Gur Sharan Lal, J.
1. In this writ petition the validity of the second part of Clause (d) of Rule 44-A of the U. P. Sales Tax Rules has been questioned. The circumstances in which the validity has been questioned and adjudication about it sought for from this court will appear from the following facts:-
2. Petitioner No. 1, M/s. Shadi Ram Ganga Prasad is a partnership firm of which Debi Prasad Kanodia, petitioner No. 2, is one of the partners. The firm was assessed to sales tax under the U. P. Sales Tax Act for the assessment year 1965-66. The total turnover included purchases in respect of oil-seeds. The firm admitted liability to pay purchase tax on a turnover of Rs. 11,51,720.80 in respect of purchase of oil-seeds and also showed payment of the requisite tax on that part of the turnover. The Sales Tax Officer however found the tax to be payable on additional purchases of the value of Rs. 38,63,608 and odd of oil-seeds. The controversy, therefore, relates to this part of the assessment and demand of additional purchase tax. It may be stated here that the assessment of the firm admittedly was as first purchaser under Section 3-D of the U. P. Sales Tax Act. The said section provides for levy of purchase tax on first purchases only of goods which may be notified by the Government under that section. In the explanations contained in Sub-section (1) and also Sub-section (2) of the section there are certain provisions intended to lay down as to when a purchaser will be regarded as the first purchaser and when he should not be regarded as the first purchaser. There is then Sub-section (7) which reads :
(7) Unless the dealer proves otherwise to the satisfaction of the assessing authority, every purchase by or through a dealer shall, for the purposes of Sub-section (1), be presumed to be the first purchase by such dealer and every sale through a dealer shall, for the purposes of Sub-section (2), be presumed to be sale to a first purchaser.
It will appear that Sub-section (7) aforesaid lays down a rule of evidence to the effect that the burden of proving that a purchaser is a subsequent and not the first purchaser will be on the purchaser.
3. Rule 44-A mentioned above provides for determination of turnover of first purchases under Section 3-D(1). It lays down that tax under the said provisions shall be computed on the net turnover and in determining the net turnover the amounts specified in the rule shall be deducted as if they are included in the gross turnover. One of such amounts specified in the rule is that contained in Clause (d) which is in the following words:
Clause (d)-All amounts for which goods are purchased by one registered dealer from another registered dealer, provided tax under Section 3-D has already been paid on such goods.
Now the contention of the petitioners before the Sales Tax Officer was that the purchases of oil-seeds of the total value of Rs. 38 lacs and odd had been made from registered dealers who were themselves the purchasers and not the producers and, therefore, the purchases by the petitioner-firm were not first purchases, with the result that there was no liability on them for purchase tax. There does not appear to have been a controversy that even if the purchases were made from persons who were registered dealers the petitioner-firm would be liable. The controversy was whether the petitioner-firm had been able to prove that the purchases made by it were first purchases (sic). In respect of purchases of the total value of Rs. 27,83,949 and odd, the finding of the Sales Tax Officer was that they were made not from but through registered dealers and accordingly in terms of the explanation contained in Sub-section (1) of Section 3-D the purchases were to be treated as first purchases by the petitioner-firm. In regard to the balance of purchases in the total sum of Rs. 10,79,659 and odd the discussion of the Sales Tax Officer is to be found at two places in his assessment order, copy of which is annexure 1 to the writ petition. At one place he stated that the assessee had not been able to provide evidence of the fact that the purchases were made of goods on which tax had already been paid. Specific reference in this connection was made to Sub-section (7) of Section 3-D of the Act but no such specific mention was made of Clause (d) of Rule 44-A however. The question of the remaining amount of Rs. 27 lacs and odd was then taken up and considered whereafter the Sales Tax Officer reverted to the dispute relating to the purchases of the value of Rs. 10,79,000 and odd. He stated that the assessee had given the names of the registered dealers from whom the purchases were claimed to have been made and on verification being sought for from the Sales Tax Officer, Sector V, he in his letter of 23rd February, 1970, did not make verification about 14 dealers and stated that the liability for tax was of the assessee-firm. It was also stated that because the said dealers had got the purchases made in their Arhat. On this fact being brought to the notice of the assessee, the assessee agreed to pay the tax on the said sum of Rs. 10,79,659.94. In the counter-affidavit filed on behalf of the opposite parties who are the State of Uttar Pradesh and the Sales Tax Officer, Sector II, Kanpur, stress has been laid on paragraph 4 to the effect that the assessee-firm admitted before the Sales Tax Officer liability to pay purchase tax on purchases made from the registered dealers for Rs. 10,79,659.94 of oil-seeds and an extract has been given from the alleged statement made on behalf of the assessee. In the rejoinder affidavit it has been stated that the liability was really not admitted and the word 'Nahin' was omitted before the words 'Daine ko taiyar hai'. Copy of a letter sent by the assessee-firm to the Sales Tax Officer has also been annexed to the rejoinder affidavit and the said copy shows that the liability to pay purchase tax on the said sum of rupees ten lacs and odd was disputed and reference was made to the evidence on which the firm relied for proof of the fact that the purchases by the firm were not first purchases and were accordingly not liable to purchase tax. It may be noted here that in the assessment order, which is of a date subsequent to the date of the letter, no reference was made to this letter and to the denial of liability after the alleged statement in which the assessee-firm would appear to have admitted the liability. In the face of this letter made before the assessment was completed it is not possible to say that the assessee is bound by the statement which according to him was not correctly recorded. If the basis of admission is excluded, the question will arise whether the assessee can be made liable for tax on first purchases of the total value of rupees ten lacs and odd. The assessee has filed an appeal against the assessment and the learned counsel appearing for the petitioners has stated that the merits of the assessment will be the subject-matter of consideration before the appellate authority, but according to him the hurdle in the way of his getting the needed relief is the provision contained in Clause (d) of Rule 44-A aforesaid according to which even after the finding that the purchases have been made from registered dealers, tax will be claimed on the ground of the failure of the assessee-appellant to furnish evidence of tax having been already paid on the oil-seeds purchased by the assessee for the said sum of rupees ten lacs and odd.
4. The learned counsel appearing for the opposite parties has contended that in the instant case the question of validity of the second part of Clause (d) of Rule 44-A of the U. P. Sales Tax Rules does not arise for consideration at all. According to him the second discussion relating to purchase tax on the purchases of the value of rupees ten lacs and odd shows that the purchases by the assessee-firm were not from registered dealers and that is a question of fact which will be open to consideration in appeal. We are unable to agree with this contention. The turnover of rupees thirty-eight lacs and odd arising from the purchase of oil-seeds from the assessee-firm has been dealt with by the Sales Tax Officer in two parts. One part relates to purchases of the value of rupees ten lacs and odd and the other to the purchases of the value of rupees twenty-seven lacs and odd. About the purchases of the value of Rs. 27 lacs and odd a separate finding has been given that the purchases are first purchases because they were made not from registered dealers but through commission agents. Regarding the purchases of the value of rupees ten lacs and odd he gave a categorical finding in the first instance that the assessee had failed to discharge the burden of proof laid on him under Section 3-D (7) by failing to show that the purchases were of goods on which purchase tax had been paid. His second discussion in regard to this item is not very intelligible. What appears from the discussion is that verification was asked for from the Sales Tax Officer, Sector V, and in the reply no verification was made in respect of 14 out of 15 dealers who had given out that the liability was of the assessee himself. It seems that the verification sought for was whether purchase tax had been paid by the dealers from whom purchases of the value of rupees ten lacs and odd had been made. But even supposing that those dealers had further given out that they had made purchases on behalf of the assessee, the petitioners would not be able to get relief by merely proving that they had made purchases from those dealers not as agents but as dealers themselves. The fact remains that those dealers have not paid purchase tax on the goods which they sold to the assessee-firm and the assessee would accordingly not be in a position to give the proof which the Sales Tax Officer expects from the assessee keeping in view what he had stated about this item of rupees ten lacs and odd when he dealt with it in the first instance and gave a categorical finding that the assessee-firm had failed to discharge the onus placed upon it. It is true that there was no specific reference to Rule 44-A aforesaid but the very fact that it was stated in the order that the assessee had failed to prove that the goods purchased by him were such on which purchase tax had been paid, shows that it was with reference to Clause (d) of Rule 44-A that he gave the finding of the assessee's failure to discharge the onus. It is clear that according to the Sales Tax Officer the onus extended to proving that purchase tax had already been paid in respect of oil-seeds which the assessee-firm had purchased of the value of rupees ten lacs and odd. We accordingly proceed to consider whether the assessee-firm could be required, in order to prove that the purchases by it of the value of rupees ten lacs and odd were not first purchases, to prove that on the goods purchase tax had already been paid.
5. The levy of tax under Section 3-D of the U.P. Sales Tax Act is on first purchases, and there will be no liability to purchase tax if the purchases on which tax is sought to be levied are not first purchases. As to what will be first purchases is of course subject to the qualifications laid down in the explanations in Sub-section (1) of Section 3-D and in Sub-section (2) of that section. These provisions nowhere raise the question of assessment already made or tax already paid in respect of goods of which purchases sought to be taxed have been made in order to exclude those purchases from coming within the category of first purchases. The onus placed upon the dealer in Sub-section (7) of Section 3-D to prove that the purchases of which he is sought to be taxed are not first purchases can only extend to proving that the purchases are not first purchases within the meaning given to first purchases in Sub-sections (1) and (2) of Section 3-D. If any rule lays down any additional condition not coming within the ambit of Sub-sections (1) and (2) of Section 3-D the rule would obviously be outside the rule-making power of the State Government. Clause (d) of Rule 44-A requires exclusion in determining the net turnover all amounts for which goods are purchased by one registered dealer from another registered dealer. So far as this is concerned it is only in accordance with the provisions in Section 3-D for levying purchase tax on first purchases only. But this provision in Clause (d) aforesaid is made subject to a condition by adding the words 'provided tax under Section 3-D has already been paid on such goods'. Learned counsel for the petitioners has firstly invited our attention to the difficulty which this proviso places upon the assessee as the assessee may not be able to prove, at least in the case of several successive purchases before the purchase made by him, as to whether tax has already been paid on the goods purchased by him or not. According to him this condition is unreasonable and is liable to be struck down on that ground. We need not however base our conclusion on this part of the challenge to the validity of the proviso because in our opinion there is a stronger ground for holding it to be ultra vires of the rule-making power of the State Government. As we have pointed out above, the proof of the fact that the purchase sought to be assessed to purchase tax is not the first purchase will be adequate and complete if the dealer sought, to be assessed to purchase tax is able to show that he had purchased the goods from a dealer who himself had purchased it from somebody else. The question whether his seller has been assessed to purchase tax or has paid the tax comes in nowhere in order to prove that his purchase is not the first purchase. Apart from this, it would appear that the proviso leads to certain absurd and unreasonable consequences. A first purchaser may have escaped liability to assessment or after assessment may be avoiding payment of the tax. If this proviso were to be the basis for holding a second purchaser from such first purchaser to be not liable to purchase tax, then that second purchaser would not be able to produce evidence that purchase tax had been paid already on the goods purchased by him and so he too would then be assessed to purchase tax. That would become the very negation of the principle of the levy of purchase tax at a single point contained in Section 3-D. Sometimes the purchaser who is sought to be assessed may be assessed before the dealer from whom he purchased has been assessed. There again the purchaser who is being assessed will face the situation of not being able to prove that the goods which he has purchased have been assessed to purchase tax already. We are accordingly of the opinion that the proviso added in Clause (d) of Rule 44-A is ultra vires and invalid and must be struck down.
6. In the reliefs claimed, the petitioners also claim the relief of quashing the assessment order and demand notice dated 26th March, 1970. This relief cannot be allowed because it is only a part of the demand which is concerned with the provision in Clause (d) of Rule 44-A and there is an appeal already pending having been filed by the petitioners. Even the assessment to purchase tax on purchases on the value of rupees ten lacs and odd may possibly be found justified on other grounds. In these circumstances we have permitted the petitioners on their oral request to implead forthwith the Assistant Commissioner (Judicial) Sales Tax, Kanpur, as opposite party No. 3, learned standing counsel appearing for the opposite parties having no objection to the same. The learned counsel has also stated that he does not require any time for any counter-affidavit being filed on behalf of the newly impleaded opposite party and has agreed to the decision of the writ petition forthwith. In the above circumstances we allow the writ petition to this extent that we direct opposite party No. 3 to deal with the question of assessment of purchase tax on the purchases of the said value of Rs. 10,79,659.94 on the basis that the proviso in Clause (d) of Rule 44-A of the U.P. Sales Tax Rules is invalid and inoperative. We direct the parties to bear their own costs.