Ramaswami, J. - (1.) These appeals are brought, by special leave, from the judgment of the Allahabad High Court dated November 30, 1962 in Miscellaneous Sales Tax Reference No. 144 of 1958 and other connected references.
(2.) The appellants are manufacturers and dealers of oil in the Province of Uttar Pradesh and they have their own depots outside the Province. For the financial year 1948-49 and the subsequent period from April 1, 1949 to January 25, 1950, the appellants had sent their goods to their depots outside the Province of Uttar Pradesh, for example to Calcutta in the State of West Bengal before any contract of sale in respect of the goods was made. After the goods had reached the depots outside the Province of Uttar Pradesh, they were sold to various parties. The Sales Tax Officers of Uttar Pradesh assessed the outside sales of all the appellants to sales tax under the Uttar Pradesh Sales Tax Act 15 of 1948, hereinafter called the 'Act'. It appears that this category of sales roughly amounted to more than one crore of rupees in the case of the appellants and the sales tax was levied at the rate of 3 pies per rupee subject to a rebate under S. 5 of the Act and certain other adjustments. Aggrieved by the assessments, the appellants took the matter in appeal under Section 9 of the Act. The appeals were heard by various Appellate Officers called Judge, Appeals. Some of the Appellate Officers held that the assessment was properly made, while some others took the view that the assessments made for outside sales were improper and the assessment order should be quashed. The parties aggrieved by the appellate orders filed revisions before the revising authority called Judge, Revisions, under Section 10 of the Act. By his judgment dated July 10, 1957 the Judge, Revisions, held that the out-of-State sales would be taxable (1) if the goods were in existence in the Province of Uttar Pradesh at the time when the contracts for sale were made, and (2) if the goods were manufactured after the contracts for sale were made in respect of them and were subsequently appropriated towards those contracts. He further held that sales of goods which were not only manufactured but also exported before any contracts for sale were made would not be taxable. Under S. 11 of the Act, the Commissioner of Sales Tax applied to the Revising Authority for making a reference of the case to the High Court. By its order dated January 23, 1958 the Revising Authority drew up a statement of the case and referred to the Allahabad High Court the following two questions of law for determination: "(1) Whether clause (ii) of the Explanation II to Section 2 (h) U. P. Sales Tax Act provides for taxing sales in which goods were manufactured or produced in U. P. but for which the contract for sale was made after the goods had left the State 2. If the reply to the above is in affirmative, whether this provision is ultra vires - By its judgment dated November 30, 1962, the High Court answered the first question in the affirmative and the second question in the negative.
(3.) It is necessary at this stage to refer to the relevant statutory provisions which were in force during the material period. Section 99 of the Government of India Act, 1935 authorised a Provincial Legislature, subject to the provisions of that Act to make laws for the Province or for any part thereof. Section 100 (3) of that Act provided that, subject to the two preceding sub-sections, the Provincial legislature had, and the Federal Legislature had not, power to make laws for any province or any part thereof with respect to any of the matters enumerated in List II of the Seventh Schedule to that Act. The matter enumerated in Enty 48 in List 11 was "Taxes on the sale of goods and on advertisements". It was in exercise of this legislative power that the Uttar Pradesh State Legislature enacted Act 15 of 1948 which came into force on April 1, 1948. Section 3 of the Act provides as follows:- "3. Liability to tax under the Act - 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: Provided that (i) the Provincial Government may, by notification in the official Gazette, reduce the rate of tax on the turnover of any dealer or class of dealers or on the turnover in respect of any goods or class of goods; (ii) a dealer whose turnover in the previous year is less than Rs. 12,000 or such larger amount as may be prescribed shall not be liable to pay the tax under this Act for the assessment year; ********** Section 2 (c) defines a "dealer' to mean "any person or association of persons carrying on the business of buying or selling and supplying goods in the United Provinces, whether for commission, remuneration or otherwise and includes any firm or Hindu joint family and any society club or association which sells or supplies goods to its members, but does not include any department of the Provincial Government or of the Indian Union (hereinafter called the 'Dominion Government') ". Section 2 (h) is to the following effect: "sale means, within its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration and includes forward contracts but does not include a mortgage, hypothecation, charge of pledge; ********** Explanation II. - Notwithstanding anything in the Indian Sale of Goods Act, 1930, or any other law for the time being in force, the sale of any goods - (i) which are actually in the United Provinces at the time when in respect thereof, the contract of sale as defined in section 4 of that Act is made, (ii) or which are produced or manufactured in the United Provinces by the producer or manufacturer thereof, shall, wherever the delivery on contract of sale is made, be deemed for the purposes of this Act to have taken place in the United Provinces. ********** " Section 10 states: "Power of revision. - (1) The Provincial Government shall appoint as Revising Authority a person qualified under sub-section (3) of Section 220 of the Government of India Act, 1935, for appointment as Judge of a High Court. (2) The appellate authority appointed under Section 9 shall be under the superintendence and control of the Revising Authority. (3) The Revising Authority may in its discretion at any time suo motu or on being moved by the Commissioner of Sales Tax or on the application of any person aggrieved, call for and examine the record of any order made or proceedings recorded by any appellate or assessing authority under this Act for the purpose of satisfying itself as to the legality or propriety of such order or as to the regularity of such proceedings and may pass such order as he thinks fit (4) The Revising Authority shall not pass any order under sub-section (3) adversely affecting any person unless an opportunity has been given to such person to be heard. (5) If the amount of assessment is reduced by the Revising Authority under sub-section (3) it shall order the excess amount of tax if already realized to be refunded". Section 11 is to the following effect: "Statement of case to High Court (1) Within sixty days from the passing by the Revising Authority of any order under sub-section (3) of Section 9 or sub-sec. (1) of Section 10 affecting any liability of any dealer to pay tax under this Act, such dealer may, by application in writing accompanied by a fee of one hundred rupees, require the Revising Authority to refer to the High Court any question of law arising out of such order. (2) If, for reasons to be recorded in writing, the Revising Authority refuses to make such reference, the applicant may, within thirty days of such refusal, either (a) withdraw his application (and if he does so, the fee shall be refunded) , or (b) apply to the High Court against such refusal. (3) If upon the receipt of an application under clause (b) of sub-section (2) , the High Court is not satisfied that such refusal was justified, it may require the Revising Authority to state a case and refer it to the High Court and on receipt of such requisition the Revising Authority shall state and refer the case accordingly. 4. If the High Court is not satisfied that the statement in a case referred under this section is sufficient to enable it to determine the question raised thereby, it may refer the case back to the Revising Authority to make such additions thereto or alterations therein as the High Court may direct in that behalf. ********** By the Amending Act of 1954 (U. P. Act VIII of 1954) which came into force on April 1, 1954 the following provisions were substituted in place of sub-sections (1) , (3) and (4) :- "(1) Within one hundred and twenty days from the date of service of the order under sub-section (3) of Section,10, the person aggrieved, may, by application in writing require the Revising Authority to refer to the High Court any question of law arising out of such order. (3) The provisions of sub-section (1) shall also be applicable to the Commissioner of the Sales Tax with the modification that it shall not be necessary for him to deposit any fee (4) If on any application being made under sub-section (1) or (3) the Revising Authority refuses to state the case . .....the person aggrieved or the Commissioner of Sales Tax as the case may be, may .............apply to the High Court ............" ;