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Himachal Flour Mills Vs. the State of Himachal Pradesh and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtHimachal Pradesh High Court
Decided On
Case Number C.W.P. No. 59 of 1978
Judge
Reported in[1979]43STC91(HP)
AppellantHimachal Flour Mills
RespondentThe State of Himachal Pradesh and anr.
Appellant Advocate B.S. Malik and; Kamlesh Sharma, Advs.
Respondent Advocate The Adv.-General and; P.N. Nag, Adv.
DispositionPetition dismissed
Cases ReferredB. Shama Rao v. Union Territory of Pondicherry A.I.R.
Excerpt:
- .....addition of an article in schedule d results in abdication of the legislative powers of the state legislature and, therefore, the same is illegal.2. in order to appreciate the above contention of the petitioner it would be necessary to state shortly some facts which constitute the background of this dispute.3. section 6 of the hitnachal pradesh general sales tax act fixes the rate of tax. sub-section (1) thereof says that subject to the provisions of this act, there shall be levied on the taxable turnover of a dealer a tax at such rates not exceeding six paise in a rupee as the government may, by notification, direct. sub-section (3) of this section contemplates deduction of tax on taxable turnover. the relevant portion of this sub-section (3) is as under:in this act, the.....
Judgment:

Mehta, AG. C.J.

1. The petitioner herein is Himachal Pradesh Flour Mills, Kangra. It owns a roller flour mill and is manufacturing, inter alia, wheat flour. The grievance made by the petitioner in this writ petition is that on account of the declaration of wheat as article of special importance in inter-State trade under Section 14 of the Central Sales Tax Act, the said article does not earn deduction under Sub-clause (ii) of Section 6(3) of the Himachal Pradesh General Sales Tax Act, 1968. The contention of the petitioner is that by the declaration of wheat as declared goods under Section 14 of the Central Sales Tax Act, Schedule D, which is attached to the Himachal Pradesh General Sales Tax Act, stands automatically amended with the result that deduction which was contemplated by Clause (ii) of Section 6(3) of the Himachal Pradesh Act is lost to the petitioner. According to the petitioner, therefore, this automatic addition of an article in Schedule D results in abdication of the legislative powers of the State Legislature and, therefore, the same is illegal.

2. In order to appreciate the above contention of the petitioner it would be necessary to state shortly some facts which constitute the background of this dispute.

3. Section 6 of the Hitnachal Pradesh General Sales Tax Act fixes the rate of tax. Sub-section (1) thereof says that subject to the provisions of this Act, there shall be levied on the taxable turnover of a dealer a tax at such rates not exceeding six paise in a rupee as the Government may, by notification, direct. Sub-section (3) of this section contemplates deduction of tax on taxable turnover. The relevant portion of this Sub-section (3) is as under:

In this Act, the expression 'taxable turnover' means that part of dealer's gross turnover during any period which remains after deducting therefrom-

(a) his turnover during that period on....

(ii) sales to a registered dealer of goods, other than sales of goods specified in Schedules C and D or of goods liable to tax at the first stage under Sub-section (2), declared by him in a prescribed form as being intended for resale in the Union Territory of Himachal Pradesh or in the course of inter-State trade or commerce or sale in the course of export of goods out of the territory of India or of goods specified in his certificate of registration for use by him in the manufacture in Himachal Pradesh of any goods, other than goods declared tax-free under Section 7 for sale in the Union territory of Himachal Pradesh and on sales to a registered dealer of containers or other materials for the packing of such goods.

4. The remaining portion of this clause, (ii) of Sub-section (3) is not relevant for our purpose. It is evident that, according to the above provisions, goods specified in the certificate of registration for use by a dealer in manufacture for sale in Himachal Pradesh were allowed for the purpose of deduction. The petitioner manufactures flour from wheat and, therefore, wheat which was used by him in manufacture of flour in Himachal Pradesh for sale was allowable for deduction under the above referred clause. But this was subject to the condition that wheat should not fall within either Schedule C or Schedule D attached to the Act. If a reference is made to Schedule D, it will be found that it is with reference to the goods which are declared under Section 14 of the Central Sales Tax Act, 1956. When this Himachal Pradesh General Sales Tax Act, 1968, was passed, wheat was not an article covered by Schedule D and, therefore, the petitioner was entitled to the deduction contemplated by the above referred Clause (ii) of Section 6(3) of the Act.

5. Subsequently, on 7th September, 1976, wheat was declared as an article of special importance under Section 14 of the Central Sales Tax Act, with the result that it was automatically covered by entry No. 3, 'all other declared goods', of Schedule D, and, therefore, deduction, which the petitioner was entitled to on sale or purchase under Clause (ii) of Section 6(3), was not available to him. The petitioner, therefore, makes a grievance that automatic addition of an article in Schedule D by virtue of its declaration under Section 14 of the Central Sales Tax Act robs the State Legislature of its legislative power and is, therefore, illegal. In this connection, our attention was also drawn to Section 43 of the Himachal Pradesh General Sales Tax Act, which says that the State Government, after giving by notification not less than thirty days' notice of its intention to do so may, by notification, add to or delete from or otherwise amend Schedule C and Schedule D and thereupon Schedule C or Schedule D shall be deemed to be amended accordingly. The contention was that under this Section 43 it was open to the State Government to amend Schedule D by making the addition of the article wheat in that schedule, but since the State Government has not preferred to take resort to that course of action, the automatic addition of the article wheat in Schedule D as a result of its being a declared goods under Section 14 of the Central Sales Tax Act would be illegal.

6. In support of the above contentions heavy reliance was placed on the Supreme Court decision in what is popularly known as the Pondicherry case A.I.R. 1967. S.C. 1480, being the case of B. Shama Rao v. Union Territory of Pondicherry A.I.R. 1967. S.C. 1480, wherein abdication of legislative powers by the Pondicherry Legislature was disapproved by the Supreme Court.

7. It is obvious from what is stated above that as a result of the declaration of wheat as an article of special importance under Section 14 of the Central Sales Tax Act, deduction which was permissible under Clause (ii) of Section 6(3) of the Himachal Pradesh Act is not now permissible to the petitioner. A bare perusal of Clause (ii) of Section 6(3) read with item No. 3 of Schedule D, shows that any declaration of a particular article as an article of special importance under Section 14 of the Central Sales Tax Act automatically introduces that article in Schedule D in the Himachal Pradesh General Sales Tax Act. The question, therefore, is whether this amounts to abdication of legislative powers of the Himachal Pradesh State.

8. After perusing the decision of the Supreme Court in the Pondicherry case A.I.R. 1967 S.C. 1480, we find that the same is not applicable to the facts of the present case. What happened in the Pondicherry case A.I.R. 1967 S.C. 1480 was that the Pondicherry Legislature not only adopted the Madras Sales Tax Act, as it stood at the date it passed the principal Act, but it also enacted that if the Madras Legislature were to amend its Act prior to the date when the Pondicherry Government would issue its notification bringing the Act into force, it would be the amended Act which would apply. The Supreme Court held that this was purely an abdication of legislative powers by the Pondicherry Legislature because the Pondicherry Legislature at that stage could not anticipate that the Madras Act would not be amended, nor could it predicate what amendment or amendments would be carried out or that they would be of a sweeping character or whether they would be suitable in Pondicherry. Obviously, what the Pondicherry Legislature did in that case was total abdication of its legislative power in favour of the Madras Legislature.

9. So far as the present case is concerned, it cannot be said that the Himachal Pradesh Legislature has in any manner abdicated its legislative powers by enacting the above-quoted Clause (ii) of Section 6(3) which operates automatically so far as Schedule D is concerned. On the contrary, it is found that by enacting Clause (ii) of Section 6(3), and by putting a general entry No. 3 with regard to 'all other declared goods' in Schedule D, the legislature of the State has positively exercised its legislative power by fixing the principle on which deduction can be granted. As already noted above, the purpose of Clause (ii) of Section 6(3) is to grant deduction. The legislature has obviously taken into consideration the fact that so far as goods of special importance in inter-State trade are concerned, the decision about the choice of such goods would rest on the Central Legislature, and in whatever manner its discretion is exercised by the Central Legislature, if once the goods are declared as of special importance under Section 14 of the Central Sales Tax Act, these goods would be covered by Schedule D, and would therefore not be capable to earn any deduction under Clause (ii) of Section 6(3). It is for this purpose that entry No. 3 of Schedule D provides that 'all other declared goods' will get automatically included in that schedule. The legislature has thus clearly applied its mind as to what category of goods can earn deduction and what category of goods cannot earn that deduction and, therefore, it cannot be said that the State Legislature has abdicated its legislative functions in favour of any other legislature. Where a legislature formulates policy and principles underlying an enactment, and also formulates a code of conduct of a binding nature in the said enactment, leaving some detail to be filled in by some other authority which, in the nature of things, is more competent to fill in that detail, it cannot be said that it has abdicated its legislative functions. In the Pondicherry case A.I.R. 1967 S.C. 1480, the Pondicherry Legislature had surrendered its whole judgment even regarding the policy and principles which formed the basis of the enactment concerned to an alien authority and, therefore, the court held that it abdicated its legislative functions. Here, in the case before us, we find that the State Legislature has enacted a complete statute and has left the question of the operation of Schedule D to the will of the Central authority because it was the only authority which could legitimately make declarations under Section 14 of the Central Sales Tax Act. The decision of the Supreme Court in the Pondicherry case A.I.R. 1967 S.C. 1480 has, therefore, no application to the facts of this case.

10. Moreover, if Clause (ii) of Section 6(3) is thus made to operate automatically, it was not necessary for the State Government to issue any notification contemplated by Section 43, which is referred to above, because that section obviously applies to the goods which the State Government wants to insert in either Schedule C or Schedule D. Here, the action in question is not taken by the State Government but is taken by the Central Government under Section 14 of the Central Sales Tax Act. Under the circumstances, it cannot be said that Section 43, which empowers the State Government to issue notification by giving notice of thirty days, is rendered otiose.

11. It is always open to the State Legislature to decide the question whether sale or purchase of particular goods would be entitled to deduction or not. This decision is taken by the State Legislature by enacting Clause (ii) of Section 6(3) in a manner in which it is already enacted. If the State Legislature, therefore, wants to give total exemption from tax to the commodity named wheat, it can do so by putting this commodity into Schedule B for exemption. Thus, the power of the State Legislature to make suitable legislation with regard to this commodity still remains intact and, therefore, it cannot be said that the State Legislature has abdicated its function to legislate with regard to this commodity.

12. It was further contended that the benefit of deduction contemplated by Clause (ii) of Section 6(3) of the Act was intended to be taken away only in respect of the commodities which were specifically mentioned in Schedule D at the time when the Himachal Pradesh General Sales Tax Act was passed and, hence, any subsequent addition of commodities in that schedule would not result in the disallowance of this deduction. Even this contention is not acceptable because even when the Himachal Pradesh General Sales Tax Act was enacted, Schedule D contained entry No. 3 stating that 'all other declared goods' would automatically fall within the ambit of this schedule.

13. No other point was raised on behalf of the petitioner during the course of the arguments.

14. In view of what is stated above, we see no force in this writ petition, which is summarily dismissed.

15. Learned Advocate of the petitioner made an oral request for certifying this case as fit for being taken to the Supreme Court. Since in this case there is no substantial point of law which, in our opinion, is required to be decided by the Supreme Court, the said request is rejected.


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