Appeal No 38 of 1959
Appeal by special leave from the judgment and order dated April 2 1956 of the Madras High Court in Writ Petition No 313 of 1954
R Ganapathy Iyer and T M Sen for the appellants
C K Daphtary Solicitor General of India and SVenkatakrishnan for the respondents
A V Viswanatha Sastri and section Venkatakrishnan for Intervener No 1 Ambur Tanners Association
R Gopalakrishnan for Interveners Nos 2 and 3 R Chennappa and P Abdul Wahab
August 12
The Judgment of the Court was delivered by KAPUR J
This is an appeal by special leave against the judgment and order of the High Court of Madras allowing a petition under Article 226 of the Constitution
The question there raised was the legality of the assessment of Sales Tax by appellant No 2 the Deputy Commercial Sales Tax Officer Saidapet under the Madras General Sales Tax Act 1939 Act IX of 1939 hereinafter termed the Act
The respondent was a partnership firm carrying on tannery business at Chromepet near the city of Madras
Before the year of assessment i e 1952 53 it was taking out licences under the relevant provisions of 150 the Act but it did not renew the licence for the assessment year
When called upon to make a return it did not do so nor did it raise any objection to the notice served on it on February 28 1954
It was assessed to sales tax of Rs 10584 on a turnover of Rs 677374 4 4
It filed a petition under article 226 to quash the assessment order on the ground that the order was illegal and not supported by the authority of law
This contention was accepted by the High Court and the petition was allowed with costs
The consequence of the judgment is that the respondent firm which is not a licensed dealer under the Act is not liable to any sales tax in respect of its dealings in hides and skins
Against this judgment and order the appellants have come to this court by special leave
The contention of the respondent firm in the High Court was that under section 5 cl
vi of the Act the liability to pay sales tax in respect of hides and skins could only be at a single point that the rule limiting the operation of this mode of taxation to licensed dealers was ultra vires and therefore r 165 of the Madras General Sales Tax Turnover and Assessment Rules 1939 hereinafter called the Turnover and Assessment Rules was void and inoperative and had been
so held by the Supreme Court in V M Syed Mohammed  Co vs The State of Madras1  that accepting this interpretation the State of Madras had deleted cl
5 of r 16 by G 0
450 Revenue dated February 26 1954 ie two days before the making of the assessment order under dispute that r 165 of the Turnover and Assessment Rules was the only provision imposing a multiple tax in respect of sales of hides and skins by unlicensed dealers and that the imposition of the sales tax after the repeal of that rule was illegal and the tax was without the authority of law
It was also contended that in the taxation scheme under the Act hides and skins because of their importance in the international market were excluded from the direct operation of section 31 of the Act which was the general charging section and were given special protection of the single point taxation under section 5vi
The 1  151 argument therefore was that in the case of sales of hides and skins the general provision was inapplicable and a special rule for taxation was laid down by section 5vi of the Act
The High Court held that in the case of hides and it skins  the charge levied by section 3 is subject to the pro
visions of section 5 and in the case of licensed dealers in hides and skins the charging provision is r 16 of the Turnover and Assessment Rules 
The High Court further held that r 165 of the Turnover and Assessment Rules which restricted the benefit of single point taxation to licensed dealers was ultra vires as it contravened section 5vi of the Act and section 6 A was not applicable to the case of a dealer who did not take out a licence for dealing in hides and skins and further that if r 165 was ultra vires as being in contravention of section 5vi r 5 of the Madras General Sales Tax Rules hereinafter called the Sales Tax Rules which requires the taking out of the licence in order to be able to get the benefit of single point taxation would also be ultra vires
Thus on a true construction of section 31 and section 5vi it was of the opinion that r 5 of the Sales Tax Rules and r 165 of the Turnover and Assessment Rules were ultra vires and section 6A was inapplicable to a person who had not taken out a licence
As a consequence it quashed the order of assessment of the respondent firm
In order to decide this appeal it is necessary to refer to and consider the relevant provisions of the Act and the two sets of Rules made thereunder
They are as follows section 31  Subject to the provisions of this Act a every dealer shall pay for each year a tax on his total turnover for such year and            3 A dealer whose total turnover in any year is less than ten thousand rupees shall not be liable to pay any tax for that year under sub section 1 or sub section 2
4 For the purposes of this section and the other provisions of this Act turnover shall be determined in accordance with such rules as may be prescribed 152 5 The taxes under sub sections 1 and 2 shall be assessed levied and collected in such manner and in such instalments if any as may be prescribed section 5
Subject to such restrictions and conditions as may be prescribed including conditions as to licences and licence fees
         vi the sale of hides and skins whether tanned or untanned shall be liable to tax under section 3 subsection 1 only at such single point in the series of sales by successive dealers as may be prescribed
section 6A
If any restrictions or conditions prescribed under section 5 or notified under section 6 are contravened or are not observed by a dealer or in case a condition so prescribed or notified requires that a licence shall be taken out or renewed if a licence is not taken out or renewed by the dealer or if any of the conditions of a licence taken out or renewed by him are contravened or are not observed the sales of the dealer with effect from the commencement of the year in which such contravention or non observance took place may be assessed to tax or taxes under section 3 as if the provisions of section 5 or of the notification under section 6 as the case may be did not apply to such sales and notwithstanding that a licence if any taken out or renewed by the dealer continued or continues to be in force during the year 
MADRAS GENERAL SALES TAX TURNOVER AND ASSESSMENT RULES
Rule 41
 Save as provided in sub rule 2 the gross turnover of a dealer for the purposes of these rules shall be the amount for which goods are sold by the dealer
2 In the case of the undermentioned goods turnover of a dealer for the purposes of these rules shall be the amount for which the goods are bought by the dealer
         c untanned hides and skins bought by a licensed tanner in the State and 153 d untanned hides and skins exported outside the State by a licensed dealer in hides or skins
Rule 151
Rules 6 to 13 shall not apply to licensed tanners and other licensed dealers in hides or skins in respect of their dealings in hides or skins but the provisions of this and the following rule shall apply to them in respect of such dealings
Rule 161
In the case of hides and skins the tax payable under section 31 shall be levied in accordance with the provisions of this rule
2 No tax shall be levied on the sale of untanned hides or skins by a licensed dealer in hides or skins except at the stage at which such hides or skins are sold to a tanner in the State or are sold for export outside the State  i in the case of all untanned hides or skins sold to a tanner in the State the tax shall be levied from the tanner on the amount for which the hides or skins are bought by him ii In the case of all untanned hides or skins which are not sold to a tanner in the State but are exported outside the State the tax shall be levied from the dealer who was the last dealer not exempt from taxation under section 33 who buys them in the State on the amount for which they were bought by him
          5 Sale of hides or skins by dealers other than licensed dealers in hides or skins shallsubject to the provisions of section 3 be liable to taxation on each occasion of sale
 Rule 51 of the ax Rules provides  Every person who        d deals in hides andor skins whether as a tanner or otherwise or           shall if he desires to avail himself of the exemption provided in sections 5 and 8 or of the concession of single point taxation provided in section 6 submit an 20 154 application in Form 1 for a licence in respect of each of his places of business to the authority specified in sub rule 2 so as to reach him not later than the 15th day of October 1939 
The scheme of taxation under the Act is this
Section 3 is the general charging section under which tax is levied in the manner prescribed in the turnover of a dealer except that a dealer whose turnover is less than Rs 10000 is exempted from sales tax
Section 3 envisages multipoint taxation on the total turnover of a dealer
In the case of the sale transactions of certain specified goods set out in section 5 of the Act an exception is made
That section provides for single point taxation subject to certain prescribed restrictions and conditions
By sub section
vi of that section sales of hides and skins are liable to tax under s3 sub section
1 at one single point in the series of sales by successive dealers
The language of the section s5 shows however that this exemption applies subject to certain restrictions and conditions which include conditions as to licences
The rule which deals with licences is r 5 of the Sales Tax Rules the relevant portion of which has already been set out It lays down that if a dealer desires to avail himself of the exemption provided in sections 5 and 8 or of the concession as to taxation in section 5 only at a single point then he must obtain a licence as prescribed in that rule
If the restrictions and conditions contemplated by section 5 read with the rules are not complied with certain consequences follow as a result of section 6 A of the Act which specifically states that where a condition prescribed or notified requires the taking out or the renewal of a licence then in the case of contravention of such conditions or restrictions the tax is to be levied under section 3 as if the provisions of section 5 did not apply to such sales
This therefore is a clear provision which makes the single point imposition of sales tax on hides and skins to be conditional on observing the condition of taking a licence
The argument of inconsistency between r 165 of the Turnover and Assessment Rules and section 5vi of the Act which was accepted in the High Court receives 155 no support from the language of that section which is a concessional provision for making the sales of hides and skins liable to taxation at a single point but that as the opening words of the section show is subject to restrictions and conditions prescribed in the rules and one of these conditions is the taking of a licence
All that r 165 does is to emphasise the consequences of non observance of the conditions which sections 5vi  6 A have in clear terms prescribed
We find no inconsistency between the rule and the sections of the Act
But it was submitted that this Court on appeal from a judgment of the Madras High Court had sId r 165 to be ultra vires the Act
That contention is based on the judgment of the Madras High Court in V M Syed Mohammed  Company vs The State of Madras 1 which on appeal was affirmed by this Court 2
This contention is not well founded
In that case when it was in the Madras High Court it was contended that the rules did not properly carry out the policy underlying the Act which was to keep the price of hides and skins at a competitive level for the world market
It was there argued that hides and skins were articles much in demand in the foreign markets and their export was one of the main items of the foreign trade of the State of Madras which enjoyed considerable natural advantage in tanning because of the plentiful supply of  Avaram bark  which was specially suited for the purpose
It was also argued that untanned hides and skins were acquired locally or by import from other States and were either tanned in the State or exported and therefore the scheme of taxation was to levy the tax at a single point ie at the stage when articles were tanned in the State or exported to foreign countries for tanning
For this reason multiple taxation was violative of section 5vi of the Act
This it appears was not disputed by the Government and it was therefore held that r 165 of the Turnover and Assessment Rules was ultra vires
But the question was really 1 1952 3 STC 367
2 V M Syed Mohammed and Company vs The State of Andhra  156 not relevant to the issue as was pointed out by Venkatarama Ayyar J at p 394 where he said  Now the contention of the petitioners is that where there are sales by unlicensed dealers to unlicensed tanners or unlicensed dealers there is the possibility of multiple taxation and that would be in violation of section 5vi
It is not disputed on behalf of the Government that Rule 165 is repugnant to section 5vi
It must therefore be held to be ultra vires
But this can bring no relief to the petitioners as they are all licensed tanners and are in no manner hurt by the operation of r 165
This was conceded by the learned Advocate for the petitioners 
This case was then brought in appeal to this Court and section R Das J as he then was observed at p 1121  Lastly the learned advocate urges that rule 16 5 clearly contravenes the provisions of section 5vi of the Act
This sub rule has been held to be ultra vires by the High Court and indeed the learned Advocate General of Madras did not in the High Court as before us dispute that rule 165 was repugnant to section 5vi
That sub rule however affects only unlicensed dealers and the appellants who are admittedly licensed dealers are not affected by that sub rule 
This judgment does not show that the repugnancy of the rule was in controversy or the court pronounced its opinion upon the merits or it was necessary to do so
The learned Solicitor General then contended before us that in their counter affidavit filed in the High Court the appellants had accepted the position that r 165 of the Turnover and Assessment Rules was ultra vires
But that will not carry the matter any further because on a construction of the provisions of the Act this argument of repugnancy is not sustainable
The Andhra Pradesh High Court rightly did not accept the view that r 165 was ultra vires of the rule making authority Syed Mohamed  Company vs State of Andhra 1
The same view was taken by the 1 1956 7 STC 465
157 Mysore High Court in the State of Mysore vs Sarvatula  Co 1
A consideration of the relevant provisions of the Act and the rules made thereunder shows that the charging section is section 31 and the general rule is taxation i at multiple points on the total turnover of the dealer but in the case of sale of certain specified articles a departure has been made and tax at single point is leviable provided certain conditions and restrictions as to licences which are envisaged in section 5 and laid down in the rules are complied with and that r 165 of the Turnover and Assessment Rules is not ultra vires
It was then contended that the provision as to licensing and taxation in the case of licensed dealers and tanners at a single point and a taxation at multiple point in the case of unlicensed dealers were violative of article 14 of the Constitution
But we did not allow this point to be taken because it was not raised in the High Court and was raised for the first time in this Court
In our opinion the judgment of the High Court in regard to the ultra vires nature of r 165 and the inapplicability of section 6 A of the Act was erroneous and the appeal must therefore be allowed the judgment and order of the High Court set aside and the respondent s petition dismissed
The respondent will pay the costs of the appellants in this Court and in the courts below
Appeal allowed
1 1957 9 STC 593


Summary:
The material portion of an order of detention made under 3 of the preventive Detention Act 1950 ran as fol lows 675 Whereas the Government of Bombay is satisfied with respect to the person known as J N   that with a view to preventing him from acting in a manner prejudicial to the maintenance of public order it is necessary to make the following order Now therefore   the Gov ernment of Bombay is pleased to direct that the said JN be detained
By order of the Governor of Bombay Sd VTD Secretary to the Government of Bombay Home Department
The High Court of Bombay held that the order was defec tive as it was not expressed to be in the name of the Governor within the meaning of article 166 1 and was not accordingly protected by article 166 2 Held that the order was not defective merely because it stated that the Government of Bombay was satisfied and that the Government of Bombay was pleased to direct that JN be detained and though the addition of the words and in his name to the words By order of the Governor of Bombay would have placed the matter beyond controversy the order was really one expressed to be taken in the name of the Governor of Bombay within article 166
Held further that assuming that the order was defec tive it was open to the State Government to prove by other means that such an order has been validly made
It is not absolutely necessary in every case to call the Minister in charge if the Secretary or any other person has the requi site means of knowledge and his affidavit is believed that will be enough
Verification should invariably be modelled on the lines of O XIX r 3 of the Civil Procedure Code whether the Code applied in terms or not and when the matter deposed to is not based on personal knowledge the sources of informa tion must be clearly disclosed