1. These two appeals arise out of two writ petitions. The petitions were disposed of by a common judgment, and we propose to follow this pattern. The leading case is the special Appeal No. 113.
2. Broad facts of the case have been set out elaborately in the judgment of the learned single Judge. We would not repeat them in detail but would restate only such facts as are material for deciding the arguments before us.
3. The learned Judge allowed the petitions and quashed the notices issued by the Sales Tax Officer (Ex. U. P. Dealers), Allahabad. Two notices were issued to the respondents under the provisions of the Sales Tax Act. One was issued on December 26, 1956, and the other on March 2, 1957. They were issued by Sri Musharraf Husain, Sales Tax Officer (for Ex. U. P. Dealers) Allahabad. They called upon the respondents to produce their account-books including purchase invoices, cash memos, bills, receipt books, sales tax registers and other papers before him for enabling him to assess sales tax on them for 1953-54, 1954-55 and for the period between April 1 and September 6, 1955. They did not obey the notices and filed writ petitions in this Court. In the petitions they challenged the competence of the Sales Tax Officer to proceed to assess them to sales tax on several grounds. The learned Judge accepted their contention and accordingly quashed the notices.
4. Before us counsel for the respondents has sought to support the judgment of the learned Judge on two grounds. Firstly, it U said that Sri Musharraf Husain was not competent to issue notices to them. Secondly, it is contended that they were not dealers and could not therefore be assessed to sales tax.
5. The first argument is double barrelled. Firstly, it is contended that the notification appointing Sri Musharraf Husain as an assessing authority is ineffective. The notification is annexure E to the counter-affidavit of Sri Musharraf Husain. It wag issued by the State Government on February 6, 1967. It states that Sri Musharraf Husain is appointed as an assessing authority
'With co-extensive jurisdiction extending over all the Sales Tax Circles and sub-circles in Uttar Pradesh and with head quarters at Allahabad,--for purposes of levy and collection of U. P. sales tax in terms of the Sales TaxLaws Validation Ordinance. 1956 (No. 3 of 1956)'.
It is pointed out that on the date of the issue of the nolification the said Ordinance stood repealed by the Sales Tax Laws Validation Act, 1956 It is urged that accordingly the notification could not effectively confer power on Sri Musharraf Husain to assess sales tax in accordance with the Sales Tax Laws Validation Act, 1956. It is evident that the respondents are insisting on giving a literal effect to the notification. Having regard to the conditions which gave birth to the notification we should not, we think, confine the notification to its strict letter After the decision of the Supreme Court in the Bengal Immunity Co. Ltd. v. State of Bihar. AIR 1955 SC 661 no sales tax could be levied on inter-State sales. This decision largely affected the revenues of a State. To relieve their difficulty the President promulgated the Sales Tax Laws Validation Ordinance (No. 3), 1956 The Ordinance declared that all State laws levying sales tax on inter-State sales upto September 6, 1955, shall be deemed to be valid. It was promulgated on January 30. 1956. It was replaced by a Parliamentary Act called the Sales Tax Laws Validation Act, 1956. The Act came into force on March 21. 1956. Its scheme was the same as that of the Ordinance. On April. 12, 1956, the Commissioner. Sales Tax, U. P., appointed Sri Musharraf Husain as an assessing authority for Ex. U. P. Dealers of West Bengal and certain other regions. The letter of appointment is annexure F. to the counter-affidavit. It recites: 'It has been decided to take up assessment of Ex. U. P. dealers again in view of the Sales Tax Laws Validation Act. 1956'. This letter was followed on February 6, 1957 by the notification already referred to It is rather strange that although the letter refers to the Sales Tax Laws Validation Act. 1956, the notification refers to the extinct Sales Tax Laws Validation Ordinance. We are satisfied that this is the common draftman's slip There is no doubt that the State Government intended to appoint Sri Musharraf Husain as an assessing authority for levy and collection of sales tax in accordance with the Sales Tax Laws Validation Act. The surrounding circumstances clearly evidence this intention. It is our duty to so construe the notification as to give effect to this unambiguous intention of the State Government with the help of the maxim ut res magis valeat quam pereat. We would accordingly read the notification as appointing Sri Musharraf Husain as an assessing authority for the levy and collection of sales tax in terms of the Sales Tax Laws Validation Act, 1956. If the notification is so read, as, in our view, it should be then the argument regarding its ineffectiveness could not succeed.
6. The next part of the first argument is that the notification is issued in contravention of Rules 3, 3-A and 6 of the Sales Tax Rules made under the U.P. Sales Tax Act. Rule 2 (c) defines a circle as a Sales Tax Circle notified under Rule 3 (a). Rule 2 (h) defines the Sales Tax Officer as a Sales Tax Officer of acertain circle appointed by the Slate Government to perform the duties and exercise the powers of an assessing authority in such circle. Sub-rule (1) of Rule 3 provides that the State Government may fix the limits of a circle and appoint officers to circles. Sub-rule (2) states that where there are more than one Sales Tax Officer in a circle, the Commissioner of Sales Tax shall determine their respective jurisdiction within such circle. Rule 3-A seems to suggest that there can be a Sales Tax Officer for a circle only. Rule 6 (a) provides that the Sales Tax Officer shall be the assessing authority in respect of the dealers carrying on business within the limits of his jurisdiction. Sub-rule (b) thereof states that if a dealer carries on business within the limits of the jurisdiction of more than one Sales Tax Officer, the Sales Tax Officer, within whose jurisdiction the principal place of his business is situate, shall be the assessing authority Sub-rule (c) thereof provides that if the principal place of business of a dealer is situate outside Uttar Pradesh, the Sales Tax Officer having jurisdiction over the place in Uttar Pradesh declared by the dealer in this behalf shall be the assessing authority. The contention is that under these rules the State Government can appoint a Sales Tax Officer as an assessing authority for one circle only. It cannot appoint him as an assessing authority for more than one circle or for the entire State.
7. Section 7 of the Sales Tax Act empowers the assessing authority to levy sales tax on dealers. The expression 'assessing authority' is defined in Section 2 (a) as any person authorised by the State Government to make any assessment under the Act. It appears to us that Section 2 (a) not only defines an 'assessing authority' but also impliedly gives power to the State Government to appoint a person as an assessing authority for assessing sales tax. The Implied power is unrestricted as to the choice of a person and of area. The State Government can pick and choose any person for appointment as an assessing authority; it can appoint him over any area in this State, small or big, as it thinks fit. The scheme of the rules is rather different. While under Section 2 (a) the State Government is empowered to appoint a person directly as an assessing authority over any area, the rules empower the State Government to appoint a person as a Sales Tax Officer. When he is posted to a circle, he becomes automatically the assessing authority for that circle. Obviously the scheme of the Act is different from and not overlapping with that of the Rules. It seems to us that the rules do not exhaust the statutory power of the State Government to appoint a person directly as an assessing authority over any part or the whole of the territory of the State. Even if there is inconsistency between the rules and Section 2 (a), the latter would prevail and preserve the power of the State Government to appoint a person directly as an assessing authority over a part or the whole of Uttar Pradesh. Wearc: therefore of opinion that the notification does not contravene the rules and is not invalid .
8. On the view that we are taking regarding the validity of the notification the subsidiary argument of the respondents based on Rule 6 (c) would also fail.
9.It was pointed out that Sri Musharraf Husain could not issue the first notice dated December 26, 1956 because on the date the State Government had issued no notification appointing him as an assessing authority over the whole of Uttar Pradesh. That is true, but there is no such flaw in the second notice March 2, 1957.
10. The second main argument' is that the respondents were not dealers. This argument was accepted by the learned Judge. To establish this argument they had described the modus operandi of their business in their petitions. It was this: They were commission agents. Their principal place of business was in Calcutta. Businessman in Uttar Pradesh sent their orders to them at Calcutta for purchase of goods. They acted as agents of these businessmen. They purchased the ordered goods from the businessmen in Calcutta They did not disclose to the Calcutta businessmen the names of their U. P. principals and purchased the goods in their own names They paid the price and obtained delivery of the goods at Calcutta. Thereafter they dispatched the goods to their U. P. Principals. They did not take any profit from them but charged only some remuneration for their work as agents. These allegations were supported by the affidavits of Mata Din Gupta and Bhola Ram. While Mata Din Gupta has described himself as General Attorney of the respondent Duli Chand Kashi Prasad, Bhola Ram has described himself as a partner of the, respondent Messrs. Behari Lal Hemraj The modus operandi in each case is verified to be true the personal knowledge of the deponent. In his counter-affidavit Sri Musharraf Husain expressed his helplessness to admit or deny their averments as the respondents had not shown to him their account-books etc. We appreciate that he has spoken the obvious truth ft seems hardly fair on the part of the respondents or this Court to expect of him a first hand knowledge of the respondents' state of business. His helplessness indeed raises a question of great importance regarding the hour of seeking a writ in the nature of prohibition.
11. The respondents had prayed for the issue of a writ in the nature of prohibition prohibiting Sri Musharraf Husain from faking proceedings against them under the Sales Tax Act. Sri Musharraf Husain was purporting to act as a quasi-judicial authority A writ in the nature of prohibition issues to restrain a quasi-judicial authority from exceeding the bounds of its jurisdiction. It may be issued at the threshold of the enquiry before it or soon after it has given a decision on the issues of its jurisdiction. It issues at the threshold of the enquiry before it if there topatent want of jurisdiction. If the jurisdiction depends on the existence of certain facts, it is generally proper that the Court should no! interfere with the enquiry until it has decided the issue of jurisdiction, for then full facts relating to its jurisdiction would be before the Court. It may he that if there is prima facie no evidence to give it jurisdiction, the Court may in a suitable case interfere at the threshold of the enquiry But these cases are not of that type. Here there is some evidence which would prima facie indicate that Sri Musharraf Husain has jurisdiction to issue notices to the respondents The respondents were registered as dealers under Section 3-A of the U. P. Sales Tax Act for the years 1953-54 and 1954-55 Their applications for registration are annexures A and B to the counter-affidavit. The applications were made to the Sales Tax Officer, Calcutta circle. The applications declared that their 'estimated turnover for the assessment year' ending March 31, 1954 and March 31, 1955 is not less than Rs. 15,000. It is further stated therein that the information given in the application was true and complete to the best of their knowledge and belief. These are their own admissions that they were dealers Then the record also bears out that M/s. Duli Chand Kashi Prasad sent a cross-cheque for Rs. 500 on March 2, 1955 in part payment of Sales Tax dues for the period between October 1 and December 31, 1954. No doubt, they had sent the cheque with a protest. In the other case M/s. Behari Lal Hemraj submitted two returns for the quarters ending December 31, 1954 and March 31, 1955, and also sent two cheques for Rs. 8753-7-0 under protest in payment of tax for the said two quarters. In view of their applications for registration under Section 8-A it is difficult to hold that there was patent want of jurisdiction. Hence we think that a writ in the nature of prohibition cannot be issued at the threshold of the enquiry We are unable to perceive any resultant injustice to the respondents If they are really not dealers within the meaning of the Sales Tax Act, they can file a return snowing the turnover as nil. In support of their returns they may produce their account-books etc. to satisfy the assessing authority.
12.In similar circumstances V. Bhargava J. (as he then was) declined to issue a writ in the nature of prohibition to intercept the enquiry at the threshold (See Chander Bhan Agarwal v Sales Tax Officer II Agra. 1954 All LJ 228: (AIR 1954 All 448) The learned Judge said:
''Of course, if the petitioner considers that he has no turnover which is liable to assessment under the Sales Tax Act, he can file a return showing that there is no turnover at all. Even in such a case the Sales Tax Officer would be competent to call for the account-books in order to verify the correctness of the return and to find out whether there was any income liable to tax or not.... Besides this, even in cases where the petitioner claims that he cannot be called upon to file a returnor to produce account-books on the ground that he has no turnover liable to sales tax, it cannot be said that the Sales Tax Officer is exercising jurisdiction not vested in him if he calls for the production of the account-books to satisfy himself that there is no taxable turnover of that person.'
13. In this case the learned Judge issued a writ in the nature of prohibition by relying on a decision of this Court in Panna Lal Babu Lal v. Commr. of Sales Tax, U. P. (1956) 7 STC 722: (AIR 1956 All 710). That case would hardly govern these cases after the commencement of the Sales Tax Validation Laws Act. That there is no patent want of jurisdiction was not present in the mind of the learned Judge. We have little doubt that if this aspect had been brought to the notice of the learned Judge, he would have declined to issue a writ in the nature of prohibition at the very threshold of the enquiry.
14. In view of the foregoing discussion we are satisfied that these appeals should be allowed. We allow the appeals and set aside the order of the learned Judge and dismiss the writ petitions.
15. Each of the respondents shall paycosts to the appellant, which we assess atRs. 300.