TMI Blog1968 (11) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... se (h) of section 2 of the Act the sales made outside Uttar Pradesh would be deemed to have taken place in Uttar Pradesh. The Sales Tax Officer, therefore, determined the gross turnover at Rs. 23,234-7-3 and rejected the contention of the assessee that he was not liable to tax. For the purpose of determining the tax liability he exempted the sales made outside Uttar Pradesh of Rs. 15,591-11-0 under section 27 of the Act and computed the tax on the remaining turnover of Rs. 7,642-12-3. The assessee preferred an appeal against the assessment, but the appeal was dismissed. Thereafter, he applied in revision and the Judge (Revisions) Sales Tax, accepted the plea of the assessee that the turnover of sales made outside Uttar Pradesh could not be included in his gross turnover and held that the remaining turnover of the assessee being below the minimum taxable limit he was not liable to tax at all. At the instance of the Commissioner of Sales Tax, U.P., the Judge (Revisions) has referred the case and invited the opinion of this Court on the following question: "Whether ex-U.P. sales are to be excluded from computing the prescribed minimum of the gross turnover or not under the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act- (i) where such sale or purchase takes place outside the State of Uttar Pradesh; or (ii) where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territory of India; (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March, 1951, be imposed where such sale or purchase takes place in the course of inter-State trade or commerce except in so far as Parliament may by law otherwise provide. (2) The Explanation to clause (1) of Article 286 of the Constitution shall apply for the interpretation of sub-clause (i) of clause (a) of subsection (1)." This section was added by the Adaptation of Laws Order, 1950, as amended by the Adaptation of Laws (Third Amendment) Order, 1951. It was added for the purpose of bringing the U.P. Sales Tax Act into line with Article 286 of the Constitution. At the relevant time, Article 286 reads: "286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counter to the provisions of the Constitution, because the presumption always is that the Legislature did not intend to disobey the Constitution. Where upon a fair reading of the statute that is not possible, the statute must fail as being outside the powers of the Legislature. We are relieved of the necessity of embarking upon this enquiry because the Legislature enacted section 27. The non obstante provision in section 27 lifts the transactions mentioned in that section outside the scope of the Act. Those transactions lie beyond the reach of the envelope of power created by the Act. According to the plain language of section 27, no matter what any provisions of the Act may say, no liability to tax can be visited on sales made outside Uttar Pradesh. Because of the non obstante provision, section 27 overrides all other provisions of the Act. Section 3, the charging section, is subject to section 27. And, therefore, neither the first proviso to section 3 nor the definition of "sale" in section 2(h) nor of "turnover" in section 2(i) can be applied to include sales made outside Uttar Pradesh. In this connection, it will be useful to refer to the observations of the Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of these transactions to tax and these transactions were therefore taken out of the purview of the Act. We are therefore of opinion that the non obstante provision contained in section 26 of the Act has the effect of taking these transactions out of the purview of the Act with the result that the dealer is not required nor is he entitled to include them in the calculations of his turnover liable to tax thereunder." (Emphasis mine*) Here italicised. These observations, to my mind, completely support the conclusion that the sales made outside Uttar Pradesh by the assessee cannot be taken into account at all in the assessment proceedings against it. Those sales cannot be taken into consideration when applying the first proviso to section 3(1) and that is so whether what is contemplated by that proviso is the gross turnover or net turnover. At this stage, I may point out with respect, that having regard to the facts of this case the decision in Balbir Singh Co.(1) is not attracted at all. The controversy in Balbir Singh Co.(1) arose upon very different facts. There, the question was whether the sales made by a dealer as a commission agent could be included in its gross t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to a smaller figure. Whether a dealer is taxable or not depends only upon the turnover of the previous year; if it exceeds Rs. 12,000 he becomes liable. But when he is found to be liable different figures may enter into the determination of the amount of the tax to be assessed....... .........We are not concerned with matters of policy; if the Legislature made a distinction between the basis for determining whether a dealer is liable to pay tax or not and the basis on which the amount of the tax to be paid by him, if found liable, is to be determined, we are not only not to enquire whether the Legislature had the power to make this distinction but also not to enquire whether it acted wisely or even reasonably in doing so. The sole question before us is whether it has done so and I have no doubt that it must be answered in the affirmative. When it did not intend to include a certain matter in a turnover, even though according to the definition it would be included in it, it has made an express provision." It was also pointed out there that "turnover" may be determined differently for different purposes. But, the last sentence, in the passage quoted above, shows that any observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso to section 3 which provides that a dealer shall not be liable to pay tax if his turnover of the assessment year would be less than Rs. 12,000 or such larger amount as may be notified by the State Government. The minimum turnover mentioned in the proviso meant the gross turnover and gross turnover of a dealer, according to the learned counsel, meant the aggregate amount of all sales effected by a dealer regardless of the fact that a part of such turnover comprised of ex-U.P. sales. Ex-U.P. sales or inter-State sales could not be subjected to tax because of the provisions of Article 286, but such sales could certainly be taken into account in order to determine a dealer's liability to pay tax in respect of his other sales which were liable to tax under the Act. The argument proceeded that so long as such sales were not subjected to tax, the mandate contained in Article 286 could not be said to have been violated merely because such sales were included in the gross turnover of a dealer in order to determine as to whether or not he was liable to pay tax in respect of his other sales. The State was not bound to provide that a dealer shall not be liable to tax if his turnover did ..... 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