R.S. Pathak, J.
1. This is a reference under Section 11(1) of the U. P. Sales Tax Act, 1948, made at the instance of the Commissioner of Sales Tax, U. P. The questions referred for the opinion of this Court are as follows :
(1) Whether the proviso to Rule 39(1) of the Sales Tax Rules is valid and whether on the facts and in the circumstances of the case the assessment of the asscssee on the basis of the assessment year under Section 7(1) read with Rule 39(1) was legally valid ?
(2) Whether on the facts and in the circumstances of the case, the assessment of the assessee on the basis of the assessment year is valid on the ground that he had not carried on business for all twelve months during the year 1953-54 ?
2. The respondent, Messrs Asha Ram Sushil Chandra, is a dealer in kerana and medicines at Baraut in the district of Mcerut. It commenced its business on 6th November, 1953.
3. The Sales Tax Officer assessed it for the assessment year 1953-54 in accordance with the provisions of Section 18(3) of the aforesaid Act.
4. For the assessment year 1954-55, the- Sales Tax Officer made an assessment order on 30th November, 1955, assessing the respondent on the turnover of the assessment year. The taxable turnover was determined at Rs. 12,000 and was assessed under Rule 41(5) of the U.P. Sales Tax Rules to sales tax.
5. Against the assessment order the respondent preferred an appeal which was dismissed. A revision application was then filed before the judge (Revisions) who by his order dated 8th December, 1958, set aside the assessment order. He held that as the respondent had not signified his election under Rule 39(1) of the U. P. Sales Tax Rules to submit returns of its turnover of the assessment year, the assessment could not be made on the basis of that turnover. According to him the respondent could be assessed only on the basis of the previous year's turnover. An attempt was made on behalf of the Commissioner to support the assessment by reliance upon the proviso to Rule 39(1) which enjoins that 'a dealer who did not carry on business during the whole of the previous year shall elect to submit his returns of the assessment year'. This contention was repelled by the Judge (Revisions), who held that the said proviso was ultra vires, as, in his opinion, it conflicted with the provisions of the Act which conferred a right upon the dealer to choose whether, instead of paying tax on the previous year's turnover, he could pay it on the assessment year's turnover.
6. We have heard Sri H.N. Seth, learned Junior Standing Counsel, on behalf of the Commissioner. The respondent is absent. Sri Seth has contended that the view taken by the Judge (Revisions) to the effect that the proviso to Rule 39(1) is ultra vires is erroneous. We have considered the matter and are inclined to accept his contention.
7. It is necessary for the purpose of appreciating his contention to consider the statutory provisions as they stood at the relevant time.
8. Section 3, Sub-section (1), of the Act charges a dealer to sales tax on his turnover of the previous year, and Sub-section (2) empowers the State Government to prescribe that the dealer could, instead of paying tax on the turnover of the previous year, pay the same on the turnover of the assessment year. Section 7, Sub-section (1), requires the dealer to submit a return or returns of his turnover of the previous year or the assessment year.
And Rule 39(1) provides :
Any dealer may elect to submit returns of his turnover of the assessment year in lieu of the returns of the turnover of the previous year, and shall signify such election in the return filed by him in Form IV :
Provided that a dealer who did not carry on business during the whole of the previous year shall elect to submit his returns of the assessment year.
9. It is apparent that it was in order to provide for the alternative mode of assessment contemplated by Section 7, Sub-section (2), that the State Government framed Rule 39(1). But the proviso to that rule is quite another matter. Although inartistically expressed, the intention appears to be clear that a dealer, who did not carry on business for the whole of the previous year, was bound to submit his returns of the assessment year. No choice was left to him as to the basis of his assessment. Why was it necessary to enact this proviso ?
10. From the very outset, when the U.P. Legislature enacted the U.P. Sales Tax Act, 1948, it recognised that difficulties would arise in the case of assessment of a dealer who had commenced business only during the course of an assessment year, and Section 18, Sub-sections (3) and (4), were enacted to provide for this distinct category of cases. After the provisions of Section 18 were recast by the U.P. Sales Tax (Amendment) Act, 1954, it became necessary to provide for the basis of assessment for the assessment year immediately following the year during which business was commenced. For such assessment year, there would be no previous year, as defined in Section 2(j)(ii), during the whole of which the business could have been carried on. It was to meet this situation that the proviso to Rule 39(1) was framed. There is no inconsistency between the provisions of the statute and the proviso to Rule 39(1). The latter operates in a field not occupied by any of the relevant statutory provisions, and was framed to provide for circumstances for which there was no provision elsewhere.
11. We, therefore, hold that the proviso to Rule 39(1) is not ultra vires on the ground on which it has been struck down by the Judge (Revisions). Accordingly, our answer to both limbs of the first question is in the affirmative. The second question is merely an amplification of the first. We answer that also in the affirmative.
12. There shall be no order as to costs.
13. We further direct that a copy of this judgment shall be sent under the seal of the Court and the signature of the Registrar to the Judge (Revisions) Sales Tax and the Commissioner of Sales Tax.