Case: State of Madras &amp; Another Vs. M/s. M.A. Noor Mohammed &amp; Company &amp; Others

the single point imposition of sales tax on hides and skins to be conditional on observing the condition of taking a licence. 10. The argument of inconsistency between R. 16(5) of the Turnover and Assessment Rules and S. 5(vi) of the Act which was accepted in the High Court receives no support from the language of that section which is a concessional provisions 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. 16(5) does is to emphasise the consequences of non-observance of the conditions which Ss. 5(vi) and 6-A have in clear terms prescribed.We find no inconsistency between the section and the Act. But it was submitted that this Court on appeal from a judgment of the Madras High Court had held R. 16(5) to be ultra vires the Act. That contention is based on the judgment of the Madras High Court in V. M. Syed Mohammed and Co. v. State of Madras, 1952-3 STC 367 : (AIR 1953 Mad 105 ), which on appeal was affirmed by this Court in 1954 SCR 1117 : (AIR 1954 SC 314 ). 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 acquried 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, i.e. 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 S. 5(vi) of the Act. This, it appears, was not disputed by the Government and it was therefore held that R. 16(5) of the Turnover and Assessment Rules was ultra vires. But the question was really not relevant to the issue as was pointed out by Venkatarama Ayyar, J., at page 394 of STC : (at p. 115 of AIR) where he said :"Now the cotnention 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 S. 5(vi). It is not disputed on behalf of the Government that Rule 16(5) is repugnant to S. 5(vi). 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. 16(5). This was conceded by the learned Advocate for the petitioners". 11. This case was then brought in appeal to this Court and S. R. Das, J., (as he then was observed at page 1121 (of SCR) : (at p. 316 of AIR) :"Lastly, the learned advocate urges that R. 16(5) clearly contravenes the provisions of S. 5(vi) 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 R. 16(5) was repugnant to S. 5(vi). That sub-rule, however affects only unlicensed dealers and the appellants who are admittedly licensed dealers are not affected by that sub-rule". 12. 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. 13. 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. 16(5) 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. 14. The Andhra Pradesh High Court rightly did not accept the view that R. 16(5) was ultra vires of the rule making authority : V. M. Syed Mohammed and Co. v. State of Andhra, 1956-7 STC 465 at p. 472 (Andhra). The same view was taken by the Mysore High Court in the State of Mysore v. Saravathulla and Co. 1958-9 STC 593 : (AIR 1958 Mys. 80). 15. A consideration of the relevant provisions of the Act and the rules made thereunder shows that the charging section is S. 3(1) and the general rule is taxation 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 S. 5 and laid down in the rules are complied with and that R. 16(5) of the Turnover and Assessment Rules is not ultra vires. 16. 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 Art. 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.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. The argument of inconsistency between R. 16(5) of the Turnover and Assessment Rules and S. 5(vi) of the Act which was accepted in the High Court receives no support from the language of that section which is a concessional provisions 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. 16(5) does is to emphasise the consequences of non-observance of the conditions which Ss. 5(vi) and 6-A have in clear terms prescribed.We find no inconsistency between the section and the Act. But it was submitted that this Court on appeal from a judgment of the Madras High Court had held R. 16(5) to be ultra vires the Act. That contention is based on the judgment of the Madras High Court in V. M. Syed Mohammed and Co. v. State of Madras, 1952-3 STC 367 : (AIR 1953 Mad 105  ), which on appeal was affirmed by this Court in 1954 SCR 1117   : (AIR 1954 SC 314  ). This contention is not well-founded12. 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 soBut that will not carry the matter any further, because on a construction of the provisions of the Act this argument of repugnancy is not sustainableBut 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.