PATHAK, J. - (1.) THE Additional Judge (Revisions), Sales Tax, has referred the following question : "Whether on the facts and circumstances of the case, the assessee was entitled to exemption from the payment of sales tax under Notification No. ST-4485/X dated 14th December, 1957, on his sales of imported mill-made cloth for the period from 14th December, 1957, to 31st March, 1958, when he failed to furnish proof to the satisfaction of the assessing authority that the additional excise duty had been paid on the said cloth ?"
(2.) THE respondent, M/s. Ram Saran Jagannath, deals in mill-made cloth. He was assessed to tax under the U.P. Sales Tax Act for the year 1957-58. An appeal by the respondent was dismissed. He applied in revision. His principal submission during the hearing of the revision application was that the turnover of mill-made cloth was exempt from tax for the period 14th December, 1957, to 31st March, 1958, by reason of Notification No. 4485/X dated 14th December, 1957. The Additional Judge (Revisions) accepted the plea, and granted relief. At the instance of the Commissioner of Sales Tax, the Additional Judge (Revisions) has made the present reference. The connected reference (S.T.R. No. 142 of 1970) has been made on similar facts, and it relates to the period 1st April, 1958, to 30th June, 1958, which falls within the assessment year 1958-59. It raises an identical question. On 24th December, 1957, Parliament enacted the Additional Duties of Excise (Goods of Special Importance) Act, 1957. The object of the legislation was to impose an additional duty of excise on certain goods of special importance in lieu of sales tax levied by the Union and the States on those goods. The reason for the legislation was explained by the Supreme Court in M/s. Chhotabhai Jethabhai Petal and Co. v. State of Uttar Pradesh (A.I.R. 1962 S.C. 1614.) as follows : "Because of the difficulties experienced in inter-State sales on a large scale of certain articles the Central Government with the concurrence of the State Government imposed an enhanced Central excise duty on the sale of those articles which was to be equivalent to and substitute for the sales tax levied upon them, and the sum so collected by the imposition of the enhanced Central excise duty on those articles was to be distributed by the Central Government to the State Governments concerned and they (the State Governments) agreed to exempt those articles from sales tax. As a result of this arrangement the Additional Duties of Excise (Goods of Special Importance) Act (Act 58 of 1957) was passed by Parliament." Section 3 of the Act provided for the levy of an additional excise duty in respect of, inter alia, cotton fabrics, rayon or artificial silk fabrics and woolen fabrics, produced or manufactured in India and on all such goods lying in stock within the precincts of a factory, warehouse or other premises where the said goods were manufactured, stored or produced, or in any premises appurtenant thereto. Section 3 of the U.P. Sales Tax Act charges tax for each assessment year at a specified rate on the turnover of that year. Section 4(1) exempts the turnover of certain commodities from the tax. Clause (a) enumerates the commodities respecting which there is absolute exemption, and clause (b) provides for the exemption of : "The sale of any goods by the All-India Spinners' Association or Gandhi Ashram, Meerut, and their branches or such other persons of class of persons, as the State Government may from time to time exempt on such conditions and on payment of such fees, if any, not exceeding eight thousand rupees annually, as may be specified by notification in the Official Gazette."
(3.) IN order to give effect to the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the Government of Uttar Pradesh issued Notification No. ST-4485/X dated 14th December, 1957. It was issued under section 4(1)(b) of the U.P. Sales Tax Act. It provided that no tax would be payable under the U.P. Sales Tax Act with effect from 14th December, 1957, by dealers in respect of mill-made textiles described therein provided that the additional excise duty leviable thereon from the closing of business on 13th December, 1957, was paid on such goods and that the dealers thereof furnished proof to the satisfaction of the assessing authority that such duty had been paid.;