Dalip K. Kapur, J.
(1) The petitioners have instituted three Writ Petitions under Article 226 of the Constitution of India in connection with the imposition of sales tax on old or second hand motor tyres and tubes which were by petitioner No. 1. The numbers of the Petitions are Civil Writ No. 1324 of 1969, No. 285 of 1970 and Civil Writ No. 323 of 197 Other petitions by other parties involving similar points to the points raised by the petitioner have been heard along with these Writ Petitions. The main judgment is being delivered in Civil Writ No. 1324 of 1969 brought by the petitioner, in the course of this judgment, I shall also deal with the points raised in Writ Petitions Nos. 285 of 1970 and 323 of 1971, aforementioned. The main challenge in the present Writ Petition is against the assessment order passed by the Sales Tax Officer, Ward No. V, Delhi, on 29th September- 1969. By this order, which relates to the assessment year 1967-68, the Sales Tax Officer rejected the claim of the petitioner claiming exemption of sales tax payable on old or second hand motor-car tyres and tubes. Indirectly, the validity of notification. No. F. 4(33)-54-Fin(E), dated 30th June, 1965, issued under the signatures of the Under Secretary, Finance (Expenditure) Delhi Administration, is challenged. This notification was issued under Section 5A of the Bengal Finance (Sales Tax) Act, 1941, and was intended to fix the point at which sales tax would be payable on the sale of all kinds of tyres and tubes Including tyres and tubes of motor vehicles in the Union Territory of Delhi.
(2) The petitioners in this Writ Petition are M/s. Harbans Motor stores and three others. The first petitioner is stated to be a partnership of which petitioners Nos. 2 to 4 are partners. It is, thereforee, only necessary to refer to the first petitioner hereafter. The said petitioner is a firm which is registered as a dealer with the Sales Tax authorities. Originally, the first petitioner was registered qua motor tyres and tubes also but later on, on account of the aforementioned notification, the registration was altered and the entry relating to motor tyres and tubes was omitted. This petition is a result of the alteration of the registration as will appear hereafter. According to the case of the petitioner, the petitioner-firm buys disposal goods, old motor vehicles and old motor parts at public auctions conducted by Government auctioneers. These old motor venicles and other motor parts are stated to be or belong to old condemned vehicles belonging to the Ministry of defense which are sold under the instructions of the Director General Supplies and Disposals, New Delhi. According to the case set out in the petition, the former procedure was that when parts of these old vehicles were dismantled and sold, sales tax was charged from ordinary consumers but not when parts were sold to registered dealers. As regards tyres and tubes, if the same were sold to ordinary consumers, sales tax was charged from those customers and paid to the sales Tax authorities. If the sale was to a registered dealer, then no sales tax was charged. However, after the issue of the notification in June 1965, the petitioner could not follow this procedure as the notification made the sales tax chargeable at a different point. Thereafter all sales effected by the petitioner were made without charging any sales tax from the customers whether they were registered dealers or ordinary consumers.
(3) Without reproducing the notificatiOn at this stage, it is sufficient to say that the effect of the notification dated 30th June, 1965 was to make tyres and tubes of motor vehicles, motor cycles, etc., chargeable to sales tax only at the point of sale by an importer (if imported from outside the Union Territory) or sale by a manufacturer (if manufactured in the Union Territory). The case of the petitioner-firm is that it is neither an importer nor a manufacturer and hence it was not liable to charge sales tax on the sale of old motor tyres and tubes obtained by it from dismantling vehicles purchased at Government auctions.
(4) It is also the case of the petitioner that soon after the impugned notification was issued,officers of the Sales Tax department visited the firm's shop and estimated the cost of the stocks lying with the firm and imposed sales tax on the same. This tax was paid on 30th June, 1965. Thereafter, the registration certificate of the petitioner-firm was varied and the item relating to tyres and tubes was deleted from the column relating to re-sale which is to be found in the certificate. The effect of such cancellation, according to the petitioners, was that the petitioner-firm could not collect sales tax on the sale of motor tyres and tubes effected by them after the change in the registration certificate. Consequently, the peitioners claimed that no sales tax was payable on the tyres and tubes sold by them after dismantling the vehicles purchased by them in the manner already mentioned. This was the case of the petitioners before the Sales Tax authoristies. This contention was rejected by the Sales Tax Officer per his order dated 29th September, 1969, Annexure 'A' to the Writ Petition. I may now briefly set out the reasons given by the Sales Tax Officer for his decision.
(5) Firstly, it was stated that if the vehicles themselves had been resold, sales tax would have been chargeable on the whole vehicle. But, as the vehicle had been dismantled, the tyres and tubes had been sold without charging sales tax and thus the department had been deprived of revenue. Secondly, it was stated that the vehicles had been purchased for re-sale and their sale after dismantling violated the conditions of the registration certificate. It was also stated that the proviso to Section 5(2)(a)(ii) of the Act applied to this situation, and thus tax had to be paid by the petitioner. Thirdly, it was stated that by dismantling the tyres and tubes the petitioner-firm became a manufacturer just as it would have been if it assembled imported parts and was, thereforee, liable to pay tax. Fourthly, reliance was placed on the proviso to the notification dated 30th June, 1965. That proviso need not be reproduced at this stage, but it is sufficient to say that it stated therein that if motor tyres and tubes had not suffered any tax under the Act they would be liable to such tax in the hands of a registered dealer just as if he was a manufacturer or importer. The Sales Tax Officer read this proviso as an exemption which the dealer had to prove. There being no satisfactory Explanationn offered that the tyres had suffered tax earlier and no opportunity having been sought the tax was held to be due from the petitioners. This order led to the petitioners challenging the sales Tax Officer's decision by this petition in which a Writ is sought to quash the assessment order as well as the notification dated 30th June, 1965 on various grounds set out in the Writ Petition.
(6) The respondents arrayed in this Writ Petition are the Sales Tax Commissioner and the Delhi Administration. An affidavit of Shri I.D. Bhagat, Sales Tax Officer, Ward No. V, has been filed in opposition to the Writ Petition. According to the case set out in the return the petitioner-firm purchased motor vehicles, of which the motor tyres and tubes formed a part, on the strength of their registration certificate without paying sales tax as they were registered dealers. As the tyres and tubes had not suffered any tax, the proviso to the notification was applicable which meant that the petitioner firm had to be treated as a manufacturer or importer for the purposes of the notification. It was also claimed that if the entire vehicle had been sold by the first petitioner the sales tax would have been payable on the whole vehicle and their dismantling could not avoid the liability to pay sales tax on the tyres and tubes. It was also claimed that the petitioners were entirely wrong in stating that the burden of sales tax could not be passed to any customei. On this part of the case the return states that though Section 1O-A prevents an unregistered dealer from collecting sales tax on the sale of goods effected by him, it does not prevent him from receiving a price which also includes the amount of sales tax paid by the unregistered dealer. One of the main contentions of the petitioners as to the validity of the notification is refuted on the ground that the Chief Commissioner had power to fix the point at which sales tax was payable. It is contended in the return that Sales Tax was payable normally by the manufacturer or importer, as stated in the notification, but in case there was no importer or manufacturer, the tax had to be levied on the registered dealer on the basis that the sale by him was the point at which the tax had to be imposed. Thus, the validity of the notification is sought to be upheld by the respondents on the gound that the point at which tax was to be paid in the case of the motor tyres and tubes in question, was when the tyres and tubes were sold by the petitioner firm as there was no earlier tax payment.
(7) The second Writ Petition brought by the petitioners No. 285 of 1970, relates to the assessment year 1965-66 in which year an assessment order was passed by the Sales Tax Officer, Shri T.D. Sharma. By that order the exemption claimed by the petitioners on the basis that the firm was not an importer or manufacturer was upheld. A notice was, however, issued by Shri K. A. Bhatnagar, Assistant Commissioner, Sales Tax on 10th March, 1970 under Section 3 of the Bengal Finance (Sales Tax) Act, 1941 stating that it was proposed to revise the order of the Sales Tax Officer. This notice was challenged on the same ground, i.e., on the ground that no sales tax could be imposed on the petitioner. The third Writ Petition brought by the petitioners is No. 323 of 1971 and relates to the assessment year 1966-67. In the case of this assess- ment year also the exemption had been granted to the petitioner firm by the Sales Tax Officer and it was proposed by Shri K.A. Bhatnagar, As sistant Commissioner, Sales Tax, to revise the assessment on his own motion on the ground that the petitioner firm should have been treated as an importer or manufacturer for the purposes of the tyres and tubes sold by the petitioner-firm after dismantling the vehicles purchased by it. The validity of this notice is also challenged on the same ground. These three Writ Petitions, thereforee, relate to the assessment years 1965-66, 1966-67 and 1967-68. As far as 1967-68 is eon- cerned, sales tax has been held chargeable by the sales Tax Officer but in the earlier years, no tax was charged, but a revision of these orders is sought to be made by the Assistant Commissioner.
(8) I have heard along with this Writ Petition, five other Writ Petilions filed by different persons which relate to the same question. These Writ Petitions are Civil Writ Petitions Nos. 1289 of 1969, 283 of 1970, 284 of 1970, 291 of 1970 and 324 of 1971. Of these, three have been brought by Subhag Singh Gurbachan Singh which are on the lines of the three Writ Petitions brought by Harbans Motor Store, the petitioner firm in the present case. Of the other two Writ Petitions, Civil Writ Petition No. 283 of 1969 has been brought by Pritam Singh and Co., and relates to a notice issued by Shri K. A. Bhatnagar, Assistant Commissioner, to suo moto revise the assessment for the year 1965-66 and Civil Writ Petition No. 284 of 1970 has been brought by Tilak Raj Suri and Brothers for the same purpose.
(9) I have heard arguments addressed by various counsel representing the different petitioners, as well as by Mr. B. Sen and Mr. S. S. Chadha, learned counsel for the respondents. The main point which has arisen in these Petitions turns on the validity of the tax sought to be imposed on the petitioners by the application of the notification dated 30th June, 1965, to the facts of the case (which are not very much in dispute).
(10) According to the submissions of Mr. A. K. Sen, learned counsel for the petitioner the tax is only payable on the turnover if it exceeds the taxable quantum during the year. 'Taxable turnover' is defined in Section 5(2) of the Act as the gross turnover minus the turnover with respect to goods declared tax free of sales made to registered dealers of goods specified in the certificate of registration of such dealer as being entitled to re-sale by him. It is submitted that all goods which are sold by registered dealers to other registered dealers are to be subtracted from the taxable turnover. Thus, before the impugned notification was issued, the petitioner was entitled to deduct from his taxable turnover all sales of tyres made to other registered dealers by reason of the provisions of Section 5(2) of the Act. At that time, tyres were included as an item in the certificate of registration of the petitioner-firm and, thereforee, the petitioner was not called upon to pay the tax with respect to sales made to other registered dealers. On the other hand, if the sale was made to a non-registered dealer, then under the proviso to Section 1O-A of the Act the petitioner was entitled to collect the tax from such persons. The method of collecting the tax, according to the submission, is that registered dealers charge tax from purchasers other than registered dealers. It is submitted that in fact a registered dealer acts as a collector of tax because he recovers the amount of tax from customers and passes the same to the State. The actual payer of the tax is thereforee the customer, but the tax is collected by the registered dealer and passed on to the State. There seems to be no dispute about this proposition. A true construction of the Act seems to support the view that though the person taxed is the registered dealer, the dealer is entitled to recompense himself by collecting the tax from the purchaser of goods sold. If the purchaser happens to be a registered dealer then the sale is deducted from the taxable turnover of the registered dealer selling the goods and he has to pay no tax. Thus, if there are a series of sales from registered dealer to registered dealer, sales tax is not payable till a sale is eventually made either to a non-registered dealer or a member of the public.
(11) It is contended that the effect of the notification is to make motor tyres and tubes taxable only at the first point instead of at the last point as is normally the case (as illustrated above). This means that a manufacturer or importer pays the tax but does not sell the goods tax-free to a registered dealer as is normally the case. That is the reason that the certificate of registration of the petitioner has been altered by striking out the item of motor tyres and tubes. This means that the petitioner firm has to pay sales tax when it purchasethe same from an importer or a manufacturer. On the other hand, no tax is chargeable at subsequent stages by any one. If this is the result, it is urged that the petitioner firm does not have to charge sales tax on any tyres and tubes sold by it, other than the tyres and tubes it had in its possession on 30th June, 1965. It is necessary now to turn to the language of the impugned notification. The said notification runs as follows :-
'DELHIADMINISTRATION Finance (Expenditure) Deptt. Notification Dated the 30th June, 1965 No. F (33)/54-Fin (E):-In exercise of the powers conferred by Section 5-A of the Bengal Finance (Sales Tax) Act, 1941, as in force in the Union Territory of Delhi, the Chief Commissioner, Delhi, is pleased to specify that with effect from the 1st July, 1965, the turnover B in respect of all Motor Cycles, Motor Scooters, Motorettes, Cycles and Animal-driven vehicles shall be liable to tax only at the point of:- (a) Sales by importer if imported from outside the Union Territory of Delhi, or (b) Sale by manufacturer if manufactured in the said Territory : Provided that the turnover in respect of sales within the Union Territory of Delhi by any registered dealer of any quantity of all kinds of Tyres and Tubes including those of Motor Vehicles, Motor Cycles, Motor Scooters, Motorettes, Cycles and Animal-driven vehicles which has not suffered any tax under the said Act, shall be liable to tax as if the dealer was a manufacturer or importer in terms of this Notification. By Order. sd/- (MADHURI SRIVASTAVA) Under Secretary Finance (Expenditure) Delhi Administration, Delhi'.
(12) The important part of this notification for this case is the proviso. According to this proviso, if the turnover of a registered dealer of any quantity of tyres and tubes has not suffered any tax under the Act, the registered dealer would have to pay tax as if he was a manufacturer or importer. In other words, if a registered dealer has to sell tyres which have not been subjected to tax under the substantive portion of the notification, then the dealer has to pay tax under the proviso. This part of the notification is challenged on various grounds. Before I proceed to deal with these grounds, it is necessary to show that the proviso is ambiguous. The proviso clearly covers eases where the tyres and tubes have not suffered tax. At the time when the notification was first brought into effect, there were tyres and tubes with all registered dealers which had been acquired by them without payment of tax on the basis of their registration certificates. As I have already pointed out, a registered dealer is a dealer who is entitled to buy goods from other registered dealers without paying sales tax. Thus, every registered dealer would have on 30th June, 1965 a quantity of tyres and tubes which he had bought without paying sales tax. This quantity would now be sold by such registered dealers without charging sales tax under the substantive part of the notification reproduced above. This necessitated the proviso. Without the proviso, all these tyres and tubes would totally escape the payment of sales tax. That was why the proviso was introduced. According to the counsel of the petitioner, the proviso ran out of its course as soon us sales tax was paid on the initial quantity of tyres and tubes held by the registered dealers. As far as future sales were concerned, they had necessarily to come about after purchases made by registered dealers from a manufactuer or importer and thus could not be liable under the proviso. On Ue other hand, the contention on behalf of the respondents is that there can be tyres and tubes which came into the Union Territory of Delhi without having been taxed at the stage of import or manufacture. In this respect, it is pointed out that under the provisions of Section 5(2) there are certain types of sales of goods, which have to be deducted from the gross turnover if the sales are made for specific purposes. This list is added to, by the Rules and there is also a long list of sales, which are not at all subject to sales tax. Rules 29 deals with sales which are to be deducted from the taxable turnover of a registered dealer. This includes sales to foreign or commonwealth Diplomatic Missions or to any office of the United Nations or personnel of such Missions or officers, as well as to others including sales to the Ministry of defense. Then there are sales to canteen stores, and various other types of sales which need not be enumerated here. It is submitted on behalf of the respondents that these sales by importers or manufacturers are not subject to sales tax at the first point under the application of the notification aforementioned. Thus, if an importer sells tyres and tubes to the Ministry of defense, those tyres and tubes are sold free of tax to that Ministry. When those tyres and tubes come into the hands of the petitioner firm, they are tyres and tubes which become subject to the proviso on the ground that these tyres and tubes have not suffered any earlier tax under the Sales Tax Act. This means that the application of the notification and its proviso is dependent on the history of the particular tyres and tubes which a second-hand dealer might have to deal with. It may be that in some cases the sales of these tyres and tubes has been subjected to tax. It may be that in some cases they have not. For example, if a person buys a car outside Delhi, and brings it into Delhi and sells the tyres, they will be tyres which have not suffered any tax under the provisions of the sales Tax Act and, thereforee, will be chargeable under the proviso to the notification. Learned counsel for the petitioner urges that the power to impose the tax in this manner is ultra virus of the powers contained in Section 5-A of the Sales Tax Act. That Section reads as hereunder :-
'POWERof Chief Commissioner to prescribe points at which goods may be taxed.- Notwithstanding anything to the contrary in this Act, the Chief Commissioner may, by notification in the official Gazette, specify the point in the series of sales by successive dealers at which any goods or class of goods may be taxed.'
(13) It is clear that the Chief Commissioner is required to specify the point at which the sales tax has to be imposed. It is urged that by allowing the sale to be tax-free at the first instance, the second-hand dealer is placed in a difficult position because he cannot determine in what cases he is required to pay or charge sales tax. ft is, thereforee, urged that this makes the proviso ambiguous and thereforee ultra vires, as it is not possible for a second-hand dealer to determine whether the sale of any tyre he is selling was initially subjected to sales tax or not.
(14) The second objection on the same line of reasoning, is that the petitioners are being called upon to pay the tax without being registered dealers with respect to motor tyres. There are two parts of this argument. Firstly, though the petitioners are registered dealers they are not registered dealers qua tyres. The reasons for this is that their certificate of registration had been altered after 30th June, 1965 by striking out the item of registered dealer. This means that the petitioners cannot charge sales tax from their customers. On the other hand, the learned counsel for the respondents urges that sales tax can be added to the price without disclosing it to be sales tax. This is contested by the petitioner on the ground that this is doing indirectly what is not permitted by Section 10-A, which says that only a registered dealer can collect sales tax from his purchasers. I am not sure that the petitioner is right in this contention. The Section does not prohibit a registered dealer with respect to one type of goods, from charging sales tax with respect to even other goods even if he is not registered with respect to it. The second part of the argument in regard to this point, is that even if sales tax has been charged by one registered dealer in the case of a sale to another registered dealer it will not be possible for the second registered dealer to show that sales tax has already been paid on tyres and tubes and this creates confusion and uncertainty concerning the tyres and tubes concerning which sales tax has to be recovered.
(15) The next contention on behalf of the petitioner is that when a certificate of registration is applied for, the authorities are not entitled to refuse to include any item that has been applied for from the certificate. In this connection, certain rules have been referred to.
(16) The first relevant rule is Rule 3 of the Delhi Sales Tax Rules, 1951. According to this Rule, an application for registration of a dealer has to be in form 'S.TII'. This form requires the applicant-dealer to give the classes of goods which are purchased for the business against Column No. 11. He has to give (a) the goods he purchases for manufacture (b) for re-sale and (c) for containers of packing material. If the first petitioner had to make an application it would have to give tyres and tubes as one of the classes of goods purchased by it for re-sale. Rule 4 of the Rules also requires that the application should give particulars, of among other things, goods purchased by the dealer for re-sale. thereforee, the statutory rules require the petitioner-firm to state that it buys tyres and tubes for re-sale. Rules 5 and 5A of the Rules permit the Assessing Authority to make an enquiry to the particulars etc., in the form. Then Rule 6 states the particulars that have to be given in the registration certificate.
(17) Rule 6(1)(c) requires the registration certificate to give the class or classes of goods which may be sold to the dealer free of tax as being required (i) for re-sale and (ii) for the purpose of manufacture. One of the points that has arisen before me is whether the Assessing Authority has authority to delete or leave out any of the goods mentioned in the application for registration as being purchased for re-sale from the certificate of registration. In this respect, the provisions of Rule 6(2) are important. It is there said :-
'SUBJECTto the provisions of the Act and these rules, the particulars referred to in clauses (b) and (c) of sub-rule (1) shall be described in the registration certificate in the same terms as are used by the dealer in his application form.'
(18) Thus, it is quite clear that the Assessing Authority cannot issue the registration certificate in terms different from the application for registration unless there is some provision of law, either in the Act or the Rules. The only provision which is applicable to the tyres and tubes in question is Section 5-A of the Act which brings the impugned notification into operation. Hence, the only ground on which the entry relating to tyres and tubes could be struck out or deleted from the certificate of registration of the petitioner-firm was because tyres and tubes were to be taxed at the first point only and all subsequent sales were to be treated as or any other dealer must buy tyres and tubes from an importer or a manufacturer, it would then have to pay sales tax because of the impugned notification; which would be contrary to the certificate of registration if tyres and tubes remained entered; hence it became necessary to alter the certificate.
(19) Now the petitioners urge that the firm is no longer a registered dealer with respect to tyres and tubes and hence, the notification and its proviso have no application. Thus, the argument presented on behalf of the petitioner is based on two alternatives which have now to be examined.
(20) The first alternative is that the petitioner is a registered dealer, and because of the proviso, the petitioners are entitled to have an entry regarding tyres and tubes in their certificate of registration and are also entitled to buy tyres and tubes free of paymant of sales tax. If the entry is not there then they should be treated as unregistered dealers and, thereforee, cannot be liable under the proviso. Though, this argument is difficult to refute in terms of logic, I think the purport of the notification under-Section 5-A which makes tyres and tubes taxable at the first point, necessarily implies that for the purpose of tyres and tubes only sales by importers or manufacturers are taxable and the petitioners have to be treated as unregistered dealers. However, the proviso makes care of the situation when a registered dealer does not buy tyres and tubes from an importer or manufacturer, but gets them from some other source. In that situation, the registered dealer, who would normally be treated a san unregistered dealer, has to be treated as a manufacturer or importer. It is, thereforee, not difficult to construe and apply the proviso to any given situation. The only difficulty arises when the situation is difficult to identify. There is no particular mark on a tyre and tube showing that sales tax has been paid and, thereforee, it is almost impossible for a second-hand dealer to discover whether a particular tyre or tube has been obtained after suffering sales tax at the first point or not. If the burden of proof is placed on the dealer it is impossible for him to escape taxation because he cannot trace back the history of the tyres and tubes in question. One answer to this problem which has been suggested during the course of the arguments is that the person who sold the vehicle should have paid the tax. It is pointed out that although the Ministry of defense can buy tyres and tubes B free of any tax, because of the provisions in the Act and Rules, it does not follow that they can sell the tyres and tubes as disposal goods without charging sales tax. As this point requires investigation of all sorts of other facts which are not on record, I do not intend to treat this as an answer to the problem arising in this case.
(21) To my mind, the only answer to this problem is, either to give a satisfactory meaning to the proviso to the notification which enables it to be applied in practice in the commercial sense. Or, alternatively, to determine whether the notification is not invalid because it leaves the point of taxation to be determined by uncertain facts. There is a third suggestion which has been made by Mr. R.C. Chawla, learned counsel for the petitioner and, that is, that the proviso is legislative in nature and should not be constructed in the manner sought by the Sales Tax authorities, because it imposes a tax on certain dealers and not on others. I shall examine this last point later.
(22) As far as the first of these three lines of approach is concerned, it is urged by Mr. A.K.Sen (I have already stated this above) that the proviso exhausted itself when the tyres and tubes in stock on 30th June, 1965 were subjected to sales tax. He urges that the proviso does not have any prospective effect, but, only applies to goods which were with the dealers on the date of the notification. He relies for this submission on the language of the proviso which contains ''turnover. . . . which has not suffered any tax under the said Act.' On this construction it is submitted that only the previous sales were intended to be covered by the proviso. I have also been shown that a number of other goods which are taxable at the first point and similar notifications have been issued with respect to them. Those goods are, cement, country liquor, motor spirit, high speed diesel oil, medicines, drugs, pharmaceutical products, coal, coke and vegetable ghee. It is pointed out that all these products are such that it would be difficult to find out if the goods had not been subject to sales tax earlier.
(23) The second alternative may now be considered. It is urged that Section 5-A of the Sales Tax Act, as applied to Delhi, gives the Chief Commissioner the power to specify the point at which any goods or class of goods may be taxed. It is urged that the notification in so far as the proviso is concerned is invalid because it does not specify the point at which the tax has to be paid. I have already referred at length to this proviso, but I do so again in considering this point of view. The substantive part of the notification provides that the tax is to be paid either by importers or by manufacturers. The scheme of this notification seems to cover every possible case. Either, a motor car tyre or tube can enter the Union Territory of Delhi through an importer or be manufactured by a manufacturer in the Union Territory. In either case, the sale by such importer or manufacturer is subject to the tax if he is a registered dealer. The proviso deals with cases which are not provided for in the substantive portion. Thus, if an importer has a turnover which is less than the taxable quantum and he is not registered, no sales tax is to be paid by him. Similarly, if there is a small manufacturer whose turn-over is small he will not pay tax. In such cases, it is the registered dealer who has to bear the tax if the tyres and tubes come into his hands. Then there may be cases in which tyres and tubes reach a registered dealer without coming through a regular importer or a manufacturer. An example of this may be an import by a private owner from outside the Union Territory. Thus, the proviso is intended to deal with those tyres and tubes that come to registered dealers otherwise than through sales by importers or manufacturers who are registered. If such tyres and tubes have not suffered sales tax earlier, then they are liable to sales tax in the hands of a registered dealer. The contention regarding the invalidity of this proviso is based primarily on the submission that the Chief Commissioner has as no power to leave the point of tax at large under the provisions of Section 5-A of the Act. A notification under that provision is required to fix the point and not leave it unfixed, and the contention further is that in the case of goods covered by the proviso, the point at which the tax has to be paid has virtually been left to be determined by several uncertain factors. Though, there is some substance in this contention, I cannot see how else the Chief Commissioner is to determine the point at which the tax is to be paid in cases which are not covered by the substantive part of the notification. The Sales Tax authorities only deal with registered dealers. If a registered dealer obtains lyres which have already been taxed, no liability is imposed on him. If a registered d
(24) It remains to consider the view-point submitted by Mr. R.C. Chawla, learned counsel for the petitioner as a subsequent and alternative argument. He contends that a registered dealer is unfairly treated by the proviso. His argument is that if an unregistered dealer was to obtain tyres and tubes, which had not been subjected to sales tax earlier and even if the quantity of such tyres and tubes exceeded the taxable quantum, i.e., exceeded the value of Rs. 30,000.00 as provided in Section 4(5) of the Bengal Finance (Sales) Tax Act, 1941, as amended in Delhi, even then the proviso would not make such unregistered dealer liable to pay sales tax. The contention, thereforee, is that an unregistered dealer and a registered dealer are differently treated by the proviso. Thus, even if an unregistered dealer has to sell tyres and tubes which had not been previously subjected to sales tax in excess of the value of Rs. 30,000.00 in a year, the sale would not be subject to sales tax under the proviso, whereas a registered dealer selling exactly the same quantity of tyres and tubes would have to pay the tax. He submits that a registered dealer and an unregistered dealer are equally placed in this respect and, thereforee, the proviso infringes Article 14 of the Constitution of India. He suggests, that in order to avoid the proviso being declared ultra vires, the proviso should be interpreted to apply only to that stock of tyres and tubes which were held by registered dealers on the date of the notification. Alternatively, he suggests that the proviso should be applied only to those persons who are registered dealers qua tyres and tubes. As the registration certificate of the petitioner-firm was altered to strike out the entry relating to tyres and tubes, he submits that for this purpose the petitioner-firm should be treated as an unregisterd dealer and thus, the petitioner firm would also not be liable to pay tax.
(25) I have considered this argument with the greatest care. There is no doubt that one solution to the problem posed in this case would be to treat the petitioner-firm as being not a registered dealer for the purpose of the proviso and thereby to exclude its operation altogether to the situation existing in this case. Another solution would be to treat this notification as being applicable only to those tyres and tubes which had not suffered any tax under the Act previous to the issue of the notification. For this purpose, reference has been placed on the wording 'which has suffered any tax.' It is contended that this part of the proviso seems to apply only in accordance with facts which existed prior to the issue of the notification.
(26) In my view, the notification has to be applied at all times to any set of facts or situation that might arise and not only retrospectively. Thus, it is clear that. if the tyres and tubes involved in the present case were acquired by the Ministry of defense free of payment of sales-tax, they are tyres and tubes which have not suffered any tax under theBengal Finance (Sales) Tax Act, 1941 for the reasons already set out above. I cannot, thereforee, accept the interpretation that the proviso must be applied only to facts and cirumstances existing on 30th June, 1965 and not thereafter.
(27) As far as the fact that the petitioner-firm has ceased to be a regis tered dealer qua tyres and tubes is concerned, I think this is an inevitable result of the decision to impose sales tax only at .the first point, i.e., in the hands of an importer or manufacturer. I do, however, feel that the petitioner-firm should have an entry in its reigistration certificate for the purposes of tyres and tubes other than those acquired from importers or manufacturers. That, however, does not mean that the petitioner can be excluded from the definition of registered dealer. The term 'registered dealer' is defined and explained by the provisions of Section 7 of the Act. Once a dealer has been registered, he becomes a registered dealer for all purposes and not only for a particular commodity. Under the provisions of Section 7, every dealer who is liable to pay tax has to be registered and has to possess a registration certificate. I think, it is quite immaterial whether the registration certificate contains an entry regarding tyres and tubes or not. Every dealer who is registerred under the Act musbibe deemed to be a registred dealer for the purposes of the proviso, I thus find that the petitioner-firm also has to be treated as a registered dealer.
(28) I now deal with the contention that the proviso works unfairly between a registered dealer and the other dealers who are not registered and treats persons who are equally placed differently. It is obvious from Section 7 of the Sales Tax Act as applicable to Delhi that certain dealers have to bs registered and certain delers have not to be registered. It was of course, possible to frame a proviso in the notification so as to cover even non-registered dealers, but that would be of no value or effect at all, because a non-registered dealer is under no obligation to give a return to the Sales Tax Authorities. It is only when a dealer is registered that the proviso could be operative because, it is only in such a case that the Sales Tax Authorities get a return from a dealer which would enable them to determine whether there were tyres and tubes included in the turnover which had not beert included in the turnover of an importer or manufacturer under the substantive part of the notification. The Sales Tax Autorities only deal with registered dealers. On the other hand, unregistered dealers are not required to furnish any return. Hence, I cannot accept the contention that persons who are equally treated are being differentiated between by reason of the terminology of the proviso.
(29) Mr. Chawla also submitted that the proviso is legislative in nature. His reason for saying so. is that under the Sales Tax, Act as applicalible to Delhi, any dealer having a turnover exceeding the taxablequantum is to be subjected to the tax. He urges that if an unregistered dealer sells tyres and tubes which have not been taxed at the first point under the substantive portion of the notification, then normnally, such dealer would be subjected to tax because he has a turnover exceeding the minimum taxable quantum. But, in view of the terminology of the proviso, such unregistered dealer will escape taxation altogether. If one reads the proviso in this light, it does appear to be legislative in character. But is one obliged to read the proviso in this manner? The proviso is only intended in my view to fix a point at which the sale of tyres and tubes has to be included in the taxable turnover of a dealer. The notification does not say that an unregistered dealer who sells tyres and tubes exceeding Rs. 30,000.00 in value is not required to be registered. That provision is to be found in the Sales Tax Act itself. As I have said, the proviso. is intended to cover sales of tyres and tubes which have not been subjected to tax in the hands of an importer or manufacturer. The taxing of any such sale by the Sales Tax Authorities can only take place, in normal circumstances, when, the Sales Tax Authorities are considering a return filed by a registered dealer. It is quite possible, though I do not express any firm opinion on this question, that even an unregistered dealer, who includes within his annual turnover tyres and tubes exceeding the taxable quantum may have to get himself registered under the provisions of Section 7 of the Act. On a true interpretation of the proviso read with the substantive part, I think that it is only meant to determine the point at Whifch sales tax has to be paid. Thus, the proviso does not travel beyond the limits of the powers given to the Chief Commissioner under Section 5-A of the Act. I, thereforee, hold that the proviso is not legislative in character.
(30) I now come to deal with another question which has been raised by the petitioner regarding the constitutional validity of the proviso. It is urged that the proviso infringes Article 14 of the Constitution of India, because it treats registered dealers and unregistered dealer unequally. Reliance is placed in this respect on certain decisions of of the Supreme Court which I may now refer to.
(31) The main case relied upon is Anandji Haridas and Co. (P) Ltd. v. S. P. Kushare, (1968) 21 S.T.C. 326 That was a case under the C.P. and Berar Sales Tax Act of 1947. Two of its provisions were before the Supreme Court for consideration. Under Section 11(4) if a registered dealer did not furnish a return in respect of any period by the prescribed date, the Commissioner was entitled to make a best Judgment assessment, provided of course, that the dealer had first been given a reasonable opportunity of being heard. Section 11 A of the said Act provided that if the Commissioner was satisfied that the turnover of a dealer had been unassessed or had escaped assessment, or had been assessed at a lower rate, or any deduction had been wrongly made, the Commissioner might within three years re-assess or assess the turnover as the case might be. The particular difference between these two provisions was that in the case of Section 11A(1), there was a time limit of three calendar years whereas under Section 11(4) there was no time limit. The majority judgment of the Court held:-
'from the above conclusions it follows that the appellants' case fails both under section 11(4)(a) and section IIA(I). thereforee, it was open to the assessing authority to proceed against them under any of those two sections. But as they were proceeded against under section ll(4)(a) they cannot have the benefit of the period of limitation prescribed under section 11A(1). Hence, it must be held that the present case falls with the rule laid down by this Court in Suraj Mall Mehta and Co. V. A. V. Visvanatha Sastri and Another, : 26ITR1(SC) On the facts found it follows that section 11(4) (a) has become a discriminatory provision in view of section IIA(3)'
(32) Later on in the judgment the Court dealt with the difference between a registered and an unregistered dealer and held as follows:-
'JUDGEDfrom the object sought to be achieved by the Act. we are of the opinion that the classification made between the registered and unregistered dealer is not a reasonable classification.'
(33) This conclusion was arrived at on the submission made by counsel for the Revenue to the effect that the classification referred to above, (J between the two provisions, was based on the distinction between unregistered dealers and registered dealers.
(34) It is urged that the present proviso under challenge also creates a distinction between an unregistered and a registered dealer. The applicability of the proviso to registered dealers is challenged on the ground that it creates a distinction between the two types of dealers. It might as well be urged that the substantive portion of the notification also creates this distinction between an importer and manufacturer and other dealers. In my view, the object of the notification is not to create a distinction between a registered and an unregistered dealer, but to fix a point in the series of sales which might take place in relation to any given tyres and tubes. This point has to be fixed on some basis, It is obvious that normally, tyres and tubes are sold in the first instance by importers or manufacturers who are registered dealers. If the importer or manufacturer happens not to be a registered dealer, he has not to pay any tax at all. This distinction is to be found in the Sales Tax Act even normally. There is a minimum taxable quantum. Dealers have been classified into two classes, namely, dealers who have a turnover above a certain quantum which is taxable and dealers who have a turnover below that quantum, in which case they are not subjected to tax. This classification is apparent in the Act itself. It must necessarily also find its place in the proviso because the Chief Commissioner is not entitled to make an unregistered dealer subject to sales tax. Thus, the proviso necessarily had to use the term 'registered dealer' when applying the proviso. , This is only a reference to a classification which already exists in the Act and has also to exist in the application of the proviso. , I, thereforee, hold that there is no classification made by this proviso, but only an application of a classification made by the Act itself.
(35) The next judgment referred to is Gopi Chand v. Delhi Admimstration, : 1959CriLJ782 . This was a case under the East Punjab Public Safety Act. It was referred to only for the purpose of showing that a classification must be based on intelligible differentia. It is clear that a distinction does exist between registered and unregistered dealers as I have already sought to explain above. The entire scheme of the Sales Tax Act is adapted to apply to registered dealers. I cannot, thereforee, hold that the applicability of the proviso only to registered dealers is ultra virus of Article 14 of the Constitution.
(36) The next judgment referred to with regard to the constitutionality of the proviso is The Commissioner of Commercial Taxes and others v. R. S. Mayor and others, etc. : 1SCR148 . This case raised a question regarding the proper construction to be placed on Section 41 of the Madras General Sales Tax Act, 1959. Under sub-section 4 of this Section, an officer of the Sales Tax Department was entitled to seize and confiscate goods found in the office, shop, godown etc., of a dealer, which was not properly accounted for by the dealer in his accounts. It was held by the High Court that the power of seizure and confiscation granted went beyond the legislative competence of the State Legislature because it was outside Item 54 of List Ii of the Seventh Schedule to the Constitution relating to taxes on the sale or purchase of goods and also that the provisions infringed Article 19(l)(f) and (g) of the Constitution. The Supreme Court, however, held that this was a reasonable restriction and the Legislature did have power to enact that goods could be seized in the manner provided for in the Act. It was held that in making an enactment under any of the Entries in the Constitution, the State Legislature had the power to make ancillary provisions such as might be necessary to effectuate the law. Thus, the power to enact a law compelling (by effect) a dealer, to make entries regarding the goods in his godown, shop, etc., in his books of accounts was upheld. This case has been referred to for the purpose of showing that this provision was upheld because it did contain safeguards regarding the exercise of the power. It is urged that Section 5A of the Sales Tax Act enables the Chief Commissioner to fix any point he likes as being the point of taxation, and thus, the provision does not contain any guide-line for its applicability. I cannot accept this line of reasoning because the power of the Chief Commissioner under Section 5-A has necessarily to be exercised in accordance with the other provisions of the Act. It is a matter of convenience for the authorities to collect the tax at the first point or any other point rather than the last point. Section 5-A merely enables a more efficient method of collecting the tax being made applicable to a number of commodities. The method by which the tax should be collected is a purely administrative function. The giving of this power to the Chief Commissioner can not thereforee be treated as being without safeguards or being without guide-lines. For example, in the sale of largely used commodities, like tins of Vanaspati, motor-spirit, etc., it is obviously easier to collect the tax from a single large scale manufacturer rather than from many small dealers. I cannot find anything arbitrary or unreasonable in such a procedure. I, thereforee, hold that the impugned proviso of the notification and the provisions of Section 5-A of the Bengal Finance (Sales) Tax Act, 1941 as modified are not ultra-vires of the constitution.
(37) In view of my conclusions, I hold that the petitioner-firm has been rightly subjected to sales tax on its turnover of second-hand tyres and tubes acquired by dismantling second-hand vehicles. Consequently, I dismiss this petition. However, I leave the parties to bear