Rule-making power and purchase tax deduction: extra proof of prior tax payment under Rule 44-A was invalid.

The proviso to clause (d) of rule 44-A of the U.P. Sales Tax Rules was considered beyond the rule-making power because it imposed an additional condition for deduction by requiring proof that purchase tax had already been paid on the goods. The statutory scheme under section 3-D levied purchase tax only on first purchases and placed the burden on the dealer to show that a transaction was not a first purchase, without requiring proof of prior tax payment. By adding that requirement, the proviso could undermine the single-point nature of the levy and create unreasonable or anomalous results where tax had not yet been assessed or paid. The proviso was therefore treated as ultra vires and invalid.

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Issues: Whether the proviso to clause (d) of rule 44-A of the U.P. Sales Tax Rules, requiring proof that purchase tax had already been paid on the goods, was within the rule-making power and valid.

Analysis: Section 3-D of the U.P. Sales Tax Act levies purchase tax only on first purchases. The statutory scheme, including the deeming and burden-of-proof provision in section 3-D(7), requires the dealer to show that the transaction is not a first purchase within the meaning of section 3-D. The added condition in the proviso to rule 44-A went beyond that scheme by making deduction depend on proof that tax had already been paid on the goods. That additional requirement could defeat the single-point character of the levy and could also produce unreasonable and anomalous results where the seller had not yet been assessed or had not paid tax.

Conclusion: The proviso to clause (d) of rule 44-A was held to be ultra vires and invalid.

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