Holding

The expression "registered dealer" in section 8(ii) means only a dealer registered under section 22 of the Bombay Sales Tax Act and does not include a dealer registered under the Central Sales Tax Act.

Summary

Union Medical Agency, a dealer registered under the Bombay Sales Tax Act, claimed a deduction under section 8(ii) for resales of goods purchased from a dealer registered only under the Central Sales Tax Act. The Sales Tax Officer disallowed the claim, the Tribunal upheld the disallowance, and the Gujarat High Court reversed, holding that "registered dealer" includes a Central Act dealer liable under section 4. The Supreme Court reversed the High Court, ruling that the term "registered dealer" in section 8(ii) must be given its statutory definition in section 2(25) – a dealer registered under section 22 of the Bombay Act – and cannot be expanded to cover Central Act dealers. The Court reasoned that extending the definition would defeat the purpose of a single‑point tax and that section 4’s legal fiction is limited to machinery provisions, not to section 8(ii). The appeal was allowed, setting aside the High Court judgment.

Issues considered

Whether the expression "registered dealer" in clause (ii) of section 8 of the Bombay Sales Tax Act includes a dealer registered under the Central Sales Tax Act, 1956 but not under the Bombay Sales Tax Act.
Whether the legal fiction created by section 4 of the Bombay Sales Tax Act can be used to expand the meaning of "registered dealer" in section 8(ii).
Whether the definition of "registered dealer" in section 2(25) can be departed from on the ground of context.

Legislation cited

Bombay Sales Tax Act, 1959 (as applicable to Gujarat)s. 2, s. 22, s. 32, s. 33, s. 34, s. 35, s. 36, s. 37, s. 38, s. 4, s. 46, s. 47, s. 48, s. 7, s. 8
Central Sales Tax Act, 1956s. 15, s. 4, s. 7, s. 8

Subjects

Sales taxRegistered dealerStatutory definitionSingle point taxInterpretation of statutesCentral Sales Tax ActBombay Sales Tax ActDeduction from turnoverLegal fiction

Judgment

S70

A

COMMISSIONER OF SALES TAX, GUJARAT

v.
B
UNION MEDICAL AGENCY

October S, 1980

[P. N. BHAGWATI, A. P. SEN AND E. S. VENKATARAMIAH, JJ.J

Bombay Sales Tax Act, 1959 as appUcable to State of Gujarat-Interpreta-
t
tion of the expression "Registered dealer" in section S(il)-Whether it mean&
only a deale1· registered under section 22 of the Act or it also comprises a
dealer registered in the Central Sales Tax Act, 1956-Rule in ex visceribus actus
explained.
Allowing the appeal by special leave and answering against the assessee,
D the Court.
,
HELD: Per Bhagwati; J. (Concurring with Sen and Venkataramiah, JJ.)
(1) The expression "Registered dealer" is used in section 8 (ii) in its defi-
nitional sense to mean a dealer registered under section 22 of the Bombay
Sales Tax Act and it does not include a dealer under the Central Sales Tax
Act. [875A]
.E (2) The obje:ct of section 8 is to prevent a multiple point taxation on
goods specified in Schedule C and for impos1tion of single point tax on them
under the Act. If a dealer is registered only under the Central Act and not
und((r the Bombay Act, it would mean. that he is not liable to pay tax under

.F
the Bombay Act and in that event, even if he has sold goods specified in Sche-
dule 'C', to a fl!gistered dealer under an intra-State sale, no tax would be
payable by him on such sale and if the purchasing dealer is also to be exempt
from tax in 1'espect of re-sale effected by him, the result would be that the
goods would escape tax altogether and not suffer even single point tax. That
.J
is not the intendment of the legislature in enacting section 8(ii); on the con-
trary it would frustrate the very object of that section. The situation would
be the same even where the sale effected by the dealer registeted under the
Central Act is au inter-State sale. That sale would undoubtedly be taxable
under the Central Act but there is no reason why the Gujarat State would give
exemption to re-sale of goods in respect of which, at the time of the first sale
tax has been levied under the Central Act of which the benefit has gone to
another State. Moreover, in such a case, the first sale being an inter-State sale,
would be taxable, at a fixed concessional rate under section 8(1Xa) or at the
rate of 7% or at a rate equal to or twice the rate applicable to the sale of such
goods in the State of the selling dealer, under clause (a) or (b) of sub-section
(2) of section :B of the Central Act and if that be so, it is difficult to understand
.H why the Legislature should have insisted, for attracting the applicability ofl
section 8(ii), that the goods re-sold by the dealer should at the time of their
first sale be goods specified in Schedule 'C'. [873F-G, 874C·G]
C.S.T., GUJARAT v. UNION MEDICAL AGENCY (Sen, !.) 871

(3) Sections 4 and 8(ii) of the Bombay Act are distinct and · independent A
J>rovisions operating on totally different areas. The legal fiction in sub-section
{I) of section (4) is created for a specific purpose and it is limited by the terms
of sub-section (2) of section 4 and it cannot be projected in section 80i). If a
dealer is not registered under the Bombay Act, it could only be on the basis
that he is not liable to pay tax under the Bombay Act, but ·even so, section 4
sub-section (I) provides that if he is registered under the Central Act, he would
be liable to pay tax under the Bombay Act in· respect of the transactions of B
sale set out in that section. This liability arises despite the fact that the dealer,
not being liable to pay tax under section 3 of the Bombay Act, is not regis- .I
tered under that Act. The dealer not being registered under the Bombay Act,
the machinery of the Bombay Act would not of itself apply for the recovery
of tax from him. Section 4 sub-section 2, therefore, enacts that every dealer
who is liable to pay tax under sub-section (1) shall, for the purpose of sections
32 to 38 and 46 to 48 be deemed to be a registered dealer. Sections 32 to 38 c
and 46 to 48 are machinery sections and it is for the purpose of making the
machinery of these sections applicable for recovery of the tax imposed on the
dealer under sub-section (1) of section 4 that an artificial fiction is created
deeming the dealer to be a registered dealer, that is, a dealer registered under
section 22 of the Bombay Act.
Per Sen, l. (On behalf of himself and Venkataramiah, J.).
(!) It is a well settled principle that when a word or phrase has been D
defined in the interpretation clause, prima ~acie that definition governs when-
ever that word or phrase is used in the body of the statute. But where the
context makes the definition clause inapplicable,- a defined word when used in
the body of the statute may have to be given a meaning different from that
-contained in the interpretation clause; all definitions given in an interpreta-
tion clause, are, therefore, normally, enacted subject to the usual qualification
-"unless there is anything repugnant in the subject or context", or "unless the E
<Context otherwise requires". Even in the absence of an express qualification
to that effect such a qualification is always implied. The expression "registered
dealer" having been defined in section 2(25) of the Bombay Act as having a
particular meaning, that is, a dealer registered under section 22 of the Act; it
is that meaning alon.e which must be given to it in interpreting clause (ii) of
section 8 of the Bombay Act unless there is anything repugnant to the context
[880B-D] F
There being no obscurity in the language of clause. (ii)" of section 8 of the
Bombay Act, it is clear that no deduction is claimable in respect of re-sales of
goods purchased from a dealer registered under the Central Act, who iR not a
registered dealer within the meaning of section 2(25) of the Act. It follows
that the expression "registered dealer" in clause (ii) of section 8 of the Act
must bear the meaning of that expression as given in section 2(25) of the Act.
If the meaning of the section is plain it is to be applied whatever the ·result. G
[879H-880A]
(2) The meaning of a word or expression defined may have to be departed
from on account of the subject or context in ·which the word had been used
and that will be. giving effect to· the opening sentence in difinition section,
namely, "unless the context otherwise requires". In view of this qualification,
the Court has not only to look at the words but also to look at the context, H
the collocation and the object of such words relating to such matter and inter-
pret the meaning intended to be conveyed by the use of the words in a parti-
cular section. But where there is no obscurity in the language of the section,

...
872 SUPREME COURT RF.PORTS [1981] 1 S.C.R.

A there is no scope for the application of
:the rule ex visceribus actus. This rule
is never allowed to alter the meaning of what is of itself clear and explicit.
[881E-G]

Bywater v. Brandling, (1828} 7 B. & C. 645; Rein v. Lane, (1867) L.R. 2.
Q.B. 144 and Jobbins v. Middlesex County Council, Craies, (1949) I K.B. 142, 'J..
held inapplicable.
B (3) The provisions of section 4, sub-section (3) of section 7 and clause
(ii) of· section 8 of the Bombay Act operate in three different fields. While
section 4 of the Act provides that a registered dealer under the Central Act who
may not be liable to pay tax under section 3 of the Act may nevertheless in
certain contingencies be liable to pay tax, sub-section (3) of section 7 provides
for the levy of a single point tax on sale in the course of inter-State trade and
commerce of declared goods, to bring the Act in conformity with clause (a) of
c section 15 of the Central Act. The object and purpose of enacting the provi-
sions of section 8 are entirely different, namely, to lay down the mode of
computation of the turnover of sales or purchases of a registered dealer· for
the imposition of a tax. Clause (ii) of section $ allows for deduction of re-sale
from the turnover of such registered dealer when the goods are purchased from
a registered dealer, that is, a dealer registered under section 22 of the Act. In
effect, section 8 deals \Vith transactions of sale or purchase taking place within
D the State. The disallowance of dednction claimed by the assessee under clause
(ii) of section 8 of the "Act, therefore, would not result in double taxation of
the same goods. [881H-882C, 883C]
While it is true that the· Baroda dealer being a dealer registered under
section 7 of the Central Sale·s Tax Act, in the instant case, was in certain con-
tingencies, liable to pay tax under section 4 of the Act, but that circumstanGe
E· by itself would not make him a "registered dealer" within the meaning of
section 2(25) of the Act. If the legislature really intended that the expression
"registered dealer" in clause (ii) of section 8 should take within its ambit a
dealer registered under the Central Sales Tax Act, upon whom liability to pay
sales tax is imposed by section 4 of the Bombay Act, it would have said so in
the clear words s. (2) of s. 4. The legal fiction in snb-s. (2) of s. 4 is created for
a limited purpose, namely, to make section 4 a self-contained code which not
F only imposes a charge of tax and lays down the rate structure, but also pro-
vides the machinery for assessment and recovery of tax and penalty. The
legal fiction contained fn sub-s. (2) of s. 4 of the Act cannot be stretched any
further. [883D-E, G]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 631 of 1973.
..
Appeal by Special Leave from· the Judgment and Order dated
G 14/16th November, 1970 of the Gujarat High Court in Sales Tax
Reference No. 9/69.
R. P. Bhatt and S. P. Nayar for the Appellant.
Appeal Set-down ex-Parte against respondent.
The following Judgments were delivered.
H BHAGWATI, J.-1 have had the advantage of reading the judgment
prepared by my learned brother Sen and I entirely agree with the '
conclusion reached by him, but I would like to state briefly my
C.s:r., GUJARAT v. UNION MEDICAL AGENCY (Bhag'wati, /.) . 873.

.own reasons for arriving at that conclusion, The facts giving rise A
to this appeal have been stated with admirable succinctness by my
learned brother Sen and I need not repeat them. The facts in deec.J
are not material, because only one single qum,tion of law arises for
··~ determination in this appeal and it does not depend on any particular
facts. The question is a very simple one, namely, whether the
expression 'Registered dealer' in sec.8 (ii) of the Bombay Sales Tax
Act, 1959 as applicable to the State of Gujarat (h<i:reinafter referred
to as the Bombay Act) means only a dealer registered under section
22 of that Act or it also comprises a dealer registered under the
Central Sales Tax Act, 1956 (hereinafter referred to as the Central
Act). '
c
Since the decision of this question turns on the true interpretation
of the expression 'Registered dealer'. in sec.S(ii) of the .Bombay
Act, w~ may reproduce that section as follows :
"Sec.8 : There shall be Jevied a sales tax on the turn-over
of sales of goods speeified in Schedule C at the rafe set out against D
each of them in column 3 thereof, but after deducting from such
turnover-
(i) * * * ••
(ii) resales of goods purchased .by him on or after the
appointed day from a Registered dealer if the goods at the
E
time ofAheir purchase were goods specified in Schedule C".
This section has obviously been enacted to prevent multiple point
...... taxation on goods specified in Schedule C. Where gcods' specified in
Schedule 'C' are sold by a dealer and obviously he must be a dealer
registered under section 22 of the Bombay Act, if he is liable to·
pay ~ax under that Act-the turnover of these sales is liable to be F
taxed at the rate specified agai.pst each category of goods in that
Schedule, but if the sales in question are re-sales of goods purchased
by the dealer on or after the appointed day from a 'Registered dealer',
they would be liable to be excluded from the turnover, because the
'Registered dealer' from whom they are purchased would have paid
tax under the main part of section 8 and the goods having already G
borne tax in the hands of the selling 'Registered dealer', the legislative
intent is that they should not .suffer tax again. Now the expression
'Registered dealer' is defined in section 2(15) of the Bombay Act to
mean "a dealer registered under section 22" and therefore, ordinarily,
the expression 'Registered dealer' as used in section 8 (ii) must carry
the, same· meaning, namely, a dealer registered under section 22 of H
dhe Bombay Act. But; as the opening par.t of section 2 shows, the
definitional meaning is subject to anything repugnant in the subject or
14-645 S. C. India/SO
874 SUPREME COURT REPORTS [1981] 1 S.C.R.

A context. The context in which the defined word occurs may clearly
indicate that it is used in a sense different from that given in the
definition clause. We must therefore :see whether there is anything
in section 8 (ii) or :in the context in which it occurs which should
compel us to place on the expression 'Registered dealer' as used in 'J,.
that section a meaning different from that given to it in section 2 (15).
B We are afraid we do not find anything: in the subject or context of
sec.8 (ii) which would persuade us to depart from the definitional
meaning of the expression 'Registered dealer'. The subject and context
in fact re-enforce the view that the expression 'Registered dealer' in
sec.8(ii) is used to mean a dealer registered under sec.22 of the
Bombay Act, and does n ot include a dealer registered only under _
J ·

c: the Central Act. If a dea1er is registered only under the Central Act
and not under the Bombay Act, it would mean that he is not liable
to pay tax under the Bombay Act and in that event, even if he has -.,..
sold goods specified in Schedule 'C', to a registered dealer under an
intra-State sale, no tax would be payable by. him on sucli siile and
if the purchasing dealer is also to be exempt from tax in respect of
D
re-sale effected by him, the result would be that the goods would
escape tax altogether and not suffer even single ,poinit tax. That
surely could not have been the intendment of the legislature in enact-
ing section 8(ii). It would indeed frustrate ,the object of section 8(ii)
which is to provide for imposition of single point tax on the goods
specified in Schedule 'C'. The situation would be the same even
where the sale effected by the dealer registered under the Central
Act· is an· inter-State sale. That sale would· undoubtedly be taxable
under the Central Act, but it is difficult to see why the Gujarat State ·~
should give exemption to re-sale of goods in respect of which, at
the time of the first sale, tax has been levied under the Central Act
J
F of which the benefit has gone to anothe:r State. Moreover, in such a
case, the first sale being an int<:r-State sale, would be taxable at a
fixed concessional rate under section 8(1)(a) or at'the rate of 7%
or at a rate equal to or twice the rate applicable to the sale of suctl
goods in the State of the selling dealer, under clause (a) or (b) of
sub-section (2) of sec. 8 of the Central Act and if that be so, it is
G impos&ible to understand why the Legislature should have insisted,
for attractin~ the applicability of section S(ii), that the goods re-
sold by the dealer should at the time of their first sale be goods speci- -f"
tied in Schedule 'C'. The requirement that the goods at the time of their
first sale by the 'Registered dealer' should be of one of the cate-
gories specified in Schedule 'C', is a clear pointer that the 'Registered
H dealer' contemplated in this provision is a dealer registered under
section 22 of the Bombay '.Act, because it is only with reference to
such a dealer liable to pay tax under the Bombay Act that this
C.S.T., GUJARAT v. UNION MEDICAL AGENCY (Bhagwafi, J.) S'7.5

Tequirement of the goods sold by him being goods specified in Schedule A
'C' can have any meaning and sigitificance. We are, therefore, clearly
<Jf the view that the expression 'Registered dealer' is used in section
..g (ii) in its definitional sense to mean a dealer registered under section
22 of the Bombay Act and it does not include a dealer registered under
the Central Act.
B
The Revenue, however, relied on section 4 of the Bombay Act
and tried to projei:t it in the interpretation of. the expression 'Regis-
tered dealer' in section 8 (ii). We fail to see how section 4 can at
all help in throwing light on the true interpretation of the expression
'Registered dealer'. That section provides :
"Sec.· 4(1) : Notwithstanding anything in section 3, 'Ii
c
dealer who is registered,under the Central Sales Tax Act, 1956,
r but who is not liable to pay tax under the said section 3, shall
'llevertheless be liable to pay tax- ·
(a) on Sales of goods is respect of the purchase of D
which he has furnished a declaration under sub-sec. ( 4) of
.section 8 of the Central Sales Tax Act, 1956, and
(b) on sales of goods in the manufacture of which the
goods so purchased have been used;
.and accordingly, the provisions of sections. 7 to 12 (both E
inclusive) shall apply to such sales, as they apply to the sales
made by a de~ler liable to _pay tax under section 3.
( (2) Every dealer who is liable to pay tax under sub-section
(1) shall, for the purposes of sections 32, 33, 35, 36, 37, 38, 46,
47 and 48 be deemed to be a Registered dealer." F
It is obvious that if a dealer is not registered under the Bombay. Act,
it could only be on the basis that he is not liable to pay tax under the
Bombay Act, but even so, section 4, sub-section ( 1) provides that
if he is ,registered under the Central Act, he would be liable to pay
tax under the Bombay Act in respect of the transactions of sale set G
out iq thaf section. This liability arises despite the fact. ·that the
-dealer, not being liable to pay tax under section 3 of the Bomoay Act,
is nqt registered under that Act. The question then would be : if ·the
dealer is not registered under the Bombay Act, how to recover the tax
irom him? The. dealer not being registered under the Bombay Act,
the machinery of the Bombay Act would not of itself H
apply for recovery of tax from him. Section 4, sub-section
(2) therefore enacts that every dealer who is liable to pay tax under
~uh-section (1) shall, for the purposes of .sections 32 to 38 and 46
8'.7 6 SUPREME COURT REPORTS [1981] 1 S.C.R.

A to 48 be deemed to be a Registered dealer. Sections 32 to 38 and
46 to 48 are machinery sections a·nd it is for the purpose of making
the machinery of these sections applicable for recovery of the tax
imposed on the dealer under sub-section ( 1) of section 4 that an
artificial fiction is created deeming the dealer to be a Registered
dealer, that is, a dealer regist•~red under section 22 of the Bombay
B Act. This legal fiction is created for a specific purpose and it is
limited by the terms of sub-section 2 of section 4 and it cannot be
projected in section 8(ii). Section 4 ha~, in fact, nothing to do with
section 8 (ii). They are distinct and independent provisions operating
on totally different areas, and it is difficult to see how section 4 cati.
be availed of for the purpose of intnpreting the expression "Registered
c dealer" in section 8 (ii).

I would therefore set aside the judgment of the High Court under
appeal and answer the question referred by the Tribunal in favour
of the Revenue and against the assessee. There will be no order as to·
costs of the appeal.
D
SEN, J.-This appeal, by special leave, is from a judgment of
the Gujarat High Court, upon a question of law referred to it. under
sub-s.(1) of s.61 of the Bombay Sales Tax Act, 1959 (hereinafter
/ referred to as 'the Act'). By that judgment the High Court answered
{ the question referred in the affirmative and in favour of the assessee.
The point involved is of considerable importance.

The facts giving rise to the reference: were these : Messrs Unron
Medical Agency, Ahmedabad was, at all material times, carrying on
business in spirit and alcohol, and was a dealer registered under s.22
F of the Act (hereinafter referred to as 'the assessee'). In the assessment
year 1964-65, the corresponding ac:counting year of which was the
year ending March 31, 1965, the assessee claimed deduction from
its turnover in respect of resales of certain goods purchased from
one Motibhai Gopalbhai Patel of Baroda who, at the relevant time,
was a dealer registered under s . 7 of the Central Sales Tax Act, 1956
G (hereinafter referred to as 'the Central Act'), but was not a dealer
registered u11der s. 22 of the Act. The Sales Tax Officer rejected the
claim of tpe assessee for such deduction on the ground that the said
Motibha\,;/Gopalbhai Patel from whom the goods were purchased
was not a registered dealer within the meaning of cl.(ii) of s.8 of
the Act inasmuch as he was not registered as a dealer under s.22 of
H the Act. The assessee appealed 110 the Assistant Commissioner of
Sales Tax, the only material grounq being that the expression 'regis-
tered dealer' in cl.~(ii) of S', 8 ot the Act was wrde enough te>
. '\
C.S.T., GUJARAT v. UNION MEDICAL AGENCY (~en, J.)

include a registered dealer under the Central Sales Tax. Act but the
.Assistant Commissioner affirmed the disallowance of the deduction.
On further appeal, the Gujarat Sales Tax Tribunal agreeing with the
·sales Tax Authorities, held t!iat in order to daim deduction' f~om
r the turnover of sales of goods under cl. (ii) of s. 8 of the Act, what
was required to be shown was that the goods were purchased by the
dealer on or after the appointed day from a 'registered dealer'. under -B
the Act, and that in view of the definition of the expression 'registered
dealer' in sub-s.(25) of s.2 of the Act, such dealer had to be a
·dealer registered under s.22 of the Act. The Tribunal accordingly
held that since Motibhai Gopalbhai Patel, the Baroda dealer, from
·whom the assessee had purchased the goods, was not a registered
dealer under the Act, therefore the requirements of cl. (ii) of . 8 of s:
the Act were not fulfilled, and the claim for deduction made ·'by the
·assessee had been rightly disallowed. On the application . of the
·assessee, the ·Tribunal referred the following question of law to the
High Court under sub-s. (1) of s. 61 of the Act, for its opinion,
·namely:
D
"Whether for the purpose of allowing deduction Jrom the.
turnover of sales under cla~se (ii) of section 8 of thef:Bombay
Sales Tax Act, 1959; purchases. of goods made by: a dealer .
registered under the Bombay Sales Tax Act, 1959 from a dealer
registered under the Central Sales Tax Act, 1956 but not
registered under the Bombay Sales Tax Act, 1959 can be E
said to be purchases of goods made fiom a registered dealer
r within the meaning of clause (ii) of. section 8 of the Bombay
Sales Tax Act, 1959."
\..
It appears. that the -High Court was not satisfied at this formu-
.lation ··as it felt that the statement of the case as made by the Tribunal F
,-did not bring out the real question of law arising out of its order. At
· the instance of the assessee, it re-framed the question in the following
.terms ! " ::~::':~/.~

"Whether for the purpose of allowing deduction from the ·
turnover of sales under clause (ii) of section 8 of the Bombay G
Sales Tax Act, 1959, purchases of goods made by a dealer
registered ·under the Bombay Sales Tax Act', 1959 from a dealer
who is registered under the Central Sales Tax Act, 19~.6 and .
who is liable to pay tax under section 4 of the Bombay Sales Tax
Act, 1959 though not registered under the Bombay Sale& Tax Act,
1959 can be· said to. be purchases of goods made from" a reiis- H
tered dealer ~within the meaning of clause (ii) of section 8 of
the Bombay Sales Tax Act, 1959."

: /-
878 SUPREME COURT REPORTS [1981] 1 S.C.R.

A We feel that the High Court was not justified in re-framing the
question as referred. It is nobody's case that Motibhai Gopalbhai
Patel, the Baroda dealer from whom the assessee had purchased the
goods, had ever paid any tax on the sales effocted by him under s.4
of the Act. Nor is there any material on record to suggest that any
proceedings were started against the Baroda dealer for subjecting the
B transactions to tax.
In answering the reference in the affirmative, in favour of the
assessee and against the Commissiioner of Sales Tax, the High Court
observes:
"The result of the foregoing discussion is that having regard
c to the context, collocation and th1~ object of the expression
'registered deal(jr' in clause (ii) of section 8 of the Bombay Act,
and having regard to the policy of the Act, the said
expression would also include a dealer registered under
the Central Act on whom special liability to pay sales tax has
been imposed under section 4 of the Act. A dealer who pur-
D chases goods from a dealer registered under the Ce,ntral Act,
who is liable to pay sales tax on the sale of the said goods by
virtue of the provisions of section 4. of the Bombay Act, would,
therefore, be entitled to deduct from his turnover of sales of
goods, resales of goods so purchased by him on or after the
appointed day if the goods, at the time of their purchase, were
E goods specified in Schedule C."
This conclusion of the High Court can hardly be supported.
The short question that falls for determination in the appeal is
whether the expression 'registered. dealer' in ,cl. (ii) of s.8 of the
Act must bear the meaning that is assigned to rt in s. 2(25)
F which is the _definition section, or the said expression is capable of
bearing an enlarged meaning, in view of the subject and context in
lvhich it is used in cl. (ii) of s.8 of the Act.
The decision of the appeal must :turn on the constructipn of
cl. (ii) of s.8 of the Act, which provides :
G "8. There shall be levied a sales tax on the turnover of
sales of goods specified in Schedule C at the rate set out against
each of them in column 3 thereof, but after deducting from such 1
turnover:-
(i) * * * * * * *
H (ii) resales of goods purchased by him on or after the
appointed day from a Registered dealer if the goods at the
· time of their purchase were goods specified in Schedule C."
C.S.T.,, GUJARAT v. UNION MEDICAL AGENCY (Sen, /.) 879

In the Act, the expressron 'registered dealer' is defined in s. 2(25) A
in these terms :
"2. In this Act, unless the context otherwise requires,-
r (25) "Registered dealer" means a dealer registered
under section 22."
The error in the decision of the High Court lies in its misunder~ B
standing of the scope and effect of s. 4 of the Act, which it has tried
to project into cl. (ii) of s. 8 and it reads as follows :
"4. (1) Notwithstanding anything in section 3, a dealer
who is registered' under the Central 'sales Tax Act, 1956, but
who is not liable to pay tax under the said .section 3, shall never- ·
theless be liable to pay tax- c
( a) on sales of goods in respect of the purchase of
t which he has furnished a declaration under sub section ( 4)
of section .8 of the Central Sales Tax Act, 1956, and
(b) on sales of goods in the manufacture of which the
goods· so purchased have been used, D
and accordingly, the provisions of sections 7 to 12 (both inclu-
sive) shall apply to such sales, as they apply to the sales made
by a dealer liable to pay tax under section 3.
(2) Every dealer who is liable to pay tax under sub-section
(1) shall, for the purposes of sections 32, 33, 34, 35, 36, 37, B.
38, 46, 47 and 48 be deemed to be a Registered dealer."
Sub-section (3) of s. 7 reads :
fI
"7. ( 3) In order to ensure that after the date of the coming
into force of section 15 of the Central Sales Tax Act, 1956, tax
shall not be levied on the sales or purchases of Declared goods
at more than one stage, it is hereby provided that if under this F
Act or any earlier law, any tax has been levied or is leviable on
the sale or purchase of such goods then no further tax shall be
levied under this Act on any subsequent sale or purchase thereof;
and accordingly, for the purpose of arriving at the taxable turn-
over of sales or purchases of· a dealer, there shall be deducted
G
from hi~ total turnover of sales, or as the case may be, of pur-
_chases, the sales or purchases of such declared goods as have
borne~tax at any earlier stage."

There is no obscurity in the language of c!. (ii) of s. 8 of the
Act. It is clear from the terms of cl. (ii) of s.8 that no deduction
is claimable in respect of resales of goods purchased froni. a dealer H
registered under the Central Act, who is not a registered dealer
within the meaning of s. 2(25) of the Act. It follows that the
880 SUPREME COURT REPORTS [1981] 1 S.C.R.

A. expression 'registered dealer' in cl. (ii) of s. 8 of the Act must bear
.the meaning of that express.ion as given in s. 2(25) of the Act. If the
meaning of the section is plain, it is• to be applied whatever the result.
It is a well settled principle that when a word or phrase has been
defined in the interpretation clause, prima facie that definition governs
B whenever that word or phrase is used in the body of the statute.
But where the contex~ makes the definition ciause inapplicable, a
defined word when used in the body of the statute may have to be
given a meaning different from that con1tained in the interpretation
clause; all definitions -given in an interpretation clause are, therefore,
normally enacted subject to the usual qualification-··'unless there is .)
c anything repugnant in the subject or context', or 'unless the context /

otherwise requires'. Even in the absence of an express qualification .
to that effect §UCh a qualification is always implied.
The expression 'registered dealer' having.been defined in s.2(25)
of the Act as having a particular meaning, i.e., a dealer registered
under s. 22 of the Act, it is that meaning alone which must be given to
D
it in interpreting cl. (ii) of s.8 of the Act, unless there is anything
repugnant to the context. It was not permissible for the High Court
to ignore a statutory definition and give to the expression a wider
meaning independent of it. There is nothing to 5uggest that the
expression 'registered dealer' is used in cl. (ii) of s.8 of the Act in.
E any different sense from that in" which it is. defined. It is significant
to notice that whenever the legislature wanted that the expression
'registered dealer' should have a, different meaning, it has expressly
said so. Thus in sub-s. ( 1) of s.4 it mentions of 'a dealer who is
registered under the Central Sales Tax Act, 1956'. The distinction
between the two classes of dealers is, therefore, clearly maintained.
F The High Court was obviously wrong in not interpreting the
expression 'registered dealer' in the context of cl. (ii) of s.8 but with
reference to the other provisions of the Act, particularly in the light of
s. 4 of the Act, to give effect to the so-called legislative intent for the
levy of a single point tax. It was in error in making an exposition
ex visceribus actus and in relying upon the leading cases of Bywater
G v. Brandll'ng( 1 ), Rein v. Lane( 2 ), Jobbins v. Middlesex County
Council( 3 ) Craies oil Statute Law, 6th ed., 99, and Maxwell on
Interpretation of Statutes, 8th ed., 30.
The High Court expresses the view that the legislative intent in
enacting cl. (H) of s.8 of the Act is two-fold (1) to restrict the levy
H (1) [1828] 7 B. & C. 643.
(2) [1867] L.R. 2 Q.B. 144.
(3) [1949] I K.B. 142.
'~,"' ·,

C.S.T., .GUJARAT v. UNION MEDICAL AGENCY (Sen, J.) 881

·Of sales tax to a single point and to avoid multiple levy of sa.Jes tax A
on goods, and (2) that sales tax should be levied at the stage of the
first sale and should be recovered from the registered dealer who
effects the first sale and that all subsequent sales of such goods should
no.t be subjected to sales tax over again. In the light of this so-called
legislative · intention and the policy of the Act, the High Court
observes that ·'having regard t,o the context, collocation and the object B
of the expression 'registered deafor' in cl. (ii) of s.8 of the Act', and
'having regard to the legislative intent, namely, to levy a single point
· tax under sub-s. ( 3) of s. 7 of the Act', the expression 'registered dealer'
in cl. (ii) of s.8 would also include a dealer registered under the
Central Sales Tax Act, 1956, on whom a special liability to pay sales
tax has been imposed under s.4. Upon .that view, it held that a c
dealer who purchased goods from a dealer registered under the
Central Act, who was liable ·to pay.sales tax on the sale of such goods
by virtue of the provisions of s.4 of the Act, would be entitled to
·deduct from his turnover of sales of goods, resales of goods so pur-
chased by him on or after the appointed day if the goods at the time
·of their purchase, ~ere goods specified in Schedule C of the Act. It
n
accordingly held that the meaning of the expression 'registered
dealer' in cl.(ii) of s.8 was not limited only to a dealer registered
under the Act but it was wide enough to also include a dealer
.tegistered' under the Central Act.
There is no dispute with the proposition that the. m'eanlng of a :E
word or expression defined may have to be departed from on account
of the subject or context in which the word had been 'used and th'at
will be giving effect to the opening sentence in definition section,
namely 'unles~ the context other~ise requires'. In view of this
qualification, the Court has not only to look at the words but also
to .Jook at the context, the collocation and the object of such Words
·F
relating to such matter and . interpret the meaning intended to be
conveyed by the use of the words in a p,articular section. But where
there is no obscurity in the language of the section, there is no scope
for the application of the rule ex visceribus act11s. This rule is never
·allowed to alter .the meaning of what is of itself clear and , explicit. .G
The authorities relied upon by the High Court are, therefore, not
applicable.
While accepting that sub-s. ( 3) of s. 7 of the Act was to give
effect to cl. (a) of s.15 of the Central Act, and therefore cannot control
the interpretation of cl. (ii) of s.8, the High Court commits the mistake
"of interpreting the expression 'registered dealer' appearing therein, >H
in the context of s.4 of the Act. The provisions of s.4, sub-s.(3) ·
; of s.7 and cl.(ii) of s.8 of the Act operate in three different fields.
,,

<-:-,Ji
882 SUPREME COURT REPORTS [1981] 1 S.C.R.

A While s.4 of the Act provides that a registered dealer under the-
Central Act who may not be liable to pay tax under s. 3 of the Act
may nevertheless in certain contingencies be liable to pay tax, sub-s. (3)
of s. 7 provides for the levy of single point tax on sales in the course
of inter-state trade and commerce of declared goods, to bring the
Act in conformity with cl.(a) of s.15 of the Central Act. The object
and purpose of enacting the provisio~s of s.8 are entirely different,
namely, to lay down the mode of computation of the turnover of"
sales or purchases of a registered dealer for the imposition of a tax.
Clause (ii) of s.8 allows for deduction of resales from the turnover·

c
of such registered dealer when the goods are purchased from a re-
gistered dealer, i.e., a dealer registered under s.22 of the Act. In.
effect, s.8 deals with transactions of sale or purchase taking place·
J
within the State.
There is a fallacy in the reasoning of the High Court. It seems:
that the High Court was obsessed with two factors, namely (1) the:
concept of a single point tax under sub-s. ( 3) of s. 7 of the Act, and
D (2) the fact that a registered dealer under the Central Act who may
not be liable to pay tax under s.3 of the Act may nevertheless in
certain contingencies be liable to pay tax. It f_ailed to appreciate that
cl.(ii) of s.8 which allows for deduction of sales by one registered'
dealer to another, deals purely with inside sales. The expression•
'registered dealer' in cl.(ii) of s.8 is sought to be given an enlarged'
E meaning by stretching, in effect, the legal fiction contained in sub-s. (2)
of s.4. After observing that the legal fiction in sub-s.(2) of s.4 is.
created for a limited purpose, it goes on to observe :
"It would, therefore, have been inappropriate or at any·
rate wholly inartistic for the legislature to provide in sub-section
F (2') of section 4 that every dealer who is .Jiable to pay tax under·
sub-section ( 1) shall be deemed to bt a registered dealer for
the purpose of clause (ii) of section 8 since the latter section
provides for the levy of sales tax on sales of goods of an altogether
different dealer after making certain deduction from the·
turnover of sales of goods of such dealer. The legislature could'
have made a specific provision, if any, in this behalf only in
clause (ii) of section 8 and not in sub-section (2) of section 4."
The High Court proceeds on the hypothesis that the transactions
in question must have been 'brought to tax in the hands of the Baroda
dealer and, therefore, it became necessary to avoid multiple levy
H of sales tax. On that assumption, it felt that it was necessary to·
give to the assessee the benefit of s.8 (ii) of the Act although the·
Baroda dealer was not a registered dealer within the meaning of•
C.S.T., GUJARAT. v. UNION MEDICAL AGENCY (Sen, J.) 883.

s. 2(25) i.e., registered as a dealer under s. 22 of the Act. We regret A
to say that in reaching that conclusion, the High Court has proceeded
on mere conjectures and surmises. For aught we know, the Baroda
' dealer at the relevant time, might not be engaged in the business of
selling goods in the State of Gujarat and was, therefore, not a dealer
liable to pay tax at all. Perhaps he was primarily engaged in effecting
·sales in the course of inter-State trade and commerce, or it may be B
that the inside sales effected by him did not exceed the taxable limits.
Both the parties proceeded upon the basis that the purchases effected
by the assessee were not subjected to tax. It was, therefore, not right
for the High Court to hold that the disallowance of deduction
claimed by the assessee under cl. (ii) of s.8 of the Act would result
in double taxation of the same goods.
c
It is evident that the High Court has completely misdirected
itself. The transactions of sales effected by the Baroda dealer to the
assessee who was a dealer at Ahmedabad, were clearly inside sales.
a
While it is true that the' Baroda dealer being dealer registered under
s.7 of the Central Sales Tax Act was, in certain conting.encies, liable D
to pay tax under s.4 of the Act, but that circumstance by itself would
not make him a 'registered dealer' within the meaning of s. 2(25) .
of the Act;
If the legislature really intended that the expression 'registered
dealer' in cl.(ii) of s.8 should take within its .ambit a dealer registered E
under the Central Sale& Tax Act, upon whom liability to pay sales
tax is imposed by s.4 of the Bombay Act, it would have said so in
clear words. It would have made necessary provision in that behalf
in sub-s. (2) of s.4 which provides that every d~aler Hable to pay
tax under sub-s. ( 1) shall be deemed to be a registered dealer for
purposes of certain sections of the Bombay Act viz., ss. 32, 33, 34, F
35, 36, 37, 38, 46, 47 and 48.
It is thus apparent that the legal fiction in sub-s. (2) of s.4
is created for a limited purpose, namely, to make sectron 4 a self-
contained code which not only imposes a charge of tax and lays down .
the rate· structure, but also provides the machinery for assessment G
and recovery of tax and penalty. The legal fiction contained in
sub-s. (2) of s.4 of the Act cannot be stretched any further.
For these reasons, the judgment of the High Court answering
the referenc~ in favour of the assessee is set aside. The question
referred by the Tribunal is answered in the negative and in favour of
H
the Revenue. There shall be no order as to costs.
S.R. Appeal allowed.