Excessive delegation in sales tax rule leads to invalidation, as artificial valuation method exceeded legislative limits.

Rule 28 of the Delhi Sales Tax Rules, 1951 was invalidated for excessive delegation because section 2(h), as then framed, left the determination of the taxable portion of contract consideration to the executive without adequate legislative standards. The rule's artificial formula and percentage-based method could extend tax beyond the true sale price of goods, showing that a substantial legislative function had been surrendered to the delegate. The rule was declared ultra vires, the assessment based on it was quashed, and further assessments under the rule were prohibited.

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Issues: Whether rule 28 of the Delhi Sales Tax Rules, 1951, framed under section 2(h) of the Delhi Sales Tax Act, was invalid for excessive delegation of legislative power and was liable to be struck down.

Analysis: Section 2(h), as it then stood, left the determination of the relevant portion of the contract consideration to be treated as sale price to the executive without laying down any guiding principles or standards. Rule 28 adopted an artificial formula and percentages which could operate so as to tax amounts beyond the true sale price of goods. The legislative function had thus been substantially surrendered to the delegate, and the rule-making power was exercised without a sufficient framework prescribed by the Legislature.

Conclusion: Rule 28 was held invalid as an instance of excessive delegation and was declared ultra vires; the assessment founded on it was quashed and prohibition was granted against future assessments under the rule.

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