M.C.Desai, C. J. - (1.) This is a statement of a case submitted by the Judge (Revisions) Sales Tax, U.P., under Section 11(1) of the Sales Tax Act at the instance of the assessee ; the following two questions have been formulated by the Judge (Revisions): (1) Whether in the circumstances and on the facts of the case the applicants were liable to pay sales tax on the sale of crystal sugar as being within the definition of the term 'importers' as prescribed in Rule 2(d-1) of the Sales Tax Rules ? (2) Whether the definition of the term 'importers' as given in Rule 2(d-1) is ultra vires the rule-making power of the Government ?
(2.) The facts as stated in the statement are these : The assessee is a dealer in sugar at Lucknow. The Regional Director of Food, Government of India, imported sugar from Java for distribution among dealers in sugar in various places in the country. One of the dealers selected by him for sale of sugar at the controlled price was the assessee and he issued a permit to it authorising it to sell sugar. He sent sugar from Bombay to Lucknow ; the railway receipt was prepared in his name and was sent to the State Bank at Lucknow. The State Bank received the price from the assessee and delivered the railway receipt to it after making the necessary endorsement and the assessee took delivery at Lucknow. Later it sold it in the course of its business and the question arises whether it was liable to pay sales tax on the turnver of the sale. Under Section 3 of the Act every dealer has to pay sales tax at a certain rate on his turnover in each assessment year. This provision is subject to Section 3-A laying down that the State Government may declare that the turnover in respect of any goods shall not be liable to tax except at such single point in the series of sales by successive dealers as it may specify. In exercise of this power the State Government issued a notification No. ST-822/X dated 1st April, 1953, declaring that the turnover in respect of sugar shall not be taxed except "in the case of sugar imported from outside Uttar Pradesh, at the point of sale by the importer." Sugar was undoubtedly imported from outside Uttar Pradesh and, therefore, under the notification sales tax was payable only on the turnover of sale by the importer. "Importer" is defined not in the Act, but in the Sales Tax Rules ; Rule 2(d-1) defines importer as follows: 'Importer' means as respects goods imported into Uttar Pradesh from any other State in India (a) in a case where the goods are not imported for the purpose of resale in the same condition as they were imported by the person who imported them, the dealer in such other State, who made the sale as a direct result of which the goods are imported into Uttar Pradesh ; (b) in a case where the goods are imported for the purpose of resale in the same condition as they were imported by the person who imported them, the dealer who makes the first sale after the sale as a direct result of which the goods were imported into Uttar Pradesh ; and (c) in a case where the goods are imported into Uttar Pradesh otherwise than as a direct result of a sale, the dealer, who makes the first sale after such import.
(3.) When the question arose for assessment for the assessment year 1954-55 the assessee contended that it was not liable to pay tax on the turnover of sale of the sugar because the first sale of it made in U.P. was by the Regional Director (i.e. to it) and that the Regional Director was the importer and not it. The Sales Tax Officer applied Clause (b) of Rule 2(d-1) to the case and held that the assessee was the importer, because the first sale by a dealer, after the sugar was imported into Uttar Pradesh, was made by it. Actually there were two sales, one by the Regional Director to the assessee through the State Bank and then by the assessee to its customers. The Regional Director was not a dealer because he did not sell the sugar to the assessee in the course of any business of selling and supplying goods in Uttar Pradesh ; consequently, the sale by him-though the first sale-was not the first sale by a dealer and the first sale by a dealer was the sale by the assessee to its customers-though it was a second sale. The Sales Tax Officer assessed the assessee. His order was set aside by the Judge (Appeals), but was restored by the Judge (Revisions) acting under Section 10. The Judge (Revisions) agreeing with the Judge (Appeals) held that Clauses (a) and (b) of Rule 2 (d-1) did not apply to make the assessee an importer but disagreeing with him held that Clause (c) applied. He stated as a finding of fact that the sugar had not been imported into Uttar Pradesh as the direct result of a sale and this finding excluded (a) and (b) from application. He further found that the sugar had been imported into Uttar Pradesh by the Regional Director and not by the assessee. Though according to the ordinary meaning the Regional Director could be the importer, according to the artificial meaning given through Rule 2(d-1) the assessee was the importer, because it was the first dealer who made the first sale after the import. In fact the first sale, after the import, was made by the Regional Director, but he was not a dealer and, therefore, it was not a sale by a dealer. The Judge (Revisions) rejected the assessee's contention that the rule should be interpreted in such a way that the assessee, who had not imported the sugar, could not be brought within the definition of "importer"; he saw no justification for considering the dictionary meaning of importer when interpreting Rule 2(d-1). The assessee then contended that the definition in Rule 2(d-1) was ultra vires inasmuch as it was inconsistent with the provisions of the Act. The Judge (Revisions) saw no conflict between the definition and any of the provisions in the Act. He observed that Section 3-A gave power to the State Government to decide at which single point the turnover of sugar could be assessed and that this included the power to define terms used in the notification. Since no sales tax was payable by the State Government and it had power to determine any point as the point at which sales tax would be payable, the Judge (Revisions) held that it had power to notify that it will be payable by a dealer even though he might not have actually imported sugar into Uttar Pradesh. Then at the instance of the assessee he submitted this statement of the case.;