DESAI, J. - (1.)THIS is a case referred by the Judge (Revisions) Sales Tax, U.P., under section 11(1) of the U.P. Sales Tax Act, at the assessee's instance, inviting this Court to answer the following two questions :
"(1) Whether the word 'successive' used in section 3-A of the U.P. Sales Tax Act includes the first dealer ? (2) Whether in view of sections 14 and 15 of the Central Sales Tax Act, section 7 of the Additional Duties of Excise (Goods of Special Importance) Act, and the definition of 'sugar' as given in the Central Excises Act, the U.P. Government could impose tax on khandsari sugar for the periods (1) 1st April, 1958 to 30th September, 1958 and (2) 1st October, 1958 to 28th February, 1959 ?"

(2.)THE associated references except Sales Tax Reference No. 9 of 1964 are similar to this and the same questions have been referred. In Sales Tax Reference No. 9 of 1964 the facts are similar but the question referred is :-
"Whether in view of section 7 taxation of sugar as defined by section 2(c) would include khandsari sugar and whether in interpreting the phrase sugar the definition of sugar as given at the relevant item of the Central Excises and Salt Act in the First Schedule shall be borrowed in spite of the notification No. M.F. (R.D.) 11-C-Exc. dated 19th July, 1952, issued by the Central Government."

All references arise out of assessment to sales tax for the assessment year 1958-59 on the assessees, who are manufacturers of khandsari sugar by means of power. Under section 3 of the Sales Tax Act, sales tax is payable at a certain rate by every dealer for each assessment year on his turnover of the year. The State Government is authorised by section 3-A to declare, by notification in the official Gazette, 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 and to declare the rate at which it shall be liable. In exercise of this power the State Government issued Notification No. 418/X-902 (9)-52 dated 31st January, 1957, declaring that with effect from 1st February, 1957, the turnover in respect of khandsari sugar manufactured in Uttar Pradesh shall be liable to tax only at the point of sale by the manufacturer and at the rate of 3 pies per rupee. Article 286(3) of the Constitution, as it was in force after the amendment of 1956, provided that any State law, so far as it imposed a tax on the sale of goods declared by Parliament "to be of special importance in inter-State trade or commerce" was to be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament might by law specify. Under section 3 of the Central Excises and Salt Act of 1944 duties of excise were levied and collected on sugar (defined in item 8 of the First Schedule as "any form of sugar containing more than ninety per cent. of sucrose") produced in a factory ordinarily using power in its production, including khandsari sugar (defined as "sugar" in the manufacture of which neither a vacuum pan nor a vacuum evaporator is employed"), at certain rates. In 1956 Parliament enacted the Central Sales Tax Act imposing sales tax on sales effected by a dealer in the course of inter-State trade or commerce. Under section 14 of it certain goods including sugar, as defined in the Central Excises and Salt Act, were declared to be "of special importance in inter-State trade or commerce". These goods are known as "declared goods". Section 14 was enacted in order to enable Parliament to impose, in exercise of the powers conferred by Article 286(3), restrictions and conditions in regard to the system of levy, rates and other incidents of sales tax imposed on sale of sugar by a State Sales Tax Act. Section 15 (as it stood after its amendment on 4th June, 1957) was to the effect that every sales tax law of a State imposing a tax on the sale of declared goods was subject to the restrictions and conditions that it could be levied "only in respect of the last sale ....... inside the State and not exceed two per cent. of the sale ...... price" and could not be levied even in respect of the last sale if the goods were intended for sale in the course of inter-State trade or commerce. On 24th December, 1957, Parliament passed the Additional Duties of Excise (Goods of Special Importance) Act (No. 58 of 1957) in order to provide for collection of additional duties of excise on sugar and certain other goods and the distribution of a part of the net proceeds thereof among the States in pursuance of the principles of distribution formulated and recommendations made by the Finance Commission in its report dated 30th September, 1957, and for declaring the goods to be of special importance in inter-State trade or commerce. Sugar was defined in section 2(c) of the Act to have the meaning assigned to it in item No. 8 of the First Schedule to the Central Excises and Salt Act, 1944. Section 3 provided that duties to excise at the rate of Rs. 3.31 per cent. were to be levied and collected in respect of sugar manufactured in India in addition to the duties of excise chargeable on it under the Central Excises and Salt Act, 1944, or any other law for the time being in force; these duties were known as "additional duties". By section 7 it was declared that sugar and certain other goods were "of special importance in inter-State trade or commerce and every sales tax law of a State shall, in so far as it imposes ....... a tax on the sale ...... of the declared goods, be subject as from the 1st day of April, 1958, to the restrictions and conditions specified in section 15 of the Central Sales Tax Act, 1956". The result was that with effect from 1st April, 1958, the sales tax imposed on sugar by the U.P. Sales Tax Act could not exceed two per cent. of the sale price thereof and could not be levied except on the last sale.

(3.)ON 13th December, 1957, it became known to the States, through publication in the Gazette of India of the Bill of the Additional Duties of Excise Act (No. 58 of 1957) that sugar was going to be declared to be of special importance in inter-State trade of commerce and that with effect from 1st April, 1958, they would not be able to levy sales tax on sugar at more than one stage and exceeding two per cent. of the sale price. So the State Government of U.P. issued on 14th December, 1957, Notification No. 4485/X amending the earlier Notification No. 418 dated 31st January, 1957, and directing that no sales tax shall be payable with effect from 14th December, 1957, by dealers in respect of sugar including khandsari sugar provided that the additional Central excise duties leviable on it from the closing of business from 13th December, 1957, had been paid and the dealers thereof had furnished proof to the satisfaction of the assessing authority about the payment.