M.C. Desai, C. J.
1. This is a statement of a case submitted by the Judge (Revisions) Sales Tax, U.P., under Section 11(1) of the Sales Tax Act at the instance of the assessee ; the following two questions have been formulated by the Judge (Revisions):
(1) Whether in the circumstances and on the facts of the case the applicants were liable to pay sales tax on the sale of crystal sugar as being within the definition of the term 'importers' as prescribed in Rule 2(d-1) of the Sales Tax Rules ?
(2) Whether the definition of the term 'importers' as given in Rule 2(d-1) is ultra vires the rule-making power of the Government
2. The facts as stated in the statement are these : The assessee is a dealer in sugar at Lucknow. The Regional Director of Food, Government of India, imported sugar from Java for distribution among dealers in sugar in various places in the country. One of the dealers selected by him for sale of sugar at the controlled price was the assessee and he issued a permit to it authorising it to sell sugar. He sent sugar from Bombay to Lucknow ; the railway receipt was prepared in his name and was sent to the State Bank at Lucknow. The State Bank received the price from the assessee and delivered the railway receipt to it after making the necessary endorsement and the assessee took delivery at Lucknow. Later it sold it in the course of its business and the question arises whether it was liable to pay sales tax on the turnver of the sale. Under Section 3 of the Act every dealer has to pay sales tax at a certain rate on his turnover in each assessment year. This provision is subject to Section 3-A laying down that the State Government may declare that the turnover in respect of any goods shall not be liable to tax except at such single point in the series of sales by successive dealers as it may specify. In exercise of this power the State Government issued a notification No. ST-822/X dated 1st April, 1953, declaring that the turnover in respect of sugar shall not be taxed except 'in the case of sugar imported from outside Uttar Pradesh, at the point of sale by the importer.' Sugar was undoubtedly imported from outside Uttar Pradesh and, therefore, under the notification sales tax was payable only on the turnover of sale by the importer. 'Importer' is defined not in the Act, but in the Sales Tax Rules ; Rule 2(d-1) defines importer as follows:
'Importer' means as respects goods imported into Uttar Pradesh from any other State in India-
(a) in a case where the goods are not imported for the purpose of resale in the same condition as they were imported by the person who imported them, the dealer in such other State, who made the sale as a direct result of which the goods are imported into Uttar Pradesh ;
(b) in a case where the goods are imported for the purpose of resale in the same condition as they were imported by the person who imported them, the dealer who makes the first sale after the sale as a direct result of which the goods were imported into Uttar Pradesh ; and
(c) in a case where the goods are imported into Uttar Pradesh otherwise than as a direct result of a sale, the dealer, who makes the first sale after such import.
3. When the question arose for assessment for the assessment year 1954-55 the assessee contended that it was not liable to pay tax on the turnover of sale of the sugar because the first sale of it made in U.P. was by the Regional Director (i.e. to it) and that the Regional Director was the importer and not it. The Sales Tax Officer applied Clause (b) of Rule 2(d-1) to the case and held that the assessee was the importer, because the first sale by a dealer, after the sugar was imported into Uttar Pradesh, was made by it. Actually there were two sales, one by the Regional Director to the assessee through the State Bank and then by the assessee to its customers. The Regional Director was not a dealer because he did not sell the sugar to the assessee in the course of any business of selling and supplying goods in Uttar Pradesh ; consequently, the sale by him-though the first sale-was not the first sale by a dealer and the first sale by a dealer was the sale by the assessee to its customers-though it was a second sale. The Sales Tax Officer assessed the assessee. His order was set aside by the Judge (Appeals), but was restored by the Judge (Revisions) acting under Section 10. The Judge (Revisions) agreeing with the Judge (Appeals) held that Clauses (a) and (b) of Rule 2 (d-1) did not apply to make the assessee an importer but disagreeing with him held that Clause (c) applied. He stated as a finding of fact that the sugar had not been imported into Uttar Pradesh as the direct result of a sale and this finding excluded (a) and (b) from application. He further found that the sugar had been imported into Uttar Pradesh by the Regional Director and not by the assessee. Though according to the ordinary meaning the Regional Director could be the importer, according to the artificial meaning given through Rule 2(d-1) the assessee was the importer, because it was the first dealer who made the first sale after the import. In fact the first sale, after the import, was made by the Regional Director, but he was not a dealer and, therefore, it was not a sale by a dealer. The Judge (Revisions) rejected the assessee's contention that the rule should be interpreted in such a way that the assessee, who had not imported the sugar, could not be brought within the definition of 'importer'; he saw no justification for considering the dictionary meaning of importer when interpreting Rule 2(d-1). The assessee then contended that the definition in Rule 2(d-1) was ultra vires inasmuch as it was inconsistent with the provisions of the Act. The Judge (Revisions) saw no conflict between the definition and any of the provisions in the Act. He observed that Section 3-A gave power to the State Government to decide at which single point the turnover of sugar could be assessed and that this included the power to define terms used in the notification. Since no sales tax was payable by the State Government and it had power to determine any point as the point at which sales tax would be payable, the Judge (Revisions) held that it had power to notify that it will be payable by a dealer even though he might not have actually imported sugar into Uttar Pradesh. Then at the instance of the assessee he submitted this statement of the case.
4. The meaning of Rule 2(d-1) is this. In respect of goods imported into Uttar Pradesh as a direct result of a sale, Clause (a) or (b) applies, depending upon whether they are intended to be resold in the same condition or not. If they are intended to be resold in the same condition, the person importing them is the importer under Clause (a) and has to pay tax on the turnover of sale made by him provided he is a dealer; and if he is not a dealer, the person to whom he sells them is the importer provided he is a dealer. If the goods are not intended to be resold in the same condition, the person importing them is not the importer (and is not liable to pay sales tax) and the ex-U.P. vendor from whom the goods were bought may be the importer under Clause (a), but we are not concerned with him. When a vendor imports goods into Uttar Pradesh, either himself or through an agent, and then sells them the goods cannot be said to have been imported as a direct result of the sale. The sale takes place in Uttar Pradesh after the import and the import is only a matter of history and has nothing to do with the subsequent sale. The sale is not at all affected by the history. Similarly when a vendee goes outside Uttar Pradesh, buys goods there and imports them into Uttar Pradesh it is again not an import as the direct result of a sale, because the sale was completed before the import. The import after the sale was completed has no effect on it and, just as in the former example the past history is irrelevant, so also in this example the subsequent happening is irrelevant. Between these two cases lies the case in which the vendor remains outside Uttar Pradesh and the vendee remains in Uttar Pradesh and the transaction of sale takes place between them in consequence of which goods are sent by the vendor to the vendee into Uttar Pradesh. This is the case of goods being imported into Uttar Pradesh as the direct result of a sale. It has recently been held by the Supreme Court in State Trading Corporation of India Ltd. v. State of Mysore (A.I.R. 1963 S.C. 548), that 'a sale occasions the movement of goods from one State to another within Section 3(a) of the Central Sales Tax Act, when the movement is the result of a covenant or incident of the contract of sale'. Under a permit system in operation in Mysore State a purchaser of cement was given a permit under which cement was to be supplied to him by a cement manufacturer outside Mysore State. The manufacturer had to send cement to the Marketing Company in Mysore State and the purchaser had to place an order for cement with the Marketing Company and it was held that the sale of cement to the purchaser was an inter-State sale as defined in Section 3(a) of the Central Sales Tax Act, because the contract for sale must be deemed to contain a covenant that cement would be supplied to the purchaser in Mysore from a place outside its borders. The vendor, namely, the manufacturer, remained outside Mysore State and the vendee, namely the purchaser, remained inside Mysore State and as cement was brought into Mysore State because of the contract of sale it was a case of goods being imported as the direct result of sale. When goods are imported into Uttar Pradesh by the owner himself, it is not the case of their being imported as the direct result of a sale and, therefore, Clause (c) and neither Clause (a) nor Clause (b) will apply. In such a case if the owner is a dealer and sells the goods he is the importer, and, if he is not a dealer, the vendee-if a dealer-is the importer. The emphasis laid by Clause (c) is not on the first sale in a series of sales but on sale by the first person who answers the description of 'dealer'. 'The dealer who makes the first sale' means 'the first person answering the description of dealer who makes a sale'.
5. Coming to question No. (1), what we notice is that it raises the question whether the facts of the case bring the assessee within the definition of 'importer' in Rule 2 (d-1). This is a question entirely different from the question whether the definition contained in Rule 2 (d-1) applies to the notification issued under Section 3-A and the question whether it was within the rule-making power of the State Government to define the word 'importer' or to define it in the particular manner. Question No. (2) deals with the latter question, e.g., whether defining 'importer' comes within the rule-making power of the State Government, and the former question, namely, whether the definition is applicable to the word used in the notification, is not a question referred to us at all. Actually this question does not arise at all from the order passed by the Judge (Revisions) and was not raised before him. He was not called upon to, and did not, decide that the definition, though included in the rules, is applicable to the word used in a notification issued under Section 3-A. Actually we find that the definition is applicable to the word used in the notification. Section 20 of the General Clauses Act lays down that a definition of a word given in a statute applies also to the word used in a notification issued under the statute ; consequently, if the Sales Tax Act contained a definition of the word 'importer' it would apply to the word used in a notification issued under Section 3-A. Here the definition is contained not in the Act, but in the rules made in exercise of the powers conferred by Section 24 of it. Sub-Section (4) of Section 24 lays down that 'all rules made under this section shall be published in the Gazette, and upon such publication shall have effect immediately as if enacted in this Act.' This creates a legal fiction ; by virtue of it Rule 2 (d-1) shall have effect as if it were enacted in the Act and, therefore, by virtue of Section 20 of the General Clauses Act it will apply to the notification. In any case question No. (1) assumes that the definition is applicable to the word used in the notification.
6. Applying Rule 2 (d-1) to the facts of this case, we come to the conclusion that the assessee was the importer of sugar under Clause (c) or under Clause (b). If it be said that sugar was imported into Uttar Pradesh as a direct result of a sale, namely the sale made by the Regional Director to the assessee, the sugar was intended to be resold in the same condition and Clause (b) would apply. The person importing it was the assessee who was a dealer and, when it sold it, it became the importer. If it be said that sugar was imported into Uttar Pradesh otherwise than as a direct result of a sale, it was imported by the Regional Director who was the consignee and who, after the import, sold it to the assessee. Though he was the person importing, he was not the 'importer', because the word as used in the notification has been given an artificial meaning, not necessarily synonymous with 'a person who imports'. He sold the sugar to the assessee but he was not a dealer according to the definition of 'dealer' then existing. He made the first sale after the import, but it was not the first sale by a person answering the description of a dealer. The assessee was a dealer and, when it sold the sugar, it was the dealer who made the first sale after the import and, therefore, became the importer under Clause (c). The question must, therefore, be answered in the affirmative.
7. Coming to question No. (2) we find that the State Government enacted Rule 2 (d-1) to define the word 'importer.' This word has not been used by the Legislature in the Act and, therefore, it had no occasion of interpreting it. It has been used by the State Government in headings of certain rules though not in the body of the rules, vide Rules 9 and 12. Even though it used the word only in headings, since headings are a part of the rules it was competent to define it and thereby give it an arbitrary meaning. Its power to make rules carries with it the power to define or give an artificial meaning to words used in the rules. Consequently defining the word ''importer' for the purpose of the rules was within the power conferred by Section 24 and Rule 2 (d-1) could not be said to be ultra vires the State Government. Had the rule been applied to the interpretation of the word used in another rule there would have been no scope for an argument, but a scope for an argument has been provided by the fact that it is sought to be applied to interpret the word used in a notification. It was contended that the State Government has no power to make a rule to define a word used in a notification. Actually it has not enacted the definition in order to apply it to a notification ; when it is applied to a notification it is by operation of the law contained in Section 20, General Clauses Act, and Section 24, U. P. Sales Tax Act. The definition though contained in the rules is deemed to be a part of the Act itself and becomes available for interpreting the notification by virtue of Section 20 of the General Clauses Act. No question of vires arises when it is used in this manner; the State Government cannot be responsible for the law's putting a rule made by it in the exercise of its powers, to another use. If any question of ultra vires can arise it is only in respect of the application of the definition to define the word used in the rules. The argument that Rule 2 (d-1) cannot be used to interpret a word used in the notification is an argument different from the one that it is ultra vires the State Government and is not to be considered by us when answering question No. (2). Since the State Government has not made Rule 2 (d-1) to interpret the word used in a notification it would be wrong to contend that it cannot define a word used in a notification through a rule. Since it is not the State Government that wants the word used in the notification to be interpreted in an artificial sense, there is no scope for contending that it has no power to require that the word used in the notification should be understood not according to its popular meaning but according to an artificial meaning. The notification does not become a part of the Act and it cannot be said that only the Legislature was competent to define words used in it and that the State Government had no power to do so. The State Government certainly has no power to define words used in a statute and it has not claimed to exercise such a power by making Rule 2 (d-1). Our answer to the question is, therefore, in the negative.
8. 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. The counsel's fee is assessed at Rs. 100.