Source: http://www.rishabhdara.com/sc/view.php?case=4703
Timestamp: 2019-11-15 02:59:16
Document Index: 248592066

Matched Legal Cases: ['Art.\t14', 'Art. 14', 'Art.\t14', 'Art.\t14', 'Art. 14', 'Art. 14']

SITA RAM BISHAMBHER DAYAL & ORS versus STATE OF U.P. & ORS
1972 AIR 1168	1972 SCR (2) 141
SITA RAM BISHAMBHER DAYAL & ORS V. STATE OF U.P. & ORS [1971] RD-SC 291 (21 October 1971)
CITATION: 1972 AIR 1168	1972 SCR (2) 141
RF	1973 SC1461	(17,63) R	1974 SC1660	(21,36) R	1975 SC1007	(15) RF	1979 SC 321	(42) R	1979 SC1475	(23) RF	1982 SC 710	(55) F	1985 SC 421	(25) RF	1990 SC 560	(13,33)
U.P. Sales Tax Act, 1948, s. 3D(1)--Its validity--Whether delegation of authority under the section excessive and bad in law--Is the section violative of Art.	14 of	the Constitution.
The appellants	are dealers in Rab. The State Government under s. 3D(1) of the U.P. Sales Tax	Act, 1948, levied purchase tax in respect of their, dealings in Rab. Section 3D(1) 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 s. 3(d)(1) 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, s. 3D(1) infringed Art. 14 of the Constitution because it discriminated between registered dealers	who purchased	through licensed dealers and	the registered dealers who purchased through other dealers.
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 v. State of Punjab, 20 S.T.C.	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 s. 3D(1) is unreasonably high. 144 E-F] (ii) Section 3D is not violative of Art.	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 v. Gannon Dunkerlay & Co. (Madras) Ltd., [1959]	S.C.R.	379 and Devi Deo Gopal Krishna v. State of Punjab, 20 S.T.C. 430, referred to.
Appeals from the judgments and orders dated May 17, 1968 of the Allahabad High Court in Writ Petitions Nos. 310 and	627 of 1968.
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 s. 3-D(1) of the U.P. 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 S.	3-D(1)	is excessive and	as such bad in law and (2)	Section 3-D infringes Art.	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 s. 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 s. 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 Art. 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 S. 3-D(1). 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.
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 v. Gannon	Dunkerley & Co. (Madras) Ltd.(1) 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. v. The State of Punjab and ors(2)	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 S. 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.
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-s.	(1) of s. 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 s. 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 s. 3-D is violative of Art. 14.
For the reasons mentioned above these appeals fail and	they are dismissed with costs-one set.