TMI Blog1959 (3) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... e permitted to argue the points. The objection was made at a late stage of the case and it was further clear that the points had to be considered in some of the writ petitions in which they had been taken. There is the further fact that the learned counsel for the State could not be said to have been taken by surprise, because there was a break of nearly a month after the above two points had been argued by the learned counsel for the petitioners and the time when he started with the points that had actually been taken in the writ case. This break of a month was caused by the fact that one of the judges, constituting the Bench, was on leave for a period of three weeks. In view of all these circumstances, we permitted the above two points to be argued even in the petitions in which they had not been taken in the grounds set forth in the petitions. The petitioner is a dealer in cloth and carries on his business for the purchase and sale of cloth in Agra. He is registered as a dealer under the U.P. Sales Tax Act. The petitioner had been paying sales tax on the sales effected by him at a certain rate, but subsequently tax on some of the commodities was made payable at one point of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government decided to enhance the tax to one anna per rupee even on articles which were not specified in sub-section (2) of section 3A. Ordinance No. IX of 1956, called the U. P. Sales Tax (Amendment) Ordinance, was published in the Government Gazette, U.P. Extraordinary, dated 31st March, 1956. By this Ordinance, sub-section (2) of section 3A of the Act was deleted and a new sub-section inserted. The amendment provided that if the State Government made a declaration under sub-section (1), it might further declare that the turnover of the dealer, who was liable to pay tax on the sale of such goods, be taxed at such rate as might be specified not exceeding one anna per rupee. On the same date a notification was issued declaring that the turnover in respect of the goods specified in the list attached to the notification was liable to tax in some cases at the point of sale by the importer and in others at the point of sale by the manufacturer. It was further declared that the turnover with effect from the Ist April, 1956, was liable to be taxed at the rate of one anna per rupee. Item No. 5 of the list appended to the notification included cloth of all kinds. Section 1 (2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification, still the notification continued to be invalid, as it had not, in fact, been issued under the amended section 3A. This Full Bench decision is reported in the case of Firm Bargali Mal Satish Chandra Jain v. Sales Tax Officer, Agra(2). It was after this decision that the Amendment Act, now impugned before us, was enacted by the U.P. Legislature. It is styled as U.P. Sales Tax (Validation) Act, 1958, and it came into force on the 6th May, 1958. Sub-section (1) of section 3 of this Validation Act is important and it is as follows: "Notwithstanding any judgment, decree or order of any Court, the notifications specified in Part A, Part B and Part C of the Schedule shall be deemed to have been issued in exercise of the powers conferred respectively by section 3, section 3A and section 4 of the U. P. Sales Tax (1) [1957] 8 S.T.C. 666; 1957 A.L.J. 654. (2) [1958] 9 S.T.C. 492; 1958 A.L.J. 228. Act, 1948, as if the said sections were in force on the date on which the notifications were issued in the form in which they were in force immediately before the commencement of this Act and all the said notifications shall be valid and shall be deemed always to have been valid and sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the 31st March, 1956, and not as subsequently amended by Act No. XXIV of 1957. We are not at all impressed by the argument of the learned counsel. In the setting in which the clause occurs there can be no doubt that it applies to the said sections and not (1) [1958] A.L.J. 719; 10 S.T.C. 424. to the notifications. The object of the legislation clearly was to validate the notifications and this could only be done if section 3A was read in the light of the amendment to it introduced by Act XXIV of 1957; otherwise section 3A, as amended by Act XIX of 1956, would have to be taken to have come into force on the 1st April, 1956, whereas the notification had been issued on the 31st March, 1956. It is true that the purpose and intention of the Act have, in the first instance, to be gathered by the language used by the Legislature. But we think the language used is amply clear and the clause, quoted above, must refer to the sections and not to the notifications. The above clause is preceded by the words "if the said sections were in force on the date on which the notifications were issued" and then follow the words "in the form in which they were in force immediately before the comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of such goods shall be liable to tax at such rates not exceeding one anna per rupee as it may specify. The argument of the learned counsel is that the subject of taxation is essentially a legislative act, but in sub-sections (1) and (2) of section 3A authority has been conferred on the State Government to select the commodities which would be made the subject-matter of taxation under section 3A. The State Government may not only declare what goods shall be subject to taxation at single point in the series of sales by successive dealers, but also determine the amount of tax leviable on such goods. It is argued that the Legislature has permitted the State Government to legislate in respect of tax and to select certain commodities for the purpose and to impose sales tax on such commodities. We are not impressed by the argument of the learned counsel. It does not take account of the entire picture. Under section 3 of the Principal Act, the Legislature has laid down that, subject to the provisions of the Act, every dealer shall pay tax at the rate of 3 pies per rupee on his turnover of his previous year. This section had the effect of imposing the tax at the rate of 3 pies per r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her safeguard provided by sub-section (3) is that every notification issued under section 3A is to be laid before the Legislative Assembly as soon as possible and the Legislative Assembly naturally has been given the right to amend or modify the notification, though the notification has to be taken to be valid till it has been amended or modified. The learned counsel for the petitioner argued that the safeguard provided by sub-section (3) is a very weak type of safeguard. In this connection he referred to page 823 of Erskine May's Parliamentary Practice, 15th Edition. Under the heading "Parliamentary Control" this type of safeguard has been called as a negative one. There is no doubt that this type of safeguard is weaker than an affirmative one, in which the rule or regulation does not come into force till it has received the approval of the Legislature. But laying of rules, regulations and notifications before a Legislature is a well-recognised parliamentary practice. The members of the Legislature know or ought to know that the Government under its delegated authority has issued certain rules, regulations or notifications and, if they have any objection to the same, they might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of commodities, which are the subject-matter of sales, is so large and their incidences are so varied that the Legislature must have found it impossible to itself prepare a list of all such commodities for all time to come. The prices of commodities vary from time to time, by the impact of different economic forces. The Legislature may have found it impossible to decide which commodities should be made the subject-matter in single point taxation and which should be permitted to continue under multiple point taxation. The rate of tax might also have to be varied from time to time. The Legislature further provided for a negative type of control by directing that the notifications under section 3A should be placed before the Legislative Assembly for such scrutiny as the members might like to exercise. The delegation of authority of this kind has been held to be valid in more cases than one. In the case of Harishanker Bagla v. State of Madhya Pradesh(1) the validity of sections 3, 4 and 6 of the Essential Supplies (Temporary Powers) Act, 1946, was challenged. This Court had upheld the validity of sections 3 and 4 but declared section 6 to be invalid. The Supreme Court agreed wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider it necessary to detail. It could have laid down only the general principles governing rules of taxation which every State Government is expected to know. (1) [1954] A.I.R. 1954 S.C. 465. The learned counsel for the State strongly relied upon the case of Edward Mills Co. Ltd. v. State of Ajmer(1). We agree with the learned counsel that the case strongly supports his contention. One of the points raised in the case was concerning the validity of section 27 of the Minimum Wages Act of 1948. The above Act was passed for the purpose of authorising the fixation of minimum wages and a schedule was attached to it, which gave a list of the employments to which the Act was to apply in the first instance. Section 27 then authorised the Government to add to the schedule any employment in respect of which the Government was of the opinion that minimum wages should be fixed. The Government was to issue a notification in the manner prescribed and then the schedule in the Act was deemed to have contained the additional employments also. The section or the Act nowhere formulated any particular legislative policy according to which particular employment was to be chosen for being included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssory or subordinate power has been conferred on the State Government to select the commodities and the object of the conferment of the power was to carry out the purpose and policy of the Sales Tax Act. The third point argued by the learned counsel is the sub-sections (1) and (2) of section 3A of the Act are inconsistent with Article 14 of the Constitution. The arguments are practically the same which were advanced in connection with the alleged improper delegation of authority on the State Government. It was argued that no guiding principle for the seletion of the commodities having been laid down by the Legislature, it was open to the State Government to select one commodity for the application of section 3A and leave out another with similar incidence with the consequence that sales tax at only 3 pies per rupee would be payable under section 3 of the Act. The absence of any directions or guiding principles leaves it open to the State Government to discriminate between dealers in different commodities, and this is said to render the legislation to be inconsistent with Article 14 of the Constitution. The scope and the implications of the above Article have been considered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety of facts which were by no means uniform and which could best be ascertained by the persons who were placed in charge of the administration of the State. We think the case before us falls within the principles laid down in the cases of Edward Mills Co. Ltd. v. State of Ajmer(4), Panna Lal Binjraj v. The Union of India(5), and Niemla Textile Finishing Mills Ltd. v. The Second Punjab Tribunal(6). We have already referred to the facts of the case of Edward Mills Co. Ltd.(4) in which section 27 of the Minimum Wages Act authorised the appropriate Government to add to the schedule the industries which it thought should be brought within the ambit of the Act. No guiding principles were laid down by the statute, but the validity of section 27 was upheld. In the case of Panna Lal Binjraj(5), one of the sections challenged was section 5(7) of the Income-tax Act on the ground that the sub-section was inconsistent with Article 14 of the Constitution. Their Lordships have dealt with the matter in paragraph 26 of the Report. The argument of the learned counsel for Panna Lal Binjraj was that a naked and arbitrary power to transfer cases from one Income-tax Officer to another was conferred on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the dispute to a Court for enquiry or to refer the dispute or any matter connected with it to a Tribunal for adjudication. We are not concerned with the proviso. The validity of this section was challenged on the ground that it was inconsistent with Article 14 of the Constitution. Their Lordships upheld the validity of the section and one of the grounds was that the steps to be taken by the appropriate Government were to be determined by the surrounding circumstances, and the discretion for setting up one or the other of the authorities for the purpose of investigation or settlement of industrial disputes would be exercised by it having regard to the exigencies of the situation and the objects to be achieved. (1) A.I.R. 1957 S.C. 329. "No hard and fast rule can be laid down as to the setting up of one or the other of the authorities for the purpose of bringing about the desired end which is the settlement of industrial disputes and promotion of industrial peace and it is hardly legitimate to say that such discretion as is vested in the appropriate Government will be exercised with an evil eye and an unequal hand". Similarly the selection of particular commodities, for the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Parliamentary Secretary to the Finance Minister, wanted the permission of the Speaker to place the impugned notification on the table of the Assembly along with some other notifications. The Speaker, however, said that the notification had been placed on the table of the Assembly on the 2nd April, 1956, but added that no announcement of the fact was made on that date. To a question by a Member whether the notifications sought to be placed on the table on the 9th May, 1956, were the same which had been printed in the Schedule of the U. P. Sales Tax (Amendment) Ordinance, the Finance Minister said that they were connected with the Ordinance. It is then stated that the Session of the Legislative Assembly lasted from 2nd April, 1956, to 22nd May, 1956, but the notification in question was never placed on the Assembly table. This information was said to have been gathered from the proceedings of the U. P. Legislative Assembly. The counter-affidavit filed on behalf of the State has been sworn to by Shripati Sahai, who was posted as Superintendent, Parliamentary Department, Legislative Assembly Secretariat, U. P., Lucknow. He says that he was present in the Legislative Assembly on 2nd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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