ION Civil Appeal No 1028 of 1976
Appeal by Special Leave from the Judgment and Order dated 8 3 1976 of the Punjab and Haryana High Court in Civil Writ Petition No 35475
AND CIVIL APPEAL NOS
1029 1032 OF 1976 Appeals by Special Leave from the Judgment and Order dated 8 3 1976 of the Punjab  Haryana High Court in CWP Nos
564 and 58275 and CWP Nos 1988 and 200076 respectively
AND CIVIL APPEAL NO
1033 OF 1976 Appeal by Special Leave from the Judgment and Order dated 31 5 1976 of the Punjab and Haryana High Court in CW Petition No 258076
AND CIVIL APPEAL NO
1034 OF 1976 Appeal by Special Leave from the Judgment and Order 10 6 1976 of the Punjab  Haryana High Court in Civil Writ Petition No 289076
955 AND CIVIL APPEAL NO
1035 OF 1976 Appeal by Special Leave from the Judgment and Order dated 28 6 1976 of the Punjab  Haryana High Court in Civil Writ Jurisdiction No 3216 of 1976
M C Bhandare A K Sen in CA 102976 Mrs Sunanda Bhandare A N Karkhanis Miss Malini Poduval and G R Sethi in CA 103176
Soli J Sorabjee Addl
In CA 102876 Hardev Singh for the Respondents
The Judgment of the Court was delivered by VENKATARAMIAH J
In these appeals by special leave we are called upon to pronounce on the validity of section 31 of the Punjab General Sales Tax Act 1948 hereinafter referred to as the Act  the Notification dated the 13th January 1968 issued thereunder by the Government of Punjab and the liability of the appellants to pay purchase tax under the Act in respect of the turnover relating to the purchases of paddy made by them during the relevant period
The appellants are dealers in paddy and engaged in the business of millers in the State of Punjab
They buy paddy from growers or katcha adatias convert it into rice and sell rice
Most of the rice manufactured by them is purchased by the State Government under food procurement orders
A brief history of the relevant provisions of the Act is as follows Under the Act as it was originally enacted there was no provision levying tax on the purchase turnover of the goods dealt with by a dealer as defined in the Act
The Act was amended by Punjab Act No 7 of 1958 which received the assent of the Governor on April 18 1958 and the amending Act came into force at once
The amending Act brought about the following changes in the Act In the long title of the Act after the word sale the words or purchase were inserted
Clause d of section 2 of the Act which defined the expression dealer  was amended so as to bring within the scope of that expression a person who purchased any goods in the course of trade or business
The turnover relating to purchases made by a dealer subsequent to the commencement of the amending Act of certain goods was made liable to payment of tax
The 956 word purchase  was defined by clause ff of section 2 which was introduced by the amending Act as follows 2
ff purchase  with all its grammatical or cognate expressions means the acquisition of goods other than sugarcane foodgrains and pulses for use in the manufacture of goods for sale for cash or deferred payment or other valuable consideration otherwise than under a mortgage hypothecation charge or pledge The rest of the clause is not necessary for the purpose of these cases
Section 4 of the Act was amended by imposing tax on purchases also subject to sections 5 and 6 of the Act
It is however seen from clause ff of section 2 that the purchase of foodgrains was not covered by the definition and remained unaffected by the above amending Act
The Act was further amended by Punjab Act No 13 of 1959 which deleted the words other than sugarcane foodgrains and pulses in clause ff of section 2
Section 6 of the Act was repealed and substituted by a new section which read as follows 6
Tax free goods 1 No tax shall be payable on the sale of goods specified in the first column of Schedule C subject to the conditions and exceptions if any set out in the corresponding entry in the second column thereof and no dealer shall charge sales tax or purchase tax on the sale or purchase as the case may be of goods which are declared tax free from time to time under this section
2 The State Government after giving by notification not less than three months  notice of its intention so to do may by like notification add to or delete from Schedule B or Schedule C and thereupon Schedule B or Schedule C as the case may be shall be deemed to be amended accordinglly
 It is seen from the above provision that the turnover relating to the sale of goods mentioned in the first column of Schedule C  to the Act subject to the conditions and exceptions if any set out in the corresponding entry in the second column thereof was exempted from payment of tax
By Punjab Act No 24 of 1959 the above section 6 was substituted by a new section which read as follows 6
Tax free goods 1 No tax shall be payable on the sale of goods specified in the first column of Schedule B 957 subject to the conditions and exception if any set out in the corresponding entry in the second column thereof and no dealer shall charge sale tax on the sale of goods which are declared tax free from time to time under this section
2 The State Government after giving by notification not less than three months  notice of its intention so to do may by like notification add to or delete from Schedule B and thereupon Schedule B shall be deemed to be amended accordingly
 By Punjab Act No 18 of 1960 clause ff of section 2 of the Act which had undergone some alteration when Punjab Act No 24 of 1959 came into force was substituted by a new clause which read 2
ff purchase  with all its grammatical or cognate expressions means the acquisition of goods specified in Schedule C for cash or deferred payment or other valuable consideration otherwise than under a mortgage hypothecation charge or pledge
 The effect of the said amendment was that the turnover relating to the purchase of goods mentioned in Schedule C  to the Act became liable to tax subject to the other provisions of the Act
Section 4 of the Act was also amended by the introduction of sub section 2 A providing that notwithstanding anything contained in sub sections 1 and 2 of section 4 of the Act no tax on the sale of any goods should be levied if a tax on their purchase was payable under the Act
Originally seven items of goods had been specified by the State Legislature in Schedule C  to the Act
By the Punjab General Sales Tax Amendment Act 1965 Punjab Act No 28 of 1965 section 31 was inserted in the Act authorising the State Government to amend Schedule C 
It read as follows 31
Power to amend Schedule C The State Government after giving by notification not less than three months  notice of its intention so to do may by notification add to or delete from Schedule C any goods and thereupon Schedule C shall be deemed to be amended accordingly
 The words three months  in the above section were substituted by twenty days  by Punjab Act No 7 of 1967
958 In exercise of the power conferred by the above provision the State Government issued the Notification on the 15th January 1968 adding paddy and rice as items 8 and 9 in Schedule C 
The result was that the turnover relating to the purchase of paddy and rice became exigible to payment of purchase tax under the Act in the hands of the purchasers with effect from the 15th January 1968
Aggrieved by the said notification the appellants who became liable to payment of purchase tax on the turnover relating to the purchases of Paddy made by them filed petitions under Article 226 of the Constitution on the file of the High Court of Punjab and Haryana questioning the validity of section 31 of the Act the Notification dated the 15th January 1968 issued thereunder and their liability to payment of purchase tax
The principal contentions urged by the appellants before the High Court were 1 that section 31 of the Act which authorised the State Government to amend Schedule C  to the Act by adding certain items making the turnover relating to their purchases liable to tax was void on the ground that it suffered from the vice of excessive delegation of legislative power and therefore the notification issued thereunder was also void and 2 that the appellants who were carrying on the business of manufacturers of rice could not be denied the benefit of section 52 a ii of the Act which authorised the deduction from the gross turnover the turnover relating to the sales of paddy effected in their favour notwithstanding the inclusion of paddy in Schedule C  to the Act
The High Court rejected both the contentions of the appellants and dismissed the writ petitions
Hence these appeals under Article 136 of the Constitution
In this Court also the very same contentions which were urged before the High Court were urged in support of the appeals with some slight variations
The first contention urged by Mr M C Bhandare learned counsel for the appellants was that section 31 of the Act which authorised the State Government to vary Schedule C  to the Act by adding certain goods whose turnover was not liable to payment of sales tax before suffered from the vice of excessive delegation of legislative power and in the alternative he submitted that even if the said provision was otherwise valid it could not be interpreted as including within its scope the power to issue a notification which would run counter to the express legislative policy of the Act contained in section 52 a ii thereof which had been enacted with the avowed purpose of giving assistance to manufacturing industries
959 A review of the decisions of this Court to some of which we will presently refer shows that the delegation of power by the legislature to a local authority or to the Executive Government to vary or modify an existing law would not be unconstitutional so long as such delegation does not involve the abdication of essential legislative power by the legislature
Such delegations of legislative power have been upheld by this Court on several varied and diverse grounds such as the scheme and policy of the statute under which the power is delegated the presence of guidelines in the statute regarding the exercise of delegated power the lack of time for the Legislature to make provision with regard to all the details involved in the administration of the law the incapacity of the Legislature to foresee all future events the nature of the subject matter of legislation and the nature of the donee of power etc
Even in matters relating to taxation law it has been consistently held that the Legislature can delegate the power to fix rates of tax provided there are necessary guidelines regarding such fixation on the ground that in a modern society taxation is one of the methods by which economic and social goals of the State can be achieved and the power to tax therefore should be a flexible power and capable of being easily altered to meet the exigencies of circumstances
Such delegation has been held to be not amounting to delegation of essential legislative function
In Powell vs Appollo Candle Company Limited1 the Judicial Committee of the Privy Council was called upon to decide whether section 133 of the Customs Regulation Act of 1879 of New South Wales which conferred the power on the Governor to impose tax on certain articles of import was an unconstitutional delegation of legislative powers
In holding that it was not unconstitutional the Privy Council observed It is argued that the tax in question has been imposed by the Governor and not by the Legislature who alone had power to impose it
But the duties levied under the Order in Council are really levied by the authority of the Act under which the Order is issued
The Legislature has not parted with its perfect control over the Governor and has the power of course at any moment of withdrawing or altering the power which they have entrusted to him
In these circumstances their Lordships are of opinion that the judgment of the Supreme Court was wrong in declar 960 ing Section 133 of the Customs Regulation Act of 1879 to be beyond the power of the Legislature In J W Hampton Jr  Company vs United States1 the validity of the action of the President to make changes in the rates provided in the Tariff Act 1922 under the power delegated by the Congress arose for consideration
That was challenged as a forbidden delegation of legislative power to executive authority
The challenge was negatived by the Supreme Court of the United States on the ground that the Congress had laid down by legislative act an intelligible principle to which the person authorised to fix the rate of customs duties on imported merchandise was to conform
The principle enunciated in the above two decisions has been substantially adopted and followed by this Court in two cases 1 Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh  Ors
2 and 2 Municipal Corporation of Delhi vs Birla Cotton Spinning and Weaving Mills Delhi  Anr3 to which we shall refer hereafter
In Rajnarain Singh vs The Chairman Patna Administration Committee Patna and Another4 where an earnest attempt was made to analyse and explain the judgment of this Court in re
The Delhi Laws Act 19125
Bose J after referring in detail to the observations made by the learned Judges in the latter case observed at page 301 In our opinion the majority view was that an executive authority can be authorised to modify either existing or future laws but not in any essential feature
Exactly what constitutes an essential feature cannot be enunciated in general terms and there was some divergence of view about this in the former case but this much is clear from the opinions set out above it cannot include a change of policy
 In Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh  Ors
supra where this Court was called upon to decide whether section 62 of the CP and Berar Sales Tax Act 1947 which authorised the State Government after giving by notification not less than one month s notice of its intention so to do by a notification 961 after the expiry of the period of notice mentioned in the first notification to amend Schedule II to that Act was constitutional it was held that it was not unconstitutional for the Legislature to leave it to the executive to determine details relating to the working of the taxation laws such as the selection of persons on whom the tax was to be laid the rates at which it was to be charged in respect of different classes of goods and the like and that the power conferred on the State Government by section 62 of that Act to amend the Schedule relating to exemption was in consonance with the accepted legislative practice relating to the topic
In that connection at page 435 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 laid the rates at which it is to be charged in respect of different classes of goods and the like The next case to which reference may be made is Corporation of Calcutta  Anr
vs The Liberty Cinema1 where the majority upheld the fixaion of a tax on cinema shows by the Corporation of Calcutta even though the Calcutta Municipal Act of 1951 prescribed no limits to which the tax could go
In that case reliance was placed on the case of Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh  Ors
supra and it was held that the fixation of rate of tax could be left to a non legislative body provided the Legislature gave necessary guidance for such fixation
This Court in that case found guidance in the various provisions of the statute including the fact that the body which had been authorised to levy the rate was a municipal body whose fiscal requirements were restricted by the nature and area of its jurisdiction
In Municipal Corporation of Delhi vs Birla Cotton Spinning and Weaving Mills Delhi  Anr
supra Hidayatullah J as he then was upholding the imposition of a tax by the Delhi Municipal Corporation in exercise of the power granted to it under the Delhi Municipal Corporation Act 66 of 1957 observed at page 287 as follows The doctrine that Parliament cannot delegate its powers therefore must be understood in a limited way
It only means that the legislature must not efface itself but 962 must give the legislative sanction to the imposition of the tax and must keep the control in its own hands
There is no specific provision in the Constitution which says that the Parliament cannot delegate to certain specified instrumentalities the power to effectuate its own will
The question always is whether the legislative will has been exercised or not
Once it is established that the legislature itself has willed that a particular thing be done and has merely left the execution of it to a chosen instrumentality provided that it has not parted with its control there can be no question of excessive delegation
If the delegate acts contrary to the wishes of the legislature the legislature can undo what the delegate has done
 In Devi Das Gopal Krishnan  Ors
vs State of Punjab  Ors1 the validity of section 5 of the Act as originally enacted which conferred on the Government power to levy tax at such rates as the Government might fix arose for consideration
This Court held that such conferment of power on the Government to levy tax at the rates determined by it without any statutory limitation or guidance was void
This Court however held that after section 5 was amended by Punjab Act No 19 of 1952 by imposing the restriction that the rates determined by the State Government should not exceed two paise in a rupee was valid as the Legislature had delegated the power to the Government to determine the rates subject to the restriction mentioned above
In the course of the above decision Subba Rao CJ dealing with the decision of this Court in Corporation of Calcutta vs Liberty Cinema supra observed If this decision is an authority for the position that the Legislature can delegate its power to a statutory authority to levy taxes and fix the rates in regard thereto it is equally an authority for the position that the said statute to be valid must give a guidance to the said authority for fixing the said rates and that guidance cannot be judged by stereotyped rules but would depend upon the provisions of a particular Act
To that extent this judgment is binding on us
But we cannot go further and hold as the learned counsel for the respondents asked us to do that whenever a statute defines the purpose or purposes for which a statutory authority is constituted and empowers it to levy a tax a that statute necessarily contains a guidance to fix the rates it depends upon the provisions of each statute
 963 In Sita Ram Bishambher Dayal  Ors
vs State of UP  Ors1 the validity of section 3D1 of the UP Sales Tax Act 1948 which authorised the levy of a tax on the turnover 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 that behalf was questioned on the ground that the delegation of power to the State Government to determine the goods or class of goods whose purchase turnover would be liable to tax and the rates of purchase tax subject to the restriction imposed in that regard by that section suffered from the vice of excessive delegation
Repelling the above contention and upholding the said provision Hegde J speaking for the Court observed thus 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 modern 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 fexible 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 refect the views of the legislatures
In fact in most matters it gives the lead to the legislature
However much one might deplore the New Despotism of the executive the very complexity of the modern society and the demand it makes on its Government have set in motion forces which have made it absolutely necessary for the legislatures to entrust more and more powers to the executive
Textbook doctrines evolved in the 19th Century have become out of date
Present position as regards delegation of legislative power 964 may not be ideal but in the absence of any better alternative there is no escape from it
The legislatures 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
 When the validity of section 3 D of UP Sales Tax Act 1948 was again challenged before this Court in Hira Lal Rattan Lal etc
etc vs State of UP  Anr
 etc1 on the very same ground it was again upheld by this Court with the following observations The only remaining contention is that the delegation made to the executive under section 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 levied
In the Act under section 3 the legislature has sought to impose multi point tax on all 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
 We shall now proceed to examine the validity of section 31 of the Act in the light of the decisions referred to above
The expression dealer  is defined in section 2d of the Act as any person including a Department of Government who in the normal course of trade sells or purchases any goods in the State of Punjab
 Section 2ff of the 965 Act defines the expression purchase  as acquisition of goods specified in Schedule C  for cash or deferred payment
 The word sale  is defined in section 2h of the Act as meaning any transfer of property in goods other than goods specified in Schedule C  for cash or deferred payment Sub section 1 of section 4 of the Act which is the charging section provides that subject to the provisions of sections 5 and 6 every dealer except one dealing exclusively in goods declared tax free under section 6 whose gross turnover during the year immediately preceding the commencement of the Act exceeded the taxable quantum shall be liable to pay tax under the Act on all sales effected after the coming into force of the Act and purchases made after the commencement of East Punjab General Sales Tax Amendment Act 1958 Section 51 of the Act authorises the State Government to determine the rates of tax payable on the taxable turnover of a dealer not exceeding the limit prescribed therein
Subsection 2 of section 5 of the Act lays down the principles governing the determination of taxable turnover
During the relevant period sub section 2 of section 5 of the Act read as follows  5
2 In this Act the expression taxable turnover means that part of a dealer s gross turnover during any period which remains after deducting therefrom a his turnover during that period on i the sale of goods declared tax free under section 6 ii sales to a registered dealer of goods other than sales of goods liable to tax at the first stage under sub section 1 A declared by him in a prescribed form as being intended for resale in the State of Punjab or sale 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 or use by him in the manufacture in Punjab of any goods other than goods declared tax free under section 6 for sale in Punjab and on sales to a registered dealer of containers or other materials for the packing of such goods Provided that in case of such sales a declaration duly filled up and signed by the registered dealer 966 to whom the goods are sold and containing prescribed particulars on a prescribed form obtained from the prescribed authority is furnished by the dealer who sells the goods ii   iii  iv sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the  of goods for use by it in the generation or distribution of such energy v sales or purchases of goods falling under section 29 vi the purchase of goods which are sold not later than six monts after the close of the year to a registered dealer or in the course of inter State trade or commerce or in the course of export out of the territory of India Provided that in the case of such a sale to a registered dealer a declaration in the prescribed form and duly filled up and signed by the registered dealer to whom the goods are soid is furnished by the dealer claiming deduction
viiSuch other sales or purchases as may be prescribed b the amount of sales tax included in the gross turnover
 Section 6 of the Act during the relevant period read as substituted by Punjab Act No 24 of 1959 with the modification made by Punjab Act No 7 of 1967 which substituted the words twenty days in the place of three months in sub section 2 thereof
Schedule A  to the Act specified certain goods which were considered as luxury goods for purposes of levy of tax at the rates prescribed by the State Government under the first proviso to section 51 Schedule B  to the Act referred to the items of goods which were treated as tax free goods under section 6 and Schedule C  during the relevant period referred to the goods the turnover of which was subject to purchase tax
The State Government was however given power to amend all the three Schedules
967 It is seen from the provisions of the Act referred to above that the Legislature while directing that the tax shall be levied on the turnover of sales and purchases of goods under section 4 left the rates of tax payable to be determined by the State Government under section 51 of the Act subject to the limits prescribed therein
The Legislature after specifying the goods which should be treated as luxury goods tax free goods and goods whose purchase turnover is liable to tax in Schedule A  Schedule B  and Schcdule C  respectively has delegated the power to the State Government to amend Schedule A  under the first proviso to sub section 1 of section 5 Schedule B  under sub section 2 of section 6 and Schedule C  under section 31 of the Act
In each of these cases the State Government can make the amendment only after giving previous publicity to its intention to do so thus giving an opportunity to interested parties to make representations if any
In the case of a democratic Government this itself acts as a check on arbitrary exercise of power
At this stage it is necessary to refer to sub section 2A of section 4 of the Act and that provides that notwithstanding anything contained in sub sections 1 and 2 of section 4 no tax on the sale of any goods shall be levied if a tax on their purchase is payable under the Act
The Act also contains the machinery for assessment and collection of tax
It follows from the scheme of the Act that no tax is payable on the sale of goods specified in the first column of Schedule B  subject to the conditions and exceptions if any set out in the corresponding entry in the second column thereof and no dealer shall charge sales tax on the sale of goods which are declared tax free
In so far as goods included in Schedule C  to the Act are concerned tax can be levied only on their purchase turnover
In the case of all other goods tax is levied on their sales turnover subject to section 5 and other provisions of the Act
When the State Government in exercise of its power under section 62 of the Act deletes any goods from Schedule B  they cease to be tax free goods and their sales turnover would become liable to payment of tax
When the State Government in exercise of its power under section 31 of the Act includes any goods in Schedule C  their sales turnover would become exempt from payment of tax but their purchase turnover would become liable for payment of tax
We are of the view that the delegation of power to the State Government to determine whether any class of goods should be included or excluded from Schedule C  to the Act cannot be considered as unconstitutional in view of the decisions of this Court referred to above and in particular the decision in Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh  Ors
supra where section 62 of the Central Provinces and Berar Sales Tax Act 1947 corres 968 ponding to section 62 of the Act was upheld by a Constitution Bench of this Court
The Constitution Bench while rejecting the challenge of section 62 observed thus The contention of the appellant that the notification in question is ultra vires must in our opinion fail on another ground
The basic assumption on which the argument of the appellant proceeds is that the power to amend the Schedule conferred on the Government under section 62 is wholly independent of the grant of exemption under section 61 of the Act and that in consequence while an exemption under section 61 would stand an amendment thereof by a notification under section 62 might be bad
But that in our opinion is not the correct interpretation of the section
The two sub sections together form integral parts of a single enactment the object of which is to grant exemption from taxation in respect of such goods and to such extent as may from time to time be determined by the State Government
Section 61 therefore cannot have an operation independent of section 62 and an exemption granted thereunder is conditional and subject to any modification that might be issued under section 62
In this view the impugned notification is intra vires and not open to challenge
 We are of the view that the case in so far as section 31 of the Act which is also an integral part of a single enactment and which authorises the State Government to amend Schedule C  to the Act cannot be different from the case which was dealt with by the Constitution Bench
If it is permissible for the Legislature to authorise the State Government to convert tax free goods into taxable ones there is hardly any justification for holding that the State Government cannot be entrusted with the power to include goods in Schedule C  making their purchase turnover taxable
It was however argued by Mr M C Bhandare that in the instant case the inclusion of paddy in Schedule C  to the Act was against the policy underlying the Act and therefore even though section 31 of the Act might be constitutionally valid the notification issued by the State Government directing inclusion of paddy in Schedule C  should be held to be outside the scope of section 31 of the Act
In other words he contended that having regard to the scheme of the Act it was necessary for us to read section 31 of the Act as not delegating the power to the State Government to include paddy in Schedule C  to the Act
The argument of the learned counsel was that the appellants were purchasing paddy either from agricul 969 turists who had grown it on their land or from katcha adatias for purposes of manufacture of rice in the circumstances mentioned in section 52 a ii of the Act
In either case no sales tax was being levied on the turnover relating to the sales in their favour by reason of item 39 of Schedule B  to the Act which declared that agricultural or horticultural produce sold by a person or a member of his family grown by himself or grown on any land in which he has an interest whether as owner or usufructuary mortgage tenant or otherwise were tax free goods or of sub clause ii of clause a of sub section 2 of section 5 of the Act which required the turnover relating to sales to a registered dealer of goods specified in his certificate of registration for use by him in the manufacture in Punjab of any goods other than goods declared tax free under section 6 for sale in Punjab to be deducted from the gross turnover of any dealer in order to arrive at taxable turnover 
It was argued that the tax payable under the Act was an indirect tax and since no sales tax was leviable the appellants could purchase paddy before the issue of the impugned notification without being saddled with the liability of payment of sales tax
The policy underlying section 52aii of the Act was that manufacturers of goods specified in the certificate of registration obtained by them should be able to acquire raw material for their industry without incurring the extra liability of sales tax
This exemption which the appellants were enjoying was taken away indirectly by the State Government by including paddy in Schedule C  to the Act resulting in the imposition of purchase tax in respect of its turnover on them
Relying upon the decision of the High Court of Madras in Syed Mohamed  Co vs The State of Madras1 it was argued that sales tax was in effect tax on the transaction of sale of goods by one person to another and that it was unreasonable to assume that the Legislature contemplated different categories of transactions depending upon the point at which the tax was levied
In support of this contention our attention was also drawn to the observation made at page 571 in Devi Das Gopal Krishnan  Ors
vs State of Punjab  Ors
supra and in State of Assam vs Ramesh Chandra Dey  Ors2
The learned counsel for the appellants contended that since the exemption from payment of sales tax accorded by the Legislature under item 39 of Schedule B  and under section 52 a ii of the Act was in respect of the transaction of sale it was not open to the Executive Government to take away the exemption by including paddy in Schedule C  and since such inclusion was contrary to the express policy of the statute section 31 of the Act must be so interpreted as not delegating the power to 970 include paddy purchased by the appellants in Schedule C 
We are therefore asked to hold that even though section 31 was not unconstitutional the notification was not enforceable against the appellants
The above argument is no doubt quite attractive but we do not find any substance in it since it overlooks the decision of the Constitution Bench of this Court in Pandit Banarasi Das Bhanot vs The State of Madhya Pradesh  Ors
supra where it has been held that it is open to the Legislature to delegate the power to withdraw the exemption which has been given by the Legislature in respect of certain transactions specified in Schedule II to the CP and Berar Sales Tax Act 1947
Moreover it cannot be said that the principal object of the Act is to encourage manufacturing industry
The Act is a fiscal legislation and its object is to collect revenue for the purpose of meeting the expenditure of the Government
It is no doubt true that while levying tax under the Act the Legislature may grant exemptions in certain cases and may decline to grant exemptions in other cases
The question whether such exemption should be given or not is only incidental or ancillary to the principal object viz the object of levying tax for the purpose of collecting revenue
It cannot also be said that when certain goods are sold in favour of manufacturer the seller is always entitled to deduct such sales turnover from the gross turnover
He can do so only when such goods are specified in the certificate of registration obtained by the purchaser and they are used by him in the manufacture in Punjab of any goods other than goods declared tax free under section 6 of the Act for sale in Punjab
Transaction in paddy cannot therefore be considered as having been generally exempted from payment of tax under the Act
It is also to be seen that section 52aii of the Act grants exemption from payment of sales tax on the turnover of goods sold in favour of a manufacturer under the circumstances mentioned therein only to the seller and not to the buyer even though indirectly the buyer may be benefited thereby
If the observation made by this Court in State of Tamil Nadu vs M K Kandaswami etc etc1 that taxable goods  taxable event  and taxable person  are three distinct concepts is borne in mind there will be no room for any confusion
In the instant case the taxable event is the purchase of paddy and not its sale which alone attracts section 52 a ii of the Act and taxble person that is person liable to pay tax is the purchaser and not the seller
The appellants cannot therefore complain that any exemption granted to them by the Act has been taken away
Even though the liability to pay purchase tax may be on appellants it is bound to have repercussions on the price at which they buy paddy and 971 the price at which rice manufactured by them out of that paddy is sold by them
The tax payable under the Act admittedly being an indirect tax the tax burden would ordinarily fall on the consumer of rice and not on any of the intermediaries including the appellants
The impugned notification cannot therefore be treated as one issued against the policy of the statute
In view of the foregoing we hold that section 31 of the Act and the Notification issued thereunder do not suffer from the vice of excessive delegation of legislative power
We may at this stage refer to one other subsidiary argument urged on behalf of the appellants
It is argued that because paddy and rice are not different kinds of goods but one and the same inclusion of both paddy and rice in Schedule C  to the Act would amount to imposition of double taxation under the Act
There is no merit in this contention also because the assumption that paddy and rice are one and the same is erroneous
In Ganesh Trading Co Karnal vs State of Haryana  Anr
arising under the Act this Court has held that although rice is produced out of paddy it is not true to say that paddy continued to be paddy even after dehusking that rice and paddy are two different things in ordinary parlance and therefore when paddy is dehusked and rice produced there is a change in the identity of the goods
The above decision follows the principle enunciated by this Court in State of Punjab vs Chandu Lal Kishori Lal in which it was held that cotton seeds when separated from cotton constituted distinct commercial goods different from cotton
The above contention has therefore to be rejected
In the result these appeals fail and they are dismissed
The parties shall however bear their own costs
NKA Appeals dismissed


Summary:
Section 51 of the Punjab Sales Tax Act 1948 authorises the State Government to determine the rates of tax payable on the taxable turnover of a dealer not exceeding the limit prescribed therein
Sub section 2 lays down the principles governing the determination of the taxable turnover
Schedule C  of the Act refers to goods the turnover of which is subject to purchase tax
Section 31 of the Act which gives specific power to the State Government to amend Schedule C  provides that after giving by notification not less than three months  notice of its intention so to do the State Government may add to or delete from Schedule C  any goods and thereupon Schedule C  shall be deemed to be amended accordingly
By a notification dated January 15 1968 the State Government added in Schedule C  paddy and rice as items on which purchase tax could be levied
As a result of this notification turnover relating to the purchase of paddy and rice became exigible to purchase tax in the hands of the purchasers with effect from that date
The appellants who are dealers in paddy buy paddy in the first instance and sell rice after converting paddy into rice
They filed writ petitions in the High Court questioning the validity of s31 of the Act and the notification issued thereunder and their liability to payment of purchase tax
The High Court dismissed the writ petitions
In appeal to this Court it was contended that section 31 of the Act which authorised the State Government to vary Schedule C  by adding certain goods whose turnover was not liable to payment of sales tax earlier suffered from the vice of excessive delegation of legislative power
Dismissing the appeals  HELD 1a The delegation of power to the State Government to determine whether any class of goods should be included or excluded from Schedule C  to the Act cannot be considered as unconstitutional
967G b The case in so far as section 31 of the Act which is an integral part of a single enactment and which authorises the State Government to amend Schedule C  to the Act cannot be different from the case which was dealt 953 with by the Constitution Bench in Pt
Banarsi Das Bhanot vs State of MP  If it is permissible for the Legislature to authorise the State Government to convert tax free goods into taxable ones there is hardly any justification for holding that the State Government cannot be entrusted with the power to include goods in Schedule C  making their purchase turnover taxable
968 D F c It is well established that the delegation of power by the legislature to a local authority or to the executive Government to vary or modify an existing law would not be unconstitutional so long as such delegation does not involve the abdication of essential legislative power by the legislature
Such delegations of legislative powers have been upheld by this Court on several varied and diverse grounds such as the scheme and policy of the statute under which the power is delegated the presence of guidelines in the statute regarding the exercise of delegated power the lack of time for the legislature to make provision with regard to all the details involved in the administration of law the incapacity of the legislature to foresee future events the nature of the subject matter of the legislation and the nature of the donee of power etc
Even in matters relating to taxation laws it has been consistently held that the legislature can delegate the power to fix rates of tax provided there are necessary guidelines regarding such fixation on the ground that in a modern society taxation is one of the methods by which economic and social goals of State can be achieved and the power to tax should be flexible and capable of being easily altered to meet the exigencies of circumstances
Such delegation has been held to be not amounting to delegation of essential legislative function
959A D Pt
Banarsi Das Bhanot vs State of MP  Ors   Municipal Corp of Delhi vs Birla Cotton Spinning and Weaving Mills Delhi  Anr   Corporation of Calcutta  Anr
vs The Liberty Cinema   Sita Ram Bishambar Dayal  Ors
vs State of UP State of UP  Anr etc etc
  referred to 2a The argument that even though section 31 was not unconstitutional the notification was not enforceable against the appellants has no force
In Pt
Banarsi Das Bhanot vs State of MP it has been held that it is open to the Legislature to delegate the power to withdraw the exemption which has been given by the Legislature in respect of certain transactions specified in the Act under consideration in that case
It cannot be said that the principal object of the Act is to encourage manufacturing industry
The Act is a fiscal legislation and its object is to collect revenue for the purpose of meeting the expenditure of the Government
It is true that while levying tax under the Act the Legislature may grant exemptions in certain cases and may decline to grant exemption in other
The question whether such exemption should be given or not is only incidental or ancillary to the principal object viz the object of levying tax for the purpose of collecting revenue
It cannot be said that when certain goods are sold in favour of a manufacturer the seller is always entitled to deduct such sales turnover from the gross turnover
He can do so only when such goods are specified in the certificate of registration obtained by the purchaser and they are used by him in the 954 manufacture in the State of any goods other than goods declared tax free under section 6 of the Act for sale in the State
Transactions in paddy cannot be considered as having been generally exempted from payment of tax under the Act
Section 52aii of the Act grants exemption from payment of sales tax on the turnover of goods sold in favour of a manufacturer under the circumstances mentioned therein only to the seller and not to the buyer even though indirectly the buyer may be benefited thereby
970A F b The terms taxable goods taxable event and taxable person are three distinct concepts
In the instant case the taxable event is the purchase of paddy and not its sale which alone attracts section 52ii of the Act
Taxable person ie the person liable to pay tax is the purchaser and not the seller
The appellants cannot complain that any exemption granted to them by the Act has been taken away
Even though the liability to pay purchase tax may be on the appellants it is bound to have repercssions on the price at which they buy paddy and the price at which rice manufactured by them out of that paddy is sold by them
The tax payable under the Act being an indirect tax the tax burden would ordinarily fall on the consumer of rice and not on any of the intermediaries including the appellants
The impugned notification cannot therefore be treated as one issued against the policy of the statute
970G H 971A B State of Tamil Nadu vs M K Kandaswami etc etc
   referred to