also be noted that the amount that is to be deducted from the turnover is not the entire price which the dealer receives on the sale from the customer, but it is only so much of the amount that was refunded by him when the articles were returned by the customer. The two amounts may differ, but so far as the assessment is concerned, only that amount that was refunded had to be deducted.

27. Thus in terms of the provision of the Act and the rules, the amount refunded has to be deducted only from the turnover of the year in which the refund was effected and it is immaterial when the sale took place and whether the price for which the goods were originally sold was included in the turnover or not. Thus, in cases where the sale and the return of the article were in two different assessment years, the assessee, as the provisions stood then, could claim a deduction of the amount refunded only in the assessment year in which the amount was refunded. He was not enabled to claim a deduction of the same in such a case in the assessment year in which the sale itself took place.

28. Let us now consider the decisions rendered with reference to the provisions then existing prior to the introduction of S. 13(5) of the Act. In Devi Films (Private) Ltd., Madras v. The State Of Madras., 12 STC 274 (Mad), a Division Bench of this Court had to consider a similar question. The facts in that case are as follows:— The assessee in that case sold some cinema machinery and apparatus under hire purchase agreements. The aggregate of the amount due under these agreements was Rs. 68275. In computing the taxable turnover of the assessee the aggregate amount was included in the year of the transaction and was assessed to sales tax. This was for the reason that the hire purchase agreements were considered to be sales and the tax is payable on the aggregate amount for which the goods were sold, even though the consideration for the same was payable in future. When the purchaser defaulted in payment of the instalments, the assessee got a return of the goods. This, default and return of the goods was in the assessment year 1955–56 long subsequent to the year of the transaction. The aggregate of the unpaid instalments in respect of these transactions was Rupees 21,191-1-6.

29. The assessee claimed that since there was a return of the article and default in payment of the further instalments the entire amount of Rs. 68275 which had suffered tax in the previous year should be deducted from its gross turnover in the assessment year 1955–56; during which period the agreements were terminated and the goods returned to the assessee. In support of this contention, the assessee relied on R. 5(1) (b) of the then Turnover and Assessment Rules, which was in pari materia with R. 5 A (b) of the present rules. It may be mentioned that explanation 2 (iii) of S. 2 (r) was also in the statute book at that time. It was held by this court that the assessee was entitled only to that amount which represented the unpaid sale price and not the aggregate amount of Rupees 68275 because it was only the unpaid sale price that would be the amount for which credit was allowed to the purchaser and the remaining consideration had already been received and not repaid by the dealer. It was also held that it was the year in which the refund was made or credit was allowed for which relief could be obtained and not in the year of sale. In so holding, a Division Bench of this court observed—

“The goods sold by the assessee were returned to the seller. It is true there was a considerable interval between the sale and the return of the goods, but the length of the interval is, in our opinion, not a relevant factor at all in deciding whether the requirements of the rule have been satisfied by a given assessee. If an allowance is made against the goods returned the deduction can be claimed only in the year in which that allowance has been made and to the real extent of that allowance, independent of the date of the sale. The rule itself makes that clear. The date of the sale decides the inclusion in the assessee's assessable turnover. The date of the allowance determines the exclusion from the gross turnover under R. 5(1) (b).”

30. A similar view was also taken by the Andhra Pradesh High Court in State of Andhra Pradesh v. Vauhini Pictures (P) Ltd., (1962) 13 STC 847 (Andh Pra), with regard to the effect of R. 6(1) (b) (i) of the Andhra Pradesh General Sales-tax Rules, 1957, which also contained a provision similar to R. 5-A (1) (b) of the Tamil Nadu General Sales-tax Rules. In that case also some publicity materials were sold to the exhibitors in the assessment year 1957–58, but they were returned in the assessment year 1958–59 and the sale price was refunded by the assessee to the purchasers. Relying on the rule, the assessee claimed a deduction of the amount refunded in the assessment year 1958–59. A Division Bench of the Andhra Pradesh High Court allowed the claim and held:

“We find that R. 6(1) (b) (i) discreetly omits to mention that the deduction claimed for refund of price in regard to the return of goods should be confined only to a particular period. All that rule mentions is that when goods are taxable on sales, the amounts allowed to purchasers in respect of the goods returned by the purchasers to the dealer is an allowable item. Further on, the condition laid down in that rule (despite repetition) says ‘provided the accounts show the date on which the goods were returned and the date on which and the amount for which refund was made.' It looks to us that the mention of the date is not with a view to find out when the claim for deduction has arisen, but only to make it feasible for the taxing authority to verify when the goods were got by the seller and how refunds were made in respect of them. Therefore, to have to read into this fact that the date of the return of the goods is to be specified by the assessee and that a revaluation in respect of the time of the transactions is also implied with a view to restrict deductions in the year of assessment, is not warranted by the language of this rule. Nor can it be said that this rule was contemplating the taking into account of the return of the goods only in the asessment year and not in regard to goods sold out previously but were returned in the assessment year.”

31. The resultant position is, when a sale takes place the amount for which it is sold or purchased will have to be included in the turnover in the year in which the sale took place. By reason only of the return of the article subsequently and refunding of any amount in respect of such return, the sale itself does not cease to be a taxable sale nor the amount for which it was sold ceased to be a turnover of the assessee. In the case of refund in respect of articles returned by the customers, that portion of the amount that was refunded will have to be deducted from the turnover of the year in which the amount was refunded. It was not permissible for an assessee when the sale and return were in different assessment years, to claim deduction and relief in the year of sale itself. When such was the position Section 13(5) of the Act was introduced by Madras Act 15 of 1964. That sub-section as originally introduced reads thus—

“(5) Where a dealer has refunded the price of articles returned by customers together with the tax collected from such customers in respect of the sale of such articles and where the amount representing the price refunded by the dealer is included in his turnover, the dealer shall be entitled to claim deduction of the tax levied in respect of such sale, within a period of six months from the date of sale by adjustment in the assessment and the final assessment shall be completed accordingly but such dealer shall not be entitled to claim any adjustment or refund of the tax in respect of the sale of such articles after the expiry of the said period of six months.”

32. As Craies on Statute Law puts it, the most firmly established rules for construing an amending enactment are those laid down by the Barons of the Exchequer in Heydon's case 1584-3 Co-Rep. 7a, which have been continuously cited with approval and acted upon in a number of cases. They are as follows:

1. What was the law before the making of the Act; 2. What was the mischief and defect for which the existing law did not provide; 3. What remedy the Legislature had resolved to cure; and 4. The true reason of the remedy. The reason for the addition of sub-sec. (5) of Section 13 of the Act is explained in the Statement of Objects and Reasons to the amending bill and it reads as follows:

“Under Explanation 2 to the definition of ‘turnover’ in S. 2 (r), any amount refunded in respect of articles returned by customers shall not be included in the turnover of a dealer. But when such articles are sold by a dealer at the close of a financial year, and customers return those articles and obtain refund of the price from the dealer sometime after the close of that year, the dealer is unable to exclude the amount of the price so refunded by him from his turnover before he furnishes his return for that year. It is considered necessary that he should be enabled to claim deduction of the tax included in his assessment in respect of the sale of such articles. It is not, however, considered necessary that a dealer should have the benefit of claiming such deduction of tax or refund of such tax for any indefinite period. It is accordingly proposed to amend Section 13 of the said Act to allow adjustment of the amount of such tax in the assessment only if the dealer makes his claim within a period of six months from the date of sale”.

33. It is seen from this that the Legislature intended to provide for that which was not found in the earlier enactment, that is to permit an assessee to claim a deduction of any amount refunded from the turnover of the assessment year in which the sale took place even though the refund was made in subsequent financial year. The provision in S. 13(5) also shows that it applies only to a case where the assessee wants to claim a deduction of the amount refunded from the turnover of the year in which the sale took place, even though the refund was in the subsequent year. The words ‘the amount representing the price refunded by the dealer is included in his turnover” in S. 13(5) clearly show that the turnover referred to therein is the turnover of the year in which the sale took place. The relief under S. 13(5) could be claimed by the dealer only if the claim for deduction of the tax levied in respect of such sale is made within a period of six months from the date of sale. A curious result flowed from this provision, as seen below. Even if the sale and the return were made in the same assessment year, in the case of a person who had opted to be assessed under R. 18, he was deprived of the relief found in Explanation (2) to S. 2 (r), because if the sale was in April it would have been included in the monthly return filed in the subsequent month and on that basis it would have been provisionally assessed.

34. Though the return and refund itself might be within six months, that is, in October, since the monthly return in respect of October is to be submitted in November, the assessee, on a strict interpretation of S. 13(5) was not entitled to claim deduction of the tax by adjustment. In the case of an annual return under R. 15 also the assessee would not be entitled to claim deduction though the sale and return were in the same year since S. 13(5), as it was originally enacted, required the claim for deduction or adjustment to be made within a period of six months from the date of sale. In all cases where the sale took place during the period from the 1st April and 30th September of any particular year, the assessee was not able to invoke S. 13(5) as the return for the year had to be filed after the end of the year and before the 1st of May. It is to get over this difficulty, S. 13(5) was again amended by Tamil Nadu General Sales-tax (Second Amendment) Act, 1972, by substituting the words ‘within such period as may be prescribed’ for the words ‘within a period of six months from the date of sale’ and R. 5-B was also introduced in the rules. Under R. 5-B such claim for adjustment or refund of tax could be made within a period of six months from the date of sale or before the date of final assessment whichever is later. Under the provisions of S. 13(5) and R. 5-B, as they stand now, if the sale and the return take place in different assessment years, the assessee could claim a deduction of the amount refunded from turnover of the year in which the sale took place before the date of final assessment for that year.

35. Even if the assessment had been completed, he could ask for an adjustment or reopening of the assessment or rectification of the assessment if he makes a claim for such adjustment or rectification within a period of six months from the date of sale itself. This is the position both in regard to assessment under R. 15 or an assessment under R. 18. Thus, Section 13(5) is not intended to cover a case where the assessee claims a deduction of the amount refunded in the year in which he refunded the money. It is intended to cover a case when the assessee claims deductions of the amount refunded from the turnover of the year in which the sale took place. The previous provision enabling the assessee to claim deduction under S. 2 (r), Explanation 2 (iii) read with R. 5-A (b) in the year in which the refund was effected is thus not affected either by express provision or by implication. It may also be pointed out that it is not correct to state that it is R. 5-A (b) that enables an assessee to deduct the amount from the turnover. It is provided for in S. 2 (r) Explanation itself and R. 5-A only prescribes the condition under which such deductions could be claimed, as Explanation 2 itself states that the deduction could be made only subject to such conditions and restrictions as may be prescribed.

36. Before parting with this case, I may also add that, assuming that the view of the learned Chief Justice is also possible, under the well-known principle where two interpretations are possible that interpretation which is beneficial to the assessee will have to be adopted in construing a taxing statute. Even under this rule, I am of the view that decision in Madras Radiators and Pressings v. State of Tamil Nadu, 37 S.T.C 123 : (1976 Tax LR 1533) (Mad) does not require any reconsideration.

37. I am therefore unable to share the view that the earlier decision of this Court in Madras Radiators and Pressings v. State of Tamil Nadu, 37 STC 123 : (1976 Tax LR 1533) (Mad) is erroneous or unsupportable on the provisions of the Act.

38. Balasubrahmanyan, J. (Majority View):— I have had the advantage of perusing the judgments of my Lord the Chief Justice and of my learned brother V. Ramaswami J. They have expressed diametrically opposite views on the scope and effect of Section 13(5) of the Tamil Nadu General Sales-tax Act, 1959. I agree with the former view and disagree with the latter. In these events, I propose to say a few words myself on the question, explaining why I prefer the one view to the other.

39. Section 13(5) deals with the tax treatment of a sales return for purpose of assessment. The Act imposes a tax on sales of goods. The charge to tax, in terms of legislative competence as well as in terms of some of the provisions in the Act itself, attaches the moment the sale is effected. This idea is sometimes put differently by saying that in sales tax the taxable event is the sale. But the Act has also to look to the process of assessment and collection of this tax. Hence it adopts the principles of aggregation familiar to fiscal measures and makes the assessment to tax a yearly assessment by aggregating all sales that a tax payer makes in the course of that year. The aggregate of the sales in the fiscal period of one year is called the turnover. This is the reason why sales-tax also goes by the other appellation, turnover tax. It would be correct to say that the tax is at once a tax on the sales and a tax on turnover. There are sections in the Act which are oriented towards the one conception of aggregation; there are other sections which are founded on the other idea of severally of transactions. It is unnecessary for me to refer to all the relevant sections that illustrate the scheme of the Act which I have outlined. Section 13(5) is one of those provisions in the Act which takes up for special treatment an individual sale, which forms part of the aggregate of sales called turnover.

40. Any transaction which is sale and is part of the taxable turnover of a year, gets taxed, and must get taxed, in the assessment for that year. The legislature, however, as a popular legislative body took note of the realities of commercial dealings, because the tax imposed under the Act is not a tax on sales of all and sundry people, but only a tax on the turnover of a dealer, all non-dealer's sales being excluded from the ambit of the charge, by definition. It often happens in the business world that a customer who has purchased a commodity from a dealer might wish to return it for some reason, and the dealer may also be agreeable to that course and be willing to refund the price. If both the parties act according to their second thoughts in the manner aforesaid, what happens is a sales return, as it is described in the fiscal jargon. But this does not abrogate the sale, or render it retrospectively, a nullity. On the contrary, it takes note of the circumstances that the earlier sale is an accomplished fact. Only, the parties agree to put themselves in the former position, the status quo ante, by consensual overt acts-the one returning the goods and the other refunding the price.

41. Technically, therefore, on the theory that sales tax attaches at the moment of sale, there is no call for making any provision in the taxing Act for giving any relief to the dealer whose sale, which is subject to a subsequent return, chargeable to tax. But, as I said, since the Legislature felt it expedient to take note of commercial realities even while enacting a strictly fiscal measure, it made provision for excluding from the taxable turnover the amount refunded by the dealer to the customer as respects a sales return. Sales return, as such, has thus no place in the scheme of taxation excepting that it can be traced to the particular sale of which it is a return. Section 13(5) makes this clear by enacting that where a dealer has refunded the price of articles returned by customers and where the price refunded by the dealer is included in his turnover, the dealer shall be entitled to claim deduction of the tax levied in respect of such sale. The words of the section are not capable of being misunderstood. They hitch the deduction of tax to the sale in question. There can be no question of considering a sales return all by itself, as if that, per se, were the subject of special tax treatment. The other provision in the section, which is very important to the present case, is that which imposes a strict time limit for the making of any claim by the tax payer for deduction of the tax referable to the sale in question. While the Act permits the dealer to get a deduction of tax in respect of the sales return, it insists that the claim for such deduction should be made within six months from the date of the sale.

42. If, by then, the assessment of the turnover in which the sale is included, is not completed, then an adjustment will be made in the computation of the taxable turnover by removing the amount covering the sales return from the figure of turnover, and the year's tax will be calculated on the net figure after exclusion of the amount of sales return from the turnover. The section having provided the six months time limit for deduction of tax in respect of sales return, logically makes provision for cases where, even during the subsistence of the six months' time limit, the final assessment happens to have been already completed. In such cases, the section entitles the dealer to obtain relief by way of refund of the tax levied in the already completed assessment, but always insisting that the claim for deduction of tax must be filed before the assessing authority within six months of the sale.

43. I do not think the scheme and structure of the section admit of any doubt. I further feel that in the matter of the tax treatment of sales returns this provision must be taken as a complete code in itself. This conclusion must be derived not only because there is no other section in the Act which has anything to say on the subject, but also because of enactment of an inexorable time-limit in the concerned provision itself. The idea of a time-limit for exercise of a right or privilege is to say that beyond the time-limit the right or privilege cannot be exercised. Otherwise, the Legislative purpose of imposing a bar would be stultified. For these reasons, without referring to the history of the legislation or any other factors, I am of the view that the claim for deduction of tax for a sales return cannot be made at any time, after the expiry of six months from the relative sale itself. I am further of the view that the claim appertains, and must appertain, only to the particular assessment of the turnover in which the sale itself figures.

44. Reference was made to R. 5-A (b) (i) of the Rules made under the Act. Reference was also made to the definition of the expression ‘taxable turnover’ and ‘turnover’ in the interpretation clauses in the Act. The former term is defined as the turnover on which a dealer shall be liable to pay tax as determined after making such deduction from his total turnover and in such manner as may be prescribed. The latter expression ‘turnover’ has a definition to which are appended explanations. Explanation (iii) says that, subject to the rules in this regard, any amount refunded in respect of articles returned by customers ‘shall not be included’ in the turnover. R. 5-A (b) (i) refers to all amounts refunded to purchasers in respect of goods returned by them to the dealer, and provides that the said amounts shall not be included in the total turnover of the dealer.

45. From the words ‘shall not be included’ occurring in the definition in S. 2 (r) read with Explanation (iii) and R. 5-A of the Rules, it is sought to be argued that whenever there is a sale return the amount covered by that return can be deducted from the turnover for arriving at the taxable turnover. It is principally on the basis of these words that the view has been expressed in the judgment of my learned brother, V. Ramaswami J., These words, it is said, warrant the taxation of a sale in one year's assessment and the exclusion of the sales return in respect of that very sale in a subsequent year's assessment. With respect, I do not see how the words point to his conclusion. Ramaswami J. has observed that the words ‘shall not be included’ only mean that to the extent of the sales return there shall be a ‘deduction’ from the turnover. In my view, the concept of a deduction in the sense of an allowance such as we know in the realm of income-tax for business expenditure, is alien to the scheme of the Tamil Nadu General Sales-tax Act. “Shall not be included” does not mean shall be deducted. Nor does it mean, shall be excluded. In my opinion the words “shall not be included” convey the idea that but for the provision for non-inclusion the thing would be included in the turnover.

46. Samuel Goldwyn the movie Mogul in a famous Goldwynism asked his host to ‘include me out’ from the list of invitees. Adopting this Goldwynism I would say that a sale return is such a return as might be included out of the taxable turnover. In other words, only those sales returns whose relative sales, but for their non-inclusion are includable in the very assessment of the turnover concerned can be kept out of the taxable turnover. It follows, therefore, that even on the basis of the statutory definitions of turnover and the pertinent rule relating to non-inclusion of sales returns, there is no warrant for the conclusion that a sales return may be claimed in any assessment year, provided the return is made in that year.

47. In the earliest Bench case on the subject in Devi Films (Private) Ltd., Madras v. The State Of Madras., (1961) 12 STC 274 (Mad) which was under the earlier Sales-tax Act of 1939, the position was somewhat epigrammatically put: the year of assessment is the year of sale, but the year of exemption for sales return is the year of return. The concerned rule that the Bench had to construe employed the expression ‘shall be deducted from the gross turnover’. The words we are dealing with are different, as I have sought to show in the foregoing paragraphs. It is not necessary, and no purpose would be served, to examine whether Devi Films (Private) Ltd., Madras v. The State Of Madras., (1961) 12 S.T.C 274 (Mad) even on the language of the statute or the statutory rules as they then existed, was correctly decided in the epigram I have referred to above. It is necessary to emphasise that under the 1959 Act, after the inclusion of S. 13(5) all the law and principles for the tax treatment of sales returns must be found only in that section and nowhere else in the Act. Rule 5-A cannot bear the meaning sought to be given to it that irrespective of the bar of limitation under S. 13(5) a dealer would be entitled to tax deduction in respect of a sales return. To permit a dealer to obtain a deduction, as it is called, from a later year's assessing turnover for a sales return appertaining to an earlier year's sale would amount to a failure to tax a taxable sale on the last year.

48. The above principle can be borne out by an illustration. Sales of commodities A, B, C and D of Rs. 10,000 each are made in 1975–76. In 1976–77 there are sales of E, F, G, and H of Rs. 10,000 each. In that year commodity A is returned and the dealer refunds the price to the customer. In terms of S. 13(5) the claim for the sales return must be made in 1975–76 assessment to which the sale of A appertains. To say that in 1976–77 Rs. 10,000 can be deducted would be equivalent to leaving out of account from proper charge of tax any one of the sales of E, F, G and H. I do not find any warrant in the words of R. 5-A (b) (i) to desist from taxing a sale which falls within the charge. The exclusion of a sales return must, therefore, be strictly confined to the very year in which the sale itself has been effected and would otherwise have had to be included and charged to tax.

49. This is the principle and provision in S. 13(5). When the section uses the words ‘deduction of tax’ which, so far as I can see, is a new phrase in sales-tax literature, it is implicit that only that tax with which the sale itself is charged, or would be charged, is the subject of tax relief. It is in this context that S. 13(5) provides for adjustment of tax in the assessment in cases where the claim for deduction of tax is made before the assessment is over, although within six months of the turnover. It is on the same principle that S. 13(5) provides for actual refund of tax-another innovation introduced by the Amendment Act of 1964-whenever the claim is made after the sale gets completed, but within six months of the sale.

50. It was suggested that S. 13(5), occurring as it does in the section marginally noted as ‘provisional assessment’ must be confined to provisional assessments. A marginal note, made by the legislative draftsman before the amendment, but omitted to be altered suitably after amendment, cannot be a proper basis for statutory construction. Vide Commr. of Income-tax v. Bhogilal Lalchand, 25 ITR 50 : (AIR 1954 SC 155) and Commr. of Income-tax v. Ahmedbhai Umarbhai and Co., 18 ITR 472 : (AIR 1950 SC 134). The words of S. 13(5) are clear enough, and I have already explained why they should be regarded as a complete Code in themselves on the subject of tax relief to sales returns.

51. Reliance was placed on a supposed rule of construction of taxing Acts that where two views are possible of a fiscal provision the more favourable to the tax payer should be held to be the correct interpretation. As a student of revenue law, I have never been able to understand the rationale behind this doctrine of interpretation of fiscal enactments. In any case, I cannot accept the validity of a doctrine of judicial construction the last resort of which is doubt, not conviction.

52. Recent trends in tax decisions show the decline of this theory of interpretation. Forensic ingenuity might be capable of raising a cloud of doubt in the most unequivocal of taxing provisions. But whatever doubts might be created in other people's minds, the court at any rate must be in a position to make up its mind in every case. That is because, while there may be a possibility of more than one construction being mooted of the same taxing provision, there can only be one view that can be correct. In any case, in expressing my views aforesaid I have not been assailed by any doubts whatsoever.

53. For the above reasons, I concur with the conclusion expressed in the judgment of my Lord, the Chief Justice and differ from that expressed by my learned brother, V. Ramaswami J. In my view, the Division Bench decision in Madras Radiators and Pressings v. State of Tamil Nadu, 37 S.T.C 123 : (1976 Tax LR 1533 (Mad)) is wrongly decided.

54. Kailasam, C.J:— In accordance with the opinion of the majority of the Full Bench, it is held that Madras Radiators and Pressings v. State of Tamil Nadu, 37 STC 123 : (1976 Tax LR 1533) (Mad) has been erroneously decided.

55. In the result, the tax case is dismissed. There will be no order as to costs.

56. Revision dismissed.

M/S. Traders And Tra... v. State Of T.N .