TMI Blog1960 (8) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... delivered by KAPUR, J.- This is an appeal by special leave against the judgment and order of the High Court of Madras allowing a petition under Article 226 of the Constitution. The question there raised was the legality of the assessment of sales tax by appellant No. 2, the Deputy Commercial Tax Officer, Saidapet, under the Madras General Sales Tax Act (Act IX of 1939) hereinafter termed the Act. The respondent was a partnership firm carrying on tannery business at Chromepet near the City of Madras. Before the year of assessment, i.e., 1952-53, it was taking out licences under the relevant provisions of the Act but it did not renew the licence for the assessment year. When called upon to make a return it did not do so nor did it raise any objection to the notice served on it on February 28, 1954. It was assessed to sales tax of Rs. 10,584 on a turnover of Rs. 6,77,374-4-4. It filed a petition under Article 226 to quash the assessment order on the ground that the order was illegal and not sup- ported by the authority of law. This contention was accepted by the High Court and the petition was allowed with costs. The consequence of the judgment is that the respondent-firm w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for dealing in hides and skins and further that if rule 16(5) was ultra vires as being in contravention of section 5(vi), rule 5 of the Madras General Sales Tax Rules (hereinafter called the Sales Tax Rules) which requires that taking out of the licence in order to be able to get the benefit of single point taxation would also be ultra vires. Thus on a true construction of section 3(1) and section 5(vi) it was of the opinion that rule 5 of the Sales Tax Rules and rule 16(5) of the Turnover and Assessment Rules were ultra vires and section 6-A was inapplicable to a person who had not taken out a licence. As a con- sequence it quashed the order of assessment of the respondent-firm. In order to decide this appeal it is necessary to refer to and consider the relevant provisions of the Act and the two sets of rules made thereunder. They are as follows: Section 3. "(1) Subject to the provisions of this Act,- (a) every dealer shall pay for each year a tax on his total turnover for such year; and ................................................................................................... (3) A dealer whose total turnover in any year is less than ten thousand repee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hides or skins." Rule 15. "(1) Rules 6 to 13 shall not apply to licensed tanners and other licensed dealers in hides or skins in respect of their dealings in hides or skins; but the provisions of this and the following rule shall apply to them in respect of such dealings." Rules 16. "(1) In the case of hides and skins, the tax payable under section 3(1) shall be levied in accordance with the provisions of this rule. (2) No tax shall be levied on the sale of untanned hides or skins by a licensed dealer in hides or skins except at the stage at which such hides or skins are sold to a tanner in the State or are sold for export outside the State; (i) In the case of all untanned hides or skins sold to a tanner in the State, the tax shall be levied from the tanner on the amount for which the hides or skins are bought by him; (ii) In the case of all untanned hides or skins which are not sold to a tanner in the State but are exported outside the State, the tax shall be levied from the dealer who was the last dealer not exempt from taxation under section 3(3), who buys them in the State on the amount for which they were bought by him. ................................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically states that where a condition prescribed or notified requires the taking out or the renewal of a licence, then in the case of contravention of such conditions or restrictions the tax is to be levied under section 3 as if the provisions of section 5 did not apply to such sales. This, therefore, is a clear provision which makes the single point imposition of sales tax on hides and skins to be conditional on observing the condition of taking a licence. The argument of inconsistency between rule 16(5) of the Turnover and Assessment Rules and section 5(vi) of the Act which was accepted in the High Court receives no support from the language of that section which is a concessional provision for making the sales of hides and skins liable to taxation at a single point; but that, as the opening words of the section show, is subject to restrictions and conditions prescribed in the rules and one of these conditions is the taking of a licence. All that rule 16(5) does is to emphasise the consequences of non-observance of the conditions which sections 5(vi) and 6-A have in clear terms prescribed. We find no inconsistency between the section and the Act. But it was submitted that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16(5) clearly contravenes the provisions of section 5(vi) of the Act. This sub-rule has been held to be ultra vires by the High Court, and indeed, the learned Advocate-General of Madras did not in the High Court, as before us, dispute that rule 16(5) was repugnant to section 5(vi). That sub-rule, however, affects only unlicensed dealers and the appellants who are admittedly licensed dealers are not affected by that sub-rule". This judgment does not show that the repugnancy of the rule was in controversy or the court pronounced its opinion upon the merits or it was necessary to do so. The learned Solicitor-General then contended before us that in their counter-affidavit filed in the High Court the appellants had accepted the position that rule 16(5) of the Turnover and Assessment Rules was ultra vires. But that will not carry the matter any further, because on a construction of the provisions of the Act this argument of repugnancy is not sustainable. The Andhra Pradesh High Court rightly did not accept the view that rule 16(5) was ultra vires of the rule-making authority: V.M. Syed Mohamed Company v. State of Andhra [1956] 7 S.T.C. 465 at p. 472.. The same view was take ..... X X X X Extracts X X X X X X X X Extracts X X X X
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