JUDGMENT

Arijit Pasayat, J. — Challenge in this Appeal is to the judgment rendered by a Division Bench of the Allahabad High Court repelling the challenge to constitutional validity of Section 8-E of the Uttar Pradesh Trade Tax Act, 1948 (in short the Act). By the impugned judgment several writ petitions involving identical challenge were disposed of. Aforesaid Section 8-E of the Act was inserted by Section 7 of the U.P. Act No. 11 of 2001.

2. A brief reference to the factual aspects would suffice.

3. Appellant filed the writ petition, inter alia, with following stands:-

Appellant is an agent of principals situated outside the State of Uttar Pradesh, who for the sake of convenience are described as Ex-U.P. Principals. Appellant purchased Mentha Oil for and on behalf of Ex-U.P. Principals and dispatched them to the said principals on the basis of agreements entered into. One consignment of Mentha Oil was detained by the Trade Tax officer, Mobile Squad, Jhansi and the driver was informed by a notice that the detention was made because the appellant had not deducted the tax from the sellers/agriculturists and had not deposited the same in terms of Section 8-E of the Act. Appellant sent a reply on 11.7.2001 stating that the purchase of Mentha Oil was for and on behalf of Ex-U.P. Principals from the agriculturists and all the documents accompanying the consignment clearly established this fact. When the authority insisted on deposit of the tax in terms of Section 8-E of the Act the Writ Petition was filed. Because similar detentions were made in case of others, writ petitions were filed challenging constitutional validity of Section 8-E of the Act. The primary challenge was that the seller was not a "dealer" as defined in the Act i.e. Section 2(c). Reference was made to proviso to the provision in this regard. Further the transactions in question being inter-state in character the State Government did not have legislative competence to provide for deduction of tax in respect of such transactions. The respondents-State and its functionaries who were respondents in the writ petition supported the constitutional validity of the impugned provision.

4. The High Court basically came to the conclusion that the language of a statutory provision can be narrowed down if that is necessary to sustain the constitutional validity. Accordingly it was held that the language of Section 8-E of the Act shall be narrowed down so as to make it applicable only the intra-State sales/purchases and held the provision to be valid. It was further held that even though the agriculturists/farmers who sell their produces to the appellant cannot be treated as "dealer" in view of proviso to Section 2(c), yet appellant had a liability to pay purchase tax on the purchases made in view of Section 3(1) of the Act. Though the High Court held that the trade tax authority concerned may decide in respect of each transaction on the facts of each case whether it is an intra-State sale or purchase or not, that according to the High Court did not affect validity of Section 8-E.

5. Questioning correctness of the judgment of the High Court learned counsel for the appellant submitted the High Court clearly missed to notice the basic issues involved. The transactions being undisputedly inter-State transactions, the State legislature had no competence to provide for deduction of tax at the time of making purchase. Strong reliance was placed on the decisions of this Court in Steel Authority of India Ltd. v. State of Orissa and others [2000 (3) SCC 200] and Nathpa Jhakri Joint Venture v. State of H.P. and Others [2000 (3) SCC 319] with reference to the decisions of this Court in M/s Bhawani Cotton Mills Ltd. v. State of Punjab and Anr. (AIR 1967 SC 1616). It was submitted that when a person has ultimately no liability to pay tax, he cannot be compelled to go through the procedure provided under the statute for the purpose of assessment and determination of tax liability, if a