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PETITIONER: HIRA LAL RATTAN LAL ETC. ETC.

       Vs.

RESPONDENT: STATE OF U.P. AND ANR.  ETC.  ETC.

DATE OF JUDGMENT03/10/1972

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. REDDY, P. JAGANMOHAN DUA, I.D. KHANNA, HANS RAJ

CITATION:  1973 AIR 1034            1973 SCR  (2) 502  1973 SCC  (1) 216  CITATOR INFO :  R          1979 SC1475  (24)  F          1985 SC 421  (25,78)  F          1985 SC 582  (4)  RF         1985 SC1416  (60)  R          1989 SC2227  (32)  R          1990 SC 560  (13)  R          1990 SC1637  (21)

ACT: U.P.  Sales  Tax Act 1948 as amended by  the  Uttar  Pradesh Sales  Tax Act (Amendment and Validation) Act 1970, s.  3-D, explanation  II,  validity of--S. 7  whether  effective  for retrospective operation of explanation II--Single point  tax on first purchase of split foodgrains whether leviable under amended  Act--Explanation II whether an unlawful  usurpation of judicial points--Whether violates Art. 14 or 19(1)(f) and (g)  of Constitution--Tax on spilt grains  whether  leviable without  amending  notification under  s.  3-D--Section  3-D whether  suffers  from excessive delegation  of  legislative powers.

HEADNOTE: Under the U.P. Sales Tax Act 1948 as it originally stood the purchases  of  split  or processed  foodgrains  and  dal  by dealers were sought to be brought to tax under s. 3-D of the principal  Act read with the notification issued. in a  writ petition  relating  to the assessment  year  1966-67  (Tilok Chand Prasan Kumar v. Sale Tax Officer, Hathras 25 STC  118) the  High  Court of Allahabad struck down the  levy  holding that  the dal purchased by the petitioner could not be  said to  be a commodity essentially different from the arhar  dal purchased  by  the dal mills and accordingly  the  purchases effected  by  the petitioner could not be  regarded  as  the first purchases.  Thereafter the Governor of U.P. issued the Uttar   Pradesh   Sale  Tax   (Amendment   and   Validation) Ordinance,, 1970 adding inter alia Explanation to s. 3-D  as well  as a validating provision viz. s. 7 to  the  principal Act.  The ordinance, was later enacted as the Uttar  Pradesh Sales   Tax  Act  (Amendment  and  Validation)   Act   1970. Explanation  II aforesaid provided that split  or  processed

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foodgrains     such as in the form of dal shall be deemed to be different from unsplit     or unprocessed foodgrains  and accordingly tax could be levied on first purchases of  split dal.  In support of the writ petition under Art. 226 of  the Constitution  filed in the High Court by the  appellant  the validity  of Explanation 11 of s. 3-D as well as s.  7  was challenged   and  it  was  contended  that  the   amendments incorporated  were not effective enough to bring to tax  the first purchase of split or processed foodgrains and  pulses. The High Court rejected these contentions and dismissed  the writ  petition.   There  after  these  recent  appeals  were brought with certificates, Dismissing the appeals. HELD : (i) The source of the legislative power to levy sales of  purchases  tax on goods is Entry 54 of List  II  of  the Constitution.    It   is  well  settled  that   subject   to constitutional restrictions a power to legislate includes  a power to legislate prospectively as well as retrospectively. In Chhotabhai Jethabhai Patel it was specifically decided by this Court that where the legislature can make a valid  law, it can provide net only for the prospective operation of the material provisions of the said law but it can also  provide for the retrospective operation of the said provisions.  The contention   that   no  fresh  levy  can   be   imposed   by retrospective  legislation must therefore be rejected.  [509 E] The  Union  of India v. Madan Gopal Kamra, [1954]  3  S.C.R. 541, M.P. Sundararamer & Co. v. The State of Andhra  Pradesh and’ anr; 503 [1958]  S.C.R. 1422, J. K. Jute Mills Co. Ltd. v. The  State of  Uttar  Pradesh  and  anr.  12,  S.T.C.  429,  Chhotabhai Jethabhai  Patel  and Co. v. The Union of  India  and  anr.; [1962]  Supp. 2 S.C.R., p. 1 and Sri Ramkrishna: &  Ors.  v. The State of Bihar, [1964] 1 S.C.R. 897, applied. (ii)  It is open to the legislature to define the nature  of the  goods, the sale or purchase of which should be  brought to  tax..  Legislature was not incompetent to  separate  the processed  or split pulses from the unsplit  or  unprocessed pulses and treat the two as separate and independent  goods. There  was no basis for the contention that the  legislature cannot  for  the purpose of tax under the Act  separate  the split or processed from the unsplit or unprocessed. [510A-D] Jagannath  and Ors. v. Union of India, [1962] 2 S.C.R.  118, referred to. (iii)     There was no justification for the contention that the  legislature  had  usurped any  judicial  power.   The legislature   had  not  purported  either  directly  or   by implication  to overrule the decision of the Allahabad  High Court  in Tilok Chand Prasan Kumar’s case On the other  hand it had accepted that decision as correct; but had sought  to remove  the  basis  of  that  decision  by   retrospectively changing  the  law.  Encroachment on the judicial  power  is outside   the   competence  of  the  legislature   but   the nullification  of  the  effect of  a  judicial  decision  by changing the law retrospectively, is within its  permissible limits.   From  the  statement of objects  and  reasons,  it appears  that in the principal Act, the  legislative  intent was  not clearly brought out.  By means of the Amending  Act the legislature wanted to make clear its intent. [510 D] (iv) In  a  democratic set up it is for the  legislature  to decide  what economic or social policy it should  pursue  or what administrative considerations it should bear in  mind., The classification between the processed or split pulses and unprocessed    or   unsplit   pulses   is    a    reasonable

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classification.  It is based on the use to which those goods can  be  put.  Hence, the impugned  classification  was  not violative of Art. 14 of the Constitution. [511 F] Khandige  Sham  and  ors. v.  The  Agricultural  Income  Tax Officer, [1963] 3 S.C.R. 809 referred to. (v)  The levy was not violative of Art. 19 (1) (f) and  (g). amendment  of  the  Act  was  necessitated  because  of  the legislature’s failure bring out clearly in the principal Act its intenion to separate the processed or split pulses  from the   unsplit   or   unprocessed   pulses.    Further    the retrospective  amendment became necessary as  otherwise  the State  would  have  to  refund large  sums  of  money.   The contention  that the retrospective levy did Dot  afford  any opportunity to the dealers to pass on the tax payable to the consumers, has not much validity.  The tax is levied on  the dealers,  the fact that he is allowed to pass on the tax  to the  consumers or he is generally in a position to  pass  on the  same to the consumer has no relevance when  legislative competence is under consideration. [511 G] (vi) Ordinarily  a proviso to a section is intended to  take out a part of the main section for special treatment.  It is not  expected to enlarge the main section.  But  cases  have arisen  in which this Court has held that despite  the  fact that a provision is called proviso, ’it is really a separate provision  and  the  so  called  proviso  has  substantially altered  the  main  section.  If on a  true  reading  of  an Explanation it appears that it has widened the scope of  the main section, effect must be given to the legislative intent not  withstanding the fact that the legislature  named  that provision as an Explanation. [512 C] 504 Commissioner of  Income.,tax,  Bombay  City.   Bombay   v. Bininchandra  Maganlal & Co. Ltd.  Bombay. [1961]  2  S.C.R. 493,  State of Rajasthan v. Leela Jain, [1965]1  S.C.R.  276 and  Bihta Cooperative Development Cane Marketing  UnionLtd. and  anr.  v. Bank of Bihar and ors., [1967]  1  S.C.R.  848 referred to. The  contention thatExplanation 11 to s. 3 D did not  widen the scope of s. 3-D could notbe accepted. Section 3-D as  it originally stood dealt with foodgrainsand pulses. It did not treat the unprocessed or unsplit foodgrains and pulses as  a separate  item.  The newly added Explanation brings  to  tax with retrospective effect the split or processed  foodgrains as well. [513E] (vii) It cannot be said that because the notification  under s.  3D  continues to refer to foodgrains only,  it  was  not possible  to  tax processed or split  foodgrains  under  it. Section  3 D  refers  to  foodgrains,  but  be..cause   of Explanaticon II, the expression "foodgrains" has to be  read as  containing  two  different  items  processed  or   split foodgrains   and   upprocessed   or   unsplit    foodgrains. Consequtntly  while reading the expression  "foodgrains"  in the  notification  also the same approach must  be  adopted. This  conclusion  is also obvious from s. 7  which  says  in plain  words  that the notification must be deemed  to  have been issued under s. 3-D as amended.  While a taxing statute must  be strictly construed, but that ,does not mean that  a provision in a taxing statute should not be read reasonably. [514 H] (viii)    Section  3  -D does not suffer from  the  vice  of delegation of legislative power to the executive. In  the Act under s. 3 the legislature has sought to  impose multi-point  tax on all ’sales and purchase.   After  having done  that  it  has given power to  the  executive,  a  high authority  and  which is presumed to  command  the  majority

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support in the legislative, to select for special  treatment dealings  in certain class of goods.  In the very nature  of things,  it is impossible for the legislature  to  enumerate goods, dealings in which sales tax or purchase tax should be imposed. it is also impossible for the legislature to select the goods which should be subjected to a single point  sales or  purchase  tax.  Before making  such  selections  several aspects  such  as  the impact of the levy  on  the  society, economic  consequences  and the  administrative  convenience will have to he considered.  These factors may change  from time  to  time.  Hence in the very nature of  things,  these details have got to be left to the executive. [515 B] Pt.   Banarsi  Das Bhanot and ors. v. The  State  of  Madhya Pradesh and others, [1959] S.C.R. 427, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 821 and 822 of 1971. Appeals  by certificates from the judgment and orders  dated July 14, and August 22, 1970 of the Allahabad High Court  in Civil Misc.  Writ Petitions Nos. 957 and 3784 of 1970. Civil Appeals Nos. 1625 and 2008 of 1971. Appeals by certificates from the judgments and orders  dated July  14, 1970 of the Allahabad High Court at  Allahabad  in Civil Misc.  Writ Nos. 953 and 928 of 1970. 505 Som  Nath Iyer, R. G. Sharma and Subodh Markendeya, for  the appellant (in C. As.  Nos. 821-822/71). S.   T.  Desai,  R.  K. Upadhya, P.  C.  Bhartari,  Ravinder Narain, for the appellant, (in C. A. No. 1625/71). M.   C. Chagla, Anil B. Divanji, P. C. Bhartari and Ravinder Narain    for the appellants, (in C.A. No. 2008/71). O.   P.  Rana and Ravindra Bana, for the respondents (in  C. As. Nos.  821-822/71). N.   D.  Karkhanis,  O. P. Rana and Ravindra Bana,  for  the respondents (in C. A. No. 1625/71). S.   C.  Manchanda,  O. P. Rana and Ravindra Bana,  for  the respondents. (in C. A. No. 2008/71). The Judgment of the, Court was delivered by Hegde,  J.  These  are appeals by  certificate.  They  raise common questions of law for decision, and they are  directed against a common judgment of the Allahabad High Court. The  facts  of the case lie within a  narrow  compass.   The appellants  are dealers in foodgrains including cereals  and pulses  especially  split or processed foodgrains  and  dal. The dispute in this case centers round the question  whether the  Government  is  competent  to  levy  sales-tax  on  the purchases   made  by  the  appellants  of  split   processed foodgrains  and  dal  under the  provisions  of  the  United Provinces  Sales  Tax  Act, 1948 as  amended  by  the  Uttar Pradesh  Sales Tax Act (Amendment and Validation) Act,  1970 (which will hereinafter be referred to as the Act). Under  the Sales Tax Act as it originally stood  which  will -hereinafter  be  referred  to as the  principal  Act),  the purchases  of  split  or processed  foodgrains  and  dal  by dealers  were sought, to be brought to tax under s.  3-D  of the  principal Act read with the notification  issued.   The validity  of the levy was challenged by Tilock Chand  Prasan Kumar,  the appellant in Civil Appeal NO’. 1625 of  1971  in respect  of  the assessment made on him for  the  assessment year  1966-67  by assessment order dated June  30,  1968  by means of a writ petition under Art. 226 of the Constitution. The  High  Court of Allahabad struck down the  levy  holding

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that the dal purchased by the petitioner before it could not be  said  to be a commodity essentially different  from  the arhar  dal  purchased by the dal mills and  accordingly  the purchases effected by the petitioner could not be  regarded as  the first purchases.  This decision is reported  in  25, S.T.C.  p. 118.  Thereafter the Governor of U.P.  issued  an ordinance  known as Uttar Pradesh Sales Tax  (Amendment  and Validation) Ordinance, 1970 (U.P. Ordinance 506 No. 2 of 1970) adding inter alia Explanation 11 to s. 3-D as well as s. 7 to the principal Act.  This ordinance was later on  enacted  as  an  Act  to  which  we  have  already  made reference.  The provisions of the Amending Act are identical with the provisions in the Ordinance.  Though at the time of the  institution  of  the writ petitions  from  which  these appeals arise, the Ordinance had not yet been made into  the Act, the Amending Act came into force during the pendency of the writ petitions.  Hence we shall refer to the  provisions of the Amending Act.               Under the principal Act a dealer is defined in               s.  2(c)  as " "dealer" means  any  person  or               association   of  persons  carrying   on   the               business  of buying or selling goods in  Uttar               Pradesh, whether for commission,  remuneration               or  otherwise, and includes any firm or  Hindu               Joint   Family  and  any  society,   club   or               association  which sells goods to its  members               and also includes any department of the  State               Government  or  the Central  Government  which               carries  on such business and any  undertaking               engaged  in the generation or distribution  of               electrical energy or any other form of power."               (Explanation  to the section is  not  relevant               for our present purpose).               Section 3 of the Act provides for the levy  of               multi-point tax.  The portion of that  section               which  is  material for  our  present  purpose               reads :               "Subject to the provisions of this Act,  every               dealer shall, for each assessment year, pay a               lax at the rate of two naye paise per rupee on               his  turnover  of such year,  which  shall  be               determined   in   such  manner   as   may   be               prescribed......"               Section  3-A  provides  for  a  single   point               taxation in respect of sale of certain  goods.               At  present we are only concerned with  s.  3-               D(1).  It provides :               "Except as provided in sub-section (2),  there               shall be levied and paid, for each  assessment               year  or part thereof, a tax on the  turnover,               to  be  determined in such manner  as  may  be               prescribed,  of  first  purchases  made  by  a               dealer  or  through  a  dealer,  acting  as  a               purchasing  agent in respect of such goods  or               class  of  goods,  and  at  such  rates,   not               exceeding  two paise per rupee in the case  of               foodgrains, including cereals and pulses,  and               five  paise  per rupee in the  case  of  other               goods and with effect from such date, as  may,               from  time to time, be notified by the,  State               Government in this behalf."               (Explanation 1 to this section is not relevant               for our purpose).  507

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The notification issued under s. 3-D of the principal Act on October  1,  1964 (Notification No. S. T.  7122/X)  provided that  with  effect  from October 1, 1964,  the  turnover  of purchases  in  respect of goods mentioned therein  shall  be liable to tax under s. 3-D at the rate mentioned: "Foodgrains    1.5 paise per rupee on first purchase On  the  basis  of s. 3-D read  with  the  notification,  as mentioned  earlier, the authorities under the Act sought  to bring to tax under the principal Act the first purchases  of processed  or split foodgrains including dal on  the  ground that  they constituted a separate item of  foodgrains  quite independent  of the unprocessed or unsplit foodgains.   This view, as seen above, was negatived by the High Court.  After the  decision  of  the High Court,  the  principal  Act  was amended.   Under  the.  Amending Act  one  more  Explanation viz., Explanation 11 was added to s. 3-D.               "For  the purposes of this sub-section,  split               or  processed foodgrains, such as in the  form               of  dal shall be deemed to be  different  from               unsplit   or   unprocessed   foodgrains,   and               accordingly, nothing in this sub-section shall               be  construed to prevent the imposition,  levy               or  collection  of the tax in respect  of  the               first   purchases   of  split   or   processed               foodgrains  merely because. tax had  been  im-               posed  levied or collected earlier in  respect               of the first purchases of those foodgrains  in               their unsplit or unprocessed form."               The  Amending  Act  also  added  a  validating               provision to the principal Act viz. s. 7. That               section reads :               "Notwithstanding any judgment, decree or order               of  any  court or tribunal  to  the  contrary,               every  notification  issued or  purporting  to               have been issued under Section 3-A or  Section               3-D  of  the  principal Act  before  the  com-               mencement of this Act shall be deemed to  have               been  issued under that section as amended  by               this  Act and shall be so interpreted  and  be               deemed to be and always to have been as  valid               as if the provisions of this Act were in force               at   all  material  times;   and   accordingly               anything  done or any action taken  (including               any order made, proceeding taken, jurisdiction               exercised,  assessment  made, or  tax  levied,               collected or paid purporting to have been done               or   taken   in   pursuance   of   any    such               notification)  shall  be  deemed  to  be,  and               always to have been, validly and lawfully done               or taken."               It will be necessary later on to consider what               was the vice that the legislature intended  to               cure by the Amending Act.  The               --L498Sup Cl/73                508               sequence   of  events  itself  discloses   the               purpose  of  the  Ordinance  as  well  as  the               Amending  Act.  That apart, the  statement  of               objects  and  reasons which  can  be  usefully               looked  into  for the purpose of  finding  the               vice  that  the  legislature  was  trying   to               provide against reads thus               "Sections  3-A and 3-D of the U.P.  Sales  Tax               Act,  1948 provide for single point  taxation.               Under the fondler section the tax is levied on

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             the turnover of sales, while under the  latter               the  tax  is levied on the turnover  of  first               purchases.  Plain and ornamented glass bangles               are subject to tax separately under section 3-               A.   Similarly, unsplit and split  pulses  are               separately  subject to tax under section  3-D.               It has been held by the High Court in one case               that tax cannot be levied separately on  plain               and ornamented glass bangles under section 3-A               and  in  another  that tax  cannot  be  levied               separately  on unsplit and split pulses  under               section  3-D  because in their  opinion  plain               glass  bangles are not a  commodity  different               from  ornamented glass bangles  and  similarly               unsplit  pulses and split pulses are also  not               two  different commodities.   These  judgments               have   created  legal  difficulties   in   the               assessment  and  collection  of  tax  on   the               aforesaid  commodities.  Besides, the  dealers               have  started applying for the refund  of  tax               already collected on these commodities.   Ibis               will have serious repercussions on the State’s               revenue.  Accordingly, it is proposed to amend               sections  3-A and 3-D to provide for the  levy               of   tax  on  the  aforesaid  commodities   as               separate  items.   It  is  also  proposed   to               validate   the  past  levy,   assessment   and               collection of tax on the above commodities."               (The  remaining  part  of  the  statement   of               objects  and reasons is not relevant  for  our               present purpose).               The  appellants  challenged  the  validity  of               Explanation  11  of  S. 3-D as well  as  s.  7               introduced by the Amending Act before the High               Court of Allahabad in petitions under Art. 226               of  the Constitution.  They further  took  the               plea that the amendments incorporated were not               effective  enough  to bring to tax  the  first               purchases of split or processed foodgrains and               pulses.    The  High  Court   rejected   these               contentions and dismissed the writ  petitions.               Thereafter  these  appeals have  been  brought               after  obtaining  certificates from  the  High               Court.               The  validity  of  the levy  in  question  was               challenged on the following grounds’:               (1)   That  no fresh levy can be imposed by  a               retrospective legislation;                509               (2)   That  the legislature cannot in case  of               legislation  of the nature with which  we  are               concerned,    separate    into     independent               commodities   split  and  unsplit  pulses   or               processed  or unprocessed pulses and  on  that               footing  seek to impose tax twice over on  the               same commodity in respect of the goods  liable               to be taxed at a single point;               (3)   That  the newly added Explanation to  s.               3-D read with s. 7 of the Amending Act amounts               to an unlawful usurpation of judicial power by               the legislature;               (4)   The newly added Explanation II to s. 3-D               is violative of Art. 14 of the  Constitution..               There  is  no rational  basis  for  separating               split  or  processed pulses  from  unsplit  or

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             unprocessed pulses;               (5)   On a true construction of Explanation It               to s. 3-D no fresh charge can be held to  have               been imposed,               (6)   No  levy  of purchase tax  can  be  made               without a fresh Notification under s. 3-D read               with Explanation 11 showing therein separately               foodgrains  unsplit or unprocessed as well  as               foodgrains split or processed; and               (7)   That   the   power  conferred   on   the               Government   under  s.  3-D  amounts   to   an               excessive delegation of legislative power. and               consequently void. The  source  of  the  legislative power  to  levy  sales  or purchase  tax  on goods is Entry 54 of the List  II  of  the Constitution.    It   is  well  settled  that   subject   to constitutional restrictions a power to legislate includes  a power to legislate prospectively as well as retrospectively. In this regard legislative power to impose tax also includes within  itself  the power to  tax  retrospectively--see  The Union of India v. Madan Gopal Kabra;(1) M. P.  Sundararamier &  Co. v. The State of Andhra Pradesh and Anr. (2) ;  J.  K. Jute Mills Co. Ltd. v. The State of Uttar Pradesh and  Anr.; (3) Chhotabhai Jethabhai Patel and Co. v. The Union of India and Anr. (4 Sri Ramkrishna & Ors. v. The State of Bihar. (5) In the last mentioned case it was specifically decided  that where  the legislature can make a valid law, it can  provide not  only  for  the prospective operation  of  the  material provisions  of the said law but it can also provide for  the retrospective operation of the said provisions. We see no force in the second contention advanced on  behalf of  the  appellants.  As seen earlier the  general  rule  as enunciated in s. 3 is multi point tax sales tax or  purchase tax; but power (1) [1954] S. C. R. 541. (2)  [1958] S. C. R. 1422. (3)  12. S.T.C. 429. (4)  [1962] Supp, (2) S.C.R. p. 1. (5) [1964] 1 S.C.R. 897. 510 is conferred on the Government to select any transaction  in respect  of such goods or class of goods as  the  Government may choose to levy a single point sales tax or purchase tax. It  is open to the legislature to define the nature  of  the goods,  the sale or purchase of which should be  brought  to tax.   Legislature  was  not  incompetent  to  separate  the processed  or split pulses from the unsplit  or  unprocessed pulses and treat the two as separate and independent goods. In  Jagannath and Ors. v. Union of India,(1) question  arose for  decision  whether  it was open to  the  legislature  to impose  separate excise duty on tobacco leaf as well  as  on broken leaf of tobacco.  This Court overruled the contention that  such a levy was invalid. It head that it was open  for the legislature to separate the two items.  We see no  basis for  the  contention  that the legislature  cannot  for  the purpose of tax under the Act separate the split or processed Pulses  from the unsplit or unprocessed.  The power  of  the legislature  to specify the nature of the goods the sale  or purchase of which, it will bring to tax is very wide. Now coming to point No. 3, there is no justification for the contention  that  the legislature has usurped  any  judicial power.  The legislature has not purported either directly or by  necessary implication to overrule the decisions  of  the Allahabad  High.  Court in Tilok Chand Prasan  Kumar’s  case (supra).   On the other hand it. has accepted that  decision

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as  correct;  but  has sought to remove the  basis  of  that decision  by retrospectively changing the law.   This  Court has pointed out in several cases the distinction between the encroachment on the judicial power and the nullification  of the  effect  of  a judicial decision  by  changing  the  law retrospectively.   The former is outside the  competence  of the  legislature but, the latter is within  its  permissible limits.   From  the  statement of objects  and  reasons,  it appears  that in the principal Act, the  legislative  intent was  not clearly brought out.  By means of the Amending  Act the legislature wanted to make clear its intent. The fourth contention also appears to be without any  basis. It  is  true that the taxing statutes are  not  outside  the scope  of Art. 14 of the Constitution.  But the  legislature has  wide  powers of classification in the  case  of  taxing statutes. In Jagannath’s case (supra), this Court ruled that there was no unconstitutional discrimination in the imposition of  the excise duty on tobacco in the broken leaf form.  Therein  it was  observed  that  tobacco in the, broken  leaf  form  was capable  of  being used in the manufacture  of  bidis  while tobacco  in  the  whole  leaf form  could  not  be  so  used economically; the two forms of tobacco were different by the test  of capability of user; the tariff is not based  either wholly or even primarily by reference to the (1)  [1962] 2 S.C.R. 118. 511 use  of  tobacco  and  there was  a  clear  and  unambiguous distinction between tobacco  the whole leaf form covered  by item 5 and tobacco in the broken leaf form covered by item 6 which  had a reasonable relation to the object  intended  by the imposition of the tariff. In  Khandige Sham Bhat and Ors. v. The  Agricultural  Income Tax  Officer,(1) this Court laid down the tests to find  out whether  there  are discriminatory provisions  in  a  taxing statute.  Therein this Court observed that in order to judge whether  a law was discriminatory what had primarily  to  be looked into was not its phraseology but its real effect.  If there was equality and uniformity within each group, the law could  :pot  be  discriminatory, though  due  to  fortuitous circumstances  in  a peculiar situation some included  in  a class might get some advantage over others, so long as  they were  not  sought  out  for  special  treatment.    Although taxation laws could be no exception to this rule, the courts would,  in  view  of  the  inherent  complexity  of   fiscal adjustment  of diverse elements, permit a larger  discretion to  the legislature in the matter of classification so  long as there was no transgression of the fundamental  principles underlying the doctrine of classification.  The power of the legislature  to  classify  must  necessarily  be  wide   and flexible so as to enable it to adjust its system of taxation in all proper and reasonable ways. It  must  be  noticed that generally  speaking  the  primary purpose of the levy of all taxes is to raise funds for  pub- lie  good.  Which person should be taxed,  what  transaction should be taxed or what goods should be taxed, depends  upon social,  economic and administrative considerations.   In  a democratic  set up it is for the legislature to decide  what economic   or  social  policy  it  should  pursue  or   what administrative  consideration it should bear in  mind.   The classification between the processed or split pulses and un- processed or unsplit pulses is a reasonable  classification. It  is  based on the use to which those goods can,  be  put. Hence,  in our opinion, the impugned classification  is  not violative of.  Art. 14.

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A  feeble attempt was made to’ show that  the  retrospective levy made under the Act is violative of Art. 19 (1) (f)  and (g)  But  we see no substance in that contention.   As  seen earlier,  the amendment of the Act was necessitated  because of  the  legislatures failure to bring out  clearly  in  the principal  Act  its intention to separate the  processed  or split  pulses  from  the,  unsplit  or  unprocessed  pulses. Further  the  retrospective amendment  became  necessary  as otherwise the State would have to refund large sum of money. The  contention that the retrospective levy did  not  afford any opportunity to the dealers to pass on the tax payable to the consumers, has not much validity.  The tax is levied  on the dealer; (1)  [1963] 3 S.C.R. 809. 512 the  fact  that  he is allowed to pass on  the  tax  to  the consumers or he is generally in position to pass on the same to  the  consumer   has no relevance when  we  consider  the legislative competence. It was next urged that on a true contribution of Explanation II to s. 3-D, no charge can be said to have been created  on the purchases of split or processed pulses.  It was  firstly contended that an Explanation cannot extend the scope of the main  section;  it  can  only  explain  that  section.    In construing a statutory provision, the first and the foremost rule of construction is the literary construction.  All that we  have  to  see  at the very  outset  is  what  does  that provision say ? If the provision is unambiguous and if  from that provision, the legislative intent is clear, we need not call  into aid the other rules of construction of  statutes. The other rules of construction of statutes are called  into aid  only  when  the legislative  intention  is  not  clear. Ordinarily a proviso to a section is intended to take out  a part  of the main section for special treatment.  It is  not expected  to  enlarge the scope of the main  section-.   But cases have arisen in which this Court has held that  despite the fact that a provision is called proviso, it is really  a separate   provision   and   the   socalled   proviso    has substantially altered’ the main section. In Commissioner  of Income-tax, Bombay, City. Bombay v. Bipinchandra Maganlal  & Co. Ltd., Bombay,(1) this Court held that by the fiction  in S.  10(2)(vii)  second proviso read with S. 2  (6C)  of  the Indian  Income-tax Act, 1922 what is really not  income  is, for  the purpose of computation of assessable income,  made, taxable income.               In State of Rajasthan v. Leela Jain   2   this               Court observed               "The primary purpose of the proviso now  under               consideration is, it is apparent, to provide a               substitute  or an alternative remedy  to  that               which  is  prohibited by the main part  of  S.               4(1).  There is, therefore, no question of the               proviso  carving  out any portion out  of  the               area covered by the main part and leaving  the               other  part unaffected.  What we  have  stated               earlier  should suffice to establish that  the               proviso- now before us is really not a proviso               in  the  accepted  sense  but  an  independent               legislative  provision  by which to  a  remedy               which  is prohibited by the main part  of  the               section,  an alternative is provided..  It  is               further obvious to us that the proviso is  not               coextensive with but covers a field wider than               the main part of S. 4 (1 ) ".               In   Bihta   Co-operative   Development   Cane

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             Marketing Union Ltd. and Anr. v. Bank of Bihar               and  Ors.  (3) this Court was called  upon  to               consider the Explanation to s. 48 (1 ) of  the               Bihar and’               (1)   [1961]  2  S.C.R.493.                (2) [1965] 1 S.C..R., 276               (3)   [1967] 1 S.C.R. 848.               513               Orissa   Co-operative  Societies   Act   1935.               Therein this Court observed:               "The  question then arises whether  the  first               Explanation to the section widens the scope of               sub-s. (1) of s. 48 so as to include claims by               registered societies against non-members  even               if the same are not covered by clause (c)." On  the basis of the language of the Explanation this  Court held  that  it did not widen the scope of clause  (c).   But from what has been said in the case, it is clear that if  on a  true  reading of an Explanation it appears  that  it  has widened the scope of the main section, effect must be  given to the legislative intent notwithstanding the fact that  the legislature named that provision as an Explanation.  In  all these matters the courts have to find out the true intention of the legislature. We  are unable to accept the contention that Explanation  II to s. 3-D did not widen. the scope of s. 3-D.  Section 3-D s it  originally stood dealt with foodgrains and  pulses.   It did  not  treat the unprocessed or  unsplit  foodgrains  and pulses as a separate item but because of Explanation 11,  we have  now to read the expression "foodgrains" in s.  3-D  as containing   two   separate  items   viz.   (1)   foodgrains unprocessed  or  unsplit  and (2)  foodgrains  processed  or split.   It is true that Explanation 11 is not very  happily worded  but  the intention of the legislature is  clear  and unambiguous.  The newly added Explanation brings to tax with retrospective  effect the split or processed  foodgrains  as well. We next come to the contention that no levy of purchase  tax can  be made on split or unprocessed pulses without a  fresh notification  under S. 3-D read with Explanation 11  showing therein separately foodgrains unsplit or unprocessed as well as foodgrains split or processed.  As seen earlier that  the notification  issued  merely  refers  to  foodgrains.   That notification does not classify foodgrains into two  separate categories-processed  or split and unprocessed  or  unsplit. Therefore  we  were  told  that no  tax  can  be  levied  on processed   or  split  foodgrains  on  the  basis  of   that notification.    This  contention  cannot  be  accepted   as correct.   The notification in question was issued under  S. 3-D,  Section  3-D  refers to  foodgrains;  but  because  of Explanation  11  to that section, we have now  to  read  the expression  "foodgrains" as containing two different  items, processed  or  split foodgrains and unprocessed  or  unsplit foodgrains.   Consequently  while  reading  the   expression "foodgrains"  in  the notification also, we must  adopt  the same  approach.  This conclusion is also obvious from S.  7. If  the  legislature had not retrospectively  validated  the assessments  made  on  the  first  purchases  of  split   or processed  foodgrain. what did s. 7 seek to achieve  ?  That section says in plain words that not- 514 withstanding  any judgment, decree or order of any court  or tribunal  to  the  contrary, every  notification  issued  or purporting to have been issued under s. 3-D of the principal Act.  before the commencement of the Amending Act  shall  be

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deemed to have been issued under that section as amended  by the  Amending Act and shall be so interpreted and be  deemed to be and always to. have been as valid as if the provisions of the amending Act were in force at all material times  and accordingly,  anything done or any action  taken  (including any  order made, proceedings taken, jurisdiction  exercised, assessment   made,  or  tax  levied,  collected   or   paid, purporting  to have, been done or taken in pursuance of  any such notification) shall be deemed to be, and always to have been validly and lawfully done or taken. We  asked the learned Counsel appearing for the  appellant’s to  let  us  know the field in which S. 7  can  be  said  to operate.   Their  answer  was that  though  the  legislature intended  to  validate  the assessments made  on  the  first purchases  of  the  split or processed  dal,  it  failed  to achieve  that  object because of the  defective  phraseology employed  in  Explanation  11  to s. 3-D and  S.  7  of  the Amending Act.  In other words their submission was that S. 7 has  become otios.  It was urged on behalf of the appellants that a taxing provision  will    have   to    be    strictly interpreted  and  in  finding  out  the  intention  of   the legislature in the matter of imposing tax, we cannot  travel beyond the words of the section. There is no doubt that a taxing provision has to be strictly interpreted.  If any legislature intends to impose any  tax, that  intention must be made clear by the language  employed in the statute; but that does not mean that the provision in a  taxing  statute  should  not  be  read  reasonably.   The contention that we should ignore S. 7 of the Amending Act is a  contention  difficult  of  acceptance.   Dealing  with  a similar  contention  Venkatarama Ayyar J. speaking  for  the Court in J. K. Jute Mills’ case (supra) observed at p. 435               "The  object of the legislation as  stated  in               the long title and in the preamble to the  Act               was  to validate the impugned notification  in               relation  to the amended section.  Schedule  B               to  the Act expressly mentions that  notifica-               tion.   And  if we are now to accede  to  the,               contention  of’ the petitioner, we  must  hold               that though the legislature set about avowedly               to  validate the notification dated March  31,               1956,  it  failed to achieve that  object.   A               construction which will lead to such a  result               must, if that is possible, be avoided." We  have  earlier  come  to  the  conclusion  that   because Explanation  II  to  S.  3-D  the,  expression   "foodgrains including pulses" in s.  3-D should be read as including two different items i.e., (1) 515 unsplit  or unprocessed foodgrains including pulses and  (2) split    or   processed   foodgrains    including    pulses. Consequently the expression "foodgrains" in the notification will also have to be read in the same manner.  This, in  our opinion, is the reasonable way of reading the notification in  the light of s. 3-D, Explanation 11 to that section  and s. 7 of the Act. The only remaining contention is that the delegation made to the  executive under s. 3-D is an excessive delegation.   It is true that the legislature cannot delegate its legislative functions  to  any  other  body-.   But  subject  to,   that qualification,  it  is permissible for  the  legislature  to delegate the power to select the persons on whom the tax  is to  be levied or the goods or the transactions on which  the tax  is  to  be  lievied.   In  the  Act,  under  s.  3  the legislature  has  sought to impose multi-point  tax  on  all

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sales  and purchases.  After having done that it  has  given power  to  the  executive, a high  authority  and  which  is presumed to command the majority support in the legislature, to select for special treatment dealings in certain class of goods.   In the very nature of things, it is impossible  for the legislature to enumerate goods, dealings in which  sales tax  or  purchase,  tax  should  be  imposed.   It  is  also impossible  for  the legislature to select the  goods  which should be subjected to a single point sales or purchase tax. Before  making such selections several aspects such  as  the impact of the levy on the society, economic consequences and the  administrative convenience will have to be  considered. These  factors may change from time to time.  Hence  in  the very nature of things, these details have got to be left  to the executive. In  Pt.  Banarsi Das Bhanot and Ors. v. The State of  Madhya Pradesh  and  Ors.  (1) the question arose  whether  it  was permissible for the legislature to empower the executive  to amend  the Schedule relating to exemptions.  This  Court  by majority  answered  that question in  the  affirmative.   It further  held  that  it  is  not  unconstitutional  for  the legislature  to leave it to the executive to  determine  the details  relating to the working of the taxation laws,  such as  the  selection of the persons on whom the tax is  to  be levied, the rates at which it is to be charged in respect of different classes of goods and the like. We  have not found any substance in any of  the  contentions advanced  on behalf of the appellants.  Hence these  appeals fail and they are dismissed with costs--hearing fee one set. G.C. Appeals dismissed. (1) [1959] S.CR. 427. 516