- (1.) THIS is a petition under Article 226 of the Constitution praying that the U.P. Sales Tax Act, 1948, be declared ultra vires the Constitution and that a writ of mandamus, direction or other writ requiring the opposite parties to desist from demanding and realising the sales tax from the applicant on the sale of printed cotton or silk cloth be issued.
(2.) THE applicant is a firm carrying on business at Farrukhabad in printed cloth, both handloom and mill-made. The applicant firm takes handloom and mill-made cloth and then prints it and sells it as saris, lihafs, fards, bed-covers etc. The applicant firm is a wholesale dealer. It holds a licence under the U.P. Hand Printers and Hand Dyers Licensing Order, 1949. On the 1st of July, 1951, the Government issued a Notification No. ST-1798/X-902(51)-49 wherein the Governor of the U.P. State notified that no tax was payable on the sale of cloth manufactured on handlooms with artificial silk, linen, flax and cotton or wool. In October, 1951, the applicant was required to pay the tax under the U.P. Sales Tax Act (U.P. Act No. XV of 1948) It is the applicant's case that the handloom silk cloth sold by it does not lose its character of handloom silk cloth by the mere fact that it has been printed and put in the form of saris, covers for quilts and bed-covers and the sale of such cloth cannot be subjected to the payment of tax under the U.P. Sales Tax Act. Further, the applicant contends that inasmuch as (i) under section 2(c) of the U.P. Sales Tax Act, the departments of the State and the Central Governments have been excluded from the definition of a "dealer" and thus, exempted from the payment of the sales tax, (ii) under sections 3 and 4 of the Act, the Government has been given the power (which power is entirely unrestricted and arbitrary) to reduce the tax of or exempt any person or class of goods from the liability of payment of sales tax, and (iii) under section 4, the Spinners Association and Gandhi Ashram and its branches have been exempted from payment of tax under the Act, the Act as a whole is discriminatory and has, therefore, become void under Article 14 read with Article 13 of the Constitution.
(3.) SECTION 2(c) of the Act defines a "dealer" as follows :- "2. (c) 'Dealer' means any person of association of persons carrying on the business of buying or selling goods in Uttar Pradesh, whether for commission, remuneration or otherwise, and includes any firm or Hindu joint family and any society, club or association, which sells goods to its members; but does not include any department of the State Government or of the Indian Union (hereinafter called the Central Government)." The applicant's objection is to the clauses underlined above. Section 3 is a charging section and reads as follows :- "3. (1) Subject to the provisions of this Act, every dealer shall, in each assessment year, pay tax at the rate of 3 pies per rupee on his turnover of the previous year which shall be determined in such a manner as may be prescribed." Then follow several provisos. The first proviso, as it stood in the year 1951 when the cause of action for the applicant arose, was as follows :- "Provided that 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." This proviso is at present the second proviso and is in the following terms :- "Provided, secondly, that the State Government may, by notification in the official Gazette, reduce the rate of tax on the turnover in respect of any goods or class of goods, and thereupon the tax shall be payable on such turnover at the reduced rate." ;