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R.B. NaraIn Singh Sugar Mills Ltd., Lhaksar Vs. Commissioner of Sales Tax, U.P., Lucknow - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtAllahabad High Court
Decided On
Case NumberS.T.R. No. 196 of 1965
Judge
Reported inAIR1969All516; [1969]23STC314(All)
ActsCentral Sales Tax Act, 1956 - Sections 3, 6, 8 and 9; Constitution of India - Article 1(1) and 1(2); Uttar Pradesh Sales Tax Act, 1948 - Sections 11
AppellantR.B. NaraIn Singh Sugar Mills Ltd., Lhaksar
RespondentCommissioner of Sales Tax, U.P., Lucknow
Appellant AdvocateAshok Gupta and ;Brijlal Gupta, Advs.
Respondent AdvocateStanding Counsel
Excerpt:
(i) sales tax - liability to central sales tax - section 3 of central sales tax act, 1956 - inter state sale made by dealer in u. p. to dealer in jammu and kashmir - central sales tax act, 1956 not applicable to jammu and kashmir - dealer in u. p. claiming exemption from central sales tax - held, sale liable to be taxed to central sales tax in u. p. (ii) ultra vires provisions - section 8 central sales tax act, 1956 - inter state sale to jammu and kashmir attracts tax at higher rate under section 8 (2) than inter state sale to other states under section 8 (1) - section 8 of act discriminatory and in violation of article 14 of constitution of india - initially contention raised before additional judge (revenue) sales tax - held, authority created under statute can not pronounce upon vires..........sales tax act. section 3 of the act determines when a sale is said to take place in the course of inter-state trade or commerce, and one of the cases in which such a sale takes place is when the sale occasions the movement of goods from one state to another. now, it cannot be doubted that the state of jammu and kashmir is a state for the purpose of this provision. it is one of the states referred to in article 1 of the constitution. article 1(1) provides that india shall be a union of states and article 1(2) declares that the states are those specified in the first schedule, the state of jammu and kashmir is mentioned at serial no. 15 of the first schedule. therefore, so far as section 3 of the central sales tax act is concerned if a sale occasions the movement of goods from any state.....
Judgment:

Pathak, J.

1. The assessee, M/s. R.B. Narain Singh Sugar Mills Ltd. of Lhaksar, district Saharanpur, was assessed to Sales Tax under the Central Sales Tax Act for the assessment year 1957-58. During the assessment proceedings a contention was raised before the Sales Tax Officer that the turn-over of Ra 1,30,813-25 was exempt from Central Sales Tax inasmuch as it consisted of Sales made to dealers in Jammu and Kashmir and therefore must be considered as made in the course of export outside the territory of India. The submission rested on the fact that the Central Sales Tax Act had not been made applicable in the State of Jammu and Kashmir. That contention was accepted by the Sales Tax Officer. The Commissioner of Sales Tax applied in revision. The revision application has been allowed by the Additional Judge (Revision) Sales Tax, who has held that the turnover was clearly taxable under the Central Sales Tax Act. At the instance of the assessee, the following question has been referred to this Court for its opinion:

'Whether the sales of Rs. 1,30.813/25 effected by the Mills during the period 1-7-57 to 31-3-1958 to the dealers of Jammu and Kashmir were taxable under the Central Sales Tax Act, 1956, when the Central Sales Tax Act was not applicable to the State of Jammu and Kashmir?'

2. It Is true that at the relevant time the Central Sales Tax Act extended to the whole of India except the State of Jammu and Kashmir. The question is whether the sales effected by the assessee to dealers in the State of Jammu and Kashmir were liable to tax under the Central Sales Tax Act. Section 3 of the Act determines when a sale is said to take place in the course of inter-State trade or commerce, and one of the cases in which such a sale takes place is when the sale occasions the movement of goods from one State to another. Now, it cannot be doubted that the State of Jammu and Kashmir is a State for the purpose of this provision. It is one of the states referred to in Article 1 of the Constitution. Article 1(1) provides that India shall be a Union of States and Article 1(2) declares that the States are those specified in the First Schedule, The State of Jammu and Kashmir is mentioned at Serial No. 15 of the First Schedule. Therefore, so far as Section 3 of the Central Sales Tax Act is concerned if a sale occasions the movement of goods from any State to the State of Jammu and Kashmir, it will be a sale in the course of inter-State trade and commerce,

3. The liability to pay tax is placed by Section 6 upon dealers who effect sales in the course of inter-State trade and commerce, and Section 9(1) expressly states that the tax payable by such dealers shall be levied and calculated by the Government of India in the State from which the movement of the goods commenced. If the movement of the goods commenced in a State over which the Act operates, then clearly the transaction which results in such movement of goods is liable to tax in the hands of the dealer in that State. In the instant case the sales fell for consideration with reference to the State of Uttar Pradesh where the movement of the goods commenced. The circumstance that the goods moved towards the State of Jammu and Kashmir is not relevant at all for the purpose of fastening the tax liability on the assessee in the State of Uttar Pradesh, except in so far as it determines that the transactions in question are inter-State sales. The same result would have obtained if the goods had moved not to the State of Jammu and Kashmir but to some other State in India. We are of opinion that the mere fact that the Central Sales Tax Act was not applicable to the State of Jammu and Kashmir does not preclude the sales in question being considered as inter-State sales liable to tax under the Central Sales Tax Act. We are supported in this view by the decisions of the Madras High Court in Marriappa Nadar v. State of Madras, 1962-13 STC 371 = (AIR 1962 Mad 290) and of the Punjab High Court in Nand Lal Hira Lal v. Punjab State, (1965) 16. STC 967 (Punj).

4. Learned counsel for the petitioner sought to raise a further contention before us. It was urged that inasmuch as the rate of tax imposed in respect of inter-State sales entered into by a dealer in the State of Uttar Pradesh with a purchaser in the State of Jammu and Kashmir resulted in the application of a higher rate of tax under Section 8(2), while an inter-State sale by that dealer to a purchaser in some other State over which the Central Sales Tax Act operated would attract the lower rate of tax prescribed in Section 8(1), an unconstitutional discrimination is effected between the transactions falling in the two categories and, therefore, there is a contravention of Article 14 and Article 301 of the Constitution. The argument in substance is that the provisions of Section 8(2), to the extent that they enable the application of a higher rate in respect of transactions effected by a dealer in the State of Uttar Pradesh with a dealer in the State of Jammu and Kashmir, are ultra vires. It is well settled now that it is not open to an authority created under the statute to pronounce upon the vires of a provision of that statute. See K.S. Venkataraman and Co. (P) Ltd. v. State of Madras, 1966-17 STC 418 - (AIR 1966 SC 1089).

5. If the Additional Judge (Revisions) Sales Tax was not entitled to entertain that question, we are also not competent to do so in the instant proceeding which is merely a reference arising out of an order of that authority. We must therefore, decline to entertain this contention of the petitioner.

6. We answer the question referred to this Court in the affirmative. The Commissioner of Sales Tax is entitled to his costs which we assess at Rs. 200/-. Counsel's fee is also assessed at the same figure.


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