- (1.) THESE are seven petitions under Article 226 of the Constitution by as many firms carrying on business as wholesale dealers in cloth in Bareilly in the State of Uttar Pradesh against the State, the Sales Tax Commissioner U. P. and the Sales Tax Officer Bareilly, impugning orders of assessment of sales tax passed against them respectively by the Sales Tax Officer Bareilly.
(2.) THIS judgment will govern all the seven writ petitions as the grounds on which the orders in question were passed, and those on which those orders are being challenged by the petitioners, are identical.
(3.) THE relevant provisions of the U. P. Sales Tax Act (15 of 1948) hereinafter referred to as the act, which came into force on 1-4-1948 and was passed by the Provincial Legislature by virtue of the power vested in it under Section 100 (3), read with Entry 48 in List II, Schedule 7, government of India! Act, 1935, may he set forth to begin with. The corresponding power is now conferred on the State Legislature by Article 246 (3), read with Entry 54 of List II, Schedule 7 of the Constitution. In accord with Section 99 (1), Government of India Act, corresponding with Article 245 (1) of the constitution, the Preamble of the Act shows that -it provides for the levy o tax on the sale of goods in the U. P. Section 2 (h) defines 'sale' as transfer of property in goods for valuable consideration and Explanations II and IV lay down what sales may be deemed to have taken place in the State of U. P. , the former acting on the pre-constitution principle of territorial nexus and the latter (added by Act 18 of 1953) incorporating the legal fiction contained in the explanation to Clause (1) of Article 286 of the Constitution. Incidentally, Section 27, which incorporates the provisions of Clauses (1) and (2) of Article 286 as to restrictions on the taxing power of a State in relation to Sales involving inter-state elements, was added to the Act by the Adaptation of Laws Order, 1950, as amended by the Adaptation of laws (Third Amendment) Order, 1951, published at p. 129 of Part II of the U. P. Gazette of 5-5-1951. Goods may be divided into three categories as those exempt from taxation (Section 4 and the first proviso to the definition of turnover), those liable to multiple point taxation (Section 3) and those liable to taxation at a single point in the series of sales by successive dealers (Section 3a ). The charging Sections 3 and 3a fix, subject to variation,, the taxable turnover on the aggregate of the proceeds of sale of a dealer (Section 21) and the rate of tax and make the dealer, defined in section 2 (c) as a person or association of persons carrying on personally or through an agent, the business of buying or selling goods in U. P. , liable for the same. The dealer has to submit returns in Form IV quarterly or yearly according as he elects the assessment year (Rules 39 and 41 (1))or the previous year (Rule 40 and Section 7 (1)) as the basis of assessment. In the former case there is a single and final assessment and in the latter a provisional, or to- the best of his judgment, assessment by the Sales Tax Officer, followed by a final assessment, in case the dealer fails to submit the return or submits it without depositing the tax payable on the turnover shown in his return (Rule 41 (3) ). If a dealer wishes to recover from his customers the sales, tax realised from him, he has to get himself registered under Section 8a of the Act. The petitioners are such registered dealers. The assessment is subject to appeal (Section 9) and revision Section 10 ). Under Section 24 the State Government has the power to make Rules to carry out the purposes of the Act.;