BHARGAVA, J. -
(1.) THE Modi Food Products, Limited, Modinagar, District Meerut, the applicant in this reference under the U.P. Sales Tax Act, is a manufacturer and dealer in non-edible oils. The U.P. Sales Tax Act came into force with effect from 1st April, 1948, and, under section 3 of that Act, tax was payable on sales of various goods including non-edible oils at the uniform rate of 3 pies per rupee on all sales. In section 3 of that Act, as originally passed, it was laid down that tax was to be paid on the turnover in an assessment year by every dealer but there was no clear specification as to which turnover was to be taken into consideration. In Section 7 of the Act, it was laid down that, for purposes of assessment, every dealer was to file a return of his turnover of the previous year within 60 days of the commencement of the assessment year. This provision in section 7 was amended by the U.P. Sales Tax Act (Amendment) Act (U.P. Act No. XXV of 1948) which came into force in the month of June, 1948. By this amendment, a proviso was added to section 7, permitting the State Government to given an option to a dealer to file returns of sales of the assessment year itself in lieu of the returns of the turnover of the previous year under certain circumstances. The mode of assessment was also laid down but, for purposes of this reference, it is not necessary to give the details of that procedure. The dealer had the option of electing whether he would like his assessment to be made on the basis of the turnover of the previous year, or, on the basis of the return of sales for the current assessment year. The applicant, the Modi Food Products Limited, Modinagar, chose to be assessed on the basis of the turnover of the previous year and, consequently, in the assessment year 1948-49, it filed its returns for the turnover of the previous year which, according to the system of accounting adopted by the applicant company, covered the period from 1st June, 1946, to 31st May, 1947. Under section 3-A of the U.P. Sales Tax Act, as amended by the U.P. Amendment Act No. XXV of 1948, power was granted to the State Government to lay down that, instead of sale of certain goods being taxed at the time of every sale tax may be imposed only at a single point in the series of sales by successive dealer. There was a further provision that, in such circumstances, the State Government could lay down that the tax on the sales of those goods at the single point of taxation may be assessed at a higher rate not exceeding one anna in the rupee. The exact language to these provisions of law, which need be considered by us, shall be quoted later on. In exercise of the power under section 3-A, the State Government issued a notification dated 8th June, 1948, in the U.P. Gazette (Extraordinary) of that date, declaring that, with effect from 9th June, 1948, the proceeds of sale of goods entered in column 2 of the schedule annexed to the notification shall not be included in the turnover of any dealer, except at the point in the series of sales by successive dealers mentioned in column 4 thereof under the circumstances shown in column 3 thereof. It was further laid down that, with effect from 9th June, 1948, the rate of tax in respect of the turnover of the aforesaid goods shall be as entered in column 5 of that schedule. As a result of this notification, non-edible oils had to be taxed at single points at the time of sale either by the importer or manufacturer depending on whether those non-edible oils were imported from outside U.P., or, were manufactured inside U.P. The rate of tax in respect of non-edible oils was declared to be 6 pies in the rupee. During the assessment proceedings of the applicant company, the Sales Tax Officer considered the question whether, while assessing the company for the assessment year 1948-49, the uniform rate of 3 pies per rupees should be applied to all the sales of the previous year in respect of tax which had to be assessed, or, whether, the applicant company being the manufacturer, the enhanced rate of 6 pies per rupee laid down in the notification dated 8th June, 1948, should be applied for any period. The Sales Tax Officer held that notification dated 8th June, 1948, came into effect after the expiry of 69 days of the assessment year 1948-49 and, consequently, the rate of 3 pies per rupee was to be applied to the turnover of the pervious year proportionate to this period of 69 days. When assessment the tax on the remaining turnover, the Sales Tax Officer applied the rate of 6 pies per rupee. Not satisfied with this decision of the Sales Tax Officer, the applicant company filed an appeal before the Judge (Appeals) who disagreed with the Sales Tax Officer and held that the rate laid down in this notification could not be applied, when assessing the tax on the turnover of the pervious year in the assessment year 1948-49 and the tax had to be calculated at the uniform rate of 3 pies per rupee. The Commissioner of Sales Tax filed a revision against this judgment of the Judge (Appeals). The Judge (Revisions), dealing with the revision filed by the Sales Tax Commissioner, agreed with the view that had been taken by the Sales Tax Officer and held that even though the applicant company was being assessed to sales tax on the basis of the turnover of the pervious year, the new rate applicable to sales of non-edible oils by a manufacturer laid down in the notification of 8th June, 1948, must be applied to this assessment. When actually applying this new rate, the learned Judge held that, for the period between 1st April, 1947, and 8th June, 1947, the rate applicable was 3 pies per rupee and, for the remaining period from 9th June, 1947, to 31st March, 1948, it was 6 pies per rupee. It appears that the Judge (Revisions) made a mistake about dates and proceeded on the assumption that the pervious year of this assessee company was from 1st April, 1947, to 31st March 1948. As we have mentioned earlier, the pervious year, according to the accounts of the applicant company, was from 1st June, 1946, to 31st May, 1947. The criterion that had been adopted by the Sales Tax Officer of dividing this period of one year in respect of the previous year in proportion to the periods in the assessment year falling before and after the notification came into effect was clearly the correct method of proceeding if the new rates, laid down in the notification, were at all to be applied. The learned Judge (Revisions), instead of proceeding on the basis of proportionate division of the two years, tried to take corresponding dates of the two years which was not at all possible. In the operative portion of the order, however, no error crept in as the learned Judge, when allowing the revision, set aside the order of the Judge (Appeals) and restored and confirmed the order of the Sales Tax Officer which had been passed on a logical basis. After the order of the Judge (Revisions), the applicant company mover the learned Judge to make a reference to this Court on the question of law arising in these circumstances. That application was dismissed and thereupon the applicant company moved this Court. A Bench of this Court, on 31st July, 1951 held that a question of law did arise and directed the learned Judge to formulate a question and refer it to this Court with a statement of the case. The statement of the case has been received and the learned Judge has formulated the question as follows :-
"Whether a manufacturer of a non-edible oil electing the previous year is liable to pay tax at the flat rate of 3 pies on the turnover of the whole year or at the rate of 3 pies on the turnover from 1st April, 1947, to 8th June, 1947, and at the rate of 6 pies in accordance with the notification issued under section 3-A on 8th June, 1948, on the turnover from 9th June, 1947, to 31st March, 1948 ?"
(2.) IT is obvious that, in framing the question also, the learned Judge (Revisions) has been misled by his impression that the previous year ran from 1st April, 1947, to the 31st of March, 1948. Obviously, the question requires to be re-framed so as to correspond to the actual previous year which was accepted by the Sales Tax Officer whose assessment was restored and confirmed by the learned Judge (Revisions). The question can be put in proper form as follows :-
"Whether the assessee, who is a manufacturer and a dealer of non-edible oils and who elected the pervious year as the basis of his assessment in the assessment year 1948-49, is liable to be assessed at the flat rate of 3 pies per rupee on the whole of the turnover of the previous year, or, whether he is liable to be assessed at the rates of 3 pies per rupee and 6 pies per rupee on the turnover of the previous year in proportion to the two periods from 1st April to 8th June, 1948, and from 9th June, 1948, to the 31st of March 1949 ?"
In dealing with this question, we have first to take notice of the fact that the provisions of sections 3, 3-A and 7 of the U.P. Sales Tax Act, as they stand now, are considerably different from what they were in the assessment year 1948-49. The U.P. Sales Tax Act, 1948 (U.P. Act No. XV of 1948), as originally passed and as it came into force on 1st April, 1948, laid down only one method of assessment of tax. Section 3 of the Act, as it then stood, laid down :-
"3. Subject to the provisions of this Act, every dealer shall pay on turnover in each assessment year a tax at the rate of 3 pies a rupee :" There were two provisos to this section, of which only the first proviso need be quoted. It is as follows :- "Provided that a dealer, whose turnover, in the previous year, is less than twelve thousand rupees, shall not be liable to pay the tax under this sub-section for that assessment year." There was no provision permitting the State Government to lay down that sales were not be taxed at every point of sale in successive sales of the same goods. Sub-section (1) of section 7 at that time was to the following effect :- "7. (1) Subject to the provisions of section 18, every dealer whose turnover in the previous year is Rs. 12,000 or more in a year shall submit such return or returns of his turnover of the previous year within sixty days of the commencement of the assessment year in such form and verified in such manner as may be prescribed : Provided that the assessing authority may in his discretion extend the date for the submission of the return by any person or class of persons."
(3.) IT is obvious that, at that time, it was contemplated that all the tax payable under the U.P. Sales Tax Act was to be assessed on the turnover of the previous year relating to the assessment year in question. It was subsequently amended by the U.P. Sales Tax Act (Amendment) Act, 1948 (U.P. Act No. XXV of 1948) when an alternative mode of assessment was provided. The main taxing section, viz., section 3, was retained in its original form though the provisos to that section were amended. In section 7, a new proviso was added as follows :-
"Provided that the Provincial Government may prescribe that any dealer or class of dealer may submit, in lieu of the return or returns specified in this section, a return or returns of his turnover of the assessment year at such intervals, in such from and verified in such manner as may be prescribed, and thereupon, all the provisions of this Act shall apply as if such return or returns had been duly submitted under this section." ;