1959 (3) TMI 47 - HC - VAT and Sales Tax

Issues Involved:
1. Unauthorized delegation of power.
2. Inconsistency with Article 14 of the Constitution.
3. Validity of the notification dated 31st March 1956.
4. Compliance with sub-section (3) of section 3A of the U.P. Sales Tax Act.

Detailed Analysis:

1. Unauthorized Delegation of Power:
The learned counsel for the petitioner argued that sub-sections (1) and (2) of section 3A of the U.P. Sales Tax Act constituted an improper delegation of authority to the State Government. The argument was that the Legislature had permitted the State Government to legislate in respect of tax and to select certain commodities for taxation, which should have been a legislative act. The court, however, was not impressed by this argument. It was held that the Legislature had laid down the policy in section 3 of the Principal Act by imposing a tax at the rate of 3 pies per rupee on every dealer's turnover. Section 3A merely authorized the State Government to select commodities for single-point taxation, with a maximum tax rate of one anna per rupee. The State Government's power was to determine under which section the tax was going to be imposed, not to legislate new taxes. The court concluded that this delegation of authority was not improper, as it was an accessory or subordinate power necessary to carry out the purpose and policy of the Sales Tax Act.

2. Inconsistency with Article 14 of the Constitution:
The petitioner contended that sub-sections (1) and (2) of section 3A were inconsistent with Article 14 of the Constitution because they allowed the State Government to select commodities for taxation without any guiding principles, leading to potential discrimination. The court referred to several Supreme Court cases, including Budhan Chowdhry v. State of Bihar and Sri Ram Krishna Dalmia v. Justice S. R. Tendolkar, to analyze the scope and implications of Article 14. The court held that the selection of commodities for single-point taxation depended on various factors and exigencies that could best be ascertained by the State Government. The court concluded that section 3A did not inherently provide for arbitrary or discriminatory treatment and was not inconsistent with Article 14.

3. Validity of the Notification Dated 31st March 1956:
The notification dated 31st March 1956, which was issued under section 3A of the U.P. Sales Tax Act, was challenged multiple times. Initially, it was held invalid by a Full Bench because it was issued before the amendment to section 3A came into operation. However, the U.P. Sales Tax (Validation) Act, 1958, was enacted to validate this and other notifications. The court held that section 3(1) of the Validation Act effectively validated the notification by introducing a legal fiction that the notification was issued under section 3A as it stood on the date of the Validation Act. The court agreed with the previous Division Bench decision in Haji Lal Mohammad Biri Works v. Sales Tax Officer, Allahabad, which upheld the validity of the Validation Act and the notification.

4. Compliance with Sub-section (3) of Section 3A of the U.P. Sales Tax Act:
The petitioner argued that the notification was not placed before the U.P. Legislative Assembly as required by sub-section (3) of section 3A. The court examined the affidavits and found that the notification, along with the U.P. Sales Tax (Amendment) Ordinance, was placed on the table of the Assembly on 2nd April 1956, although no announcement was made. A formal motion for placing the notification was made on 9th May 1956, and the Speaker confirmed that the notification had already been placed on 2nd April 1956. The court held that the requirement of placing the notification on the table was fully complied with, and the objection on this ground was rejected.

Conclusion:
The petition was dismissed with costs, and the court assessed the counsel's fee for the State at Rs. 400. The court upheld the validity of the U.P. Sales Tax (Validation) Act, 1958, and the notification dated 31st March 1956, finding no improper delegation of authority or inconsistency with Article 14 of the Constitution. The court also confirmed that the procedural requirements under sub-section (3) of section 3A were duly followed.

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