Alagiriswami, J. - (1.) These appeals arise out of the judgment of the High Court of Mysore dismissing a batch of writ petitions filed by a number of dealers in the State of Mysore (now Karnataka) questioning the levy of sales tax under the Central Sales Tax Act on certain inter-State sales. The goods dealt with were all declared goods and under the Mysore Sales Tax Act they were taxable at the point of purchase at a single point. The assessment periods are prior to 10th November 1964. The importance of this date will become clear when we proceed to deal with the matter subsequently. The assessing authorities assessed all these transactions of inter-State sales to tax. This Court delivered its judgment in what is known as Yaddalam's case, (supra) holding that where a certain transaction was not liable to sales tax if it were an intra-State sale under the Sales Tax Law of the appropriate State, it would not be liable to sales tax if it were an inter,State sale. Following this decision the assessment orders were rectified giving effect to the judement. To set aside the effect of this decision sub-s. (1A) was inserted in Section 6 and a consequential amendment was made in sub-s. (2A) of Section 8 of the Central Sales Tax Act. After this the assessing authorities again rectified the assessment orders and brought to tax the inter-State sales.
(2.) Before this Court the validity of Section 8 (2) (a) as well as Section 6 (1A) of the Central Sales Tax Act read with Section 10 of the Central Sales Tax (Amendment) Act, 1969 is questioned. In the alternative it is argued that even after the amendment these transactions are not liable to sales tax. The rectification orders are also impugned on the ground: 1. that there was no mistake apparent on the face of the record to justify the rectification under R. 38 of the Mysore Sales Tax Rules, and 2. that in any case such rectification is beyond the permitted period.
(3.) The first contention regarding the unconstitutionality of S. 8 (2) (a) is sought to be based on the decision of this Court in G. Rayon Silk Mfg. (Wvg.) Co. Ltd. v. Asst. Commr. 33 SIC 219 - (AIR 1974 SC 1660= 1974 Tax LR 2017) dealing with the constitutionality of, section 8 (2) (b). We consider that far from supporting the appellants that decision actually is against the contention put forward on behalf of the appellants. It is only necessary to set out what this Court said in that decision. It is hardly necessary to add anything more. In that case the majority while upholding the validity of Section 8 (2) (b) observed: "It has been argued on behalf of the appellants that the fixation of rate of tax is a legislative function and as the Parliament has, under Section 8 (2) (b) of the Act, not fixed the rate of Central sales tax but has adopted the rate applicable to the sale or purchase of goods inside the appropriate State in case such rate exceeds 10 per cent the Parliament has abdicated its legislative function. The above provision is consequently stated to be constitutionally invalid because of excessive delegation of legislative power. This contention, in our opinion, is not well founded. Section 8 (2) (b) of the Act has plainly been enacted with a view to prevent evasion of the payment of the Central sales tax. The Act prescribes a low rate of tax of 3 per cent in the case of inter-State sales only if the goods are sold to the Government or to a registered dealer other than the Government. In the case of such a registered dealer, it is essential that the goods should be of the description mentioned in sub-section (3) of Sec. 8 of the Act. In order, however, to avail of the benefit of such a low rate of tax under Section 8 (1) of the Act, it is also essential that the dealer selling the goods should furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer, to whom the goods are sold, containing the prescribed particulars in the prescribed form obtained from the prescribed authority, or if the goods are sold to the Government not being a registered dealer, a certificate in the prescribed form duly filled and signed by a duly authorised officer of the Government. In cases not falling under sub-section (1), the tax payable by any dealer in respect of inter-State sale of declared goods is the rate applicable to the sale or purchase of such goods inside the appropriate State:vide Section 8 (2) (a) of the Act. As regards goods other than the declared goods, Section 8 (2) (b) provides that the tax payable by any dealer on the sale of such goods in the course of inter-State trade or commerce shall be calculated at the rate of 10 per cent or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher. The question with which we are concerned is whether the Parliament in not fixing the rate itself and in adopting the rate applicable to the sale or purchase of goods inside the appropriate State has not laid down any legislative policy and has abdicated its legislative function. In this connection we are of the view that a clear legislative policy can be found in the provisions of Section 8 (2) (b) of the Act. The policy of the law in this respect is that in case the rate of local Sales tax be less than 10 per Cent, in such an event the dealer, if the case does not fall within S. 8 (1) of the Act, should pay Central Sales tax at the rate of 10 per cent. If, however, the rate of local sales tax for the goods concerned be more than 10 per cent in that event the policy is that the rate of Central sales tax shall also be the same as that of the local sales tax for the said goods. The object of law thus is that the rate of Central sales tax shall in no event be less than the rate of local sales tax for the goods in question though it may exceed the local rate in case that rate be less than 10 per cent. For example, if the local rate of tax in the appropriate ,State for the non declared goods be 6 per cent, in such an event a dealer, whose case is not covered by, Section 8 (1) of the Act would have to pay Central sales tax at the rate of 10 per cent. In case, however, the rate of local sales tax for such goods be 12 per cent, the rate of Central sales tax would also be 12 per cent because otherwise, if the rate of Central sales tax were only 10 per cent, the unregistered dealer who purchases goods in the Course of inter-State trade would be in a better position than an intra-State purchaser and there would be no disincentive to the dealers to desist from selling goods to unregistered purchasers in the course of inter-State trade. The object of the law apparently is to deter inter-State sales to unregistered dealers as such inter-State sales would facilitate evasion of tax. It is also not possible to fix the maximum rate under Section 8 (2) (b) because the rate of local sales tax varies from State to State. The rate of local sales tax can also be Changed by the State Legislatures from time to time. It is not within the competence of the Parliament to fix the maximum rate of local sales tax. The fixation of the rate of local sales tax is essentially a matter for the State Legislatures and the Parliament does not have any control in the matter. The Parliament has therefore necessarily, if it wants to prevent evasion of payment of Central sales tax, to tack the rate of such tax with that of local sales tax, in case the rate of such local sales tax exceeds a particular limit." ..................... ........................... .................. "The adoption of the rate of local sales tax for the purpose of the Central Sales tax as applicable in a particular State does not show that the Parliament has in any way abdicated its legislative function. Where a law of Parliament provides that the rate of Central sales tax should be 10 per cent or that of the local sales tax, whichever be higher, a definite legislative policy can be discerned in such a law, the policy being that the rate of Central sales tax should in no event be less than the rate of local sales tax. In such a case, it is, as already stated above, not possible to mention the precise figure of the maximum rate of Central sales tax in the law made by the Parliament because such a rate is linked with the rate of local sales tax which is prescribed by the State Legislatures. The Parliament in making such a law cannot be said to have indulged in self-effacement. On the contrary, the Parliament by making such a law effectuates its legislative policy according to which the rate of Central sales tax should in certain contingencies be not less than the rate of local sales tax in the appropriate State. A law made by Parliament containing the above provision cannot be said to be suffering from the vice of excessive delegation of legislative function. On the contrary, the above law incorporates within itself the necessary provisions to carry out the objective of the Legislature, namely to prevent evasion of payment of Central sales tax and to plug possible loopholes." Mathew, J. speaking for himself and the learned Chief Justice held: "We think that Parliament fixed the rate of tax on inter-State sales of the description specified in S. 8 (2) (b) of the Act at the rate fixed by the appropriate State Legislature in respect of intra-State sales with a purpose, namely, to check evasion of tax, on inter-State sales and to prevent discrimination between residents in one State and those in other States. Parliament thought that unless the rate fixed by the States from time to time is adopted as the rate of tax for inter-State sales of the kind specified in the sub-clause, there will be evasion of tax in inter State sales as well as discrimination. We have already pointed out in our judgment in State of Tamil Nadu v. Sitalakshmi Mills Ltd. Civil Appeals Nos. 2547-2549 of 1969 and 105-106 of 1970 (since reported in 33 STC 200) = (AIR 1974 SC 1505= 1974 Tax LR 1995) the objectives which Parliament wanted to achieve by adopting the rate of tax in the appropriate State for taxing the local sales. And for attaining these objectives Parliament could not have fixed the rate otherwise than by incorporating the rate to be fixed from time to time by the appropriate State Legislature in respect of local sales. It may be noted that in so far as inter-State sales are concerned, the Central Sales Tax Act, by Section 9 (2) has adopted the law of the appropriate State as regards the procedure for levy and collection of the tax as also for imposition of penalties." It is only necessary to add that the legislative policy laid down by Parliament in Section 8 (2) (a) is that inter-State trade should not be discriminated against. If the argument of the appellants is accepted there will have to be unending series of amendments to this section every time one State or other alters its rate of tax,;