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TMI Blog1968 (3) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... st Bengal before any contract of sale in respect of the goods was made. After the goods had reached the depots outside the Province of Uttar Pradesh, they were sold to various parties. The Sales Tax Officer of Uttar Pradesh assessed the outside sales of all the appellants to sales tax under the Uttar Pradesh Sales Tax Act (15 of 1948), hereinafter called the "Act". It appears that this category of sales roughly amounted to more than one crore of rupees in the case of the appellants and the sales tax was levied at the rate of 3 pies per rupee subject to a rebate under section 5 of the Act and certain other adjustments. Aggrieved by the assessments, the appellants took the matter in appeal under section 9 of the Act. The appeals were heard by various appellate officers called Judge, Appeals. Some of the appellate officers held that the assessment was properly made, while some others took the view that the assessments made for outside sales were improper and the assessment order should be quashed. The parties aggrieved by the appellate orders filed revisions before the revising authority called Judge, Revisions, under section 10 of the Act. By his judgment dated July 10, 1957, the Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) the Provincial Government may, by notification in the official Gazette, reduce the rate of tax on the turnover of any dealer or class of dealers or on the turnover in respect of any goods or class of goods; (ii) a dealer whose turnover in the previous year is less than Rs. 12,000 or such larger amount as may be prescribed shall not be liable to pay the tax under this Act for the assessment year; * * *" Section 2(c) defines a "dealer" to mean "any person or association of persons carrying on the business of buying or selling and supplying goods in the United Provinces, whether for commission, remuneration or otherwise and includes any firm or Hindu joint family and any society, club or association which sells or supplies goods to its members; but does not include any department of the Provincial Government or of the Indian Union (hereinafter called the 'Dominion Government')." Section 2(h) is to the following effect: "'sale' means within its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration and includes forward contracts but does not include a mortgage, hypothecation, charge or pledg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther- (a) withdraw his application (and if he does so, the fee shall be refunded), or (b) apply to the High Court against such refusal. (3) If upon the receipt of an application under clause (b) of sub- section (2), the High Court is not satisfied that such refusal was justified, it may require the Revising Authority to state a case and refer it to the High Court and on receipt of such requisition the Revising Authority shall state and refer the case accordingly. (4) If the High Court is not satisfied that the statement in a case referred under this section is sufficient to enable it to determine the question raised thereby, it may refer the case back to the Revising Authority to make such additions thereto or alterations therein as the High Court may direct in that behalf. * * * By the amending Act of 1954 (U.P. Act 8 of 1954), which came into force on April 1, 1954, the following provisions were substituted in place of sub-sections (1), (3) and (4): "(1) Within one hundred and twenty days from the date of service of the order under sub-section (3) of section 10, the person aggrieved may, by application in writing ..... require the Revising Authority to refer to the High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion arising in these appeals, namely, whether the deeming provision contained in section 2(h), Explanation 11(ii), of the Act was ultra vires the Government of India Act, 1935. It was argued by Mr. Chagla that the doctrine of nexus was not applicable to sales tax legislation, because such legislation was concerned with the tax on the transaction of sale, that is to say, a completed sale and to break up a sale into its component parts and to take one or more such parts and to apply the theory to it would mean that the State would be entitled to impose tax on one or more of the ingredients or constituent elements of the transaction of sale which by itself will not amount to a sale. An identical question has been the subject-matter of consideration by this Court in The Tata Iron & Steel Co. Ltd. v. The State of Bihar [1958] S.C.R. 1355; 9 S.T.C. 267.. It was held in that case that the provisions of section 4(1) read with section 2(g), second proviso, of the Bihar Sales Tax Act, 1947, as amended by the Bihar Sales Tax (Amendment) Act, 1948, were within the legislative competency of the Provincial Legislature of Bihar. The second proviso added by the amending Act did not extend the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses eventually outside the State, are produced or manufactured in Bihar and the sale wherever that takes place is by the same person who produced or manufactured the same in Bihar. The producer or manufacturer gets his sale price in respect of goods which were in Bihar at the date when the important event of agreement for sale was made or which were produced or manufactured in Bihar. These are relevant facts on which the State could well fasten its tax." The principle of this decision was reiterated by this Court in a subsequent case-Bharat Sugar Mills Ltd. v. The State of Bihar [1960] 11 S.T.C. 793. In The Tata Iron & Steel Co. Ltd. v. The State of Bihar [1958] S.C. R. 1355; 9 S.T.C. 267., the course of dealing between the manufacturers and the purchasers was described is follows: "The intending purchaser has to apply for a permit to the Iron and Steel Controller at Calcutta, who forwards the requisition to the Chief Sales Officer of the assessee working in Calcutta. The Chief Sales Officer thereafter makes a 'works order' and forwards it to Jamshedpur. The 'works order' mentions the complete specification of the goods required. After the receipt of the 'works order' the Jamshe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment justifiable in whole or in part by reference to, or by such a provision was more aptly described as an assessment not made under the Act than as an assessment made under the Act. The argument was negatived by the Judicial Committee for the reason that the circumstance that the assessing officer had taken into account an ultra vires provision of the Act was immaterial in determining whether the assessment was "made under the Act". The main reason that persuaded the Judicial Committee to accept the construction they placed on section 67 of the Income-tax Act may be stated in their own words as follows: "The absence of such machinery would greatly assist the appellant on the question of construction and, indeed, it may be added that, if there were no such machinery, and if the section affected to preclude the High Court in its ordinary civil jurisdiction from considering, a point of ultra vires, there would be a serious question whether the opening part of the section, so far as it debarred the question of ultra vires being debated fell within the competence of the legislature." It was held by this Court in K.S. Venkataraman & Co. v. State of Madras [1966] 2 S.C.R. 229; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence also considered that questions. Also, in Gannon Dunkerley & Co. v. State of Madras [1954] 5 S.T.C. 216; I.L.R. 1955 Mad. 832., the proceeding reached the High Court of Madras in a revision petition under section 12-B of the Madras General Sales Tax Act, 1939, and the High Court entertained the plea of ultra' vires and decided it in favour of the taxpayer. It is, however, not necessary in the present case for us to decide the question as to whether the principle laid down in K. S. Venkataraman's case [1966] 2 S.C.R. 229; 17 S.T.C. 418., is applicable. The reason is that the appellants did not challenge the jurisdiction of the High Court to examine the question of law regarding the constitutional validity of Explanation 11 to section 2(h) of the Act. Nor was any such challenge made in the special leave petition to this Court or in the statement of the case. On the contrary, the appellant has itself applied to the Judge, Revisions, under section 10 of the Act contending that Explanation 11 to section 2(h) was ultra vires. It is not therefore open to the appellants to deny the jurisdiction of the Revisional Authority to decide the question or to challenge the jurisdiction of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to accept this argument as correct. The right to apply for a reference is conferred upon a person aggrieved by an order passed under section 10 and this right exists regardless of when the application for revision was made. Only the existence of an order under section 10 is required for the accrual of the right to make an application for a reference. It was suggested by Mr. Chagla that the Commissioner did not have the right to apply for a reference because the right did not exist when the appellants had made the application for revision. But the right did exist on the date on which the Commissioner applied for a reference and there is nothing in the language or context of section 11 to suggest that the Commissioner could exercise the right only if it existed on the date on which the application for revision had been made. On behalf of the appellants Mr. Chagla referred to the well-recognised rule that a statute should be interpreted, as far as possible, so as to respect vested rights. But this rule has no application to the present case for we do not think that amendment of section 11 of the Act by enabling the Commissioner also to ask for a reference of a question to the High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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