Ex-U.P. sales excluded from turnover computation under the sales tax threshold, limiting taxable liability.

Section 27 of the U.P. Sales Tax Act gave statutory effect to the constitutional exclusion of sales outside Uttar Pradesh and, by a non obstante clause, removed such transactions from the Act's operation. On that basis, the charging provision, the definitions of sale and turnover, and the minimum-turnover proviso in section 3(1) could not be applied to include ex-U.P. sales in taxable turnover. Rule 8 of the U.P. Sales Tax Rules also could not enlarge liability by counting excluded sales in gross turnover. Sales effected outside Uttar Pradesh were therefore ignored when determining whether the dealer crossed the taxable threshold.

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Issues: Whether ex-U.P. sales are to be excluded from computing the prescribed minimum of the gross turnover under the U.P. Sales Tax Act, 1948.

Analysis: Section 27 of the Act gave statutory effect to the constitutional prohibition in Article 286 of the Constitution of India and used a non obstante clause to take sales outside Uttar Pradesh out of the operation of the Act. As a result, the charging provision, the definition of sale, the definition of turnover, and the minimum turnover proviso to section 3(1) could not be applied so as to include transactions which the Act itself declared to be beyond its reach. The same principle also governed rule 8 of the U.P. Sales Tax Rules, which could not be read to enlarge tax liability by including excluded sales in gross turnover. The earlier Supreme Court pronouncement on non-liability to tax supported exclusion of such sales from the computation of turnover for assessment purposes.

Conclusion: Ex-U.P. sales were not to be included in the turnover for determining liability under the minimum turnover proviso, and the question was answered in favour of the assessee.

Final Conclusion: Sales effected outside Uttar Pradesh were to be ignored for the purpose of deciding whether the dealer crossed the taxable threshold under the Act.

Ratio Decidendi: Where the statute by a non obstante clause expressly excludes certain sales from its operation, those sales cannot be counted in turnover for determining tax liability or the minimum taxable threshold.

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