1960 PLP 723 (PTD)

Sl. No. Description of goods. Taxable point 1 2 3 27 Pepper Last purchase in the state by a dealer who is not exempt from taxation under section 3 (3). 28 Ginger do. do.

7. The petitioner is a dealer in pepper and ginger. He has been assessed to sales tax in pursuance of the notification dated 28th September 1957. His prayer is that this Court "may be pleased to issue a writ of certiorari or any other appropriate writ, direction, or order declaring that the notification of the Govern ment of Kerala No. H1‑10674/57/RD‑2 dated 28th September 1957, in so far as it fixes the taxable point on pepper and ginger at the last purchase in the State of Kerala is illegal being ultra vires the powers of Government and quasting the order Exhibit A 1 and all subsequent orders of respondents 2 and 3 demanding tax from the petitioner".

8. The contention in respect of the prayer is stated as follows in paragraph 7 of the petitioner's affidavit dated 20th December, 1958: The above notification (Notification No. H1‑10674/57/RD‑2 dated 28th September 1957), issued by the Kerala Government in so far as it seeks to make the last purchase the taxable point in respect of pepper and ginger and some other articles being items 27 to 40 of the above notification is illegal, being ultra vires of the powers conferred upon the Government by section 5 (vii) of Act XI of 1125. Section 5 (vii) empowers the Government to issue notification only in respect of sale of goods at such single point in the several sales by successive dealers and not at any point of purchase." We are inclined to accept this contention.

9. It is common ground that the answer to the controversy depends on the meaning of the words "at such single point in the series of the sales by successive dealers." According to the peti tioner the "single point" that can be specified under section 5 (vii) in a series of sales is the first sale or the last sale or any of the sales in‑between. According to the Department the specification can and should go further and indicate also the person who is liable for the tax the learned Government Pleader summarised his contention as follows:‑ "The expression `point' means the point at which the sale of goods is liable to tax in the series of sales. It is this point that the Government have to specify. If the Government specify the transaction in respect of which the tax is to be levied, the charge may be on the seller or on the buyer. It does not amount to specifying the point at which the tax is to be levied. Specifying the point at which the tax is to be levied means and involves the idea that both the transaction and the person to be taxed in respect of the transaction have to be specified".

10. A transaction which involves a sale by somebody neces sarily involves a purchase by somebody else. In other words, a sale as pointed out by the Supreme Court in Bengal Immunity Co., Ltd v. The State of Bihar and others ((1955) 6 S T C 446 : A I R 1955 S C 661), is a bilateral transaction with two facets, and either of the two facets can be made the basis of taxation. But that has to be done under the Act, not by a specification under section 5 as contended by the Department, but by a rule under section 24 as submitted by the petitioner.

11. The sales tax under the General Sales Tax Act, 1125, is a tax on "turnover" and as to whether the "turnorver" liable to taxation should be the amount for which goods are bought or sold by a dealer has to be determined in accordance with such rules as may be prescribed. This is abundantly clear from subsection (4) of section 3 which says that for the purposes of that section and other provisions of the Act the turnover shall be determined "in accordance with such rules as may be prescribed".

12. Rule 7 of the General Sales Tax Rules, 1950, provides that the tax or taxes under section 3 or 5 or the notifications under section 6 shall be levied on the net, turnover of a dealer, and that the net turnover should be determined by making the deductions specified therein from the gross turnover of a dealer. Rule 4 deals with the determination of the gross turnover of a dealer, and as already pointed out sub‑rule (1) of that rule provides that except in cases covered by sub‑rule (2) of that rule the gross turnover of a dealer shall be the amount for which goods are sold by him.

13. If in respect of any sale it was intended that the gross turnover of a dealer shall be the amount for which goods are bought by him, the proper thing to do would have been to make specific provision for such cases in sub‑rule (2) of rule

4. Instead of that, sub‑rule (2) has been made entirely dependent on the notification under section 5 (vii), a notification which itself is beyond the power conferred by that provision.

14. Subsection (4) of section 24 of the Act as already men tioned provides: "The power to make rules conferred by this section shall be subject to the condition of the rules being made after previous publication for a period of not less than two weeks." It has to be noted that the notification of 28th September 1957, was not even in existence when the "prior publication" of sub‑rule (2) of rule 4 was effected by the State.

15. It follows that in the absence of a rule prescribed under section 24 of the Act there is no valid provision enabling the State to tax the amount for which the goods were bought by the petitioner, and that this petition has to be allowed. We decide accordingly, though in the circumstances of the case without any order as to costs.

16. In the view we have taken, it is unnecessary to consider the other points urged in support of the petition and they are not considered in this judgment. Petition allowed.