{"id":25676,"date":"1979-05-04T00:00:00","date_gmt":"1979-05-03T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/babu-ram-jagdish-kumar-co-etc-vs-state-of-punjab-ors-etc-etc-on-4-may-1979"},"modified":"2015-02-17T13:25:17","modified_gmt":"2015-02-17T07:55:17","slug":"babu-ram-jagdish-kumar-co-etc-vs-state-of-punjab-ors-etc-etc-on-4-may-1979","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/babu-ram-jagdish-kumar-co-etc-vs-state-of-punjab-ors-etc-etc-on-4-may-1979","title":{"rendered":"Babu Ram Jagdish Kumar & Co., Etc., … vs State Of Punjab & Ors., Etc., Etc on 4 May, 1979"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Babu Ram Jagdish Kumar & Co., Etc., … vs State Of Punjab & Ors., Etc., Etc on 4 May, 1979<\/div>\n
Equivalent citations: 1979 AIR 1475, \t\t 1979 SCR (3) 952<\/div>\n
Author: E Venkataramiah<\/div>\n
Bench: Venkataramiah, E.S. (J)<\/div>\n
           PETITIONER:\nBABU RAM JAGDISH KUMAR & CO., ETC., ETC.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF PUNJAB & ORS., ETC., ETC.\n\nDATE OF JUDGMENT04\/05\/1979\n\nBENCH:\nVENKATARAMIAH, E.S. (J)\nBENCH:\nVENKATARAMIAH, E.S. (J)\nUNTWALIA, N.L.\nPATHAK, R.S.\n\nCITATION:\n 1979 AIR 1475\t\t  1979 SCR  (3) 952\n 1979 SCC  (3) 616\n CITATOR INFO :\n R\t    1981 SC1206\t (6,13)\n D\t    1984 SC1870\t (17)\n\n\nACT:\n     Punjab  Sales   Tax  Act,\t 1948-S.   31-Constitutional\nvalidity  of-Legislature.   If\tcould\tdelegate  power\t  to\nexecutive to add or delete anything in Schedules to the Act.\n     Words &  Phrases \"Taxable\tevent\" and \"taxable person\"-\nMeaning of.\n\n\n\nHEADNOTE:\n     Section  5(1)   of\t the  Punjab  Sales  Tax  Act,\t1948\nauthorises the\tState Government  to determine\tthe rates of\ntax  payable  on  the  taxable\tturnover  of  a\t dealer\t not\nexceeding the limit prescribed therein. Sub-section (2) lays\ndown the  principles  governing\t the  determination  of\t the\ntaxable turnover.  Schedule 'C'\t of the Act refers to goods,\nthe turnover of which is subject to purchase tax. Section 31\nof  the\t  Act  which  gives  specific  power  to  the  State\nGovernment to  amend Schedule 'C' provides that after giving\nby notification,  not less  than three months' notice of its\nintention so to do the State Government may add to or delete\nfrom Schedule 'C' any goods and thereupon Schedule 'C' shall\nbe deemed to be amended accordingly.\n     By a  notification dated  January 15,  1968  the  State\nGovernment added  in Schedule  'C', \"paddy\"  and  \"rice\"  as\nitems on  which purchase tax could be levied. As a result of\nthis notification turnover relating to the purchase of paddy\nand rice became exigible to purchase tax in the hands of the\npurchasers with effect from that date.\n     The appellants  who are  dealers in paddy, buy paddy in\nthe first instance and sell rice after converting paddy into\nrice.  They   filed  writ   petitions  in   the\t High  Court\nquestioning  the  validity  of\ts.31  of  the  Act  and\t the\nnotification  issued   thereunder  and\ttheir  liability  to\npayment of  purchase tax.  The High Court dismissed the writ\npetitions.\n     In appeal\tto this Court it was contended that s. 31 of\nthe Act\t which\tauthorised  the\t State\tGovernment  to\tvary\nSchedule 'C'  by adding certain goods whose turnover was not\nliable to  payment of  sales tax  earlier, suffered from the\nvice of excessive delegation of legislative power.\n     Dismissing the appeals,\n^\n     HELD:  1(a)  The  delegation  of  power  to  the  State\nGovernment to determine whether any class of goods should be\nincluded or  excluded from Schedule 'C' to the Act cannot be\nconsidered as unconstitutional. [967G]\n     (b) The  case in so far as s. 31 of the Act which is an\nintegral part of a single enactment and which authorises the\nState Government  to amend Schedule 'C' to the Act cannot be\ndifferent from the case which was dealt\n953\nwith by the Constitution Bench, in Pt. Banarsi Das Bhanot v.\nState of  M.P., [1959] SCR 427. If it is permissible for the\nLegislature to authorise the State Government to convert tax\nfree  goods   into  taxable   ones,  there   is\t hardly\t any\njustification for  holding that\t the State Government cannot\nbe entrusted with the power to include goods in Schedule 'C'\nmaking their purchase turnover taxable. [968 D-F]\n     (c) It is well established that the delegation of power\nby the\tlegislature to a local authority or to the executive\nGovernment to  vary or\tmodify an  existing law would not be\nunconstitutional so long as such delegation does not involve\nthe  abdication\t  of  essential\t legislative  power  by\t the\nlegislature. Such  delegations of  legislative\tpowers\thave\nbeen upheld  by this  Court on\tseveral varied\tand  diverse\ngrounds such  as the  scheme and policy of the statute under\nwhich the  power is delegated, the presence of guidelines in\nthe statute  regarding the  exercise of delegated power, the\nlack of\t time for  the legislature  to make  provision\twith\nregard to  all the details involved in the administration of\nlaw, the  incapacity of\t the legislature  to foresee  future\nevents, the  nature of the subject matter of the legislation\nand the\t nature of  the donee  of power etc. Even in matters\nrelating to  taxation laws,  it has  been consistently\theld\nthat the  legislature can delegate the power to fix rates of\ntax provided  there are\t necessary guidelines regarding such\nfixation on the ground that in a modern society, taxation is\none of\tthe methods  by which  economic and  social goals of\nState can  be achieved\tand  the  power\t to  tax  should  be\nflexible and  capable of  being easily\taltered to  meet the\nexigencies of  circumstances. Such  delegation has been held\nto be  not amounting  to delegation of essential legislative\nfunction. [959A-D]\n     Pt. Banarsi  Das Bhanot v. State of M.P. & Ors., [1959]\nSCR 427;  Municipal Corp. of Delhi v. Birla Cotton, Spinning\nand  Weaving   Mills,  Delhi  &\t Anr.,<\/a>\t[1968]\t3  SCR\t251;\nCorporation of Calcutta & Anr. v. The Liberty Cinema,<\/a> [1965]\n2 SCR  477; Sita Ram Bishambar Dayal & Ors. v. State of U.P.\nJUDGMENT<\/a>:\n<\/pre>\n
State of  U.P &\t Anr. etc.,  etc. [1973] 2 SCR 502; referred
\nto.\n<\/p>\n
     2(a) The  argument that  even  though  s.\t31  was\t not
\nunconstitutional  the\tnotification  was   not\t enforceable
\nagainst the  appellants has  no force.\tIn Pt.\tBanarsi\t Das
\nBhanot v.  State of M.P. it has been held that it is open to
\nthe Legislature\t to  delegate  the  power  to  withdraw\t the
\nexemption which has been given by the Legislature in respect
\nof  certain   transactions  specified\tin  the\t  Act  under
\nconsideration in  that case.  It cannot\t be  said  that\t the
\nprincipal object  of the  Act is  to encourage manufacturing
\nindustry. The  Act is a fiscal legislation and its object is
\nto  collect   revenue  for   the  purpose   of\tmeeting\t the
\nexpenditure of the Government. It is true that while levying
\ntax under  the Act,  the Legislature may grant exemptions in
\ncertain cases  and may\tdecline to grant exemption in other.
\nThe question  whether such  exemption should be given or not
\nis only\t incidental or\tancillary to  the  principal  object
\nviz.,  the   object  of\t levying  tax  for  the\t purpose  of
\ncollecting revenue.  It cannot\tbe said\t that  when  certain
\ngoods are  sold in  favour of  a manufacturer, the seller is
\nalways entitled to deduct such sales turnover from the gross
\nturnover. He can do so only when such goods are specified in
\nthe certificate\t of registration  obtained by  the purchaser
\nand they are used by him in the
\n954<\/span>
\nmanufacture in\tthe State  of any  goods  other\t than  goods
\ndeclared tax  free under  s. 6\tof the\tAct for\t sale in the
\nState. Transactions  in paddy cannot be considered as having
\nbeen generally\texempted from  payment of tax under the Act.
\nSection 5(2)(a)(ii) of the Act grants exemption from payment
\nof sales  tax on  the turnover\tof goods sold in favour of a
\nmanufacturer under  the circumstances mentioned therein only
\nto the\tseller and  not to  the buyer even though indirectly
\nthe buyer may be benefited thereby. [970A-F]\n<\/p>\n
     (b) The  terms “taxable  goods”,  “taxable\t event”\t and
\n“taxable person” are three distinct concepts. In the instant
\ncase the  “taxable event”  is the  purchase of paddy and not
\nits sale  which alone  attracts\t s.  5(2)(ii)  of  the\tAct.
\n“Taxable person”  i.e. the  person liable  to pay tax is the
\npurchaser and not the seller. The appellants cannot complain
\nthat any exemption granted to them by the Act has been taken
\naway. Even  though the\tliability to pay purchase tax may be
\non the\tappellants, it\tis bound to have repercssions on the
\nprice at  which they  buy paddy\t and the price at which rice
\nmanufactured by\t them out of that paddy is sold by them. The
\ntax payable  under the\tAct being  an indirect\ttax, the tax
\nburden would ordinarily fall on the consumer of rice and not
\non any\tof the\tintermediaries including the appellants. The
\nimpugned notification  cannot therefore,  be treated  as one
\nissued against the policy of the statute. [970G-H, 971A-B]
\n     State of  Tamil Nadu  v. M.  K. Kandaswami,<\/a> etc., etc.,
\n[1976] 1 SCR 38; referred to.\n<\/p>\n
&
\n     CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1028 of
\n1976.\n<\/p>\n
     Appeal by\tSpecial Leave  from the\t Judgment and  Order
\ndated 8-3-1976 of the Punjab and Haryana High Court in Civil
\nWrit Petition No. 354\/75.\n<\/p>\n
\t\t\t    AND
\n\t    CIVIL APPEAL NOS. 1029-1032 OF 1976
\n     Appeals by\t Special Leave\tfrom the  Judgment and Order
\ndated 8-3-1976\tof the Punjab & Haryana High Court in C.W.P.
\nNos. 564  and  582\/75  and  C.W.P.  Nos.  1988\tand  2000\/76
\nrespectively.\n<\/p>\n
\t\t\t    AND
\n\t       CIVIL APPEAL NO. 1033 OF 1976
\n     Appeal by\tSpecial Leave  from the\t Judgment and  Order
\ndated 31-5-1976 of the Punjab and Haryana High Court in C.W.
\nPetition No. 2580\/76.\n<\/p>\n
\t\t\t    AND
\n\t       CIVIL APPEAL NO. 1034 OF 1976
\n     Appeal by Special Leave from the Judgment and Order 10-
\n6-1976 of  the Punjab  & Haryana  High Court  in Civil\tWrit
\nPetition No. 2890\/76.\n<\/p>\n
955<\/span><\/p>\n
\t\t\t    AND
\n\t       CIVIL APPEAL NO. 1035 OF 1976
\n     Appeal by\tSpecial Leave  from the\t Judgment and  Order
\ndated 28-6-1976\t of the Punjab & Haryana High Court in Civil
\nWrit Jurisdiction No. 3216 of 1976.\n<\/p>\n
     M. C.  Bhandare, A.  K.  Sen,  (in\t CA  1029\/76),\tMrs.
\nSunanda Bhandare,  A. N.  Karkhanis, Miss Malini Poduval and
\nG. R. Sethi (in CA 1031\/76).\n<\/p>\n
     Soli J.  Sorabjee, Addl.  Sol. Genl.  (In CA  1028\/76),
\nHardev Singh for the Respondents.\n<\/p>\n
     The Judgment of the Court was delivered by
\n     VENKATARAMIAH, J.-In these appeals by special leave, we
\nare called  upon to  pronounce on the validity of section 31
\nof the\tPunjab General\tSales  Tax  Act,  1948\t(hereinafter
\nreferred to  as ‘the  Act’), the Notification dated the 13th
\nJanuary, 1968  issued thereunder by the Government of Punjab
\nand the\t liability of  the appellants  to pay  purchase\t tax
\nunder the  Act in  respect of  the turnover  relating to the
\npurchases of paddy made by them during the relevant period.\n<\/p>\n
     The appellants  are dealers in paddy and engaged in the
\nbusiness of  millers in\t the State of Punjab. They buy paddy
\nfrom growers  or katcha\t adatias, convert  it into  rice and
\nsell  rice.  Most  of  the  rice  manufactured\tby  them  is
\npurchased by  the State\t Government under  food\t procurement
\norders.\n<\/p>\n
     A brief  history of  the relevant provisions of the Act
\nis as follows:-\n<\/p>\n
     Under the\tAct as\tit was originally enacted, there was
\nno provision  levying tax  on the  purchase turnover  of the
\ngoods dealt  with by a dealer as defined in the Act. The Act
\nwas amended  by Punjab\tAct No. 7 of 1958 which received the
\nassent of  the Governor\t on April  18, 1958 and the amending
\nAct came  into force at once. The amending Act brought about
\nthe following changes in the Act:-\n<\/p>\n
     In the  long title\t of the\t Act, after the word “sale”,
\nthe words “or purchase” were inserted. Clause (d) of section
\n2 of  the Act  which defined  the  expression  ‘dealer’\t was
\namended so as to bring within the scope of that expression a
\nperson who  purchased any  goods in  the course\t of trade or
\nbusiness. The  turnover relating  to  purchases\t made  by  a
\ndealer subsequent to the commencement of the amending Act of
\ncertain goods was made liable to payment of tax. The
\n956<\/span>
\nword ‘purchase’\t was defined  by clause\t (ff) of  section  2
\nwhich was introduced by the amending Act as follows:-\n<\/p>\n
\t  “2. (ff)  ‘purchase’ with  all its  grammatical or
\ncognate expressions,  means the\t acquisition of\t goods other
\nthan sugarcane,\t foodgrains,  and  pulses  for\tuse  in\t the
\nmanufacture of\tgoods for  sale for cash or deferred payment
\nor other  valuable  consideration  otherwise  than  under  a
\nmortgage, hypothecation,  charge or  pledge.”.. (The rest of
\nthe clause is not necessary for the purpose of these cases).\n<\/p>\n
     Section 4\tof the\tAct was\t amended by  imposing tax on
\npurchases also\tsubject to  sections 5\tand 6 of the Act. It
\nis, however,  seen from\t clause (ff)  of section  2 that the
\npurchase of foodgrains was not covered by the definition and
\nremained unaffected by the above amending Act.\n<\/p>\n
     The Act  was further  amended by  Punjab Act  No. 13 of
\n1959  which   deleted  the   words  “other  than  sugarcane,
\nfoodgrains and\tpulses” in clause (ff) of section 2. Section
\n6 of  the Act  was repealed and substituted by a new section
\nwhich read as follows:-\n<\/p>\n
\t  “6. Tax free goods.-(1) No tax shall be payable on
\nthe sale  of goods specified in the first column of Schedule
\nC subject  to the conditions and exceptions, if any, set out
\nin the\tcorresponding entry in the second column thereof and
\nno dealer shall charge sales tax or purchase tax on the sale
\nor purchase, as the case may be, of goods which are declared
\ntax free from time to time under this section.
\n\t  (2)  The   State  Government\t after\t giving\t  by
\nnotification not  less than  three  months’  notice  of\t its
\nintention so to do may by like notification add to or delete
\nfrom Schedule  B or  Schedule C\t and thereupon Schedule B or
\nSchedule C,  as the  case may  be, shall  be  deemed  to  be
\namended accordinglly.”\n<\/p>\n
     It is  seen from  the above provision that the turnover
\nrelating to  the sale of goods mentioned in the first column
\nof Schedule  ‘C’ to  the Act  subject to  the conditions and
\nexceptions, if\tany, set  out in  the corresponding entry in
\nthe second column thereof was exempted from payment of tax.\n<\/p>\n
     By Punjab\tAct No.\t 24 of 1959, the above section 6 was
\nsubstituted by a new section which read as follows:-\n<\/p>\n
\t  “6. Tax free goods.-(1) No tax shall be payable on
\nthe sale  of goods specified in the first column of Schedule
\nB
\n957<\/span>
\n     subject to\t the conditions\t and exception,\t if any, set
\nout in\tthe corresponding entry in the second column thereof
\nand no\tdealer shall  charge sale  tax on  the sale of goods
\nwhich are  declared tax-free  from time\t to time  under this
\nsection.\n<\/p>\n
\t  (2)  The   State  Government\t after\t giving\t  by
\nnotification not  less than  three  months’  notice  of\t its
\nintention so  to do,  may by  like notification\t add  to  or
\ndelete from  Schedule B\t and thereupon\tSchedule B  shall be
\ndeemed to be amended accordingly.”\n<\/p>\n
     By Punjab\tAct No. 18 of 1960, clause (ff) of section 2
\nof the\tAct which  had undergone some alteration when Punjab
\nAct No.\t 24 of 1959 came into force was substituted by a new
\nclause which read:\n<\/p>\n
\t  “2. (ff)  ‘purchase’, with  all its grammatical or
\ncognate\t expressions,\tmeans  the   acquisition  of   goods
\nspecified in  Schedule C  for cash  or deferred\t payment  or
\nother  valuable\t  consideration\t otherwise   than  under   a
\nmortgage, hypothecation, charge or pledge.”\n<\/p>\n
     The effect\t of the said amendment was that the turnover
\nrelating to  the purchase of goods mentioned in Schedule ‘C’
\nto the\tAct became  liable  to\ttax  subject  to  the  other
\nprovisions of the Act. Section 4 of the Act was also amended
\nby the\tintroduction of\t sub-section  (2-A)  providing\tthat
\nnotwithstanding anything  contained in\tsub-sections (1) and
\n(2) of section 4 of the Act, no tax on the sale of any goods
\nshould be  levied if  a tax  on their  purchase was  payable
\nunder the  Act. Originally  seven items\t of goods  had\tbeen
\nspecified by  the State\t Legislature in\t Schedule ‘C’ to the
\nAct. By\t the Punjab  General Sales Tax (Amendment) Act, 1965
\n(Punjab Act  No. 28  of 1965) section 31 was inserted in the
\nAct authorising\t the State Government to amend Schedule ‘C’.
\nIt read as follows:-\n<\/p>\n
\t  “31.\tPower\tto  amend   Schedule   C-The   State
\nGovernment, after giving by notification not less than three
\nmonths’\t notice\t  of  its   intention  so   to\tdo,  may  by
\nnotification add  to, or  delete from, Schedule C any goods,
\nand thereupon  Schedule C  shall be  deemed  to\t be  amended
\naccordingly.”\n<\/p>\n
     The words\t‘three months’\tin the\tabove  section\twere
\nsubstituted by ‘twenty days’ by Punjab Act No. 7 of 1967.\n<\/p>\n
958<\/span><\/p>\n
     In\t exercise  of  the  power  conferred  by  the  above
\nprovision, the\tState Government  issued the Notification on
\nthe 15th  January, 1968\t adding paddy  and rice as items (8)
\nand (9)\t in Schedule  ‘C’. The\tresult was that the turnover
\nrelating to  the purchase  of paddy and rice became exigible
\nto payment of purchase tax under the Act in the hands of the
\npurchasers  with   effect  from\t  the  15th  January,  1968.
\nAggrieved by  the  said\t notification,\tthe  appellants\t who
\nbecame liable  to payment  of purchase\ttax on\tthe turnover
\nrelating to  the purchases  of\tPaddy  made  by\t them  filed
\npetitions under\t Article 226 of the Constitution on the file
\nof the\tHigh Court  of Punjab  and Haryana  questioning\t the
\nvalidity of  section 31\t of the\t Act, the Notification dated
\nthe 15th January, 1968 issued thereunder and their liability
\nto payment of purchase tax.\n<\/p>\n
     The  principal  contentions  urged\t by  the  appellants
\nbefore the  High Court\twere (1)  that section 31 of the Act
\nwhich authorised  the State Government to amend Schedule ‘C’
\nto the\tAct by\tadding certain\titems  making  the  turnover
\nrelating to  their purchases  liable to\t tax was void on the
\nground\tthat   it  suffered   from  the\t vice  of  excessive
\ndelegation  of\t legislative   power   and   therefore\t the
\nnotification issued  thereunder was  also void\tand (2) that
\nthe  appellants\t  who  were  carrying  on  the\tbusiness  of
\nmanufacturers of  rice could  not be  denied the  benefit of
\nsection 5(2)  (a) (ii)\tof  the\t Act  which  authorised\t the
\ndeduction from\tthe gross  turnover the turnover relating to
\nthe sales  of paddy effected in their favour notwithstanding
\nthe inclusion  of paddy in Schedule ‘C’ to the Act. The High
\nCourt rejected\tboth the  contentions of  the appellants and
\ndismissed the  writ petitions.\tHence  these  appeals  under
\nArticle 136 of the Constitution.\n<\/p>\n
     In this  Court also,  the very  same contentions  which
\nwere urged  before the\tHigh Court  were urged in support of
\nthe  appeals   with  some   slight  variations.\t  The  first
\ncontention urged  by Mr. M. C. Bhandare, learned counsel for
\nthe  appellants\t was  that  section  31\t of  the  Act  which
\nauthorised the\tState Government to vary Schedule ‘C’ to the
\nAct by adding certain goods whose turnover was not liable to
\npayment of  sales tax  before  suffered\t from  the  vice  of
\nexcessive  delegation\tof  legislative\t power\tand  in\t the
\nalternative he submitted that even if the said provision was
\notherwise valid,  it could  not be  interpreted as including
\nwithin its  scope the  power to\t issue a  notification which
\nwould run  counter to  the express legislative policy of the
\nAct contained  in section  5(2) (a)  (ii) thereof  which had
\nbeen enacted with the avowed purpose of giving assistance to
\nmanufacturing industries.\n<\/p>\n
959<\/span><\/p>\n
     A review  of the  decisions of  this Court\t to some  of
\nwhich we  will presently  refer shows that the delegation of
\npower by  the legislature  to a\t local authority  or to\t the
\nExecutive Government to vary or modify an existing law would
\nnot be\tunconstitutional so long as such delegation does not
\ninvolve the abdication of essential legislative power by the
\nlegislature. Such delegations of legislative power have been
\nupheld by  this Court  on several varied and diverse grounds
\nsuch as the scheme and policy of the statute under which the
\npower is  delegated,  the  presence  of\t guidelines  in\t the
\nstatute regarding  the exercise of delegated power, the lack
\nof time for the Legislature to make provision with regard to
\nall the\t details involved  in the administration of the law,
\nthe incapacity\tof the\tLegislature to\tforesee\t all  future
\nevents, the  nature of the subject matter of legislation and
\nthe nature  of the  donee of  power  etc.  Even\t in  matters
\nrelating to taxation law, it has been consistently held that
\nthe Legislature\t can delegate  the power to fix rates of tax
\nprovided  there\t are  necessary\t guidelines  regarding\tsuch
\nfixation on the ground that in a modern society, taxation is
\none of the methods by which economic and social goals of the
\nState can  be achieved\tand the\t power\tto  tax,  therefore,
\nshould be  a flexible  power and  capable  of  being  easily
\naltered\t to  meet  the\texigencies  of\tcircumstances.\tSuch
\ndelegation has\tbeen held  to be not amounting to delegation
\nof essential legislative function.\n<\/p>\n
     In Powell\tv. Appollo  Candle  Company  Limited(1)\t the
\nJudicial Committee  of the  Privy Council was called upon to
\ndecide whether\tsection 133 of the Customs Regulation Act of
\n1879 of\t New South  Wales which\t conferred the\tpower on the
\nGovernor to  impose tax on certain articles of import was an
\nunconstitutional  delegation   of  legislative\t powers.  In
\nholding that  it was not unconstitutional, the Privy Council
\nobserved:\n<\/p>\n
\t  “It is  argued that  the tax\tin question has been
\nimposed by the Governor and not by the Legislature who alone
\nhad power  to impose  it. But  the duties  levied under\t the
\nOrder-in-Council are  really levied  by the authority of the
\nAct under which the Order is issued. The Legislature has not
\nparted with  its perfect  control over the Governor, and has
\nthe power,  of course,\tat any\tmoment,\t of  withdrawing  or
\naltering the  power which  they have  entrusted to  him.  In
\nthese circumstances, their Lordships are of opinion that the
\njudgment of the Supreme Court was wrong in declar-\n<\/p>\n
960<\/span><\/p>\n
     ing Section  133 of  the Customs Regulation Act of 1879
\nto be beyond the power of the Legislature.”\n<\/p>\n
     In J.  W. Hampton Jr. & Company v. United States(1) the
\nvalidity of  the action\t of the President to make changes in
\nthe rates  provided in\tthe Tariff Act, 1922 under the power
\ndelegated by  the Congress arose for consideration. That was
\nchallenged as a forbidden delegation of legislative power to
\nexecutive authority.  The challenge  was  negatived  by\t the
\nSupreme Court  of the  United States  on the ground that the
\nCongress had  laid down\t by legislative\t act an intelligible
\nprinciple to  which the person authorised to fix the rate of
\ncustoms duties on imported merchandise was to conform.\n<\/p>\n
     The principle enunciated in the above two decisions has
\nbeen substantially adopted and followed by this Court in two
\ncases-(1) Pandit  Banarsi Das  Bhanot v. The State of Madhya
\nPradesh & Ors.<\/a> (2) and (2) Municipal Corporation of Delhi v.
\nBirla Cotton, Spinning and Weaving Mills, Delhi & Anr.<\/a>(3) to
\nwhich we shall refer hereafter.\n<\/p>\n
     In\t  Rajnarain    Singh   v.    The   Chairman,   Patna
\nAdministration Committee,  Patna  and  Another<\/a>(4)  where  an
\nearnest attempt was made to analyse and explain the judgment
\nof this\t Court in  re. The Delhi Laws Act, 1912(5). Bose, J.
\nafter referring\t in detail  to the  observations made by the
\nlearned Judges in the latter case observed at page 301:-\n<\/p>\n
\t  “In our  opinion, the\t majority view\twas that  an
\nexecutive authority  can  be  authorised  to  modify  either
\nexisting or  future laws  but not  in any essential feature.
\nExactly what  constitutes an  essential\t feature  cannot  be
\nenunciated in  general terms,  and there was some divergence
\nof view\t about this  in the  former case,  but this  much is
\nclear from  the opinions  set out above: it cannot include a
\nchange of policy.”\n<\/p>\n
     In Pandit\tBanarsi Das  Bhanot v.\tThe State  of Madhya
\nPradesh &  Ors.<\/a> (supra)\t where this Court was called upon to
\ndecide whether\tsection 6(2) of the C.P. and Berar Sales Tax
\nAct, 1947 which authorised the State Government after giving
\nby notification\t not less  than one  month’s notice  of\t its
\nintention so to do by a notification
\n961<\/span>
\nafter the  expiry of  the period  of notice mentioned in the
\nfirst notification  to amend  Schedule II  to that  Act\t was
\nconstitutional, it was held that it was not unconstitutional
\nfor  the  Legislature  to  leave  it  to  the  executive  to
\ndetermine details  relating to\tthe working  of the taxation
\nlaws, such  as the  selection of persons on whom the tax was
\nto be  laid, the  rates at  which it  was to  be charged  in
\nrespect of  different classes of goods and the like and that
\nthe power  conferred on the State Government by section 6(2)
\nof that\t Act to amend the Schedule relating to exemption was
\nin  consonance\t with  the   accepted  legislative  practice
\nrelating to  the topic. In that connection at page 435, this
\nCourt observed:\n<\/p>\n
\t  “Now, the  authorities are  clear that  it is\t not
\nunconstitutional for  the legislature  to leave\t it  to\t the
\nexecutive to  determine details\t relating to  the working of
\ntaxation laws,\tsuch as the selection of persons on whom the
\ntax is to be laid, the rates at which it is to be charged in
\nrespect of different classes of goods, and the like.”\n<\/p>\n
     The next  case  to\t which\treference  may\tbe  made  is
\nCorporation of\tCalcutta &  Anr. v.  The  Liberty  Cinema<\/a>(1)
\nwhere the  majority upheld  the fixaion\t of a  tax on cinema
\nshows  by  the\tCorporation  of\t Calcutta  even\t though\t the
\nCalcutta Municipal Act of 1951 prescribed no limits to which
\nthe tax\t could go.  In that case, reliance was placed on the
\ncase of\t Pandit Banarsi\t Das Bhanot  v. The  State of Madhya
\nPradesh &  Ors.<\/a> (supra) and it was held that the fixation of
\nrate of tax could be left to a non-legislative body provided
\nthe Legislature\t gave necessary\t guidance for such fixation.
\nThis Court  in that  case  found  guidance  in\tthe  various
\nprovisions of  the statute  including the fact that the body
\nwhich had  been authorised  to levy the rate was a municipal
\nbody whose fiscal requirements were restricted by the nature
\nand area of its jurisdiction.\n<\/p>\n
     In Municipal  Corporation of  Delhi  v.  Birla  Cotton,
\nSpinning  and\tWeaving\t Mills,\t  Delhi\t  &   Anr.<\/a>   (supra)
\nHidayatullah, J.  (as he  then was) upholding the imposition
\nof a  tax by  the Delhi Municipal Corporation in exercise of
\nthe  power   granted  to   it  under   the  Delhi  Municipal
\nCorporation Act 66 of 1957 observed at page 287 as follows:-\n<\/p>\n
\t  “The doctrine\t that Parliament cannot delegate its
\npowers, therefore,  must be  understood in a limited way. It
\nonly means that the legislature must not efface itself but
\n962<\/span>
\n     must give the legislative sanction to the imposition of
\nthe tax and must keep the control in its own hands. There is
\nno specific  provision in  the Constitution  which says that
\nthe  Parliament\t  cannot  delegate   to\t certain   specified
\ninstrumentalities the  power to effectuate its own will. The
\nquestion always\t is whether  the legislative  will has\tbeen
\nexercised  or\tnot.  Once   it\t is   established  that\t the
\nlegislature itself  has willed\tthat a\tparticular thing  be
\ndone and  has merely  left the\texecution of  it to a chosen
\ninstrumentality (provided  that it  has not  parted with its
\ncontrol) there\tcan be\tno question of excessive delegation.
\nIf  the\t  delegate  acts  contrary  to\tthe  wishes  of\t the
\nlegislature the\t legislature can  undo what the delegate has
\ndone.”\n<\/p>\n
     In Devi  Das Gopal Krishnan & Ors. v. State of Punjab &
\nOrs.(1) the  validity of section 5 of the Act (as originally
\nenacted) which conferred on the Government power to levy tax
\nat  such  rates\t as  the  Government  might  fix  arose\t for
\nconsideration. This Court held that such conferment of power
\non the\tGovernment to levy tax at the rates determined by it
\nwithout any  statutory limitation or guidance was void. This
\nCourt, however,\t held that  after section  5 was  amended by
\nPunjab Act  No. 19  of 1952 by imposing the restriction that
\nthe rates  determined by  the State  Government\t should\t not
\nexceed two paise in a rupee was valid as the Legislature had
\ndelegated the power to the Government to determine the rates
\nsubject to the restriction mentioned above. In the course of
\nthe above  decision,  Subba  Rao,  C.J.,  dealing  with\t the
\ndecision of this Court in Corporation of Calcutta v. Liberty
\nCinema<\/a> (supra) observed:\n<\/p>\n
\t  “If this decision is an authority for the position
\nthat the  Legislature can  delegate its power to a statutory
\nauthority to levy taxes and fix the rates in regard thereto,
\nit is  equally an  authority for  the position that the said
\nstatute to  be valid  must  give  a  guidance  to  the\tsaid
\nauthority for fixing the said rates and that guidance cannot
\nbe judged  by stereotyped  rules but  would depend  upon the
\nprovisions of a particular Act. To that extent this judgment
\nis binding  on us. But we cannot go further and hold, as the
\nlearned counsel\t for the  respondents asked  us to  do, that
\nwhenever a statute defines the purpose or purposes for which
\na statutory authority is constituted and empowers it to levy
\na tax  a that statute necessarily contains a guidance to fix
\nthe rates: it depends upon the provisions of each statute.”\n<\/p>\n
963<\/span><\/p>\n
     In Sita  Ram Bishambher Dayal & Ors. v. State of U.P. &
\nOrs.<\/a>(1) the  validity of section 3D(1) of the U.P. Sales Tax
\nAct, 1948 which authorised the levy of a tax on the turnover
\nof first  purchases made  by a\tdealer or  through a  dealer
\nacting as  a purchasing\t agent in  respect of  such goods or
\nclass of  goods, and  at such rates, not exceeding two paise
\nper rupee  in the  case of foodgrains, including cereals and
\npulses, and  five paise per rupee in the case of other goods
\nand with  effect from  such date, as may, from time to time,
\nbe notified  by the  State Government  in  that\t behalf\t was
\nquestioned on the ground that the delegation of power to the
\nState Government  to determine\tthe goods  or class of goods
\nwhose purchase turnover would be liable to tax and the rates
\nof purchase  tax subject  to the restriction imposed in that
\nregard by  that section\t suffered from the vice of excessive
\ndelegation. Repelling the above contention and upholding the
\nsaid provision,\t Hegde, J.  speaking for  the Court observed
\nthus:-\n<\/p>\n
\t  “It is  true that  the power\tto fix the rate of a
\ntax is\ta legislative power but if the legislature lays down
\nthe  legislative   policy   and\t  provides   the   necessary
\nguidelines, that  power can  be delegated  to the executive.
\nThough\ta  tax\tis  levied  primarily  for  the\t purpose  of
\ngathering revenue,  in selecting the objects to be taxed and
\nin determining\tthe rate of tax, various economic and social
\naspects,  such\t as   the   availability   of\tthe   goods,
\nadministrative\tconvenience,  the  extent  of  evasion,\t the
\nimpact of  tax levied on the various sections of the society
\netc. have  to be considered. In a modern society taxation is
\nan instrument  of planning.  It can  be used  to achieve the
\neconomic and  social goals of the State. For that reason the
\npower to  tax must be a fexible power. It must be capable of
\nbeing modulated\t to meet the exigencies of the situation. In
\na Cabinet  form of  Government, the executive is expected to
\nrefect the  views of  the  legislatures.  In  fact  in\tmost
\nmatters it  gives the lead to the legislature. However, much
\none might  deplore the “New Despotism” of the executive, the
\nvery complexity\t of the\t modern society\t and the  demand  it
\nmakes on its Government have set in motion forces which have
\nmade it absolutely necessary for the legislatures to entrust
\nmore and  more powers  to the  executive. Textbook doctrines
\nevolved in the 19th Century have become out of date. Present
\nposition as regards delegation of legislative power
\n964<\/span>
\n     may not  be ideal,\t but in\t the absence  of any  better
\nalternative, there  is no  escape from\tit. The legislatures
\nhave neither the time, nor the required detailed information
\nnor even the mobility to deal in detail with the innumerable
\nproblems arising time and again. In certain matters they can
\nonly lay down the policy and guidelines in as clear a manner
\nas possible.”\n<\/p>\n
     When the validity of section 3-D of U.P. Sales Tax Act,
\n1948 was  again challenged  before this\t Court in  Hira\t Lal
\nRattan Lal  etc. etc., v. State of U.P. & Anr. etc., etc.(1)
\non the\tvery same  ground, it was again upheld by this Court
\nwith the following observations:-\n<\/p>\n
\t  “The\tonly   remaining  contention   is  that\t the
\ndelegation  made  to  the  executive  under  s.\t 3-D  is  an
\nexcessive delegation. It is true that the legislature cannot
\ndelegate its  legislative functions  to any  other body. But
\nsubject to  that qualification,\t it is\tpermissible for\t the
\nlegislature to\tdelegate the  power to select the persons on
\nwhom  the   tax\t is  to\t be  levied  or\t the  goods  or\t the
\ntransactions on\t which the  tax is to be levied. In the Act,
\nunder s.  3 the legislature has sought to impose multi-point
\ntax on\tall sales  and purchases.  After having done that it
\nhas given power to the executive, a high authority and which
\nis  presumed   to  command   the  majority  support  in\t the
\nlegislature, to\t select for  special treatment\tdealings  in
\ncertain class  of goods. In the very nature of things, it is
\nimpossible for\tthe legislature to enumerate goods, dealings
\nin which  Sales tax or purchase tax should be imposed. It is
\nalso impossible\t for the  legislature to  select  the  goods
\nwhich should  be  subjected  to\t a  single  point  sales  or
\npurchase tax.  Before making such selections several aspects
\nsuch as\t the impact  of the  levy on  the society,  economic
\nconsequences and the administrative convenience will have to
\nbe considered.\tThese factors  may change from time to time.
\nHence in  the very  nature of things, these details have got
\nto be left to the executive.”\n<\/p>\n
     We shall now proceed to examine the validity of section
\n31 of  the Act\tin the\tlight of  the decisions\t referred to
\nabove. The expression ‘dealer’ is defined in section 2(d) of
\nthe Act\t as “any person including a Department of Government
\nwho in\tthe normal  course of  trade sells  or purchases any
\ngoods, in the State of Punjab.” Section 2(ff) of the
\n965<\/span>
\nAct defines  the expression  ‘purchase’ as  “acquisition  of
\ngoods  specified  in  Schedule\t‘C’  for  cash\tor  deferred
\npayment.” The  word ‘sale’ is defined in section 2(h) of the
\nAct as meaning “any transfer of property in goods other than
\ngoods  specified  in  Schedule\t‘C’  for  cash\tor  deferred
\npayment.” Sub-section  (1) of  section 4 of the Act which is
\nthe  charging\tsection\t provides   that  “subject   to\t the
\nprovisions of  sections 5  and 6,  every dealer\t (except one
\ndealing exclusively in goods declared tax-free under section
\n(6)  whose   gross  turnover  during  the  year\t immediately
\npreceding the  commencement of\tthe Act exceeded the taxable
\nquantum shall  be liable  to pay  tax under  the Act  on all
\nsales effected\tafter the  coming into\tforce of the Act and
\npurchases made after the commencement of East Punjab General
\nSales Tax  (Amendment) Act,  1958.” Section  5(1) of the Act
\nauthorises the\tState Government  to determine\tthe rates of
\ntax  payable  on  the  taxable\tturnover  of  a\t dealer\t not
\nexceeding the  limit prescribed\t therein. Subsection  (2) of
\nsection 5  of the Act lays down the principles governing the
\ndetermination of  “taxable turnover”.  During  the  relevant
\nperiod, sub-section  (2) of  section 5\tof the\tAct read  as
\nfollows :-\n<\/p>\n
\t  “5.  (2)  In\tthis  Act  the\texpression  “taxable
\nturnover” means\t that part  of\ta  dealer’s  gross  turnover
\nduring any period which remains after deducting therefrom-\n<\/p>\n
\t  (a)  his turnover during that period on-<\/p>\n
\t       (i)  the\t sale  of  goods  declared  tax-free
\nunder section 6;\n<\/p><\/blockquote>\n
\t       (ii) sales  to a\t registered dealer  of goods
\nother than  sales of  goods liable to tax at the first stage
\nunder sub-section  (1-A); declared  by him  in a  prescribed
\nform as\t being intended for resale in the State of Punjab or
\nsale in\t the course of inter-State trade or commerce or sale
\nin the\tcourse of  export of  goods out\t of the territory of
\nIndia,\tor   of\t goods\t specified  in\this  certificate  of
\nregistration or\t use by\t him in the manufacture in Punjab of
\nany goods,  other than goods declared tax-free under section
\n6, for sale in Punjab and on sales to a registered dealer of
\ncontainers or other materials for the packing of such goods:\n<\/p><\/blockquote>\n
\t       Provided\t that  in  case\t of  such  sales,  a
\ndeclaration duly  filled up  and signed\t by  the  registered
\ndealer
\n966<\/span>
\n\t\t    to\twhom   the  goods   are\t  sold\t and
\ncontaining  prescribed\tparticulars  on\t a  prescribed\tform
\nobtained from  the prescribed  authority is furnished by the
\ndealer who sells the goods:\n<\/p><\/blockquote>\n
\t       (ii) .. .. .. .. .. ..\n<\/p><\/blockquote>\n
\t       (iii).. .. .. .. .. ..<\/p><\/blockquote>\n<\/blockquote>\n
\t       (iv) sales  to\tany  undertaking   supplying
\nelectrical energy  to the public under a licence or sanction
\ngranted or  deemed to  have been  granted under\t the  Indian
\nElectricity Act,  1910, of  goods  for\tuse  by\t it  in\t the
\ngeneration or distribution of such energy;\n<\/p><\/blockquote>\n
\t       (v)  sales  or  purchases  of  goods  falling
\nunder section 29;\n<\/p><\/blockquote>\n
\t       (vi) the purchase of goods which are sold not
\nlater than  six monts  after the  close of  the year,  to  a
\nregistered dealer,  or in the course of inter State trade or
\ncommerce, or in the course of export out of the territory of
\nIndia;\n<\/p><\/blockquote>\n
\t       Provided that in the case of such a sale to a
\nregistered dealer, a declaration, in the prescribed form and
\nduly filled  up and  signed by the registered dealer to whom
\nthe goods  are soid,  is furnished  by the  dealer  claiming
\ndeduction.<\/p><\/blockquote>\n
\t       (vii)Such other\tsales or purchases as may be
\nprescribed;\n<\/p>\n
\t  (b)  the amount of sales tax included in the gross
\nturnover.”\n<\/p>\n
     Section 6 of the Act during the relevant period read as
\nsubstituted  by\t  Punjab  Act\tNo.  24\t of  1959  with\t the
\nmodification  made  by\tPunjab\tAct  No.  7  of\t 1967  which
\nsubstituted the\t words “twenty\tdays” in the place of “three
\nmonths” in sub-section (2) thereof.\n<\/p>\n
     Schedule ‘A’  to the  Act specified certain goods which
\nwere considered\t as luxury goods for purposes of levy of tax
\nat the\trates prescribed  by the  State Government under the
\nfirst proviso  to section  5(1), Schedule  ‘B’\tto  the\t Act
\nreferred to  the items\tof goods  which were treated as tax-
\nfree goods  under section  6 and  Schedule  ‘C’\t during\t the
\nrelevant period\t referred to the goods the turnover of which
\nwas subject  to\t purchase  tax.\t The  State  Government\t was
\nhowever, given power to amend all the three Schedules.\n<\/p>\n
967<\/span><\/p>\n
     It is  seen from  the provisions of the Act referred to
\nabove that  the Legislature  while directing  that  the\t tax
\nshall be  levied on  the turnover  of sales and purchases of
\ngoods under  section 4\tleft the  rates of tax payable to be
\ndetermined by the State Government under section 5(1) of the
\nAct  subject   to  the\t limits\t prescribed   therein.\t The
\nLegislature after  specifying  the  goods  which  should  be
\ntreated as  luxury goods,  tax-free goods  and\tgoods  whose
\npurchase turnover is liable to tax in Schedule ‘A’, Schedule
\n‘B’ and Schcdule ‘C’ respectively has delegated the power to
\nthe State  Government to  amend Schedule ‘A’ under the first
\nproviso to  sub-section (1) of section 5, Schedule ‘B’ under
\nsub-section (2)\t of section 6 and Schedule ‘C’ under section
\n31 of  the Act. In each of these cases, the State Government
\ncan make  the amendment only after giving previous publicity
\nto its\tintention to  do so  thus giving  an opportunity  to
\ninterested parties  to make  representations, if any. In the
\ncase of a democratic Government, this itself acts as a check
\non  arbitrary  exercise\t of  power.  At\t this  stage  it  is
\nnecessary to  refer to\tsub-section (2A) of section 4 of the
\nAct  and   that\t provides   that  notwithstanding   anything
\ncontained in  sub-sections (1)\tand (2) of section 4, no tax
\non the\tsale of\t any goods shall be levied if a tax on their
\npurchase is payable under the Act. The Act also contains the
\nmachinery for  assessment and  collection of tax. It follows
\nfrom the  scheme of  the Act  that no  tax is payable on the
\nsale of\t goods specified in the first column of Schedule ‘B’
\nsubject to the conditions and exceptions, if any, set out in
\nthe corresponding entry in the second column, thereof and no
\ndealer shall charge sales tax on the sale of goods which are
\ndeclared tax-free.  In so  far as goods included in Schedule
\n‘C’ to\tthe Act\t are concerned,\t tax can  be levied  only on
\ntheir purchase turnover. In the case of all other goods, tax
\nis levied  on their  sales turnover subject to section 5 and
\nother provisions  of the  Act. When  the State Government in
\nexercise of  its power under section 6(2) of the Act deletes
\nany goods from Schedule ‘B’, they cease to be tax-free goods
\nand their  sales turnover  would become liable to payment of
\ntax. When  the State  Government in  exercise of  its  power
\nunder section  31 of  the Act includes any goods in Schedule
\n‘C’, their  sales turnover  would become exempt from payment
\nof tax\tbut their  purchase turnover would become liable for
\npayment of  tax. We  are of  the view that the delegation of
\npower to the State Government to determine whether any class
\nof goods should be included or excluded from Schedule ‘C’ to
\nthe Act\t cannot be considered as unconstitutional in view of
\nthe decisions  of  this\t Court\treferred  to  above  and  in
\nparticular the\tdecision in Pandit Banarsi Das Bhanot v. The
\nState of Madhya Pradesh & Ors.<\/a> (supra) where section 6(2) of
\nthe Central Provinces and Berar Sales Tax Act, 1947 corres-\n<\/p>\n
968<\/span><\/p>\n
ponding\t to  section  6(2)  of\tthe  Act  was  upheld  by  a
\nConstitution Bench  of this  Court. The\t Constitution  Bench
\nwhile rejecting\t the  challenge\t of  section  6(2)  observed
\nthus:-\n<\/p>\n
\t  “The\tcontention   of\t the   appellant  that\t the
\nnotification  in  question  is\tultra  vires  must,  in\t our
\nopinion, fail  on another  ground. The\tbasic assumption  on
\nwhich the  argument of\tthe appellant  proceeds is  that the
\npower to  amend the  Schedule conferred\t on  the  Government
\nunder  s.  6(2)\t is  wholly  independent  of  the  grant  of
\nexemption under s. 6(1) of the Act, and that in consequence,
\nwhile an  exemption under  s. 6(1) would stand, an amendment
\nthereof by  a notification  under s.  6(2) might be bad. But
\nthat, in  our opinion,\tis not the correct interpretation of
\nthe section.  The two  sub-sections together  form  integral
\nparts of a single enactment, the object of which is to grant
\nexemption from taxation in respect of such goods and to such
\nextent as  may from  time to time be determined by the State
\nGovernment.  Section   6(1),  therefore,   cannot  have\t  an
\noperation independent  of s.  6(2), and an exemption granted
\nthereunder is  conditional and\tsubject to  any modification
\nthat might  be issued  under s.\t 6(2).\tIn  this  view,\t the
\nimpugned  notification\tis  intra  vires  and  not  open  to
\nchallenge.”\n<\/p>\n
     We are  of the  view that the case in so far as section
\n31 of  the Act\twhich is  also an  integral part of a single
\nenactment and which authorises the State Government to amend
\nSchedule ‘C’  to the  Act cannot  be different from the case
\nwhich was  dealt with  by the  Constitution Bench.  If it is
\npermissible for\t the  Legislature  to  authorise  the  State
\nGovernment to  convert tax  free goods\tinto  taxable  ones,
\nthere is hardly any justification for holding that the State
\nGovernment cannot  be entrusted\t with the  power to  include
\ngoods  in   Schedule  ‘C’  making  their  purchase  turnover
\ntaxable.\n<\/p>\n
     It was,  however, argued  by Mr. M. C. Bhandare that in
\nthe instant  case, the inclusion of paddy in Schedule ‘C’ to
\nthe Act\t was against  the policy  underlying  the  Act\tand,
\ntherefore, even\t though section\t 31  of\t the  Act  might  be
\nconstitutionally valid, the notification issued by the State
\nGovernment directing  inclusion of  paddy  in  Schedule\t ‘C’
\nshould be  held to be outside the scope of section 31 of the
\nAct. In\t other words, he contended that having regard to the
\nscheme of  the Act,  it was necessary for us to read section
\n31 of  the Act\tas not\tdelegating the\tpower to  the  State
\nGovernment to  include paddy in Schedule ‘C’ to the Act. The
\nargument of the learned counsel was that the appellants were
\npurchasing paddy either from agricul-\n<\/p>\n
969<\/span><\/p>\n
turists who  had grown\tit on  their  land  or\tfrom  katcha
\nadatias\t for   purposes\t of   manufacture  of  rice  in\t the
\ncircumstances mentioned in section 5(2) (a) (ii) of the Act.
\nIn either case no sales tax was being levied on the turnover
\nrelating to  the sales\tin their favour by reason of item 39
\nof Schedule  ‘B’ to the Act which declared that agricultural
\nor horticultural produce sold by a person or a member of his
\nfamily grown by himself or grown on any land in which he has
\nan interest whether as owner or usufructuary mortgage tenant
\nor otherwise  were tax\tfree goods  or of sub-clause (ii) of
\nclause (a)  of sub-section (2) of section 5 of the Act which
\nrequired the  turnover relating\t to sales  to  a  registered
\ndealer of goods specified in his certificate of registration
\nfor use\t by him\t in the\t manufacture in\t Punjab of any goods
\nother than  goods declared tax-free under section 6 for sale
\nin Punjab  to be  deducted from\t the gross  turnover of\t any
\ndealer in  order to  arrive at\t‘taxable turnover’.  It\t was
\nargued that  the tax  payable under  the Act was an indirect
\ntax and\t since no  sales tax  was leviable,  the  appellants
\ncould purchase\tpaddy  before  the  issue  of  the  impugned
\nnotification without  being saddled  with the  liability  of
\npayment\t of   sales  tax.   The\t policy\t underlying  section
\n5(2)(a)(ii) of\tthe Act\t was  that  manufacturers  of  goods
\nspecified in  the certificate  of registration\tobtained  by
\nthem should  be able  to  acquire  raw\tmaterial  for  their
\nindustry without incurring the extra liability of sales tax.
\nThis exemption\twhich the appellants were enjoying was taken
\naway indirectly\t by the\t State Government by including paddy
\nin Schedule  ‘C’ to  the Act  resulting in the imposition of
\npurchase tax  in respect  of its  turnover on  them. Relying
\nupon the  decision of  the High\t Court\tof  Madras  in\tSyed
\nMohamed &  Co. v.  The State of Madras<\/a>(1) it was argued that
\nsales tax  was in  effect tax  on the transaction of sale of
\ngoods by  one person to another and that it was unreasonable
\nto  assume   that  the\tLegislature  contemplated  different
\ncategories of transactions depending upon the point at which
\nthe tax\t was levied.  In support  of  this  contention,\t our
\nattention was also drawn to the observation made at page 571
\nin Devi\t Das Gopal Krishnan & Ors. v. State of Punjab & Ors.
\n(supra) and  in State  of Assam\t v.  Ramesh  Chandra  Dey  &
\nOrs.<\/a>(2). The  learned counsel  for the\tappellants contended
\nthat since  the exemption from payment of sales tax accorded
\nby the\tLegislature under  item 39 of Schedule ‘B’ and under
\nsection 5(2)  (a) (ii)\tof the\tAct was\t in respect  of\t the
\ntransaction of\tsale, it  was  not  open  to  the  Executive
\nGovernment to  take away the exemption by including paddy in
\nSchedule ‘C’  and since\t such inclusion\t was contrary to the
\nexpress policy of the statute, section 31 of the Act must be
\nso interpreted as not delegating the power to
\n970<\/span>
\ninclude paddy  purchased by  the appellants in Schedule ‘C’.
\nWe are,\t therefore asked to hold that even though section 31
\nwas  not   unconstitutional,  the   notification   was\t not
\nenforceable against the appellants. The above argument is no
\ndoubt quite  attractive but  we do not find any substance in
\nit since it overlooks the decision of the Constitution Bench
\nof this\t Court in Pandit Banarasi Das Bhanot v. The State of
\nMadhya Pradesh & Ors. (supra) where it has been held that it
\nis open to the Legislature to delegate the power to withdraw
\nthe exemption  which has  been given  by the  Legislature in
\nrespect of  certain transactions specified in Schedule II to
\nthe C.P.  and Berar  Sales Tax Act, 1947. Moreover it cannot
\nbe said that the principal object of the Act is to encourage
\nmanufacturing industry.\t The Act is a fiscal legislation and
\nits object  is to collect revenue for the purpose of meeting
\nthe expenditure\t of the Government. It is no doubt true that
\nwhile levying  tax under  the Act, the Legislature may grant
\nexemptions  in\tcertain\t cases\tand  may  decline  to  grant
\nexemptions  in\t other\tcases.\tThe  question  whether\tsuch
\nexemption should  be given  or not  is\tonly  incidental  or
\nancillary to the principal object viz. the object of levying
\ntax for the purpose of collecting revenue. It cannot also be
\nsaid  that   when  certain  goods  are\tsold  in  favour  of
\nmanufacturer, the  seller is  always entitled to deduct such
\nsales turnover\tfrom the  gross turnover.  He can do so only
\nwhen  such   goods  are\t specified  in\tthe  certificate  of
\nregistration obtained  by the purchaser and they are used by
\nhim in\tthe manufacture\t in Punjab  of any  goods other than
\ngoods declared\ttax-free under section 6 of the Act for sale
\nin  Punjab.  Transaction  in  paddy  cannot,  therefore,  be
\nconsidered as having been generally exempted from payment of
\ntax under  the Act.  It is  also to  be\t seen  that  section
\n5(2)(a)(ii) of\tthe Act\t grants exemption  from\t payment  of
\nsales tax  on the  turnover of\tgoods sold  in favour  of  a
\nmanufacturer under  the circumstances mentioned therein only
\nto the\tseller and  not to  the buyer even though indirectly
\nthe buyer  may be benefited thereby. If the observation made
\nby this\t Court in  State of  Tamil Nadu\t v. M. K. Kandaswami<\/a>
\netc., etc.(1)  that ‘taxable  goods’,  ‘taxable\t event’\t and
\n‘taxable person’  are three  distinct concepts\tis borne  in
\nmind, there  will be  no room  for  any\t confusion.  In\t the
\ninstant case, the taxable event is the purchase of paddy and
\nnot its\t sale which  alone attracts section 5(2) (a) (ii) of
\nthe Act and taxble person, that is person liable to pay tax,
\nis the\tpurchaser and not the seller. The appellants cannot,
\ntherefore, complain  that any  exemption granted  to them by
\nthe Act\t has been  taken away.\tEven though the liability to
\npay purchase  tax may  be on appellants, it is bound to have
\nrepercussions on the price at which they buy paddy and
\n971<\/span>
\nthe price  at which  rice manufactured\tby them\t out of that
\npaddy is  sold by  them.  The  tax  payable  under  the\t Act
\nadmittedly being  an  indirect\ttax  the  tax  burden  would
\nordinarily fall\t on the\t consumer of  rice and not on any of
\nthe intermediaries  including the  appellants. The  impugned
\nnotification cannot,  therefore, be  treated as\t one  issued
\nagainst the policy of the statute.\n<\/p>\n
     In view  of the  foregoing, we  hold that section 31 of
\nthe Act and the Notification issued thereunder do not suffer
\nfrom the vice of excessive delegation of legislative power.\n<\/p>\n
     We may  at this  stage refer  to one  other  subsidiary
\nargument urged\ton behalf  of the  appellants. It  is argued
\nthat because paddy and rice are not different kinds of goods
\nbut one\t and the  same, inclusion  of both paddy and rice in
\nSchedule ‘C’ to the Act would amount to imposition of double
\ntaxation under the Act. There is no merit in this contention
\nalso because  the assumption that paddy and rice are one and
\nthe same  is erroneous.\t In Ganesh  Trading Co.,  Karnal  v.
\nState of  Haryana &  Anr.<\/a> arising  under the Act, this Court
\nhas held  that although rice is produced out of paddy, it is
\nnot true  to say that paddy continued to be paddy even after
\ndehusking; that\t rice and  paddy are two different things in
\nordinary parlance  and therefore, when paddy is dehusked and
\nrice produced,\tthere is  a change  in the  identity of\t the
\ngoods. The  above decision  follows the principle enunciated
\nby this\t Court in  State of Punjab v. Chandu Lal Kishori Lal<\/a>
\nin which  it was  held that cotton seeds when separated from
\ncotton constituted  distinct commercial goods different from
\ncotton. The above contention has, therefore, to be rejected.\n<\/p>\n
     In\t the   result  these   appeals\tfail  and  they\t are
\ndismissed. The parties shall, however, bear their own costs.
\nN.K.A.\t  Appeals dismissed.\n<\/p>\n
972<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Babu Ram Jagdish Kumar & Co., Etc., … vs State Of Punjab & Ors., Etc., Etc on 4 May, 1979 Equivalent citations: 1979 AIR 1475, 1979 SCR (3) 952 Author: E Venkataramiah Bench: Venkataramiah, E.S. (J) PETITIONER: BABU RAM JAGDISH KUMAR & CO., ETC., ETC. Vs. RESPONDENT: STATE OF PUNJAB & […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-25676","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nBabu Ram Jagdish Kumar & Co., Etc., ... vs State Of Punjab & Ors., Etc., Etc on 4 May, 1979 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/babu-ram-jagdish-kumar-co-etc-vs-state-of-punjab-ors-etc-etc-on-4-may-1979\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Babu Ram Jagdish Kumar & Co., Etc., ... vs State Of Punjab & Ors., Etc., Etc on 4 May, 1979 - 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