ORDER
Obul Reddi, J.
1. This revision preferred by the State against the order of the Sales Tax Appellate Tribunal in T.A. No. 376 of 1966, raises an important question whether the amendment to the proviso to Section 5(1) of the Andhra Pradesh General Sales Tax Act introduced by Section 5 of the Amendment Act No. 16 of 1963 with effect from 1st August, 1963, empowers the assessing authority to levy tax at one rate up to the period 31st July, 1963, in accordance with the proviso as it stood prior to its amendment and in respect of the period subsequent to 31st July, 1963, at a different rate as provided for in the substituted proviso.
2. To appreciate the question involved, we may set out the relevant facts of this case in brief: M/s. Murali Cafe, Vizianagaram (hereinafter referred to as the assessee) was assessed to tax by the Deputy Commercial Tax Officer, Vizianagaram, for the year 1963-64 on 30th June, 1964, on a net turnover of Rs. 2,77,618.21 out of which the turnover of meals and coffee worked out to Rs. 2,73,996.96. The Deputy Commercial Tax Officer assessed the turnover of meals and coffee splitting it up into two parts : (1) Rs. 93,113.23 up to 31st July, 1963, at 3 per cent. applying the old provision; and (2) up to the limit of Rs. 39,999 at 2 per cent. and the balance of Rs. 1,40,884.73 at 3 per cent. from 1st August, 1963 to 31st March, 1964, applying the substituted provision. Against the order splitting up the turnover into two parts and applying two different rates of tax in respect of the total turnover, the assessee preferred an appeal unsuccessfully to the Assistant Commissioner of Commercial Taxes, Kakinada. Thereafter, a further appeal was preferred to the Sales Tax Appellate Tribunal and the Tribunal, holding that the amendment, which came into effect on 1st August, 1963, is prospective, gave relief in accordance with the rates prescribed in the amended proviso. It is this order that is assailed before us by the revision petitioner, the State of Andhra Pradesh.
3. In order to judge whether the assessing authority can invoke the old proviso up to 31st July, 1963, and the substituted proviso thereafter, it is necessary to notice both the provisions. Section 5(1) of the Andhra Pradesh General Sales Tax Act with its proviso prior to the amendment is in the following terms :
5. Levy of tax on sales or purchases of goods.–(1) Every dealer (other than a casual trader and an agent of a non-resident dealer) whose total turnover for a year is not less than Rs. 10,000 and every agent of a nonresident dealer, whatever be his turnover for the year, shall pay a tax for each year, at the rate of two naye paise on every rupee of his turnover :
Provided that if and to the extent to which such turnover relates to articles of food or drink or both sold in a hotel, boarding house, restaurant, stall or any other place, the tax shall be calculated at the rate of three naye paise in the rupee, if the total turnover relating to those articles is not less than Rs. 25,000.
and after the amendment by Act 16 of 1963, which came into effect on 1st August, 1963, it reads :
5. Levy of tax on sales or purchases of goods.–(1) Every dealer (other than a casual trader) whose total turnover for a year is not less than Rs. 10,000 and every agent of a non-resident dealer, whatever be his turnover for the year, shall pay a tax for each year, at the rate of two naye paise on every rupee on his turnover :
Provided that if and to the extent to which, such turnover relates to articles of food or drink or both sold in a hotel, boarding house, restaurant, stall or any other place for consumption on the premises and if the total turnover relating to those articles is not less than Rs. 40,000 for the year, the tax shall be calculated at the rate of two naye paise in the rupee on the first Rs. 39,999 and at the rate of three naye paise in the rupee on the balance of the turnover.
(There was a further amendment of the rates with effect from 1st April, 1966, by the Amendment Act 7 of 1966).
4. The learned Principal Government Pleader relying upon a decision of two learned Judges of this Court, Kumarayya, Acting C.J., and Kondaiah, J. in T.R.C. No. 65 of 1966 (decided on 18th June, 1969) contended that, although the order of assessment made by the assessing authority relates to a particular assessment year, the period of assessment can nevertheless be separated or split up into two or more periods, if different rates of tax are provided for different periods. The learned Principal Government Pleader has also invited our attention to the decision in State of Bombay v. United Motors (India) Ltd. [1953] 4 S.T.C. 133 at 156 (S.C.) which was relied upon by the Supreme Court in State of Jammu and Kashmir v. Caltex (India) Ltd. [1966] 17 S.T.C. 612 (S.C.) We may here quote what Patanjali Sastri, C.J., observed in United Motors case:
In the present case the tax is imposed, in ultimate analysis, on receipts from individual sales or purchases of goods effected during the accounting period, and it is therefore possible to separate at the assessment the receipts derived from exempted sales or purchases and allow the State to enforce the statute with respect to the constitutionally taxable subjects, it being assumed that the State intends naturally to keep what it could lawfully tax, even where it purports to authorise the taxation of what is constitutionally exempt.
5. Their Lordships in that case were considering the vires of Rule 5(2)(i) made under the Bombay Sales Tax Act, 1952. It was held that Rule 5(2)(i), which provided that in order to claim deduction for the sales covered by Clauses (1)(b) and (2) of Article 286, the goods should be consigned only through a railway, shipping or aircraft company or country boat registered for carrying cargo or public transport service or by registered post, was ultra vires the rule-making authority inasmuch as Article 286(2) in exempting sales in the course of inter-State trade, made no distinction between modes of transport by which the goods were despatched and there was no reason why sales of goods despatched by other modes of transport should not also be deductible from the taxable turnover. But Rule 5(2)(i) being clearly severable from Rule 5(1)(i), could be ignored and the exemption under Rule 5(1)(i) might be allowed to stand.
6. It is in that context that their Lordships held that severability in such cases includes the separability in enforcement. But the question here is whether the language of the substituted proviso permits such separability in the matter of levy of tax, which shall be on the total turnover for the assessment year.
7. To separate the assessment on the basis of the receipts derived from the sales and levy tax at different rates, the State should have been empowered to do so by the Legislature. We cannot read something which is not there in the provision. A taxing statute cannot be interpreted on any presumptions or assumptions. The court must look squarely at the words employed in the statute and interpret them in the light of what is expressed therein. Therefore, the court cannot add words or read something which is not there in the statute.
8. Section 5(1) of the Andhra Pradesh General Sales Tax Act, which has been extracted supra provides for the levy of tax on sales or purchases of goods by a dealer whose total turnover “for the year” is not less than Rs. 10,000; in other words, a tax is levied under the Act yearly. The substituted proviso with which we are now concerned is also expressed in the same manner that “if the total turnover relating to those articles is not less than Rs. 40,000 ‘for the year’, the tax shall be calculated at the rate of two naye paise in the rupee on the first Rs. 39,999 and at the rate of three naye paise in the rupee on the balance of the turnover.” We may here point out that, by subsequent amendments, the rates were changed so as to make it three paise in the rupee on the first Rs. 39,999 and four paise in the rupee on the balance of the turnover. It is no doubt true that the substituted provision came into effect on 1st August, 1963; but by mere reason of the fact that the substituted provision came into effect on 1st August, 1963, the State cannot split up or separate the turnover so as to levy tax at different rates on the turnover prior to 31st July, 1963, and subsequent to that date. The proviso does not, in our opinion, admit of such splitting up the turnover “for the year” into two parts. The rates of tax provided in the proviso are “for the year” and, therefore, in our view, there is no warrant for importing something which is not there in the proviso so as to empower the assessing authorities to split the turnover into two parts and levy the sales tax at different rates.
9. To a similar effect is the view expressed by Hidayatullah, J. (as he then was) speaking for the majority in Mathra Parshad and Sons v. State of Punjab [1962] 13 S.T.C. 180 (S.C.). Although their Lordships were dealing with the case of exemption, the principle enunciated by them equally applies to the levy of tax. The material portion of their Lordships’ observations may be quoted with advantage:
that as the tax under the Act was yearly and was to be paid on the taxable turnover of a dealer, the exemption, whenever it came in, in the year for which the tax was payable, would exempt sales of those goods throughout the year, unless the Act said that the notification was not to have this effect, or the notification fixed the date for the commencement of the exemption.
10. This decision, according to the learned Judges of this Court, far from rendering assistance to the dealer in the case before them, supported the plea of the State that the amended proviso, which came into force on 1st August, 1963, had no retrospective effect.
11. The question here is, as already stated, whether the total turnover for the year can be split up so as to apply two different rates for the periods prior and subsequent to 1st August, 1963. We may now refer to the decisions relied upon by the learned Judges, who decided T.R.C. No. 65 of 1966.
12. The observations of Shah, J., in Commissioner of Sales Tax v. Modi Sugar Mills Ltd. [1961]. 12 S.T.C. 182 (S.C.) do not answer the question involved, as there is nothing to suggest from the substituted proviso that the levy of tax at the altered rate is only in respect of sales taking place after 1st August, 1963. That was a case where there was a notification altering the rates of tax and in the face of the language employed in that notification, sales anterior to the date specified could not be affected.
13. Commissioner of Sales Tax, U.P. v. Bijli Cotton Mills, Hathras, U.P. [1964] 15 S.T.C. 656 (S.C.), is a case where a substituted provision provided that, notwithstanding the option exercised by the assessee, the tax would have to be computed in the light of the rate prevailing in 1948-49, as if they were projected upon the turnover of the previous year. Therefore, on the facts of that case, the Supreme Court observed:
If the law which the Tribunal seeks to apply to the dispute is amended, so as to make the law applicable to the transaction in dispute, it would be bound to decide the question in the light of the law so amended. Similarly, when the question has been referred to the High Court and in the meanwhile the law has been amended with retroactive operation, it would be the duty of the High Court to apply the law so amended if it applies.
14. The decision in State of Jammu and Kashmir v. Caltex (India) Ltd. [1966] 17 S.T.C. 612 (S.C.), where it was held that the assessment could be split up and dissected and the items of sale could be separated and taxed for different periods, was based on the facts of that case where the Petrol Taxation Officer assessed the dealer to pay sales tax for the period January, 1955, to May, 1959, on the petrol supplied pursuant to a contract between the Director-General of Supplies, Delhi, and the dealer. The price of petrol so supplied was paid to the dealer at Delhi by the Director-General of Supplies. In that case, two-questions arose for determination : (1) Whether sales tax could be imposed on the dealer for the period from October, 1955, to May, 1959, in view of the prohibition contained in Article 286(2) of the Constitution as it stood before its amendment; and (2) whether sales tax could be validly levied on sales taking place between 1st January, 1955, to 6th September, 1955, in view of the provisions of the Sales Tax Laws Validation Act, 1956 (Act 7 of 1956). On the first question, it was held that Section 3 of the Jammu and Kashmir Motor Spirit (Taxation of Sales) Act applied to the transactions of sale of petrol made by the dealer during the period from 1st January, 1955, to 6th September, 1955, and the levy of sales tax for that period was valid. On the other question, it was held :
…it is possible to separate the assessment of the receipts derived from the sales for the period from 1st January, 1955 to 6th September, 1955, and to allow the taxing authorities to enforce the statute with respect to the sales taking place in this period and also prevent them by grant of a writ from imposing the tax with regard to sales for the exempted period.
15. So, it is in that context that the learned Judges ultimately held that the High Court was in error in holding that the assessment for the entire period was invalid in toto.
16. It should be remembered that, in the instant case, the rate of tax as provided for in the proviso is on the total turnover “for the year” and the rate applicable depends upon the total turnover and, therefore, we are of the view that it cannot be split up into two parts so as to apply two different rates of tax.
17. With great respect to the learned Judges, who decided T.R.C. No. 65 of 1966, we are unable to persuade ourselves to agree with that decision and, therefore, we are bound to refer this revision case to a Full Bench for an authoritative pronouncement on the question involved, viz., the scope and applicability of the proviso as amended by the Amendment Act 16 of 1963.
18. We, therefore, direct that the papers may be placed before the Honourable the Chief Justice for directions as to posting before a Full Bench.
19. In pursuance of the abovesaid order of reference the revision case came on for hearing before the Full Bench:–
JUDGMENT
Gopal Rao Ekbote, J.
20. This tax revision case is filed by the State of Andhra Pradesh against the order of the Sales Tax Appellate Tribunal dated 23rd September, 1966, made in T.A. No. 376 of 1966.
21. The revision cast first came up before Obul Reddi and Ramachandra Raju, JJ. The learned Judges were unable to agree with the decision given by another Bench of this Court consisting of Kumarayya, C.J., and Kondaiah, J., in T.R.C. No. 65 of 1966 on 18th June, 1969. As a result, the case has been referred to a Full Bench and that is how the case has come before us.
22. The essential facts are that Messrs Murali Cafe are hoteliers running a hotel at Vizianagaram. They were assessed by the Deputy Commercial Tax Officer, Vizianagaram, for the year 1963-64 on 30th June, 1964, on a net turnover of Rs. 2,77,618.21 out of which the turnover of coffee and meals worked out to Rs. 2,73,996.96. The Deputy Commercial Tax Officer assessed the turnover at the following rates : Turnover up to 31st July, 1963: Rs. 93,113.23 at 3 per cent. Turnover from 1st August, 1963, to 31st March, 1964: (a) up to the limit of Rs. 39,999.00 at 2 per cent., (b) balance thereafter, Rs. 1,40,884.73 at 3 per cent., the total turnover being Rs. 2,73,996.96.
23. Subsequently the Deputy Commercial Tax Officer himself found that the respondents were originally assessed at a lower rate. He, therefore, revised the assessment and assessed the entire turnover at 3 per cent. as the turn-over up to 31st July, 1963, exceeded Rs. 25,000 and the turnover after 1st August, 1963, exceeded Rs. 40,000.
24. Against the said revised assessment, the respondents preferred Appeal No. 168 of 1965-66 before the Assistant Commissioner of Commercial Taxes, Kakinada. The appeal related to the rate of tax on the turnover of Rs. 39,999. The Assistant Commissioner dismissed the appeal.
25. On a further appeal to the Sales Tax Appellate Tribunal, the Tribunal by its order dated 23rd September, 1966, held that the amended provisions of Section 5(1) of the Andhra Pradesh General Sales Tax Act, hereinafter called “the Act” which came into force from 1st August, 1963, has to be given effect to and therefore it found that the respondents were entitled to be assessed on a turnover of Rs. 39,999 at 2 per cent. The Tribunal further held that there was no warrant for the proposition that because the total turnover exceeded Rs. 40,000, the assessee was liable to be taxed at 3 per cent., on the entire turnover. It is this order of the Tribunal that is now questioned in this revision case.
26. The principal question raised before us is whether the amendment of the proviso to Section 5(1) of the Act, which came into force on 1st August, 1963, entitles the assessing authority to levy tax at the rate prevailing up to 31st July, 1963, in accordance with the proviso as it stood prior to its amendment and in respect of the period subsequent to 31st July, 1963, at the rate as provided for in the amended proviso.
27. In order to appreciate the implications of the contention, it is necessary to read Section 5(1) of the Act as it now stands and then also read the proviso which stood prior to its amendment on 1st August, 1963 :
Section 5(1): “Every dealer (other than a casual trader and an agent of a non-resident dealer) whose total turnover for a year is not less than Rs. 10,000 and every agent of a non-resident dealer, whatever be his turnover for the year, shall pay a tax for each year, at the rate of two paise on every rupee of his turnover: Every casual trader shall pay a tax at the rate of two paise on every rupee of his turnover :
Provided that if and to the extent to which such turnover relates to articles of food or drink or both sold in a hotel, boarding house, restaurant, stall or any other place for consumption on the premises and if the total turnover relating to those articles is not less than Rs. 40,000 for the year, the tax shall be calculated at the rate of two paise in the rupee, on the first Rs. 39,999 and at the rate of three paise in the rupee on the balance of the turnover.
28. The following proviso, which appeared prior to 1st August, 1963, was substituted by the abovesaid proviso. The previous proviso read :
Provided that if and to the extent to which such turnover relates to articles of food or drink or both sold in a hotel, boarding house, restaurant, stall or any other place, the tax shall be calculated at the rate of three naye paise in the rupee if the total turnover relating to those articles is not less than Rs. 25,000.
29. A comparative study of both these provisions would indicate that prior to its amendment, in respect of the turnover relating to articles of food or drink sold in a hotel the tax was to be calculated at the rate of 3 naye paise in the rupee in a case where the turnover was not less than Rs. 25,000. After its amendment two changes have been brought about. Firstly, the limit of the turnover is raised from Rs. 25,000 to Rs. 40,000; and, secondly, the tax on the first Rs. 39,999 is levied at the rate of two paise in the rupee, and at the rate of 3 paise in the rupee on the balance of the turnover. The result of the amendment is that a concession is given to the hotels inasmuch as the tax on the first Rs. 39,999 is reduced to two paise in the rupee which if it was above Rs. 25,000 was taxed at 3 paise in the rupee. It is, therefore, natural that the assessees should make an attempt to bring their cases under the amended proviso rather than allow more tax to be collected under the old proviso. The amendment of the proviso was effected in the midst of the assessment year which in the present case is 1963-64. Because of these differing rates and the different manner of applying these rates introduced in the middle of the year the question naturally arose as to whether the amended proviso would govern the assessment of the total turnover of the whole year or whether the assessment of the turnover of transactions completed up to 31st July, 1963, shall be made according to the rates then prevailing under the repealed proviso and the transactions which took place on or after 1st August, 1963, at the rate under the substituted proviso.
30. It is already seen that although the assessing authority first had calculated the tax at 2 per cent. on the first Rs. 39,999 and the balance at the rate of 3 per cent. applying the amended proviso to all the transactions of the whole year, he, however, subsequently revised the assessment and by splitting the year into two parts, applied the old rates to the transactions completed prior to the amendment and the new rates to the transactions completed subsequent to the amendment. The Tribunal interfered with this view and held that the original assessment as was made was correct. The learned Judges, who referred the case to the Full Bench, seem to be of the opinion that the Tribunal’s view is correct and since the decision in T.R.C. No. 65 of 1966 dated 18th June, 1969, had decided contrary to their view, they referred the matter to the Full Bench. We have, therefore, to examine which of the two views is correct.
31. Although it was not doubted before us that the amended proviso to Section 5(1) is not retrospective in its operation, the contention was that the assessment for the whole year should be made according to the amended proviso. It was not disputed that this argument applies the amended proviso to a period prior to 1st August, 1963, on which date the amended proviso came into force even though the previous period from 1st April, 1963, to 31st July, 1963, was governed by the proviso then in force.
32. Now the law in regard to retroactive Act is not in doubt. The rule is that statutes are prospective, and should not be construed to have retrospective operation unless the language employed in the enactment is so clear that it admits of no other construction. Tax statutes are not an exception to rules against retroactivity. They may be retroactive if the Legislature clearly so intends. Otherwise, even the taxing statute is prospective in its operation unless as stated above the language employed clearly indicated its retrospective operation.
33. The question, however, is whether the same rule of interpretation applies to a case where the original Act or a section is amended and re-enacted in part and amended and substituted in the other part. The rule in that behalf, in our view, cannot be different.
34. Provisions of the original Act or section which are repeated in the body of the amendment, either in the same or equivalent words, are considered a continuation of the original law. This rule of interpretation is applicable even though the original Act or section is expressly declared to be repealed. Nevertheless the provisions of the original Act or section re-enacted by the amendment are held to have been the law since they were first enacted, and the provisions introduced by the amendment are considered to have been enacted at the time the amendment took effect. Thus rights and liabilities accrued or incurred under the provisions of the original Act, which are re-enacted, are not affected by the amendment, In other words, the original Act or the section would govern the transactions as long as it was in operation. And the amendment would govern the transactions subsequent to the amendment.
35. In such a case, in accordance with the general rule of construction that a statute or a section should be read as a whole, as to future transactions the provisions introduced by the amendatory Act should be read together with the provisions of the original section that were re-enacted in the amendatory Act, or left unchanged thereby, as if they had been originally enacted as one section. And effect is to be given to each part, and they are to be interpreted so that they do not conflict.
36. What follows is that, in determining the effect of an amendatory Act on transactions completed prior to its enactment, it is necessary to distinguish between provisions added to the original Act by the amendment and provisions of the original Act repealed by the amendment, and provisions of the original Act re-enacted thereby. In accordance with the rule applicable to original Acts, it is presumed that provisions added by the amendment affecting substantive rights are intended to operate prospectively. Provisions added or substituted by the amendment that affect substantive rights will not be construed to apply to transactions completed prior to its enactment unless the Legislature has expressed its intent to that effect or such intent is clearly implied by the language of the amendment or by the circumstances surrounding its enactment. Thus, although provisions of the original Act which are re-enacted in the amendatory Act, either in the same or equivalent words or in different terms and conditions, are considered a continuation of the original law, nevertheless rights and liabilities accrued or incurred under those provisions of the original Act are not affected by the amendments. The result is that the old law will govern old transactions and the new law will govern new transactions.
37. When once it is conceded that the substituted proviso is not retrospective in its operation, then it will be contradiction in terms to argue that the amended proviso would apply even to a prior period of its coming into force. Any such argument can only mean that the amended proviso is retrospective, an argument which is contrary to the concession made, and we find no scope for any such contention.
38. It was, however, contended that the new proviso uses the words “for the year” and since assessment is made at the end of the assessment year, the provisions of the new proviso would apply to the whole year because it is that provision of law which was in force at that time. What is, however, overlooked in advancing this argument is that the change which has been brought about in the rates and in the manner of their application are substantive rights and liabilities which are accrued or incurred. The moment the transactions are completed, under the Act rights are accrued and they are not affected by the amended proviso. If the unaffected transactions have already attracted particular rates of tax and the manner in which those rates are to be made applicable, then if the new proviso is to be applied which involve new rates and a new manner of applying them, it will affect the vested rights and liabilities which the Legislature never intended to affect. Nothing could have prevented the Legislature by introducing some words which would have given the substituted proviso a retrospective operation. When the proviso directs the making of an assessment “for the year”, it does not indicate in any manner that the new rates and the method of their application would govern the old transactions as well. Making of an assessment for the year is only a procedural aspect and does not affect in any manner the substantive rights and liabilities which had accrued on the completion of the transactions. Although thus the assessment may be made for the year and may be made at the end of it, the assessment shall have to be made on concluded transactions at the rate and in the manner in which they are applied prior to 1st August, 1963, when the new proviso came into force, and new rates and the manner of their application would govern the transactions completed after the new proviso came into force.
39. It cannot be in doubt that under the Act sales tax is imposed, in ultimate analysis, on receipts from individual sales or purchases of goods effected during the accounting period. The taxable event under the Act is either sale or purchase and the scheme of the Act is that each transaction of sale or purchase by a dealer attracts tax at the point of time when the transactions take place though for the purpose of convenience the computation of the turnover is made annually. The liability to pay tax, therefore, arises on the happening of the taxable event though quantification and its collection may be postponed till after the total turnover is determined, the tax quantified and the actual demand made. That this is so is seen from the following decisions : State of Bombay v. United Motors, [1953] 4 S.T.C. 133 at 156 (S.C.), A.P. Mariappa Mudaliar v. State of Madras [1962] 13 S.T.C. 746, K. Kannaiah v. Deputy Commercial Tax Officer [1964] 15 S.T.C. 689 and the unreported decision in T.R.C. No. 25 of 1966 dated 14th October, 1970 [1971] 28 S.T.C. 175.
40. It is a mistake to think that as the assessment is made for the year, the tax rate prevalent at the end of the year in all cases would apply to all the transactions of the year. A tax is levied yearly only in the sense that it is quantified at the end of the year and collected accordingly. The imposition of the tax is by virtue of the charging section and under that section tax is imposed on every rupee of the turnover the moment the floor limit of Rs. 10,000 of the turnover is crossed. The imposition of a tax, assessment or quantification of it on the turnover and the collection of such a quantified tax are the three distinct stages of the sales tax scheme. Whereas the first, i.e., imposition is automatically attracted the moment a certain limit of turnover is crossed, the other two aspects which mainly relate to procedural part are attracted subsequently and only in a case where the first element exists. What must necessarily follow is that the words “for the year” or the fact that the assessment is made on the total turnover for the year does not alter the position of law in regard to the operation of the charging section as we have indicated above. We are, therefore, not satisfied that the words “for the year” or the words “total turnover for the year” make the substituted proviso applicable even to the transactions completed prior to 1st August, 1963.
41. It was then contended that the total turnover for the year cannot be split into two or more parts. The reason for such an argument is that the substituted proviso states that the assessment has to be made on the total turnover for the year. That is normally so if the substantive rights and liabilities have not undergone any change in-between because of certain amendments in regard to rates at which the tax has to be levied. It has no relevance when in between rates of tax change without making such rates applicable retrospectively for the whole assessment year. If two different rates operate for two different periods during the course of an assessment year, then in order to work out the tax amount, the year has to be split keeping in view the law prevalent in the particular part of the year. Without splitting up it would not be possible to apply old rates to the old transactions and new rates to the new transactions. No provision of law was brought to our notice which prohibits splitting up of the assessment year for the purpose of quantification of the tax. On the other hand, the very fact that the Legislature has brought about change in the rates of taxes in the midst of the year without expressing its intention to apply the new rates to the whole year would necessarily mean that the Legislature wanted the year to be split for the purpose of assessment. If effect is to be given to that clear intention, the year will have to be split into two parts, one relating to transactions which were completed prior to the amendment and which were completed subsequent thereto. Any other interpretation would amount to flying in the face of the clear position of law as we comprehend it to be. We are, therefore, clear in our opinion that the amended proviso to Section 5(1) of the Act would govern the transactions concluded after it came into force and the quantum of tax would be determined according to the rates prevailing after the amendment and that the transactions completed prior to 1st August, 1963, would be governed by the proviso as it previously existed and the tax would be calculated at the rates mentioned in the repealed proviso.
42. We do not experience any difficulty in working out the quantification of the tax in the manner suggested above. In the instant case since the total turnover for the year exceeded Rs. 25,000, the tax on the turnover of transactions completed before 1st August, 1963, which turnover was to the tune of Rs. 93,113.23 would be at the rate of 3 per cent. as it has been levied by the assessing authority according to the old proviso. This will clearly indicate that the old law has been fully applied to all the old transactions.
43. Likewise since the total turnover for the year exceeded Rs. 40,000, according to the amended proviso, the rate of tax would be 3 per cent. on the turnover of the transactions which were completed subsequent to the amendment and that is how the assessing authority has calculated it and, in our view, rightly. That also would amount to applying the new provisions to all the transactions completed after the amended proviso came into force.
44. The contention, however, was that in regard to the quantification of the tax relating to the second period, the first Rs. 39,999 of that period must be taxed at 2 per cent. according to the new proviso. We do not think such a calculation can be made in the present case. The first Rs. 39,999 as per the new proviso does not mean the first Rs. 39,999 of the transactions completed after the amended proviso. It means the first Rs. 39,999 of the assessment year. Since the first Rs. 39,999 would have been already taxed under the old proviso, it would not be proper to tax them again though at a lesser rate. It is impossible not to tax them in the first half because if this amount is taxed under the second half, the assessee will get some concession because of the lesser rate involved. As the total turnover of the year exceeded Rs. 25,000, whatever may be the total turnover of the transactions which were completed prior to the amendment, it has to be taxed at the rate then prevailing. No portion of that turnover can be left out as it will be inconsistent with the law. The said Rs. 39,999 since has already been taxed, it cannot be re-taxed. Thus, it is not possible to accept the contention as it would be contrary to the law. As the transactions in the first period were more than Rs. 25,000 those transactions have to be taxed according to the old rates and since the total turnover of the year exceeded Rs. 40,000 the transactions which took place subsequently have to be taxed according to the rates mentioned in the amended proviso. The contention that the first Rs. 39,999 should not be taxed in the first half but should be taxed in the second half at lesser rate cannot, therefore, be accepted. It would amount to giving retrospective effect to a provision which, as has already been seen, is not made retrospective. The Tribunal, in our view, went wrong in calculating the tax on Rs. 39,999 at the rate of 2 per cent. and on the rest of the turnover at 3 per cent. The assessing authority, in our view, was right in applying the rate of 3 per cent. for both the periods because that was the rate which, as we have already seen, was attracted in view of the total turnover of the year. That calculation, therefore, is perfectly in accordance with the provisions of the law.
45. The view which we have expressed that the assessment year can validly be split for the purpose of working out the quantum of the tax is fully supported by the following decisions. In State of Bombay v. United Motors (India) Ltd. [1953] 4 S.T.C. 133 at 156 (S.C.) it is observed :
In the present case the tax is imposed, in ultimate analysis, on receipts from individual sales or purchases of goods effected during the accounting period, and it is therefore possible to separate at the assessment the receipts derived from exempted sales or purchases and allow the State to enforce the statute with respect to the constitutionally taxable subjects, it being assumed that the State intends naturally to keep what it could lawfully tax, even where it purports to authorize the taxation of what is constitutionally exempt. The principle, as it is Jersely put in the American case, is that severability in such cases includes separability in enforcement.
46. To the same effect is Commissioner of Sales Tax v. Modi Sugar Mills Limited [1961] 12 S.T.C. 182 (S.C.). In Commissioner of Sales Tax v. Bijli Cotton Mills [1964] 15 S.T.C. 656 (S.C) the Supreme Court observed :
A Tribunal called upon to decide a taxing dispute must apply the relevant law applicable to a particular transaction to which the problem relates, and that law normally is the law applicable as on the date on which the transaction in dispute has taken place. If the law which the Tribunal seeks to apply to the dispute is amended, so as to make the law applicable to the transaction in dispute, it would be bound to decide the question in the light of the law so amended. Similarly when the question has been referred to the High Court and in the meanwhile the law has been amended with retroactive operation, it would be the duty of the High Court to apply the law so amended if it applies.
47. In State of Jammu and Kashmir v. Caltex (India) Limited [1966] 17 S.T.C. 612 (S.C) the Supreme Court held:
that though there was one order of assessment for the period January 1, 1955, to May, 1959, the assessment could be split up and dissected and the items of sale could be separated and taxed for different periods. The principle in Bennett and White (Calgary) Ltd. v. Municipal District of Sugar City No. 5 [1951] A.C. 786 had no application because the sales tax is imposed, in ultimate analysis, on receipts from individual sales or purchases of goods effected during the entire period.
48. In K. Venkatasatyanarayana and Brothers v. State of A.P. A.I.R. 1970 S.C. 306 at 311, the Supreme Court said:
In the present case we are of opinion that though there is a single order of assessment for the period from April 1, 1949, to March 31, 1950, the assessment could be split up and dissected and the items of sale separated and taxed for different periods. It is quite easy in this case to ascertain the turnover of the appellant for “the pre-Constitution and post-Constitution periods for these figures are furnished in the plaint by the appellant himself. It is open to the court in these circumstances to sever the illegal part of the assessment and give a declaration with regard to that part alone instead of declaring the entire assessment void.
49. T.R.C. No. 65 of 1966 decided by a Bench of this Court on 18th June, 1969, is in accordance with the view which we have expressed, and in our view rightly decided.
50. We do not consider that Mathra Parshad and Sons v. State of Punjab [1962] 13 S.T.C. 180 (S.C.) decided anything contrary to what we have laid down. In our view on facts it does not help the respondents either. That was a case in which on 27th September, 1954, the State Government issued a notification by which manufactured tobacco was exempted from the levy of sales tax. The appellants had paid sales tax for the first quarter ending 30th June, 1954. On a demand being made by the department on the remaining three quarters of the year, the appellants filed unsuccessfully a writ petition in the High Court. The Supreme Court formulated the question for consideration :
Did the exemption in the notification issued on September 27, 1954, have effect from that date, or from the beginning of the financial year ?
51. In determining that question, the majority reached the conclusion that the tax is a yearly tax. It was observed :
Here, the nature of the tax, as disclosed in Sections 4 and 5 is decisive. In Section 5, the tax is made leviable on the taxable turnover every year of a dealer.
52. It is because of this scheme of taxation that it was held:
If the tax is yearly and is to be paid on the taxable turnover of a dealer, then the exemption, whenever it comes in, in the year for which the tax is payable, would exempt sales of those goods throughout the year…
53. In this context it is relevant to note that Kapur, J., who wrote a dissenting judgment, noted the argument advanced :
The argument was that it was a yearly tax on the turnover and not that every year a tax was to be levied on the taxable turnover, i.e., aggregate of the sales made during a given period.
54. This contention was rejected by the learned Judge in the following observation :
I am unable to agree that the effect of the collocation of the words in Section 5 and particularly of the words ‘shall be levied on the taxable turnover every year…a tax’ is what was argued by the appellants, i.e., it was a yearly tax like the income-tax.
55. It will immediately be plain that the said decision has no bearing whatsoever on the question which we are considering. Firstly, because the scheme of the Act in that case was different. There the tax was a yearly tax. In the present case as we have observed the tax is immediately imposed the moment the taxable event happens and the taxable transaction is completed. It is not a yearly tax. Secondly, that was a case relating to exemption, a question with which we are not concerned in this case. The distinction between the two is obvious. In Bhawani Cotton Mills Ltd. v. State of Punjab [1967] 20 S.T.C. 290 at 330 (S.C.), the Supreme Court pointed out the difference as follows :
There is a broad distinction between the provisions contained in the statute in regard to the exemptions of tax or refund or rebate of tax on the one hand and in regard to the non-liability to tax or non-imposition of tax on the other. In the former case, but for the provisions as regards the exemptions or refund or rebate of tax, the sales or purchases would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed. In the latter case, the sales or purchases are exempted from taxation altogether.
56. For the reasons which we have given, we find ourselves unable to agree with the view expressed by the Tribunal in its order under revision, and also with the view expressed by the Bench which referred the case to us. We hold that the assessing authority had rightly assessed in its revised assessment. The Tribunal erred in interfering with that assessment. 57. We would, therefore, allow the tax revision case and set aside the order of the Tribunal and restore that of the assessing authority as confirmed by the Assistant Commissioner. The petitioner will get costs.