# M/S. CHHOTABHAIJETHABHAI PATEL & CO v. STATE OF UTTAR PRADESH - **Citation:** [1963] 1 S.C.R. 991 - **Court:** Supreme Court of India - **Decided:** 1963 - **Case number:** writ petition must fail. Ujjam Bai v. State of U. P., W. P. No. 79 of 1959 - **Bench:** S. K. Das, J. L. Kapur, A. K. Sarkar, K. Subba Rao, M. llIDAYATULLAH, N. RAJAGOPALA.. AYYA.NGAR a~d J. R. MuDHOLKAR - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-chhotabhaijethabhai-patel-co-v-state-of-uttar-pradesh-2654 - **Pages:** 8 ## Headnote Sales·tax-:Notification by State Government exempting ltand-made biris--Validity of order of assessment-Uttar Praduh Sales Tax Act, 1948 (U. P. XV of 1948) s. 4(1)(b). The appellant firm was a registered dealer in biris under the Uttar Pradesh Sales -Tax Act, 1.943. The Sales Tax Officer assessed it to sales tax provisionally for lhc quarter from April I, 1958, to June 30, 1958. The appellant moved the High Court under Art. 226 of the Constitution but the petition was dismissed. It appealed to this Court by special leave and filed a petition under Art. 32 of the Constitution. Its case was that b¥ the notification issued under s. 4( 1 )(b) of the Act on December 14, 1957, hand-made biris were exempt· ed from sales tax and the order of' assessment made by the Sales Tax Officer was based on a misconstruction of the same. The notification provided "that no tax shall be payable under the aforesaid Act with effect from December 14, 1957, by dealers in respect of the following classes. of goods provided tha1. the Additional Central Excise Duties leviable thereon from the closing of business on December 13, 1957, have been paid on such goods" and the classes of goods included "cigars, cigarettes, biris tobacco in any form x x x x"-. Held, (Subha Rao, J., dissenting) that for the reasons given in the majority judgment of this Court in Ujjam Bai v . .State of U. P., the writ petition must fail. Ujjam Bai v. State of U. P., W. P. No. 79 of 1959, applied. The exemption '!:lnder the notification, properly con· strued, was conditional and applied only to goods on which additional Central Excise Duty was leviable and had been paid. Since no such duty was leviable on hand-made biris ant (Act Ui -0f 1948) hereinafter called the •Act'_ uuder which ·a not;ifice.tion giving exemption in regard to sales tax on cerlia.in articles was notified by a notiftcatiOn of Deoemb&r 14.1957, which has been set out at another place in this judgment. On February 271 1959, the Salee ·Tax Officer, Agra, passed a provision&I Order · of ·assessment of sales tax fbr the quarter fi"Odl April l, l968 to June 30, 1968. The tu sousesaed was Ra; .t>2,500. It is a~ tha.t no notice was gi ## Text l S.O.R. SUPREME COURT REPORTS 991 M/S. CHHOTABHAIJETHABHAI PATEL & CO. v. STATE OF UTTAR PRADESH (S. K. DAS, J. L. KAPUR, A. K. SARKAR, K. SUBBA RAO, M. llIDAYATULLAH, N. RAJAGOPALA.. AYYA.NGAR a~d J. R. MuDHOLKAR, JJ.) Sales·tax-:Notification by State Government exempting ltand-made biris--Validity of order of assessment-Uttar Praduh Sales Tax Act, 1948 (U. P. XV of 1948) s. 4(1)(b). The appellant firm was a registered dealer in biris under the Uttar Pradesh Sales -Tax Act, 1.943. The Sales Tax Officer assessed it to sales tax provisionally for lhc quarter from April I, 1958, to June 30, 1958. The appellant moved the High Court under Art. 226 of the Constitution but the petition was dismissed. It appealed to this Court by special leave and filed a petition under Art. 32 of the Constitution. Its case was that b¥ the notification issued under s. 4( 1 )(b) of the Act on December 14, 1957, hand-made biris were exempt· ed from sales tax and the order of' assessment made by the Sales Tax Officer was based on a misconstruction of the same. The notification provided "that no tax shall be payable under the aforesaid Act with effect from December 14, 1957, by dealers in respect of the following classes. of goods provided tha1. the Additional Central Excise Duties leviable thereon from the closing of business on December 13, 1957, have been paid on such goods" and the classes of goods included "cigars, cigarettes, biris tobacco in any form x x x x"-. Held, (Subha Rao, J., dissenting) that for the reasons given in the majority judgment of this Court in Ujjam Bai v . .State of U. P., the writ petition must fail. Ujjam Bai v. State of U. P., W. P. No. 79 of 1959, applied. The exemption '!:lnder the notification, properly con· strued, was conditional and applied only to goods on which additional Central Excise Duty was leviable and had been paid. Since no such duty was leviable on hand-made biris ant (Act Ui -0f 1948) hereinafter called the •Act'_ uuder which ·a not;ifice.tion giving exemption in regard to sales tax on cerlia.in articles was notified by a notiftcatiOn of Deoemb&r 14.1957, which has been set out at another place in this judgment. On February 271 1959, the Salee ·Tax Officer, Agra, passed a provision&I Order · of ·assessment of sales tax fbr the quarter fi"Odl April l, l968 to June 30, 1968. The tu sousesaed was Ra; .t>2,500. It is a~ tha.t no notice was given to ·the petitioner firm.- The notice or demand. was i:Jsued on the same date. An appeal was taken against this order of &88e88inent to the Judge .(Appeals) and an applies.· tion was made tCJ ·the Commissioner of -Sales Tb.x for a stay of the realisation of the tax asses~ed·. The - Commissioner on April 28, 1959, directed that if hart of the amo\mt assess.ad was deposited by the petitioner f>y April 30, 1959, the payment of the· remaining amount shall J;>e stayed pending· the fmal asseasment. ·On April 30, 1959, the petitioneJ;' firm deposited half the tax assessed i.e. lts. 31,250. Qn April 28, 1959, the :petitioner ·firm moved the Wgh Court under Art. 226 of tire -Constitution for a writ olceniorari quaiJhing the assessment order allfi the eeoond notioe .0£ demand and for a writ of mancitumtB dire.oting the taxing authorities to forbear from reoov•ing the ta.x~ This petition was dismiaed. b_y the High Court by an order dated May 14. 1959. An a.pplica.tian for a certificate under Art. 133.(l.)(c) of -the Constitution was dismissed by the High Court·onOetober 23, 1959, and .agair.lst the· order· -of dismissal of the petition under Art. 226, speei.J.l le&ve w.as granted by this Court en Deoember l'-8, 1:908. A petition under Art. 32 of the- Oonatitutim was also filed by the petitioner firm on December 16, 1959, and rule was -issued -th$'00n and that ia· how t8e appeal against the High Court or-Oer made in proceedings under Art.226 1961 Clrhotabli•i J 1t1111b/iai Paul th Co. •• S1ot1 of Uttar Pradesh 196) Chho1r:1bluii J1tf.abhrii l'atei ti:: Co. '· S111t. of Ull•f' J>,ad,s/t. Kapur J. 994 SUPREME COURT REPORTS [1963] and the petition under Art. 32 of the Constitution have been brought to this Court. On September 29, 1959, the Sales Tax Officer issued another notice calling upon the petitioner firm to submit returns for the period from December 13, 1957, to March 31, 11J58. On October 1959, a further notice was issued under s. 15(i)(a.) to show ca.use why a penalty should not be imposed. This matter was not bi.fore the High Court as the petition in tha~ Court was filed earlier but it has also been challenged in the petition under Art. 32 of the Constitution. For reasons given in W.P. No. 79 or 1959 this petition under A rt. 32 is dismissed. The appeal which the petitioner firm had filed before the Judge (Appeals) was dismissed and a revision taken against that order was also dismissed but these orders have not been challenged in any proceedings so far. The appellant firm's contention in the appeal was that the order of the Sa.Jes Tax Officer limiting the excess Central Excise Duty had been paid wa.s erroneous. It will be opposite at this stage to trace the history of the exemption which is claimed by the appellant firm. Because of the difficulty experienced in regard to inter-Sta.Le sales on a. large sea.le of certain articles the Central Government with the concurrence of the State Governments impo1ed an enhanced Central Ext.iee Duty on the sales tax levied upon them, and the sum so collected by the imposition of the enhanced Central Excise ' Duty on those articles was to be distributed by the Central Government to the State Governments concerned and they (the State Governments) agreed to exempt those articles from sales tax. As a. result of this arrangement. The Additional Duties of Excise (Goods of Special Importance) Aot (Act 58 • ' l S.C.R. SUPREME COURT REPORTS 995 of 1957) was passed by Parlh.ment. In this judgment it will be called 'Central Act 58 of 1957'. By this Act additional Central Excise duty was levied on tobacco but no such duty was levied on biris. Even under the Central Excise and Salt Act (Act 1 of 1944), herdnafter ca.Bed 'Central Act I of 1944', no Central Excise Duty was imposed on handmade mris although excise duty was levied on maohinemade biris but the object of imposing: that duty was to protect the handmadebiris industry. In pursuance of the abovementioned arrangement for the exemption from sales tax of certain articles the U. P. Government issued notification. No. ST-4485/X dated December 14, 1957, under s. 4(l)(b) of the Act which will be quoted at another place in this judgment. Liability to sales tax arises under s. 3 (I) of the Act which provides:- S. 3( I) "Subject to the provisions of this Act, every dealer shall, for each assessment year, pay a tax at the rate of (two naya paise per rupee) on his turnover of stJch year, which shall be determined in such mannt}r as may be prescribed''. and provision for exemption for sales tax is made in s. 4(l)(a) and (b) which provides:- S. 4(1) "No tax shall be pay~ble on- (a) the sale of water, milk, salt, newspapers and motor spirit as defined in the U.P. Sales of Motor Spirit (Taxation) Aot, 1939, and of any other goods which the State Government may be notification in the official gazette exempt: (b) the sale of any goods by the AllIndirJ. Spinners' Association or Gandhi Ashram Meerut, and their branches or s~cb other persons, or class of persons as the State Government may from time to time exempt on such 1962 Ch'iottJbh11i Jethnbhbi Patel &: Co. "· Shte of Uttor Prad11h Ka,111 J, lDli Cilhdi.Tiltii J11h1'~ai Patel d: Co. v. Slat• of U ttar Pr""4slt ,..,...J. 996 SUPREME COURT REPORTS [1963] conditions and on payment of such fees, if any not exceeding (eight thousand rupees) annually as may be specified by notifica.tion in the Official Gazette". The U.P. Government on December 14, 1957, iBBued the following notification under s. 4(1)(b) of the Act:- "No. ST-4485/X dated Lucknow Dec. 14, 1957 (Published in U.P. Gazette Extraordinary, dated December 14, 1957). In partial modification- of notifications No. ST-1:105/X dated March 31, 1956 and ST418/X 902(9)-62 dated January 31, 1957 and exercise of the powers conferred by clause (b) of sub-section (I) of sec. 4 of the CJ.P. Sales Tax Act, 1948 (CJ.P. Act No. XV of 1948) as amended upto date, Governor ofUttar Pradesh i.i pleased to order that no tax shall be payable under the aforesaid Act with effect from December 14, 1957 by the dealers in respect of the following classes of goods provided that the Additional Central Excise Duties leviable thereon from the closing of business on December 13, 1957 have been paid on such goods and that the dealers thereof furnish proof to the satisfaction of the a88688ing authority that such duties have been paid. (1)---- --------- ( (2)--------------- - t (3) Cigars, cigarettes, biris and tobaooo, that is to say any form of tobacco, whether cured or uncured and whether manufactured or not and includes the leaf, stalk11 and stems of the tobacco plant but does not include any part of a tobacco plant while still attached to the earth". 1 1 s.o~B. SUPREME COURT REPORTS 997 This: ilJ the notification, which, it is submitted, by petitfoner, has been misconstrued and misapplied and has resulted in the infringement of the petitioner's right Art. 19( 1 )(g) of the Constitution. It was contended that under the Central Act J>S of 19b7 additional Central. Duty of Excise had been paid on tobacoo as defined in the Central Act 1 of 1944. In the 4th item in the 1st Schedule of Central Act 1 of 1944 tobacco is defined as follows:- u 'Tobaooo' means any form of tobacco, whether cured or uncured and whether manufactured or not; and includes the . leaf, stalks and stems of the- tobaooo plant, but dues not include any part of a tobacco plant while .still attached to the earth". The notification expressly states that it is made under s. 4{ l)(b) of the Act and therefore the exemption was oonditional and properly read it applies only to those goods on which additional Central Excise Duty was leviable and had been paid. No such duty was leviable on hand-made biris and it was not pa.id. The condition of the exemption therefore cannot be said to have fulfilled and the sales of the petitioners did not fall within the exemption cov.ered and given by the notification. In our opinion therefore the Sales Tax Of.tlcer correctly interpreted the notification and it has not been shown that hie determination . was in any way errODeous. On this . ground also th·e petition ipust fail • . The appeal against the order . of the High Oourt of Allahabad is therefore dismissed but the parties will bear their ow costs. · · 1961 Cliltotoillai J1th1/Jhai Pai1l &: Co, ... Stat1 I/ Utlat ·Prad111' SUB.BA.RAO, J.-It ie common case that the Mll•Ra.J • . appeal and the writ petition would be goverAed · by -our deoieiol) in the oonW10ted writ petition viz., 1961 Clrllol1bh•i Je'habh,j Potll "'c.. Y. St•ltaj Ullar · Pradesh Subbo R•oJ. 998 SUPREME COURT REPORTS [1963] Writ Petition No. 79 of 1959. For the reasons mentioned therein, the writ petition and the appeal a.re allowed with costs. BY CouRT:-In accordance with the judgment of the majority, Civil Appeal No. 99 of 1961 and Writ Petition No. 195 of 1959 are dismissed, but the parties are left to bear their own costs. ( ' {