Sales tax classification and delegated power upheld where the rule fixed the taxable point for the first dealer.

Rule 6 under the General Sales Tax Act, 1125 was upheld as a valid sales tax classification because taxing legislation allows wide latitude and no material showed the levy structure lacked a rational basis or offended Article 14. The rule also remained within section 3(2) because that provision authorised fixation of a single taxable point in the series of sales, and Rule 6 merely designated the first dealer in the State, subject to exemption under section 3(3), as the person liable. It did not expand the statutory charge beyond the parent Act. The constitutional and ultra vires challenges therefore failed.

---

---

Issues: (i) Whether rule 6 framed under the General Sales Tax Act, 1125 was discriminatory and violative of Article 14 of the Constitution of India; (ii) Whether rule 6 travelled beyond the scope of the power conferred by section 3(2) of the General Sales Tax Act, 1125.

Issue (i): Whether rule 6 framed under the General Sales Tax Act, 1125 was discriminatory and violative of Article 14 of the Constitution of India.

Analysis: The rule was challenged on the ground that it created an impermissible classification in the context of sales tax liability. In taxing legislation, a wider latitude is available in making classifications, and the rule had to be tested on the basis of whether there was a reasonable foundation for the levy structure adopted. No material was shown to establish that the classification lacked a rational basis or that the rule offended the constitutional guarantee of equality.

Conclusion: The challenge under Article 14 failed.

Issue (ii): Whether rule 6 travelled beyond the scope of the power conferred by section 3(2) of the General Sales Tax Act, 1125.

Analysis: Section 3(2) authorised levy of tax at such single point in the series of sales by successive dealers as may be prescribed. Rule 6 merely fixed that point by making the first dealer in the State, if not exempt under section 3(3), the person liable to pay the tax. That prescription operated within the statutory mandate of choosing the taxable point and did not enlarge the charge beyond what the parent provision permitted. The scope of the rule was also consistent with the earlier judicial understanding of the same provision.

Conclusion: Rule 6 was within the delegation under section 3(2) and was not ultra vires.

Final Conclusion: The writ petitions failed because the impugned rule was upheld both on constitutional grounds and on the ground of delegated power.

---