Sales tax delegation and classification upheld where statute set policy, limits, and allowed provisional assessment without prior hearing.

Section 3-D of the U.P. Sales Tax Act was treated as valid guided discretion rather than unconstitutional delegation because the statute itself supplied the tax policy, the class of notified goods, and the outer limits of the rate. The classification under the scheme was also held not to violate Article 14, since all dealers in the same notified goods were treated alike and the choice of commodities had a rational relation to the statutory object. A provisional assessment under rule 41(3) was likewise held permissible without a prior oral hearing where the dealer had failed to file the required return, as the assessment was only provisional and the later final assessment preserved fairness.

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Issues: (i) Whether section 3-D of the U.P. Sales Tax Act and the notification issued under it amounted to unconstitutional delegation of legislative power. (ii) Whether section 3-D and the notification offended Article 14 by conferring arbitrary power and creating impermissible discrimination. (iii) Whether a provisional assessment under rule 41(3) could be made without giving the dealer an opportunity of being heard.

Issue (i): Whether section 3-D of the U.P. Sales Tax Act and the notification issued under it amounted to unconstitutional delegation of legislative power.

Analysis: The statutory scheme imposed the tax by the section itself and left only the selection of notified goods and the rate, within prescribed maxima, to the State Government. The legislative policy was gathered from the Act and its objects, namely, the shift to single-point purchase tax for specified goods, especially essential commodities and goods where intermediaries evaded liability. The Court treated this as guided discretion and conditional legislation rather than abdication of essential legislative function. It relied on established authority that the Legislature may entrust the executive with fixing rates and selecting commodities for taxability where the policy and limits are supplied by the statute.

Conclusion: Section 3-D and the notification did not involve unconstitutional delegation and were valid.

Issue (ii): Whether section 3-D and the notification offended Article 14 by conferring arbitrary power and creating impermissible discrimination.

Analysis: The distinction drawn by the statute was not between dealers similarly situated in respect of the same commodity, but between commodities taxed under section 3 and commodities subjected to purchase tax under section 3-D. All dealers dealing in the same notified goods were treated alike and taxed at the same rate. The Court held that the Legislature may classify goods for taxation if the classification has a rational relation to the object of the law, and that the choice of goods and rates in the present scheme was referable to the policy disclosed by the statute. The challenge under Article 14 was found to rest on bare allegations without showing hostile discrimination among similarly circumstanced persons.

Conclusion: There was no infringement of Article 14.

Issue (iii): Whether a provisional assessment under rule 41(3) could be made without giving the dealer an opportunity of being heard.

Analysis: Rule 41(3) required the Sales Tax Officer, where a return was not filed or was defective in the relevant respect, to make such enquiry as he considered necessary and provisionally assess the tax. The Court held that no obligatory personal hearing was required at that stage, particularly where the dealer had failed to submit the necessary return. The provision itself supplied the opportunity through the return process, and the assessment made was only provisional, with the final assessment to follow later. On that footing, the principles of natural justice were not violated.

Conclusion: The provisional assessment without prior hearing was valid.

Final Conclusion: The challenge to section 3-D, the notification, and the provisional assessment failed, and the writ petitions were liable to be dismissed.

Ratio Decidendi: Where a taxing statute lays down the policy, fixes the outer limits of taxation, and authorises the executive only to select specified goods and rates within that framework, the delegation is valid and the resulting classification is not arbitrary; further, a provisional assessment made after failure to file the required return does not necessarily require a prior oral hearing.

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