SURYALAL MAKAND LAL Vs. STATE OF U P

JUDGEMENT

(1.) THE petitioner is a partnership-firm and carries on business, amongst other things, in vanaspati. It carries on the business on its own according as well as on commission agency basis for ex-U.P. manufacturers. During the assessment years 1970-71 and 1971-72 its turnover of vanaspati sold on commission basis amounted to Rs. 53,280 and Rs. 2,12,332 respectively.

(2.) UNDER a notification issued under section 3-A of the U.P. Sales Tax Act the turnover of vanaspati is taxable at a single point, the point being the sale by the manufacturer in the case of goods manufactured in U.P. and the sale by the importer in the case of goods imported from outside U.P. The Act, as it stood on the material time, did not contain a definition of the word "importer". Such a definition was given in rule 2(d-1) of the U.P. Sales Tax Rules. Under sub-clause (c) of clause (d-1) an importer means "in a case where the goods are importer into Uttar Pradesh otherwise than as a direct result of a sale, the dealer who makes the first sale after such import". The petitioner was treated as an importer in respect of the turnover of vanaspati sold by him on commission basis and was subjected to tax. The petitioner did not raise any objection before the Sales Tax Officer with regard to its taxability and paid the tax as assessed. The petitioner has, however, stated that when he came to Allahabad in 1973 for legal consultation he was told by his counsel that rule 2(d-1) of the U.P. Sales Tax Rules was ultra vires and as such the petitioner had wrongly been assessed to tax under that rule. The petitioner has accordingly filed this petition under article 226 of the Constitution praying for a writ of certiorari quashing the assessment order on the ground that the petitioner had paid the tax under a mistake of law and, as such, he was entitled to its refund.

(3.) THE last contention raised by Mr. Khare is that rule 2(d-1) of the U.P. Sales Tax Rules is ultra vires of the rule-making powers of the State Government conferred upon it under section 24 of the Act. The argument is that the State Government can make rules to carry out the purposes of the Act and not to supplement the Act. According to him rule 2(d-1) enlarges the scope of the charging section in so far as it seeks to assess a person as an importer, who, in fact, is not an importer. An importer, according to him, is a person who imports goods on his own account and a commission agent to whom the goods are sent by its principal cannot be said to be an importer. Now it is true that rule 2(d-1)(c), with which we are concerned, gives an artificial definition of "importer" so as to include a commission agent who sells goods on behalf of its ex-U.P. principal, but such a rule has been made clearly to carry out the purpose of the Act, namely, to levy tax on all sales made inside the State except those specifically exempted. Had such a rule not been made the sale of imported vanaspati by a commission agent would go untaxed. Therefore, it was legitimate for the State Government to provide by a rule as to how such sales will be taxed. That apart, it was really necessary for the State Government to have enacted rule 2(d-1) at all. The could have achieved the object by providing in the notification issued under section 3-A itself that in the case of goods manufactured outside Uttar Pradesh and sold through a commission agent in Uttar Pradesh the tax will be leviable on the commission agent and such a provision in the notification would be perfectly legal because under the explanation to section 2(c) a commission agent who carries on the business of buying or selling goods or through whom the goods are sold or purchased on behalf of his principal is deemed to be a dealer for the purposes of the Act. Thus it is obvious that the State Government had ample power to levy tax upon persons like the petitioner under section 3-A of the Act itself. The fact that the State Government, instead of making a suitable provision in the notification issued under section 3-A, has chosen to frame a rule to achieve the same object, does not affect its jurisdiction to levy tax in cases like the petitioner.