TMI Blog1955 (4) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, 1951, the applicant was required to pay the tax under the U.P. Sales Tax Act (U.P. Act No. XV of 1948). It is the applicant's case that the handloom silk cloth sold by it does not lose its character of handloom silk cloth by the mere fact that it has been printed and put in the form of saris, covers for quilts and bed-covers and the sale of such cloth cannot be subjected to the payment of tax under the U.P. Sales Tax Act. Further, the applicant contends that inasmuch as (i) under section 2(c) of the U.P. Sales Tax Act, the departments of the State and the Central Governments have been excluded from the definition of a "dealer" and thus, exempted from the payment of the sales tax, (ii). under sections 3 and 4 of the Act, the Government has been given the power (which power is entirely unres- tricted and arbitrary) to reduce the tax of or exempt any person or class of goods from the liability of payment of sales tax, and (iii) under section 4, the Spinners Association and Gandhi Ashram and its branches have been exempted from payment of tax under the Act, the Act as a whole is discriminatory and has, therefore, become void under Article 14 read with Article 13 of the Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meerut, and their branches and of such other persons or class of persons as the State Government may notify materially affects the applicant inasmuch as the price payable to the applicant by purchasers would be higher than the price which a purchaser would have to pay, if he were to purchase his goods from persons exempted or whose tax might be reduced under the provisions of sections 3 and 4 quoted above and this would adversely affect the sales by the applicant. The defence of the opposite parties, who are the Sales Tax Officer, Fateligarh, the State of Uttar Pradesh and the Commissioner, Food and Civil Supplies, Government of Uttar Pradesh, is (i) that the printed handloom articles sold by the applicant are not cloth but readymade garments fit for personal wear and use and are, therefore, not covered by the aforementioned notification; (ii) that the Government can reasonably be placed in a classifica- tion separate from other dealers on the ground that it sells only hand- loom goods for the purpose of encouraging cottage industries, as required by Article 43 of the Constitution, and does not make any profits; (iii) that, for the same reasons, the Spinners Association and the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhi Ashram, Meerut, in section 4(1)(b) is unjustifiable as it is not based on any reasonable classification. The departments of the State or Central Governments mentioned in section 2(c) clearly refer to the State or the Central Governments themselves. It is an error to think that a department of the State Government can be treated as a person in the absence of any law to that effect. The person is the State itself and not its department which is merely its agency. The mention of the word "department" in section 2 was not quite accurate but the intention of the legislature is clear that the State and the Central Governments are exempted from being considered as "dealers" within the meaning of the Act. They have been treated separately from other dealers. A State acts in two capacities, sovereign and commercial. In its sovereign capacity it exercises the legislative, judicial and executive functions properly so-called. In that capacity, it must necessarily be placed in a different category from private individuals. When, how- ever, the State acts as a commercial concern, it can sue and be sued like any other private person and it can be put on the same footing as the latter. Any dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to be the duty of the State. From the affidavit filed on behalf of the opposite parties, it is clear that the State Govern- ment engages itself in the sale of handloom cloth. The Uttar Pradesh Government has got about a dozen U.P. Government emporiums in some of the important towns of the State. These emporiums are main- tained primarily in the form of show-rooms with the object of giving encouragement to cottage industries. Goods manufactured from hand- loom cloth are put on view to show the advance which is being made from time to time in the cottage industries of the State. The Govern- ment purchases goods manufactured from handloom cloth and the sale is made not from a business point of view or from a profit motive but goods are sold at cost price which means the price at which they have (1) (1952) A.I.R. 1952 S.C. 235. (3) [1954] 5 S.T.C. 108; A.I.R. 1954 (2) (1951) A.I.R. 1951 All. 257. S.C. 314. been purchased, plus the incidental charges. A body which is carrying on a business in this spirit and with this objective must surely stand on a footing different from a person who carries on business solely for his own benefit. Article 43 of the Constitution lays it down as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not fulfilled, it can- not be said that the Act, as it stands, creates any discrimination as to taxation and no relief can be given to the applicant unless the Govern- ment creates a discrimination by the issue of a notification. It has not been urged in the petition that any such notification has been issued. In the arguments before us, it was suggested that some such notification has been made in favour of certain institutions, but no affidavit was filed and we have no proof of the same. We must, therefore, hold that as matters stand at present, the applicant is not entitled to question the validity of the said provisions. We are further of opinion that it is unnecessary for us to pronounce upon the validity of the aforesaid provisions of sections 3 and 4 of the Act, as, assuming that those provisions are discriminatory and void, they can be severed from the rest of the Act. It may be noted at the outset that the Sales Tax Act is a piece of legislation intended primarily for the raising of revenue for the State. It is an Act which charges certain persons with the liability for the payment of tax upon sales of certain goods. The charging provisions are general. Every person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith or dependent upon those giving bounties upon the production of sugars in this country that the former would not have been adopted except in connection with the latter. While in a general sense, both may be said to be parts of a system, neither the words nor the general scope of the Act justifies the belief that Congress intended they should operate as a whole, and not separately for the purpose of accomplishing the objects for which they were respectively designed. Unless it be impossible to avoid it, a general revenue statute should never be declared inoperative in all its parts because a particular part relating to a distinct subject may be invalid. A different rule might be disastrous to the financial operations of the Government, and produce the utmost confusion in the business of the entire country." In Uttah Power Light Company v. Emmitt Pfost(1), section 1 of the Tax Act of the United States provided that: "any individual, corporation, etc., engaged in the generation, manufacture or production of electricity and electrical energy, by any means, for barter, sale or exchange, shall, at a specified time, pay a certain licence tax." Section 5 provided that "all electrici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined, when evidently the legislature intended that they should not be regarded as offending against the law even if they did not combine their capital, skill, or acts in respect of their products or stock in hand". It is interesting to note that the view of the Court that the exemption was invalid was overruled in a later decision of the Supreme Court in Herbert Tigher v. State of Texas(2), where it was observed that "Connolly's case has been worn away by erosion of time and is no longer controlling." No Government can be carried on without taxation. In taxing statutes, the presumption is that the legislature's predominant intention was to tax and the exemptions granted were secondary in importance. If the exemptions are found to be invalid, the presumption is that the legislature would still have intended that the rest of the statute should be enforced. On the other hand, in statutes creating offences, if the exemptions are invalid, and by reason of their invalidity, certain objects or activities would be rendered unlawful and subject to punish- ment, no such presumption can be raised. In such cases, both the objects must be held to be equally important. Applying these princip ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
