BAKHAT RAM TAKHAT RAM Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) THE petitioners, who are in number, are dealers in paddy. The petitioners Nos. 1 to 26 are millers, who purchase paddy, husk it and sell rice. The remaining petitioners are wholesale dealers who purchase paddy and get it hulled and processed by other millers and sell the rice so produced. They are all registered under the provisions of the U.P. Sales Tax Act. Hitherto paddy was not liable to purchase tax nor was it liable to sales tax. Recently, the State Government of U.P. has issued a notification dated 15th November, 1971, under which the turnover of purchases of paddy is sought to be taxed by the sales tax department. The petitioners have deposited purchase tax in respect of the third and fourth quarters of the year 1971-72. According to the petitioners, they are not liable to any tax in respect of the purchase of paddy and are entitled to the refund of the tax already paid. Hence this and other connected petitions under article 226 of the Constitution.

(2.) SECTION 3-D of the U.P. Sales Tax Act is the charging section under which purchase tax is levied on the turnover of first purchases of such commodities and at such rate not exceeding 2 paise per rupee in respect of the foodgrains including cereals and pulses, and five paise per rupee in the case of other goods and with effect from such date, as may from time to time be notified by the State Government. The Governor of Uttar Pradesh issued an Ordinance, Uttar Pradesh Taxation Laws (Amendment) Ordinance 1971 (U.P. Ordinance No. 19 of 1971). It came into force on 15th November 1971. Section 3 of the Ordinance has amended section 3-D of the U.P. Sales Tax Act. The amendment so far as material for our purpose is as under :

(3.) IT will be immediately noticed that the restriction in the unamended section 3-D(1) that the tax would be leviable on the first purchases only was removed in respect of foodgrains, even though such restriction was retained in respect of other goods. The notification of 15th November, 1971, reproduced above, purports to impose a tax at the rate of 1 per cent. at all points of purchases in respect of foodgrains [clause (ii)] while under clause (iii) the tax is levied on the turnover of first purchases of goods mentioned in List II.