Ultra vires taxable point notification: shifting sales tax to last purchase exceeded statutory power and invalidated the levy.

The power under clause (vii) of section 5 of the General Sales Tax Act, 1125, was confined to fixing a single taxable point in the series of sales and did not authorise the Government to shift the charge to a purchase point or alter liability beyond the Act and rules. Rule 4 of the General Sales Tax Rules, 1950 treated sale price as the basis of turnover, and the challenged notification fixing the last purchase as the taxable point exceeded that statutory scheme. The absence of a valid rule under section 24 and defects in prior publication reinforced the invalidity of the arrangement. The notification was ultra vires and the levy on purchase turnover was invalid.

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Issues: Whether the notification fixing the taxable point for pepper and ginger at the last purchase in the State was within the power conferred by clause (vii) of section 5 of the General Sales Tax Act, 1125, and whether tax could validly be levied on the purchase amount under the rules framed under section 24 of that Act.

Analysis: The statutory scheme treated sales tax as a tax on turnover, with the amount liable to tax to be determined in accordance with rules made under section 24. Clause (vii) of section 5 empowered the Government only to specify a single point in the series of sales by successive dealers at which the sale of the goods would be liable to tax; it did not authorise the Government to shift the charge to a point of purchase or to identify the person liable in a manner unsupported by the Act and the rules. Rule 4 of the General Sales Tax Rules, 1950 dealt with gross turnover and, except where validly covered by its own sub-rule (2), contemplated sale price as the basis of turnover. Since the challenged notification purported to make the last purchase the taxable point, it exceeded the statutory power and could not sustain taxation of purchase turnover. The absence of a valid rule under section 24 and the defect in prior publication reinforced the invalidity of the impugned arrangement.

Conclusion: The notification was ultra vires, and the levy of tax on the petitioner's purchase turnover was invalid.

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