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PETITIONER: M/S. CHHOTABHAI JETHABHAI PATEL & CO.

       Vs.

RESPONDENT: STATE OF UTTAR PRADESH

DATE OF JUDGMENT: 10/04/1962

BENCH: KAPUR, J.L. BENCH: KAPUR, J.L. DAS, S.K. SARKAR, A.K. SUBBARAO, K. HIDAYATULLAH, M. AYYANGAR, N. RAJAGOPALA MUDHOLKAR, J.R.

CITATION:  1962 AIR 1614            1963 SCR  (1) 991  CITATOR INFO :  F          1962 SC1621  (8)

ACT: Sales-tax--Notification by State Government exempting  hand- made  biris--Validity of order of assessment--Uttar  Pradesh Sales Tax Act, 1948 (U. P. XV of 1948) s. 4(1)(b).

HEADNOTE: The  appellant firm was a registered dealer in  biris  under the  Uttar  Pradesh  Sales Tax Act,  1943.   The  Sales  Tax Officer  assessed  it  to sales tax  provisionally  for  the quarter from April 1, 1958, to June 30, 1958.  The appellant moved the High Court under Art. 226 of the Constitution  but the  petition was dismissed.  It appealed to this  Court  by special  leave  and filed a petition under Art.  32  of  the Constitution.  Its case was that by the notification  issued under s. 4(1)(b) of the Act on December 14, 1957,  hand-made biris  were  exempted  from  sales  tax  and  the  order  of assessment  made  by the Sales Tax Officer was  based  on  a misconstruction  of  the same.   The  notification  provided "that  no tax shall be payable under the aforesaid Act  with effect from December 14, 1957, by dealers in respect of  the following  classes  of goods provided  that  the  Additional Central  Excise Duties leviable thereon from the closing  of business on December 13, 1957, have been paid on such goods" and the classes of goods included "cigars, cigarettes, biris tobacco in any form x x x x". Held, (Subha Rao, J., dissenting) that for the reasons given in the majority judgment of this Court in Ujjam Bai v. State of U. P., the writ petition must fail. Ujjam Bai v. State of U. P., W. P. No. 79 of 1959, applied. The  exemption under the notification,  properly  construed, was   conditional  and  applied  only  to  goods  on   which additional  Central  Excise Duty was leviable and  had  been paid.   Since no such duty was leviable on  hand-made  biris and none was paid, the condition precedent to exemption  was not  satisfied.   The Sales Tax Officer had  therefore  cor-

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rectly  interpreted  the  notification  and  his  order  was correct.

JUDGMENT: ORIGINAL JURISDICTION : Petition No. 195 of 1959. 992 Petition  Under  Art. 32 of the Constitution  of  India  for enforcement of Fundamental Rights.                             WITH Civil Appeal No. 99 of 1961. Appeal  by special leave, from the Judgment and order  dated May  14,  1959, of the Allahabad High Court in  Civil  Misc. Writ No. 1384 of  1959. G. C. Mathur, for the petitioners (in Petn.No.195/59). M.  C. Setalvad, Attorney-General of India and G. C.  Mathur for the appellants (in C. A. No.99/61). S.   N. Sanyal, Additional Solicitor General of India and C. P.  Lal,  for  the respondents (in both  the  petition,  and appeal). 1962, April 10.  The following Judgments were delivered KAPUR,  J. This judgment will dispose of two  matters  which arise  out of the same proceedings under the U.P. Sales  Tax Act  (1) a petition under Art. 32 and (2) an appeal  against the judgment and order of the High Court of Allahabad passed in proceedings taken under Art. 226 of the Constitution. One of the questions that arises in these two matters is the same  which  arose and has been decided in W. P. No.  79  of 1959 in which the judgment has been delivered today. The  facts giving rise to these two matters are  these:  The petitioner  firm is a partnership firm carrying on  business of  selling  biris and although its principal office  is  at Nadiad  (Bombay State) it has a branch office at Agra in  U. P. where biris manufactured by it are brought and sold.  The firm was registered as a dealer under s. 8 of the U.P. Sales 993 Tax Act (Act 15 of 1948) hereinafter called the ’Act’  under which a notification giving exemption in regard to sales tax on  certain  articles  was notified  by  a  notification  of December  14, 1957, which has been set out at another  place in  this  judgment.   On February 27, 1959,  the  Sales  Tax Officer,  Agra, passed a provisional order of assessment  of sales  tax  for the quarter from April 1, 1958 to  June  30, 195S.   The tax so assessed Was Bs. 62,500.  It  is  alleged that no notice was given to the petitioner firm.  The notice of demand was issued on the same date.  An appeal was  taken against this order of assessment to the Judge (Appeals)  and an application was made to the commissioner of Sales Tax for a  stay  of  the  realisation  of  the  tax  assessed.   The Commissioner on April 28, 1959, directed that if half of the amount assessed was deposited by the petitioner by April 30, 1959,  the payment of the remaining amount shall  be  stayed pending  the  final  assessment.  On  April  30,  1959,  the petitioner  firm  deposited half the tax assessed  i.e.  Rs. 31,250. On  April 28, 1959 the petitioner firm moved the High  Court Under Art. 226 of the Constitution for a writ of  certiorari quashing  the  assessment  order and the  second  notice  of demand  and  for  a writ of mandamus  directing  the  taxing authorities  to  forbear  from  recovering  the  tax.   This petition was dismissed by the High Court ’by an order dated May  14, 1959.  An application for a certificate under  Art. 133(1)(o)  of  the Constitution was dismissed  by  the  Hikh Court  on  October  23,  1959,  and  against  the  order  of

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dismissal of the petition under Art. 226, special leave  was granted  by  this Court on December 18,  1959.   A  petition under  Art.  32 of the Constitution was also  filed  by  the petitioner  firm on December 16, 1959, and rule  was  issued thereon  and that is how the appeal against the  High  Court order made in proceedings under Art.226 994 and the petition under Art. 32 of the Constitution have been brought to this Court. On September 29, 1959, the Sales Tax Officer issued  another notice  calling upon the petitioner firm to  submit  returns for  the period from December 13, 1957, to March  31,  1958. On  October  1959,  a further notice  was  issued  under  s. 15(i)(a) to show cause why a penalty should not be  imposed. This matter was not before the High Court as the petition in that Court was filed earlier but it has also been challenged in  the  petition under Art. 32 of  the  Constitution.   For reasons  given  in W.P. No. 79 of 1959 this  petition  under Art. 32 is dismissed. The  appeal which the petitioner firm had, filed before  the Judge  (Appeals) was dismissed and a revision taken  against that order was also dismissed but these orders have not been challenged in any proceedings so far. The  appellant firm’s contention in the appeal was that  the order  of the Sales Tax Officer limiting the excess  Central Excise  Duty  had  been  paid was  erroneous.   It  will  be opposite at this stage to trace the history of the exemption which  is  claimed by the appellant firm.   Because  of  the difficulty  experienced in regard to inter-State sales on  a large scale of certain articles the Central Government  with the concurrence of the State Governments imposed an enhanced Central  Excise Duty on the sales tax levied upon them,  and the  sum  so  collected by the imposition  of  the  enhanced Central Excise Duty on those articles was to be  distributed by the Central Government to the State Governments concerned and  they  (the State Governments) agreed  to  exempt  those articles  from sales tax.  As a result of this  arrangement. The   Additional   Duties  of  Excise  (Goods   of   Special Importance) Act (Act 58 995 of 1957) was passed by Parliament.  In this judgment it will be called ’Central Act 58 of 1957’.  By this Act  additional Central Excise. duty was levied on tobacco but no such  duty was levied on biris.  Even under the Central Excise and Salt Act  (Act 1 of 1944), hereinafter called ’Central Act  1  of 1944’, no Central Excise Duty was imposed on handmade  biris although  excise duty was levied on machine made  biris  but the  object.  of  imposing  that duty  was  to  protect  the handmade   biris  industry.   In  pursuance  of  the   above mentioned  arrangement for the exemption from sales  tax  of certain  articles the U. P. Government  issued  notification No.  ST-4485/X dated December 14, 1957, under s. 4(1)(b)  of the  Act  which  will be quoted at  another  place  in  this judgment.  Liability to sales tax arises under s. 3 (1)  of the Act which provides-.-               S.  3(1)  "Subject to the provisions  of  this               Act, every dealer shall, for ’each  assessment               year, pay a tax at the rate of (two naya paise               per rupee) on his turnover of such year, which               shall  be determined in such manner as may  be               prescribed". and  provision  for exemption for sales tax is  made  in  a. 4(1)(a) and (b) which provides               S. 4(1) "No tax shall be payable on-               (a) the sale of water, milk, salt,  newspapers

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             and motor spirit as defined in the U.P.  Sales               of Motor Spirit (Taxation) ’Act, 1939, and  of               any  other goods which the  State,  Government               may  be notification in the  official  gazette               exempt:               (b)  the  sale of any goods by  the  All-India               Spinners Association or Gandhi Ashram  Meerut,               and  their branches or such other persons,  or               class  of persons as the State Government  may               from time to time exempt on such 996               conditions and on payment of such fees, if any               not exceeding (eight thousand rupees  annually               as  may  be specified by notification  in  the               Official Gazette". The  U.P.  Government  on  December  14,  1957,  issued  the following notification under s. 4(1)(b) of the Act "No.   ST-4485/X dated Lucknow Dec. 14, 1957  (Published  in U.P. Gazette Extraordinary, dated December 14, 1957). In partial modification of notifications No. ST-905/X  dated March  31, 1956 and ST418 ’ /X 902(9)-52 dated  January  31, 1957  and exercise of the powers conferred by clause (b)  of subsection  (1) of see. 4 of the U.P. Sale’s Tax  Act,  1948 (U.P. Act No. XV of 1948) as amended upto date, Governor  of Uttar  Pradesh  is pleased  to order that no  tax  shall  be payable  under the aforesaid Act with effect  from  December 14, 1957 by the dealers in respect of the following  classes of goods provided that the Additional Central Excise  Duties leviable  thereon from the closing of business  on  December 13,  1957 have been paid on such goods and that the  dealers thereof  furnish proof to the satisfaction of the  assessing authority that such duties have been paid (1).................................. (2).................................. (3)  Cigars, cigarettes, biris and tobacco, that is  to  say any  form of tobacco, whether cured or uncured  and  whether manufactured or not and includes the leaf, stalks and  stems of  the  tobacco plant but does not include any  part  of  a tobacco plant while still attached to the earth". 997 This  is  the  notification,, which,  it  is  submitted,  by petitioner,  has  been misconstrued and misapplied  and  has resulted in the infringement of the petitioner’s right  Art. 19(1)(g) of the Constitution. It  was  contended  that under the Central Act  58  of  1957 additional Central Duty of Excise had been paid. on  tobacco as defined in the Central Act 1 of 1944.  In the 4th item in the 1st Schedule of Central Act 1 of 1944 tobacco is defined as follows :-               "Tobacco’  means any form of tobacco,  whether               cured  or uncured and whether manufactured  or               not,  and includes the leaf, stalks and  stems               of the tobacoo plant, but dues not include any               part  of a tobacco plant while still  attached               to the earth". The  notification expressly states that it is made under  s. 4(1)(b)   of  the  Act  and  therefore  the  exemption   was conditional and properly read it applies only to those goods on which additional Central Excise Duty was leviable and had been  paid.  No , such duty was leviable on hand-made  biris and  it  was  not  paid.  The  condition  of  the  exemption therefore cannot be said to have fulfilled and the sales  of the  petitioners did not fall within the  exemption  covered and given by the notification.  In our opinion therefore the Sales Tax Officer correctly interpreted the notification and

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it has not been shown that his determination was in any  way erroneous.  On this ground also the petition must fail. The appeal against the order of the High Court of  Allahabad is  therefore dismissed but the parties will bear their  own costs. SUBBA RAO, J.-It is common case that the appeal and the writ petition would be governed by our decision in the  connected writ petition viz., 998 Writ  Petition  No. 79 of 1959.  For the  reasons  mentioned therein,  the writ petition and the appeal are allowed  with costs. BY  COURT:-In accordance with the judgment of the  majority, Civil  Appeal  No. 99 of 1961 and Writ Petition No.  195  or 1959  are dismissed, but the parties are left to bear  their own costs.