Delegated rule on escaped turnover assessment was invalid, while statutory incorporation of State tax machinery was upheld.

A delegated rule cannot add substantive machinery for escaped turnover assessment, limitation, or best-judgment determination unless the parent statute specifically authorises it, so sub-rule (7) of rule 5 of the Central Sales Tax (Madras) Rules, 1957, was treated as ultra vires. By contrast, section 9(3) of the Central Sales Tax Act, 1956, validly incorporated the State sales tax assessment machinery by reference, including powers to assess escaped turnover, and was upheld as constitutional. The re-enactment of the State law in substantially similar form did not alter that legislative reference. The statutory challenge therefore failed except for the invalid delegated rule.

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Issues: (i) Whether sub-rule (7) of rule 5 of the Central Sales Tax (Madras) Rules, 1957, was within the State Government's rule-making power under the Central Sales Tax Act, 1956, and valid to the extent it provided for assessment of escaped turnover, limitation, and best judgment determination. (ii) Whether section 9(3) of the Central Sales Tax Act, 1956, validly attracted the machinery and powers of assessment available under the State sales tax law, including power to assess escaped turnover.

Issue (i): Whether sub-rule (7) of rule 5 of the Central Sales Tax (Madras) Rules, 1957, was within the State Government's rule-making power under the Central Sales Tax Act, 1956, and valid to the extent it provided for assessment of escaped turnover, limitation, and best judgment determination.

Analysis: The Central Act conferred rule-making power under section 13, but section 13(4) did not specifically empower the State Government to frame a rule dealing with escaped turnover, the period of limitation for such assessment, or determination by best judgment. Those matters were treated as substantive and not merely procedural, and a rule could not supply them in the absence of a specific enabling provision. The rule therefore travelled beyond the delegated authority.

Conclusion: Sub-rule (7) of rule 5 was ultra vires and invalid.

Issue (ii): Whether section 9(3) of the Central Sales Tax Act, 1956, validly attracted the machinery and powers of assessment available under the State sales tax law, including power to assess escaped turnover.

Analysis: Section 9(3) directed that Central sales tax be assessed, collected, and enforced in the same manner as local sales tax and authorised the State tax authorities to exercise their State-law powers for that purpose. The Court treated this as an incorporation of the existing State machinery for assessment, including assessment of escaped turnover, and rejected the challenge that the provision amounted to unconstitutional abdication. The fact that the State law had been re-enacted in substantially the same form did not alter the substance of the legislative reference.

Conclusion: Section 9(3) was constitutional and did validly confer the necessary assessment powers.

Final Conclusion: The petitioners succeeded only in establishing the invalidity of the delegated rule, but the statutory machinery under section 9(3) remained effective, so the challenge to the revenue's action ultimately failed and the petitions stood dismissed.

Ratio Decidendi: A delegated rule cannot create substantive machinery for assessment of escaped turnover, limitation, and best judgment powers unless the parent statute specifically authorises it, but a Central statute may validly adopt and apply the assessment machinery and powers of the existing State sales tax law by reference under section 9(3).

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