V.D. Bhargava, J. - (1.) This is a reference under section 11(3) of the U. P. Sales Tax Act. The applicant is a joint stock company carrying on the business of cotton cloth, yarn etc. at Lucknow. Under the Sales Tax Act the tax payable on cotton cloth and yarn is at single point and payable by the manufacturer. The applicant had been manufacturing the goods and selling its own goods to different depots. During the year 1950-51 the Mill transferred to its retail depots goods worth Rs. 45,16,161/15/3. It was contended on behalf of the applicant that they could charge only the ex-mill price plus excise duty plus sales tax on ex-mill price and the excise duty. The goods having been sold to the depots were disposed of during the year by the depots to the consumers for Rs. 46,54,333/12/6. The Sales Tax Officer assessed the applicant on the amount of sales as effected by the depots and not on the sales effected by the mills to the depots. The mill thereupon filed a revision to the Judge (Revisions) Sales Tax, Lucknow, but the revision was dismissed. Then an application was made under section 11 to the Judge (Revisions) Sales Tax to make a reference to the High Court. But the Judge (Revisions) was of opinion that there was no question of law necessitating a reference to this Court and he rejected the application. Thereupon an application was made under Section 11(3) of the Sales Tax Act. On 22-3-1955 a Bench of this Court directed the Judge (Revisions) Sales Tax to state a case and to refer it to the High Court. Thereupon, the case was stated by the judge (Revisions) Sales Tax by his order dated 27-8-1955 and accordingly this matter has come before us today.
(2.) Learned counsel far the applicant has argued that section 3A of the U. P. Sales Tax Act provides for single point taxation. Section 3A runs as follows :" Notwithstanding anything contained in section 3, the State Government may, by notification in the official Gazette, 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 the State Government may specify." Purporting to act under this provision the State Government passed a notification No. ST-117/X-923-1948 dated June 8, 1949. By that notification the Governor purporting to act under section 3A of the U. P. Sales Tax Act was pleased to declare that with effect from the 8th June, 1948, the proceeds of sale of goods entered in column 2 of the schedule thereto were not to be included in the turnover of any dealer except at the point in the series of sales by successive dealers mentioned in column 4 thereof under the circumstances shown in column 3 thereof. Out of the numerous items in the schedule, we are concerned with only two items. They are 'cotton yarn' manufactured by the mills and the 'cloth' manufactured by mills. If they are manufactured in the State, sales tax is to be paid at single point by the manufacturer at a rate of 6 pies .per rupee. Thus from this notification it is clear that the sales tax is payable by the manufacturer as the goods are manufactured in the present case in the State.
(3.) Clause 4 of the U. P. Controlled Cotton Cloth and Yarn Dealers' Licensing Order, 1948, runs as follows:-" Subject to the provision of clause 16 no person other than a dealer shall obtain or attempt to obtain or store for sale or distribute controlled cotton cloth or cotton yarn and save as hereinafter provided, no dealer shall obtain or attempt to obtain or store for sale or distribution or sell or distribute or attempt to sell or distribute to any person controlled cotton cloth or cotton yarn except under and in accordance with the conditions of a licence in the appropriate form granted under this Order." Thus nobody was to purchase cloth without licence. There are different classes of licences provided and we are concerned with only two licences for the purpose of this case. One licence is issued in Form B for cloth and that licence is to buy controlled cotton cloth as a 'district importer' in mill packed bales or split bales. This licence is meant for the purpose of wholesale dealers, who directly obtain cloth from the manufacturer. The other class is Form B-1. That licence is to buy controlled cotton cloth from persons other than manufacturers in mill packed bales and sell in mill packed bales or split bales. From the above order it is quite clear that the mill was not in a position to sell directly to the retail dealers. Nobody could purchase cloth from the mills except under licence in Form B.;