Appeals Nos 62 and 1672 of 1969
Appeals from the judgments and orders dated May 17 1968 of the Allahabad High Court in Writ Petitions Nos 310 and 627 of 1968
J P Goyal and Sobhag Mal Jain for the appellants in both the appeals
L M Singhvi and O P Rana for the respondents in both the appeals
The Judgment of the Court was delivered by Hegde J
These are appeals by certificate
They raise a common question of law for decision
The only contention arising for decision in these appeals is as to the vires of section 3 D1 of the UP Sales Tax Act 1948 to be hereinafter referred to as the Act
The validity of that section has been assailed on two different grounds viz 1 that the power delegated to the executive under section 3 D1 is excessive and as such bad in law and 2 Section 3 D infringes article 14 of the Constitution in as much as it discriminates between the registered dealers who purchase through the agency of licensed dealers and the registered dealers who purchase through other dealers The appellants are dealers in Rab
In respect of their dealings in Rab they have been levied purchase tax as per the notification issued by the Government under section 3 D 1 of the Act
They are challenging the validity of the levy on the grounds mentioned above
The High Court has repelled both the above contentions
The High Court has come to the conclusion that the power con ferred on the State Government under section 3 D is a valid power
It opined that the conferment of power on the executive to fix the rate of tax within the limits laid down in the section is not impermissible
Further it held that the section is not hit by article 14 of the Constitution
143 Before proceeding to consider the correctness of the conten tions advanced on behalf of the appellant it is necessary to read section 3 D1
It says Except as provided in sub section 2 there shall 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 paisa per rupee in the case of foodgrains including cereals and pulses and five paisa 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
In the case of a purchase made by a registered dealer through the agency of a licensed dealer the registered dealer shall be deemed to be the first purchaser and in every other case of a first purchase made through the agency of a dealer the dealer who is the agent shall be deemed to be the first purchaser
 It is true that the power to fix the rate of a tax is a legislative power but if the legislature lays down the legislative policy and provides the necessary guidelines that power can be delegated to the executive
Though a tax is levied primarily for the purpose of gathering revenue in selecting the objects to be taxed and in determining the rate of tax various economic and social aspects such as the availability of the goods administrative convenience the extent of evasion the impact of tax levied on the various sections of the society etc
have to be considered
In a modem society taxation is an instrument of planning
It can be used to achieve the economic and social goals of the State
For that reason the power to tax must be a flexible power
It must be capable of being modulated to meet the exigencies of the situation
In a Cabinet form of Government the executive is expected to reflect the views of the legislatures
In fact in most matters it gives the lead to the legislature
However much one might deplore the New Despostism of the executive the very complexity of the modern society and the demand it makes on its Gov enment have set in motion forces which have made it absolutely necessary for the legislatures to entrust more and more powers to the executive
Text book doctrines evolved in the 19th Century have become out of date
Present position as regards delegation of legislative power may not be ideal but in the absence of any better alternative there is no Escape from it
The legisla 144 tures have neither the time nor the required detailed information nor even the mobility to deal in detail with the innumerable problems arising time and again
In certain matters they can only lay down the policy and guidelines in as clear a manner as possible
In State of Madras vs Gannon Dunkerley  Co Madras Ltd1 this Court observed  Now the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws such as the selection of persons on whom the tax is to be levied the rate at which it is to be charged in respect of different classes of goods and the like
It was not contended before us that the power delegated to the executive to select the goods on which the purchase tax is to be Ievied was an excessive delegation nor was it contended that the power granted to the executive to determine the rate of tax by itself amounts to an excessive delegation
All that was said was that in empowering the Government to levy tax on goods other than foodgrains at a rate not exceeding 5 paise in a rupee the legislature parted with one of its essential legislative functions as the power given to the executive is an unduly wide one
We are unable to accede to this contention
Whether a power delegated by the legislature to the executive has exceeded the permissible limits in a given case depends on its facts and circumstances
That question does not admit of any general rule
It depends upon the nature of the power delegated and the purposes intended to be achieved
Taking into consideration the legislative practice in this country and the rate of tax levied or leviable under the various sales tax laws in force in this country it cannot be said that the power delegated to the executive is excessive
In Devi Dass Gopal Krishnan and ors
vs The State of Punjab and ors2 this Court ruled that it is open to the legislature to delegate the power of fixing the rate of purchase tax or sales tax if the legislature prescribes a reasonable upper limit
We are unable to accept the contention of Mr Goyal Iearned Counsel for the appellant that the maximum rate fixed under section 3 D is unreasonably high
At any rate there is no material before us on the basis of which we can come to that conclusion
This takes us to the contention that section 3 D is ultra vires article 14 of the Constitution
The argument on this question proceeds thus  The explanation to section 3 D provides that in the case of 1  2 20 STC 430
145 purchase made by a registered dealer through the agency of a licensed dealer the registered dealer would be deemed to be the first purchaser whereas in every other case of a first purchase made through the agency of a dealer the dealer who is the agent would be deemed to be the first purchaser
This difference according to Mr Goyal is discriminatory in character
He urged that there was no justification for making an agent liable to pay sale tax merely because he is an unlicensed agent
According to him there is no rational distinction between the purchases made through licensed dealers and those made through unlicensed dealers
The power to levy tax includes within itself the power to provide against evasion of tax
A licensed dealer has to function according to the conditions of his licence
He is bound to maintain true and correct accounts of his day to day transactions Of sales and purchase of goods notified in sub section
1 of section 3 D in an intelligible form and in such manner if any as may be prescribed and further he must furnish to the assessing authority the details of the aforesaid transactions together with the name and parti culars of the purchaser and the number and date of the registration certificate filed by the purchaser under section 8A and such other information regarding the transactions as may subject to rule if any in this behalf be required
Hence whenever a purchase is made through a licensed agent the authorities have the opportunity to know what purchases have been made and from whom those purchases were made but that would not be the case when purchases are made through dealers who are not licensed
They are not required by law to maintain any accounts or submit any returns
Hence if registered dealers are permitted to make purchases through dealers who are not licensed and those dealers themselves are not liable to be taxed then opportunity for evasion becomes larger
The rule of discrimination does not rule out classification
The power of classification under a fiscal law is larger than in the case of other laws
Hence there was nothing wrong in the legislature making a classification between licensed dealers and dealers who are not licensed
Even when a dealer who is not licensed is liable to pay purchase tax the ultimate burden falls on his principal
For these reasons we do not see any basis for the contention that section 3 D is violative of article 14
For the reasons mentioned above these appeals fail and they are dismissed with costs one set
SN Appeals dismissed


Summary:
The appellants are dealers in Rab
The State Government under section 3D1 of the UP Sales Tax Act 1948 levied purchase tax in respect of their dealings in Rab
Section 3D1 of the Act inter alia provides that for each assessment year there shall be levied and paid a tax on the turnover of first purchases made by a dealer or through a dealer in respect of such goods at such rates not exceeding 2 paise per rupee in the case of foodgrains and 5 paise in respect of other goods and in the explanation it is provided that in the case of purchase made by a registered dealer through a licensed dealer the registered dealer shall be the first purchaser and in every other case of fresh purchase the dealer through whom the first purchase is made shall be deemed to be the first purchaser
The appellants challenged the vires of section 3d1 of the Act before the High Court but the High Court held against the appellants
In appeal this Court it was contended by the appellants that in empowering the Government to levy tax on goods other than foodgrains at a rate not exceeding 5 paise in a rupee the legislature had given an unduly wide power to the executive
Such a delegated power was therefore excessive and bad in law and secondly section 3D1 infringed article 14 of the Constitution because it discriminated between registered dealers who purchased through licensed dealers and the registered dealers who purchased through other dealers
Dismissing the appeals HELD i The power to fix the rate of tax is a legislative power but if the legislature lays down the legislative policy and provides the necessary guidelines that power can be delegated to the executive
 Though a tax is levied primarily for the purpose of gathering revenue in selecting the objects to be taxed and in determining the rate of tax various social and economic factors are to be considered and since the legislatures have very little time to go into details they have to delegate certain powers to the Executive
This Court has ruled that if a reasonable upper limit is prescribed the legislature can always delegate the power of fixing the rate of purchase tax or sales tax
143 E Devi Days Gopal Krishnan vs State of Punjab 20 STC 430 followed
In the present case taking into consideration the legislative practice in this country and the rate of tax levied or leviable under the various sales tax laws in force in this country it cannot be said that the power delegated to the
executive is excessive and in the absence of any material it cannot be said that the maximum rate fixed under section 3D1 is unreasonably high
144 E F ii Section 3D is not violative of article 14 of the Constitution
In the present case there is nothing wrong for the legislature to make a classification between licensed dealers and dealers who are not licensed
A licensed dealer has to maintain true and correct accounts and other particulars of 142 purchasers whereas dealers who are not registered are not required to maintain any accounts
Hence if registered dealers are permitted to make purchases through dealers who are not licensed and those dealers are themselves not liable to be taxed then opportunity for evasion of tax becomes larger
Under the circumstances the classification is not unjustified
145 G State of Madras vs Gannon Dunkerlay  Co Madras Ltd  and Devi Deo Gopal Krishna vs State of Punjab 20 STC 430 referred to