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Issues: (i) Whether the assessee was the "importer" of the sugar within rule 2(d-1) of the Sales Tax Rules and was therefore liable to pay tax on its turnover of sale; (ii) Whether rule 2(d-1), which defined "importer", was ultra vires the rule-making power under the U.P. Sales Tax Act.
Issue (i): Whether the assessee was the "importer" of the sugar within rule 2(d-1) of the Sales Tax Rules and was therefore liable to pay tax on its turnover of sale.
Analysis: The notification under section 3-A made sugar taxable only at the point of sale by the importer, and the definition in rule 2(d-1), read as part of the rules having effect as if enacted in the Act, applied to the word used in the notification by virtue of section 20 of the General Clauses Act. On the facts, the sugar had either been imported as a direct result of a sale in which the assessee was the dealer who made the relevant sale after import, or it had been imported otherwise than as a direct result of sale, in which case the assessee was the first dealer to make a sale after import. In either view, the assessee answered the statutory description of importer.
Conclusion: The assessee was the importer within rule 2(d-1) and the answer was in favour of revenue.
Issue (ii): Whether rule 2(d-1), which defined "importer", was ultra vires the rule-making power under the U.P. Sales Tax Act.
Analysis: The State Government had power under section 24 to make rules, and that power included authority to define words used in the rules by giving them an artificial meaning. The definition was framed for use in the rules themselves, and its application to the notification followed only because section 24(4) gave the rules statutory force and section 20 of the General Clauses Act extended the definition to the notification. No want of power was shown merely because the definition was later used through operation of law in construing the notification.
Conclusion: Rule 2(d-1) was not ultra vires and the answer was in favour of revenue.
Final Conclusion: The reference was answered against the assessee, the definition of importer was upheld, and the assessee remained liable to tax on the turnover in question.
Ratio Decidendi: A rule-making authority empowered to make rules may validly assign an artificial meaning to a term used in those rules, and where such rules are statutorily given the force of enactment, the defined term may operate in construing a notification issued under the Act.
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