The amendment of S. 15 of the Assam Sales Tax Act, 1947 and Rule 80 framed under the Act were not ultra vires Art. 286(2) of the Constitution.

Judgment

HIDAYATULLAH, J. : This appeal has been filed by the State of Assam against a judgment of the High Court of Assam dated July 16, 1956.* By the judgment under appeal, the High Court held that S. 15 of the Assam Sales Tax Act. 1947 and Rule 80 framed under the Act were ultra vires, being a breach of Art. 286 (2) of the Constitution. The High Court granted a certificate under Art. 132(1) of the Constitution.

* See (S) AIR 1956 Assam 177.

2. R. C. Day, the answering respondent, is a wholesale dealer in tea, and has been in business since 1940. He registered himself as a dealer under the Assam Sales Tax Act on January 14, 1950. His business consists mainly of buying tea in Assam and selling it either in Assam or in Calcutta. In respect of tea sold in Calcutta. R. C. Dey consigns the tea to himself after purchasing it in Assam. This tea is then approved by prospective purchasers, to whom the documents of title are endorsed on receipt of the price.

3. In 1951 the Assam Sales Tax Act was amended by the Assam Sales Tax (Amendment) Act, 1951 (4 of 1951). Section 15 of the Act before the amendment provided that in calculating the net turnover of a registered dealer for tax purposes all sales made to another registered dealer of goods specified in the latter s certificate of registration were to be excluded from the gross turnover, if the goods were bought for resale. By the amendment in 1951, the section was amended by the addition of the words "in the State" after the words "resale". Thus, in calculating the net turnover of a registered dealer, the goods intended for resale in the State could alone be excluded from the gross turnover. This amendment was followed by amendment of the Rules. Rule 80 was enacted to provide as follows:

"80. (1) A dealer who wishes to deduct from gross turnover the amount of sales on the ground that he is entitled to make such deductions under clause (b) of sub-sec. (1) of S. 15 shall, on demand produce in respect of such sales the copy of the relevant cash memo or bill according as the sale is a cash sale or a sale on credit, and a true declaration in writing by the purchasing dealer or by such responsible person duly authorised by the purchasing dealer in this behalf that the goods in question are specified in the certificate of registration of such dealer.

(2) For purposes of this rule the declaration shall be in the following form :

I/We. . . . .hereby declare that I/We have purchased the goods herein mentioned for the purposes for use in the manufacture of goods for sale in the State, or for use in the execution of a contract in the State or for re-sale in the State, and further declare that these goods have been specified in/our certificate of registration bearing No..... in the District of. . .. "

4. R. C. Day filed a petition under Art. 226 of the Constitution, challenging the amendment and the Rule, and contended that they offended against Art. 286(2) and Part XIII of the Constitution and were, thus ultra vires. He also submitted that the amendment and the Rules were void as offending Art. 19(1)(g). The last submission was given up in the High Court, and the Objection about Part XIII of the Constitution which was decided against him must be taken to have been abandoned, because none appeared on his behalf to urge this point. We need not refer to Art. 19 or Part XIII of the Constitution. The High Court upheld his contention about Art. 286 (2). In the High Court separate judgments were delivered by the learned Chief Justice and Ram Labhaya J. They both agreed that S. 15, as amended, and the Rule were ultra vires Art. 286(2). The reasons given by the learned Judges were different. According to the Chief Justice, the amendment and the Rule had the effect of taxing sales in the course of inter-State trade or commerce and were, therefore, illegal. Ram Labhaya, J. held that the sale to R. C. Dey and the sale by him in Calcutta were separate sales, and that the first sale was not in the course of inter-stat