1. This and connected cases have been referred to this Court under Section 11 (1) of the U. P. Sales Tax Act by the Judge (Revisions) at the instance of the Commissioner, Sales Tax, U. P. They are in respect of different assessment years of the same assessee, the assessment years respectively being 1951-52, 1952-53 and 1953-54. The question referred jn the cases is :-
(a) Whether the sales of the opposite party M/s. Balbir Singh & Company, 21, A. P. Sen Road, Lucknow, made by them in the capacity of a commission agent would be included in their gross turnover in order to determine their liability to tax.
2. Under Section 3 of the Sales Tax Act as it was in force during the assessment years under consideration a dealer was under an obligation to pay on turnover in each assessment year a tax at a certain rate, provided that a dealer whose turnover in the previous year was less than Rs. 12,000 was exempt from the liability for the assessment year. 'Dealer' means a person carrying on the business of buying or selling and supplying goods in Uttar Pradesh whether for commission, remuneration or otherwise. 'Sale' means transfer of property in goods, 'turnover' means the aggregate of the proceeds of sale by a dealer, 'assessment year' means the twelve months ending on March 31 and 'previous year' means the twelve months ending on March 31 next preceding the assessment year. Under Section 7 every dealer whose turnover in the previous year is Rs. 12,000 or more in a year is required to submit his return of the turnover of the previous year and he is to be assessed on the turnover if it is accepted as correct. The assessment is for one year and the amount of the tax is to be determined on the basis of the turnover of the previous year. A dealer is liable to pay the sales tax in a year only if his turnover in the previous year is not less than Rs. 12,000. In respect of single point taxation goods, proceeds of sale at a point other than the prescribed point are not to be included in the turnover at all, vide Section 3-A. Section 3 imposing a liability to pay the sales tax does not apply to the sale of certain articles enumerated in Section 4. This means that no sales tax is to be payable on proceeds of sale of these goods even though they may be included in the turnover. The Section also does not apply to sale by an agent licensed under Section 6. The State Government is empowered by Section 3-A to declare that the sales tax on the turnover of single point taxation goods may be at a rate higher than the rate fixed in Section 3, and Sections 3-B and 5 also prescribe different rates on turnovers of forward contracts and of goods sold for delivery outside Uttar Pradesh. While a certain figure is taken to be the turnover for the previous year in order to determine whether the dealer is liable to pay sales tax or not, once he is found liable to pay the sales tax, proceeds of sale of certain goods may have to be deducted from the turnover and different rates may have to be applied to proceeds of sale of different goods. Under Rule 8 of the Rules made by the State Government a dealer's liability to pay tax is to be determined on the basis of his gross turnover and the sales tax under Section 3 is to be computed on the net turnover which is determined after deducting from the gross turnover the amounts mentioned in Rule 44.
3. It would be clear from the above resume of the law that liability to pay tax, or the accrual of liability to pay tax, or, in short, taxability is one matter and the quantum of tax to be assessed, or how it is to be assessed, or, if it is to be assessed by applying a certain rate to a certain amount, or how that amount is to be determined is quite a different matter. It is possible under the law to hold that a dealer is liable to tax, because a certain figure exceeds a certain amount and to assess the amount of tax by applying a certain rate to a smaller figure. Whether a dealer is taxable or not depends only upon the turnover of the previous year ; if it exceeds Rs. 12,000 he becomes liable. But when he is found to be liable different figures may enter into the determination of the amount of the tax to be assessed. Even if the tax is to be assessed by applying a certain rate to the amount of the turnover of the previous year it may be that proceeds of sale of some goods are to be excluded, or are to be deducted, from the turnover before the rate is applied. It may be mentioned that the assessees do not challenge the constitutionality or the vires of any provision of the Act or of the Rules and that the questions raised by them are essentially of interpretation. We are not concerned with matters of policy; if the Legislature made a distinction between the basis for determining whether a dealer is liable to pay tax or not and the basis on which the amount of the tax to be paid by him, if found liable, is to be determined, we are not only not to enquire whether the Legislature had the power to make this distinction but also not to enquire whether it acted wisely or even reasonably in doing so. The sole question before us is whether it has done so, and I have no doubt that it must be answered in the affirmative. When it did not intend to include a certain matter in a turnover, even though according to the definition it would be included in it, it has made an express provision. Whatever turnover of the previous year is worked out in accordance with the definition and the provisions laying down that certain matters will not be included in the turnover, is the turnover referred to in Section 3, proviso (2), and whether a dealer is liable to pay tax or not depends upon this amount. There are other provisions dealing with how a dealer found liable is to be assessed to the tax. Even though the tax has to be determined by applying a certain rate or certain rates to the amount of the turnover of the previous year, the Act and the Rules have provided for certain deductions to be made from the turnover determined for purposes of Section 3, proviso (2). It necessarily follows that the turnover determined for purposes of Section 3, proviso (2), may be different from, and higher than, the turnover to which the rate or rates are to be applied for determination of the tax to be assessed and it cannot be contended that whatever is the turnover to which the rate or rates are to be applied is the turnover for purposes of Section 3, proviso (2). That would be reversing the process and illogical. Though the Act has not divided turnovers into classes, the Rules have divided them into two classes, (1) of gross turnover and (2) of net turnover ; gross turnover is the turnover determined for purposes of Section 3, proviso (2), and net turnover is the turnover determined for applying the rate or rates for determining the amount of the tax. It was not contended before us that the proceeds of the sales referred to in the question are not proceeds of sale of goods by a dealer and, therefore, are not to be included in 'turnover' as defined in the Act; the question raised is simply whether they should not be disregarded for determining the liability or taxability when they are to be disregarded for determining the amount of the tax to be assessed and the answer is clearly 'no.'
4. Our answer to the question is in the affirmative.
5. We direct that copies of this judgment shall be sent to the Judge (Revisions) Sales Tax, U. P., and the Commissioner, Sales Tax, U. P., under the seal of the Court and the signature of the Registrar, as required by Section 11(6) of the U. P. Sales Tax Act. We further direct that the assessee shall pay to the Commissioner the costs of this reference, which we assess at Rs. 100.