1971 (10) TMI 90 - SC - VAT and Sales Tax

Whether section 3-D(1) of the U.P. Sales Tax Act 1948 is ultra vires? Whether Notification No. ST-7122/X-900(16)64 dated October 1 1964 issued under section 3-D(1) of the Act imposing purchase tax on oil-seeds is invalid as it contravenes section 3-AA of the Act? Held that - Appeal dismissed. The High Court of Allahabad has consistently taken the view that it is open to the State Government to levy purchase tax in exercise of its powers under section 3-D even in respect of goods covered by section 3-AA. We are in agreement with that view.

Summary

Issues:
1. Constitutionality of section 3-D(1) of the U.P. Sales Tax Act
2. Validity of Notification imposing purchase tax on oil-seeds
3. Interpretation of section 3-AA of the Act

Constitutionality of section 3-D(1) of the U.P. Sales Tax Act:
The appellant challenged section 3-D(1) of the U.P. Sales Tax Act, arguing that excessive legislative power had been delegated to the State Government and that it discriminates between registered dealers. The Supreme Court, in a previous judgment, had already ruled on the constitutionality of section 3-D(1) in a similar case, holding that it was not ultra vires the Constitution. Therefore, the contention that section 3-D(1) is unconstitutional failed.

Validity of Notification imposing purchase tax on oil-seeds:
The main issue in this case was whether Notification No. ST-7122/X-900(16)64 dated October 1, 1964, imposing a purchase tax on oil-seeds, violated section 3-AA of the Act. Section 3-AA exempts certain goods from tax except at the point of sale to the consumer, subject to a maximum rate specified by the State Government. The appellant argued that the notification contravened section 3-AA. The Court analyzed the provisions of section 3-AA and section 3-D(1) to determine the validity of the notification. The Court found that section 3-D(1) allowed the State Government to levy purchase tax on goods, including those covered under section 3-AA. Therefore, the Court held that the notification imposing purchase tax on oil-seeds was valid.

Interpretation of section 3-AA of the Act:
The Court delved into the interpretation of section 3-AA, which exempts certain goods from tax except at the point of sale to the consumer. The appellant argued that dealings in oil-seeds should be exclusively governed by section 3-AA as a special provision. However, the revenue contended that section 3-D empowers the State Government to levy purchase tax on goods notified under it. The Court observed that section 3-D was incorporated into the Act after section 3-AA and that the legislature intended for section 3-D to apply to goods covered by section 3-AA. The Court held that the State Government could levy purchase tax under section 3-D even for goods specified in section 3-AA, upholding the High Court's consistent view on the matter.

In conclusion, the Supreme Court dismissed the appeals, affirming the validity of the notification imposing purchase tax on oil-seeds and holding that the State Government could levy purchase tax under section 3-D even for goods covered by section 3-AA.