Sales made outside Uttar Pradesh are excluded from turnover calculations for tax liability under the U. P. Sales Tax Act, reaffirmed by constitutional provisions.

1. The assessee, M/s. Allied Chemicals, Kanpur, is a dealer in chemicals.

2. During assessment proceedings under the U. P. Sales Tax Act, 1948 for the assessment year 1956-57 it disclosed that the sales effected by it within Uttar Pradesh during the year amounted to Rs. 7, 642/12/3 and the sales made outside Uttar Pradesh during the same period amounted to Rs. 15, 591/11. The assessee contended that the sales made outside Uttar Pradesh fell outside the purview of the U. P. Sales Tax Act and could not be taken into consideration for any purpose whatsoever under the Act. According to the assessee, if the turnover of the sales made outside Uttar Pradesh was excluded, the turnover of the remaining sales being Rs. 7, 642/12/3 would fall below the prescribed minimum turnover liable to tax and, therefore, the assessee would not be liable to tax at all. The Sales Tax Officer did not accept the contention of the assessee. He held that by virtue of Explanation II to Cl. (h) of S.2 of the Act the sales made outside Uttar Pradesh would be deemed to have taken place in Uttar Pradesh, The Sales Tax Officer, therefore, determined the gross turnover at Rs. 23, 234/7/3 and rejected the contention of the assessee that he was not liable to tax. For the purpose of determining the tax liability he exempted the sales made outside Uttar Pradesh of Rs. 15, 591/11 under S.27 of the Act and computed the tax on the remaining turnover of Rs. 7, 642/12/3.

3. The assessee preferred an appeal against the assessment, but the appeal was dismissed.

4. Thereafter, he applied in revision and the Judge (Revisions), Sales Tax, accepted the plea of the assessee that the turnover of sales made outside Uttar Pradesh could not be included in his gross turnover and held that the remaining turnover of the assessee being below the minimum taxable limit he was not liable to tax at all.

5. At the instance of the Commissioner of Sales Tax U. P., the Judge (Revisions) has referred the case and invited the opinion of this Court on the following question: -
"Whether ex - U. P. sales are to be excluded from computing the prescribed minimum of the gross turnover or not under the circumstances of the case?"
The reference came on for hearing before a Division Bench of this Court. In the view that there was a conflict between the decision of this Court in Commissioner of Sales Tax, U. P. v. Balbir Singh and Co. , 1963-14 STC 546 (All) and some observations of the Supreme Court in A. V. Fernandez v. State of Kerala , 1957-8 STC 561 : (AIR 1957 SC 657) and considering the point to be one of importance it has referred the case to a larger Bench. The reference has now been laid before us.

6. The question referred relates to the assessment year 1956-57 and we must therefore, examine the provisions of the Act as it stood on April 1, 1956. S.3 of the Act provides: -
"(1) Subject to the provisions of this Act, every dealer shall, for each assessment year, pay tax at the rate of three pies per rupee on his turnover of such year, which shall be determined in such manner as may be prescribed:
Provided that a dealer shall not......be liable to pay the tax if his turnover of the assessment year ............ is less than Rs. 12, 000.................."
S.2 (h) declared that a 'sale' means
"With its grammatical variations and cognate expressions, any transfer of property in goods for cash or deferred payment or other valuable consideration...........................
Explanation I...............
Explanation II - Notwithstanding anything in the Indian Sale of Goods Act, 1930, or any other law for the time being in force, the sale of any goods -
(i) which are actually in Uttar Pradesh at the time when in respect thereof the con