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TMI Blog1964 (4) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officers on the ground that there was no apparent error in the assessment orders. These petitions came up for hearing before our brother Manchanda, J., who has referred them to a larger Bench because he considered that the questions raised before him call for an authoritative decision. The petitioners in all the petitions have been assessed to sales tax at the rate of 2 nP. per rupee of turnover of sales of cotton yarn made by the petitioners to consumers; the sales in all the petitions are the last sales in a series of sales. Under section 3 of the Sales Tax Act, subject to the other provisions in the Act every dealer has to pay a tax at the rate of 2nP. per rupee on his turnover of the assessment year. This is the general provision and under it sales tax is payable on the turnover of every sale in a series of sales and at the fixed rate of 2nP. per rupee. Section 3-A reads as follows: "(1) Notwithstanding anything contained in section 3, the State Government may, by notification.................declare that the turnover in respect of any.................class of goods shall not be liable to tax except at such single point in the series of sales by successive dealers as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify." Parliament then enacted the Central Sales Tax Act No. 74 of 1956, which by section 14 declared that cotton yarn was of special importance in inter-State trade or commerce and by section 15 required that every sales tax law of a State shall, in so far as it imposes or authorizes the imposition of, a tax on the sale of declared goods, be subject to the restrictions and conditions that it shall not exceed two per cent. of the sale price and shall not be levied at more than one stage. On account of these restrictions and conditions the U.P. Sales Tax Act was amended by addition of section 3-AA with retrospective effect from 1st April, 1956. It lays down that, "Notwithstanding anything contained in section 3 or 3-A, the turnover in respect of 'cotton yarn' shall not be liable to tax except at the point of sale by a dealer to the consumer, and the rate of tax shall not exceed two naye paise per rupee." Under section 3-A(2) the State Government was given the right to fix the rate of tax at any amount not exceeding 10 nP. per rupee but in respect of cotton yarn it could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 3-AA, notifying that, "the turnover in respect of cotton yarn... which under the said section is liable to tax only at the point of sale by a dealer to the consumer shall with effect from 1st August, 1958, be subject to tax at the rate of two naye paise per rupee." The petitioners in these petitions challenge the vires of this notification. Section 3-AA which is referred to in the notification as the authority for its issue does not contain any words authorizing its issue. It does not expressly leave anything to be fixed by the State Government through a notification. It does not provide for the issue of a notification at all by the State Government. It has itself selected the single point in the series of sales. It has not fixed the rate of tax but it has also not provided that the rate of tax would be fixed by the State Government through a notification. Not only does it not lay down the rate of tax but also does not lay down by whom or how the rate of tax could be fixed. If the Legislature intended that the State Government should fix the rate of tax in respect of the goods mentioned in section 3-AA it failed to carry out the intention by enacting a provision conferring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and, therefore, the assessment orders cannot be sustained on the ground that they were, or could be passed under section 3. They were passed not under section 3 but under the notifications mentioned above which themselves were issued in the supposed exercise of the powers conferred by sections 3-A and 3-AA. Section 3 does not contemplate the issue of any notification by the State Government. Sections 3-A and 3-AA both are by way of exceptions to the general provision of section 3; the turnover in respect of cotton yarn and other declared goods is governed by section 3-AA and the turnover of some other goods is governed by section 3-A. In either case, the provisions of section 3 must be read with section 3-AA or section 3-A, and to the extent that section 3-A or 3-AA confines the point of taxability to a specified single point of sale and provides for the rate of tax, the corresponding provisions in section 3 must be superseded. Both sections 3-A and 3-AA open with the words "Notwithstanding anything contained in section 3", which means that anything contained in section 3 which is inconsistent with that for which provision is made in section 3-A or 3-AA shall yield to the latter. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otton yarn and other declared goods but also it has not done so. Therefore, it cannot be contended that what has happened is that the State Government has been required, while exercising its power under section 3-A(1) in respect of cotton yarn and other declared goods, to select a particular point of sale and that consequently subsection (2) applies to the turnover of the goods and the State Government can fix the rate of tax. The maximum rate of tax prescribed by section 3-A(2) is different from that prescribed by section 3-AA. If the contention of Sri Raja Ram were accepted and section 3-A(2) were applied, it would be open to the State Government to fix a rate of tax exceeding 2 nP. per rupee. This would be in clear conflict with the provisions contained in section 3-AA. It is evident that section 3-A(2) cannot be applied in a case covered by section 3-AA. In the result we hold that there is no rate of tax on the turnover of cotton yarn fixed and that the petitioners in these cases could not be assessed to any tax on the turnover of cotton yarn. The petitioners are still not entitled to succeed in these petitions because they had a remedy available to them by appeals from the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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