1976 Supreme(P&H) 29

PUNJAB & HARYANA HIGH COURT
Bhopinder Singh Dhillon and Harbans Lal JJ.
Babu Ram Jagdish Kumar And Co.
Versus
State Of Punjab
Civil Writ No. 354 of 1975,
Civil Miscellaneous Petition No. 618 of 1975,
Decided On : MARCH 8, 1976

The power conferred on the State Government under Section 31 of the Act to add to or delete from Schedule C is neither unconstitutional nor excessive.

Headnote:

Punjab General Sales Tax Act, 1948 - Section 31 - Constitutional validity - Excessive delegation of legislative power - Section 31 does not suffer from excessive delegation of legislative policy - It is constitutionally valid and within the permissible limit of delegation of legislative powers - Section 31 is intra vires and the power conferred on the State Government to add to or to delete from Schedule C is constitutionally valid and is within the permissible limit of delegation of legislative powers.

Fact of the Case:

The petitioners, who are licensed rice millers, challenged the notification dated 15th January, 1968, including paddy in Schedule C to the Act, on the grounds that Section 31 of the Act, which has conferred power on the State Government to add any goods in Schedule C for the purpose of levying purchase tax suffers from excessive delegation of legislative power and is, thus, ultra vires the Constitution; that the inclusion of paddy in Schedule C by the impugned notification has resulted in withdrawing the exemption conferred on the purchasers of goods to be used for the purpose of manufacture under Section 5(2)(a)(ii) of the Act, which cannot be done by the delegated authority because the exemption was given by the legislature in the Act itself; the petitioner is not a dealer as defined in Section 2(d) of the Act, because the paddy purchased by the petitioner is not sold as such. The same is only used for the purpose of manufacturing rice, which is not allowed to be sold by the Government in open market and 95 per cent of the rice is acquired by the Government under the Procurement Order at a fixed price. Under the circumstances, the petitioner does not carry on the business of purchasing paddy and selling rice (in the normal course of business).

Finding of the Court:

The Court held that Section 31 of the Act is intra vires and the power conferred on the State Government to add to or to delete from Schedule C is constitutionally valid and is within the permissible limit of delegation of legislative powers. The Court further held that the petitioner is a dealer as defined in Section 2(d) of the Act, because the paddy purchased by the petitioner is not sold as such. The same is only used for the purpose of manufacturing rice, which is not allowed to be sold by the Government in open market and 95 per cent of the rice is acquired by the Government under the Procurement Order at a fixed price. Under the circumstances, the petitioner does carry on the business of purchasing paddy and selling rice (in the normal course of business).

Issues: Whether Section 31 of the Act suffers from excessive delegation of legislative power? Whether the inclusion of paddy in Schedule C by the impugned notification has resulted in withdrawing the exemption conferred on the purchasers of goods to be used for the purpose of manufacture under Section 5(2)(a)(ii) of the Act? Whether the petitioner is a dealer as defined in Section 2(d) of the Act?

Ratio Decidendi: The power conferred on the State Government under Section 31 of the Act to add to or delete from Schedule C is neither unconstitutional nor excessive. The power conferred on the State Government under Section 6 of the Act is similar in character and substance. The same having been held valid by their Lordships of the Supreme Court in Pandit Banarsi Das Bhanots case AIR 1958 SC 909 cannot be held to be excessive or unconstitutional under Section 31. The expression "the sale of goods" in Section 6 or Sub-clause (i) of Section 5(2)(a) or the expression "sales to a registered dealer of goods" in Sub-clause (ii) of Section 5(2)(a) has a reference both to the sales and purchases of goods because sale and purchase are only two facets of the same transaction. In any transaction of goods, there must be a sale of goods and a purchase of the same in order to complete the transaction. The petitioner is a dealer as defined in Section 2(d) of the Act, because the paddy purchased by the petitioner is not sold as such. The same is only used for the purpose of manufacturing rice, which is not allowed to be sold by the Government in open market and 95 per cent of the rice is acquired by the Government under the Procurement Order at a fixed price. Under the circumstances, the petitioner does carry on the business of purchasing paddy and selling rice (in the normal course of business).

Final Decision: The writ petitions were dismissed.