SITA RAM BISHAMBHER DAYAL & ORS. versus STATE OF U.P. & ORS.

Citation: [1972] 2 S.C.R. 141 · Decided: 21-10-1971 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed

Cited by 8 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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SITA RAM BISHAMBHER DAYAL & ORS. 
v. 
STATE OF U.P. & ORS. 
October 21, 1971 
[K. S. HEGDE AND H. R. KHANNA, JJ.] 
U.P. Sales Tax Act, 1948, s. 3D(l)-Its validity-Whether delegation 
of authority under the section excessive and bad in law-ls the section 
violative of Art. 14 of the Canstitution. 
The appellants are dealers in Rab. 
The St,ate Government under s. 
30(1) of the U.P. Sales Tax Act, 1948, levied purchase tax in respect of 
their dealings in Rab. Section 30(1) of the Act, inter a/ia, provides that 
for each assessment year, there shall be levied and. paid a tax on the turn-
over of first purchases made by a dealer or through a dealer in respect of 
such goods, at such rates not exceeding 2, paise per rupee in the case of 
foodgrains .and 5 paise in respect of other goods and in the explanation it 
is provided that "in the case of purchase made by a registered dealer 
through a licensed dealer, the registered dealer shall be the first purchaser 
and in every other case of fresh purchase, the dealer through whom the 
first purchase is made shall oe deemed to be the first purchaser. The 
appellants challenged the vires of s. 3(d) (1) of the Act before the High 
Court but the High Court held against the appellants. 
In appeal this Court, it was contended by the appellants that in em-
powering the Government to levy tax on goods other than foodgrains at 
a rate not exceeding 5 paisa in a rupee, the legislature had given an unduly 
wide power to the executive. 
Such a delegated power was, 
therefore,. 
excessive anc! bad in law and secondly, s. 30( 1) in'fringed Art. 14 of the 
Constitution because it discriminated between registered dealers who pur· 
chased through licensed dealers and the registered dealers who purchased 
through other dealers. 
Dismissing the appeals, 
HELD : ( i) The power to fix the rate of tax is a legislative power, but 
if the legislature Jays down the legislative policy and provides the necessary 
guidelines that power can be delegated to the executive, Though a tax 
is levied primarily for the purpose of gathering revenue, in selecting 
the objects to be taxed and in determining the rate of tax, various social 
and economic factors are to_ be considered and since the Jegislatures have 
very little time to go. into details, they have to delegate certain powers 
to the Executive. This Court has ruled that if a reasonable upper limit 
ts prescribed, the leg1slature can always delegate the power of fixing the 
rate of purchase tax or sales tax. [143 EJ 
Devi Dass Gopal Krishnan v. State of Punjab, 20 S.T.C. 430, followed. 
. In the present case, taking into ~onsiderat~on the legislative practice in 
this coun_try and the rate of tax levied 0F- lev1able under the various sales 
tax laws tn force. in this c_ountry, it cannot be said that the power delegated 
to th~ executtve is e~cess1ve and in the absence of any material, it cannot 
be said that the maximum rate fixed under s. 30( 1) is unreasonably high 
[144 E-FJ 
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(ii) Section 3IJ: is not_ violative of Art. 14 of the Constitution. In the 
~resent case, t~ere IS nothmg wrong for the legislature to make a classifica-
lton between bce~sed. dealers and dealers who are not licensed. A licemed 
dealer has to mamtam true and correct accounts and other particulars o'i 
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142 
SUPREME COURT REPORTS 
[1972] 2 S.C.R. 
purchasers whereas dealers who are not registered are not required to 
maintain any accounts. Hence, if registered dealers are permitted to make 
purchases through dealers who are not licensed and those dealers 
are 
themselves not liai>le to be taxed, then opportunity for evasion of tax be-
comes larger. Under the circumstances, the classification is not unjustified. 
[145 G] 
State of Madras v. Gan/llOn Dunker/ay & Co. (Madras) 
Ltd., [1959] 
S.C.R. 379 and Devi Deo Gopa/ Krishna v. State of Punjab, 20 S.T.C. 430, 
referred to. 
CIVIL APPELLATE JURISDICTION ; Civil Appeals Nos. 362 and 
1672 of 1969. 
Appeals from the judgments and orders dated May 17, 1968 
of the Allahabad High Court in Writ Petitions Nos. 310 and 627 
of 1968. 
J. P. Goyal and Sob hag Mal Jain, for tbe appellants (in both 
the appeals) . 
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L. M. Singhvi and 0. P. Rana, for the respondents (in both 
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the appeals) . 
The Judgment of the Court was delivered by 
. · Hegde, J. 
These are appeals by certificate. 
They raise a 
common question of law for decision. The only contention aris-
ing for decision in these appeals is as to the

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