Venkatarama Ayyar, J.:-

These writs raise the question of the validity of the madras general sales tax act (ix of 1939) and of the turnover and assessment rules, 1939, framed thereunder hereinafter called the rules. The petitioners in writ petitioners no. 21 of 1952 are doing business as tanners in eluru. The course of business is that they purchase raw hides and skins and tan them in their own tannery. They hold a licence as tanners under the act. Under rule 15, they were submitting monthly returns of hides and skins purchased by them for the purpose of tanning in from no. A - 4 and an order was passed on 23rd february, 1951, on the basis of these returns determining the tax payable at rs. 10 - 180 - 7 - 3. Payments amounting to 4,790 - 13 - 0 had been made by the petitioners towards the amount of the tax and for the balance of rs. 5,389 - 10 - 3 remaining payable, a demand was duly made by notice under rule 15 (4). No appeal was taken against the order of assessment and it has become final. Nor was any action instituted to contest its validity. The tax not having been paid, the commercial tax officer instituted proceedings under section 15 (b) of the act for the recovery of the amount. The section so far as it is material runs as follows : -

"any person who fails to pay within the time allowed, any tax assessed on him, or any fee due from him, under this act shall, on conviction by a presidency magistrate or a magistrate of the first class, be liable to a fine which may extend to one thousand rupees, and in the case of a conviction under clause (b) , the magistrate shall specify in the order the tax, fee or other amount, which the person convicted has failed or evaded to pay or has wrongfully collected, and the tax, fee or amount so specified shall be recoverable as if it were a fine. "

These proceedings are now pending before the honorary special first class magistrate, eluru, as c. C. No. 88 of 1951. The petitioners have taken out this writ for quashing these proceedings on the ground that the act and the rules and the assessment made thereunder are void and that the prosecution is illegal.

In writ petition no. 41 of 1952, the facts are similar. The petitioner is a licensed tanner of hides and skins doing business at eluru. He sent monthly returns of hides and skins purchased for tanning in from no. A - 4 and on the basis of these returns, an order was passed on 23rd february, 1951, determining the tax payable by him at rs. 4,407 - 7 - 0. After deducting rs. 1,805 - 3 - 4 which had been paid by the petitioner towards the amount of the tax, there was a balance of rs. 2,602 - 3 - 8 remaining payable by him and a notice for this amount under rule 15 (4) was duly served on him. The order of assessment was not taken in appeal and has become final. Nor was any action filed contesting its validity. Default having been made in the payment of the tax, proceedings were taken for its recovery under section 15 (b) of the act. These proceedings are now pending before the honorary first class magistrate, eluru, as c. C. No. 90 of 1951. The present writ has been writ has been filed for quashing those proceedings on the ground that the act and the rules and the assessment made thereunder are all void and that the prosecution is, therefore, illegal.

It is necessary, to begin with, to define what contentions are open to the petitioners in these proceedings. The madras general sales tax act which creates the liability to pay tax on sales also constitutes tribunals for determining the amount payable under the act and such determination has to be made after notice to the assessee and it is open to appeal and further to a revision. The petitioners were duly served with notice under the act and had ample opportunity of putting forward before the tribunals all contentions based on the provisions of the act or the rules. Not having done so, they cannot be permitted to put forward in these proceedings contentions which were available to them before the tribunals. The only pleas that are now open to them are those which could not have been urged before the tribunals. Such, for example, would be the plea that the act is ultra vires : such a plea could not obviously be entertained by a tribunal which owes its very existence to act. Mr. K. V. Venkatasubramania ayyar, the learned advocate who appeared for the petitioners, did not contest this position. But he argued that even on this section 16a should be declared void. It runs as follows : -

"the validity of the assessment of any tax, or of the levy of any fee a other amount, made under this act, or the liability of any person to pay any tax, fee or other amount so assessed or levied shall not be questioned in any criminal court in any prosecution or other proceeding, whether under this act or otherwise"

.

The contention is that the section prevents the petitioners from showing that they are not liable to be taxed under the act and is, therefore, opposed to rules of natural justice. There would have been substance in this objection, if the petitioners had been denied an opportunity of contesting the claim before an order of assessment was made. But where, as here, the tax is determined after notice to the assessees, it is not repugnant to rules of natural justice to provide that the validity of assessment shall not be questioned at the stage of realisation of the tax. The provision is analogous to the rule which precludes judgment - debtors from putting forward at the stage of execution of a decree defences that were open to them, in the suit itself. The law on the subject is thus summed up by rottschaefer in his work on constitutional law at page 686 : -

"the general rule is that due process requires that the taxpayer be accorded an opportunity to be heard at some stage in the proceedings before his liability is irrevocably fixed with respect to all matters the ascertainment of which involves the exercise of such administrative or quasi judicial functions, so far as those matters affect the existence or extent of his liability"

. (vide turner v. Wade (254 u. S. 64; 65 l. Ed. 134)) and again

"a taxpayer who fails to take advantage of the opportunity to be heard accorded him, loses his right to object to an assessment made against him"

: vide chicago, m. St. P. & p. R. Co. V. Risty (276 u. S. 567; 72 l. Ed. 703) and mcgregor v. Hogan (263 u. S. 234; 68 l. Ed. 282).

It is also well settled in america that where the assessment is not otherwise open to objection, laws which provide for their recovery in a speedy and summary manner are not liable to be assailed as unconstitutional. In state railroad tax cases (92 u. S. 575; 23 l. Ed. 663) the court observed : -

"it is a wise policy. It is founded in the simple philosophy derived from the experience of ages that the payment of taxes has to be enforced by summary and stringent means against a reluctant and often adverse sentiment and to do this successfully other instrumentalities and other modes of procedure are necessary than those which belong to courts of justice"

.

In springer v. United states (102 u. S. 586; 26 l. Ed. 253) the court stated : -

"the prompt payment of taxes is always important to the public welfare. It may be vital to the existence of the government. The idea that every taxpayer is entitled to the delays of litigation is unreasonable. If the laws here in question involve any wrong or unnecessary harshness it was for congress or the people who make the congresses to see the evil was corrected. The remedy does not lie with the judicial branch of the government. "

The contention that section 16 - a is opposed to natural justice must, therefore, be rejected.

Mr. K. V. Venkatasubramania ayyar urged that the madras general sales tax act was void on the following grounds : -

(1) the provincial legislature had no power under the government of india act of 1935 to enact a law imposing a tax on purchasers.

(2) the liability to pay a tax on sales is thrown on the purchaser not by the statute, but by the rules. This is an unconstitutional delegation by the legislature of its functions to the executive and the imposition of the tax is accordingly illegal.

(3) the act has become void under article 14 of the constitution, as it singles out for taxation purchasers in some trades and is, therefore, discriminatory.

(4) the rules framed under the act are inconsistent with the provisions enacted in the body of the act and are void.

Before dealing with these contentions, it will be convenient to set out the relevant provisions of the act. The preamble to the act declares that the object of the enactment is "to provide for the levy of a general tax on the sale of goods in the province of madras". Section 2 (b) defines a "dealer" as a person who carries on the business of buying or selling goods. "sale" is defined in section 2 (h) as meaning every transfer of the property in goods by one person to another in the course of trade or business. Section 2 (i) defines "turnover" as the aggregate amount for which goods are either bought or sold by a dealer. Section 3 which is the charging section runs as follows : -

Section 3. (1) "subject to the provisions of this act, (a) every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every rupee in such turnover. "

Sub - clauses (4) and (5) run as follows : -

" (4) for the purposes of this section and the other provisions of this act, turnover shall be determined in accordance with such rules as may be prescribed : provided that no such rules shall come into force unless they are approved by a resolution of the legislative assembly. (5) the taxes under sub - sections (1) and (2) shall be assessed, levied and collected in such manner and in such instalments, if any, as may be prescribed : provided that - (i) in respect of the same transaction of sale, the buyer or the seller, but not both, as determined by such rules as may be prescribed, shall be taxed; (ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him"

.

Section 5 (vi) is as follows : -

"subject to such restrictions and conditions as may be prescribed, including conditions as to licences and licence fees the sale of hides and skins, whether tanned or untanned, shall be liable to tax under section 3, sub - section (1) , only at such single point in the series of sales by successive dealers as may be prescribed"

.

Now to take up the first contention, the argument of the petitioners is that under the government of india act of 1935 which was the constitution act in force when the madras general sales tax act was enacted, the provincial legislature was not competent to impose a tax on purchasers. The power to legislate on this subject was conferred by entry 48 in the provincial list which runs as follows : -

"taxes on the sale of goods and on advertisements".

The argument on behalf of the petitioners is that the words "tax on the sale of goods" in this entry should be construed as meaning tax on the act of selling of goods and on that construction the legislature had no power to impose a tax on the act of purchasing of goods. Support for this contention is sought in the change in language in entry 54 in the state list of the constitution of india, 1950, which corresponds to entry 48 of the provincial list of the government of india act, 1935. Entry 54 is in these terms : "taxes on the sale or purchase of goods other than newspapers". It is argued that the change in the language proceeds on a recognition that "sale" in entry 48 does not include "purchase" and that, therefore, a tax on purchasers was beyond the legislative competence of the provincial legislature.

The words "sale of goods" import in their ordinary sense a transaction which results in change of ownership from one person to another. That must, by its very nature, be a bilateral transaction, with a seller on the one hand and a purchaser on the other. It is only when there is a contract to which both are parties that there can be a sale. A power to tax sale of goods is, therefore, in reality a power to tax the transaction and the power to tax the transaction carries with it the power to tax either party thereto. In madras province v. Boddu paidanna & sons ([1942] f. L. J. 61; 1 s. T. C. 104.) in discussing the scope of entry 48 gwyer, c. J. , observed as follows : -

"the tax on the sale of goods which the act assigns exclusively to the provincial legislature is a tax levied on the occasion of the sale of goods"

.

This construction accords with the views generally held by text - writers on the subject who treat taxes imposed on purchasers as sales tax and express the view that thought the might in the first instance be levied on the seller or purchaser, that might not be its ultimate incidence. Thus, dalton observes : "a tax on sales or on turnover is only a tax on the commodities sold or turned over (vide principles of public finance, 15th edition, page 40) ; and again "it makes no essential difference whether the tax is legally imposed on buyers or sellers, thought this may affect the length of time which will elapse before the process of shifting the direct money burden, or part of it, from one side to the other is completed. Every tax tends, for a time, to stick to where it falls". Nicks on public finance has the following : -

"the other big group of taxes which we have to consider is that consisting of the so - called gross income taxes, turnover taxes and general sales taxes. The british war - time purchases tax, however, belongs essentially to the same class of tax. Whatever that may be called and whatever the differences of detail, these taxes are essentially similar in effect. They are regarded by purchasers as additions to costs and are added to selling prices"

.

In the encyclopaedia of the social sciences by messrs. Seligman and johnson, vol. 13, at p. 517 the nature and scope of the sales tax are thus described : -

"sales taxes may be imposed upon total receipts, with deductions for returns, allowances and possible other items; upon the individual transaction; upon the privilege of conducting business, which is supposedly measured by sales; upon sales in general; or upon specified types of sale. Not only different jurisdictions but also the same jurisdiction may employ varying basis of taxation. Taxes may be collected from vendors in general or from a certain class or classes of vendors. Customarily the vendor rather than the vendee is liable for taxation, although both may be held responsible for proper payment of the tax"

.

Findlay shirras in his work on the science of public finance (volume 2, page 612) observes that in france doctors, lawyers, and other professional men are exempted from sales tax for the reason that the tax was always shifted to the consumer and, therefore, it was impolitic to tax professional men with businessmen. Vide also ratner on american taxation, page 404, where it is stated that there was agreement among economists "that the sale tax under normal conditions would be shifted to the consumers". These passages clearly show that the words "sales tax" are generally understood as importing a tax on the occasion of sale, that it is immaterial whether it is collected in the first instance from the sellers or the purchasers, for, eventually it would be passed on to the consumers, and that in either case it would be a tax on sales. It is in this sense that the words "tax on sales" would appear to have been used in entry no. 48. It is to be particularly remembered that it is a constitution act that has to be interpreted and "in interpreting a constituent or organic statute, that construction most beneficial to the widest amplitude of its powers must be adopted" : vide british coal corporation v. The king ([1935] a. C. 500 at p. 518.) and "that a constitution must not be construed in any narrow and pedantic sense" : vide james v. Commonwealth of australia ([1936] a. C. 578 at p. 614). It would be in accordance with these principles to hold that entry no. 48 in the provincial list is of sufficient amplitude to authorise the levy of a tax on purchasers and that the madras act ix of 1939 is intra vires of the powers of the madras legislature.

(2) it is next contended that even if the legislature had under entry 48 the power to tax either the seller or the purchaser, the decision to tax either the one or the other is a legislative act and that must be taken only by the legislature and cannot be delegated to the administration. It will be remembered that with reference to hides and skins, section 5 (vi) did not itself impose a tax on the purchaser, but it left it to the rules to determine on which point in the series of sales by successive dealers the tax should be levied. It is under rules 4 and 16 that the liability to pay the tax is thrown on the purchaser. Rule 4 is as follows : -

"rule 4. (1) save as provided in sub - rule (2) the gross turnover of a dealer for the purposes of these rules shall be the amount for which goods are sold by him.

(2) in the case of the undermentioned goods the gross turnover of a dealer for the purposes of these rules shall be the amount for which goods are bought by him.

(a) groundnut,

(b) cashew, (c) untanned hides and skins bought by a licensed tanner in the province, and

(d) untanned hides and skins exported outside the province by a licensed dealer in hides or skins. "

Rule 16 runs thus : -

Rules 16. (1) in the case of hides and skins the tax payable under section 3 (1) shall be levied in accordance with the provisions of this rule.

(2) no tax shall be levied on the sale of untanned hides or skins by a licensed dealer in hides or skins except at the stage at which such hides or skins are sold to a tanner in the province or are sold for export outside the province.

(i) in the case of all untanned hides or skins sold to a tanner in the province, the tax shall be levied from the tanner on the amount for which the hides or skins are bought by him.

(ii) in the case of all untanned hides or skins which are not sold to a tanner in the province but are exported outside the province, the tax shall be levied from the dealer who was the last dealer not exempt from taxation under section 3 (3) who buys them in the province, on the amount for which they were bought by him.

(3) sales by licensed dealers of hides or skins which have been tanned within the province shall be exempt from taxation provided that the hides or skins have been tanned in a tannery which has paid the tax leviable under the act. If such hides or skins have been tanned in a tannery which is exempt from taxation under section 3 (3) , the sale of such hides or skins shall be liable to taxation as under the next sub - rule below dealing with hides or skins tanned outside the province.

(4) sales by licensed dealers in hides or skins which have been tanned outside the province shall be exempt from taxation except at the stage of sale by the dealer who is the first dealer not exempt from taxation under section 3 (3) who sells them within the province. The tax shall be levied from such dealer on the amount for which he sells such hides or skins.

(5) sale of hides or skins by dealers other than licensed dealers in hides or skins shall, subject to the provisions of section 3, be liable to taxation on each occasion of sale".

It is argued on behalf of the petitioners that under article 265 "no tax shall be levied or collected except by authority of law", that it was the legislature alone that was competent to impose a tax and the delegation of this function to the administration was unconstitutional. Reliance was placed upon the decision of the court of appeal in attorney - general v. Wills united dairies, limited (37 t. L. R. 884). In the case the facts were that a food controller, acting under the defence of realm acts and regulations imposed a tax of two pence per gallon of milk as a condition for the issue of a licence to purchase milk in a certain area. The regulation conferred a power on the controller to issue orders for regulating the production, manufacture, distribution, supply, sale etc. Of milk and milk products. But no power was granted for imposing any charges. In holding that the impost was illegal, the court of appeal observed that no tax could be levied, unless it is authorised by the parliament and there being no such authority in the defence of realm acts and regulations, the levy was illegal. The following observations of atkin, l. J. , may be quoted : -

"in these circumstances, if an officer of the executive seeks to justify a charge upon the subject made for the use of the crown (which includes all the purpose of the public revenue) he must show, in clear terms, that parliament has authorised the particular charge. The intention of the legislature is to be inferred from the language used and the grant of powers may, thought not expressed, have to be implied as necessarily arising from the words of a statute. I am clearly of opinion that no such powers, and indeed no powers at all, of imposing of any such charge are given to the minister of food by the statutory provisions on which he relies. "

This decision was affirmed on appeal by the house of lords (vide 38 t. L. R. 780). It will be seen that the question discussed here was not the validity of delegated legislation but the existence of any legislating, direct or delegated, authorising the imposition of a tax. Neither the decision nor the observations quoted above are, therefore, of much assistance in the present case, there being clear and express imposition of tax under the madras act ix of 1939. On the other hand, there is an observation in the judgment of bankes, l. J. , bearing more directly on the point now under consideration. He stated : -

"it is conceivable that parliament which may pass legislation requiring the subject to pay money to the crown may also delegated its powers of imposing such payments to the executive. "

A direct decision on the point is the one reported in powell v. Appollo candle company limited ((1885) 10 app. Cas. 282). Under section 133 of the customs regulation act of 1879, the legislature of new south wales had conferred a power on the governor to impose a tax on certain articles of import. On a question as to whether the delegation of the powers of taxation to the governor by the legislature was legal, the privy council observed as follows : -

"it is argued that the tax in question has been imposed by the governor and not by the legislature who alone had power to impose it. But the duties levied under the order - in - council are really levied by the authority of the act under which the order is issued. The legislature has not parted with its perfect control over the governor, and has the power, of course, at any moment, of withdrawing or altering the power which they have entrusted to him. In these circumstances, their lordships are of opinion the judgment of the supreme court was wrong in declaring section 133 of the customs regulation act of 1879 to be beyond the power of the legislature. "

We may now turn to the american authorities cited by the petitioners. In panama refining co. V. Ryan (79 l. Ed. 446 (at p. 459)) , a congressional legislation conferred on the president power to prohibit the transportation of "hot oil" in inter - state and foreign commerce. The act contained no definition of the circumstances or conditions under which this power could be exercised. In striking down the legislation as unconstitutional delegation, hughes, c. J. , observed as follows : -

"the congress manifestly is not permitted to abdicate, or to transfer to others, the essential legislative functioning with which it is thus vested. Undoubtedly legislation must often be adapted to complex conditions involving a host of details with which the national legislature cannot deal directly. The constitution has never been regarded as denying to the congress the necessary resources of flexibility and practicality, which will enable it to perform its function in laying down policies and establishing standards, while leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the legislature is to apply. Without capacity to give authorizations of that sort we should have the anomaly of a legislative power which in many circumstances calling for its exertion would be but a futility. But the constituent recognition of the necessity and validity of such provisions, and the wide range of administrative which has been developed by means of that, cannot be allowed to obscure the limitations of the authority to delegate if our constitutional system is to be maintained. "

In schechter v. United states (79 l. Ed. 1570; 295 u. S. 495) a congress legislation provided that certain trade groups should have the power to frame "a code of fair competition" and that on approved by the president, it should have the force of law. This was held to be an unconstitutional delegation because the act contained no definition of "fair competition" and in the words of justice cardozo : -

"the delegated power of legislation which has found expression in this code is not canolized within banks that keep it from over - flowing. It is unconfined and vagrant. "

It is unnecessary to examine other american authorities bearing on the subject. The law is well - settled and may be summed up in two propositions : (1) the enunciation of policy is a matter exclusively within the competence of the legislature and incapable of delegation to other bodies; (2) it is not unconstitutional to entrust to special bodies the carrying out of the policies declared by the act and for that purpose to clothe them with authority to frame regulations within the framework of the act. Simple as are these proposition as statements of law, in their practical application they present complicated problems. It was observed by marshal, c. J. , in wayman v. Southard (23 u. S. 43; 6 l. Ed. 253 at 263) that : -

"the line has not been exactly drawn which separates those important subjects which must be entirely regulated by the legislature itself from those of less interest in which a general provision may be made and power given to those who are to act under such general provisions to fill up the details"

.

And the course of decisions has been to limit the region of the legislative policies within the narrowest bounds and enlarge the area which can be left to be administered by other bodies. Willis in his work on constitutional law at pp. 136 - 137 remarks : -

"it is a dogma (in harmony with our definition) that legislative power cannot be delegated either to other branches of the government or to independent boards or commissions or even back to the people; but the rule of the dogma has so many exceptions that it is difficult to decide whether the dogma or the exceptions state the true rule"

.

One of those exceptions is legislation entrusting to outside bodies the power to fix rates. Authority in america is uniform that such legislation is not invalid as constituting delegation of legislative power. In oregon r. And nav. Co. V. Campbell (230 u. S. 525; 57 l. Ed. 1604) , the question was whether a provision under the statute conferring upon a commission the power to fix the rates was valid. In upholding the enactment, the court observed : -

"the legislature has delegated to the commission the duty of fixing rates, which it does in aid of legislative action, or as an auxiliary to the exercise of the legislative functions. This the authorities all sanction as falling within the legislative power. There can exist no valid objection to conferring such authority upon an administrative board"

.

Vide also georgia r. & b. K. G. Co. V. Smith (128 u. S. 174; 32 l. Ed. 371) and united states v. Illinois central railroad company (291 u. S. 457; 78 l. Ed. 909). In j. W. Hampton, jr. & co. V. United states (276 u. S. 394; 72 l. Ed. 624) , a congress legislation had authorised the president to impose on articles of import such duty as he might determine with the aid of advisers. This provision was impugned as unconstitutional delegation. This contention was repelled and it was held that it was within the competence of the legislature to assign the work of fixing rates to administrative bodies. Thus, even according to the principles established in american decisions, the power entrusted to the rule - making authorities under the madras act cannot be held to be unconstitutional delegation.

The question how far the indian legislature was competent to delegate its powers to other bodies was considered by the privy council in the queen v. Burah ([1878] i. L. R. 4 cal. 172 (p. C.)) , and the king emperor v. Benoari lal sarma ([1945] f. C. R. 161; [1945] f. L. J. 1.) , and the decision was that such delegation was valid. In jatindra nath gupta v. The province of bihar ([1949] f. C. R. 595; [1949] f. L. J. 225) , a majority of judges held that the proviso to section 1 (3) of the bihar maintenance of public order act was ultra vires the powers of the bihar legislature as amounting to unconstitutional delegation of power. The question was again considered in reference under article 143 of the constitution of india ([1951] f. C. R. 747; [1951] s. C. J. 527) , and the decision of the majority was that the laws in question were not bad on the ground that there was delegation of legislative powers. Fazl ali, j. , summed up the conclusions as follows : -

" (1) the legislature must normally discharge its primary legislative function itself and not through others.

(2) once it is established that it has sovereign power within a certain sphere, it must follow as a corollary that it is free to legislate within that sphere in any way which appears to it to be the best way to give effect to its intention and policy in making a particular law, and that it way utilize any outside agency to any extent it finds necessary for doing things which it is unable to do itself or finds it inconvenient to do. In other words, it can do everything which is ancillary to and necessary for the full and effective exercise of its power of legislation.

(3) it cannot abdicate its legislative functions, and therefore while entrusting power to an outside agency, it must see that such agency acts as a subordinate authority and does not become parallel legislature.

(4). Therefore, there are only two main checks in this country on the power of the legislature to delegate, these being its goods sense and the principle that it should not cross the line beyond which delegation amounts to 'abdication and self - effacement. '"

Patanjali sastri, j. , as he then was, expressed the view that the legislature had the power to delegate even legislative functions, unless such a delegation was prohibited by the constitution and that

"the courts in this country cannot strike down an act of parliament as unconstitutional merely because parliament decides in a particular instance to entrust its legislative power to another in whom it has confidence, or, in other words, to exercise such power through its appointed instrumentality, however repugnant such entrustment may be to the democratic process. What may be regarded as politically undesirable is constitutionally competent"

.

Mukherjea, j. , observed : -

"provided the legislative policy is enunciated with sufficient clearness or a standard laid down the courts cannot and should not interfere with the discretion that undoubtedly rests with the legislature itself in determining the extent of delegation necessary in a particular case"

.

Das, j. , stated the position as follows : -

"if what the legislature does is legislation within the general scope of the affirmative words which give the power, and if it violates no express condition or restriction by which that power is limited, then it is not for the court to enquire further or to enlarge constructively those conditions or restrictions; that while the legislature is acting within its prescribed sphere there is, except as hereinafter stated, no degree of or limit to its power of delegation of its legislative power, it being for the legislature to determine how far it should seek the aid of subordinate agencies and how long it shall continue them and it is not for the court to prescribe any limit to the legislature's power of delegation, and that the power of delegation is, however, subject only to the qualification that the legislature may not abdicate or efface itself, that is to say, may not, without preserving its own capacity intact, create and endow with its own capacity a new legislative power not created or authorised by the act to which it owes its own existence"

.

Bose, j. , held that the principles laid down in the queen v. Burah ((1878) i. L. R. 4 cal. 172) as to the limits of valid delegation of legislative power were applicable to delegation of powers under the constitution.

Applying these principles it is impossible to hold that there is any abdication by the madras legislature of its functions in favour of the rule - making authority. In fact under section 3 (4) the rules were required to be placed before the legislative assembly and they are to come into force only after they were approved by a resolution of the assembly. In accordance with this provision the rules were first published on 18th july, 1939, for eliciting public opinion. On 3rd august, 1939, they were laid before the assembly and the proceedings of the house show that there was considerable debate over the provisions. After they were approved the rules were again published on 12th september, 1939, and actually came into force on 1st october, 1939. Mr. K. V. Venkatasubramania ayyar argued that the resolutions of legislative assemblies have not the force of laws and that, therefore, the rules must be judged on their own merits. That undoubtedly is so : vide dicey on law of the constitution, 9th edition, page 55, and the authorities cited there. But the question now is not whether the rules have independent force as a piece of legislation, but whether the legislature has, in leaving the matter to be determined by the rule - making authority, abdicated its functions. The fact that the rules are to come up for consideration before the house and that they are to come into force only after they are approved by a resolution of the house are sufficient to repel the contention that there has been abdication by the legislature. The following observations occurring in the judgment of fazl ali, j. , in reference under article 143 of the constitution of india ([1951] s. C. R. 747; [1951] s. C. J. 527, at p. 581.) may be quoted : -

"it may also be stated that in england 'delegated legislation' often requires the regulations or provisions made by the delegate authority to be laid before the parliament either in draft from or with the condition that they are not to operate till approved by parliament or with no further direction. The acts before us are certainly open to the comment that this valuable safeguard has not been observed, but it seems to me that however desirable the adoption of the safeguard and other safeguards which have been suggested from time to time may be, the validity of the acts, which has to be determined on purely legal considerations, cannot be affected by their absence"

.

In in re george edwin gray (57 s. C. R. Canada 150) , there was a war - time legislation conferring on the governor wide powers of issuing orders - in - council. By virtue of this power, the governor issued certain orders - in - council and they were approved by a resolution of the house. In dealing with the effect of resolution the chief justice observed : -

"there are obvious objections of a political character to the practice of executive legislation in this country because of local conditions. But these objections should have been urged when the regulations were submitted to parliament for its approval, or better still when the 'war measures act' was being discussed. Parliament was the delegating authority, and it was for that body to put any limitations on the power conferred upon the executive. I am not aware that the authority to pass these regulations was questioned by a vote in either house. "

Anglin, j. , observed as follows : -

"the fact that in the present case a resolution was adopted by both houses of parliament approving of the orders - in - council, while it does not add anything to their legal force as enactments, makes it abundantly clear that no attempt was made in this instance to take advantage of the powers conferred by section 6 of the 'war measures act' to pass legislation without the concurrence and approval of parliament"

.

In the present case, what the legislature has done is merely to authorise the rule - making authorities to carry out the policies enunciated in the statute and to fill up the details. The rules themselves are to come into operation only after they are approved by a resolution of the house. Far from effecting self - effacement, the legislature has retained complete control over the legislation and in fact it has exerted that control by introducing amendments of the act from time to time. It must, therefore, be held that the madras act ix of 1939 and the rules are not open to challenge on the ground of unconstitutional delegation.

(3) it is next contended on behalf of the petitioners that the provisions of the madras general sales tax act and the rules framed thereunder are discriminatory, in that they impose sales tax in some cases on the purchaser, while laying it on the sellers in other cases, that there is no rational basis for this differentiation and that it is repugnant to article 14 of the constitution and, therefore, void. This article is substantially based on section (i) of the 14th amendment to the american constitution which runs as follows : -

"no state shall. Deny to any person within its jurisdiction the equal protection of the laws".

Mr. K. V. Venkatasubramania ayyar quoted a number of american authorities and contended that on the principles enunciated therein the classification made in the madras general sales tax act and the rules must be held to be arbitrary and unconstitutional. There is no need to examine them in any great detail in view of the decisions of the supreme court in charanjit lal chowdhury v. Union of india ([1950] s. C. R. 869; [1951] s. C. J. 29) , state of bombay v. Balsara ([1951] s. C. R. 682; [1951] s. C. J. 478) , state of west bengal v. Sircar ([1952] s. C. R. 284; [1952] s. C. J. 55) , and kathi raning rawat v. The state of saurashtra ([1952] s. C. R. 435). The following principles may be taken to be well - established : (1) the guarantee of equal protection of laws does not require that the same law should be made applicable to all persons or that the law should have the same operation on all persons. It prohibits only an application of different laws to persons who are in similar circumstances.

"the guaranty of the 14th amendment of the equal protection of the laws is not a guaranty of equality of operation or application of a state legislation upon all citizens of state"

: stebbins v. Riley ( 268 u. S. 137; 69 l. Ed. 884 (at p. 888)).

"the purpose of the clause in respect of equal protection of the laws is to rest the rights of all persons upon the same rule under similar circumstances"

: frost v. Corporation commission (278 u. S. 515; 73 l. Ed. 483 (at p. 488)).

"it must be admitted that the guarantee against the denial of equal protection of laws does not mean that identically the same rules of law should be made applicable to all persons within the territory of india in spite of differences of circumstances and conditions. In other words, there should be no discrimination between one person and another, if as regards the subject - matter of the legislation their position is the same."

: per mukherjea, j. , in charanjit lal chowdhury v. Union of india ([1951] s. C. J. 29 (at p. 53)).

"the principle of equality does not mean that every law must have universal application for all person who are not by nature, attainment or circumstances in the same position and the varying needs of different classes of persons often require separate treatment. If a law deals equally with members of a well defined class, it is not obnoxious and it is not open to the charge of denial of equal protection on the ground that it has no application to other persons"

: per fazl ali, j. , in state of bombay v. Balsara ([1951] s. C. J. 478 (at p. 492)).

(2) the requirements as to equal protection of laws do not forbid legislative classifications, provided such classifications rest on some difference germane to the purpose of the statute.

"it must appear not only that a classification has been made but also that it is one based upon reasonable ground, some difference which bears a just and proper relation to the attempted classification and is not a mere arbitrary selection"

: gulf. C. & s. F. R. Co. V. Eills ( 165 u. S. 150; 41 l. Ed. 666 (at p. 672)).

"it is unnecessary to say that the equal protection of the laws required by the 14th amendment does not prevent the state from resorting to classification for the purpose of legislation. Numerous and familiar decisions of this court establish that they have a wide range of discretion in that regard. But the classification must be reasonable and not arbitrary and must rest upon some ground of difference having a fair and substantial relation to the object of the legislation so that all persons similarly circumstanced shall be treated alike"

: royster guano co. V. Virginia (253 u. S. 412; 64 l. Ed. 989 (at pp. 990 - 991)).

"the principle of equal protection does not take away from the state the power of classifying persons for legitimate purpose. While reasonable classification is permissible, such classification must be based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained and the classification cannot be made arbitrarily and without any substantial basis"

: per fazl ali, j. , in state of bombay v. Balsara ([1951] s. C. R. 682; [1951] s. C. J. 478).

(3) a classification cannot be upheld on purely fanciful grounds.

"we have no right to conjure up possible situations which might justify discriminations" : mayfower farms v. Ten eyek (297 u. S. 266; 80 l. Ed 675).

"discriminations are not to be supported by mere fanciful conjucture" : hartford s. B. I. & ins. Co. V. Harrison (301 u. S. 459; 31 l. Ed. 1223).

(4) with reference to taxing statutes the legislature has considerable latitude in making classifications. It can select such persons or things as it chooses for purposes of taxation.

"in such matters the state necessarily enjoy a wide range of discretion and it would require a clear case to justify the court in striking down a law that is uniformly applicable to all persons pursuing a given occupation on the ground that persons engaged in other occupations more or less like it ought to be similarly taxed"

: singer sewing machine v. Brickell (233 u. S. 304; 58. L. Ed. 974).

"the power of the state to classify to classify for purposes of taxation is of wide range and flexibility"

. Louisville gas & e. Co. V. Coleman (277 u. S. 32; 72 l. Ed. 770 (at p. 774)).

"the power of taxations is fundamental to the very existence of the government of the state. The restriction that it shall not be so exercised as to deny to any the equal protection of the laws does not compel the adoption of an iron rule of equal taxation in order to prevent variety or differences in taxation or discretion in the selection of subjects or the classification for taxation of properties, businesses, trades, callings or occupations"

: state board v. Jackson (283 u. S. 527; 75 l. Ed. 1248 (at pp. 1255 - 56)).

"the power to make distinctions exists with full vigour in the field of taxation where 'no iron rule' of equality has been enforced by the statutes"

: new york rapid transit corporation v. City of new york (303 u. S. 573; 82 l. Ed. 1024).

(5) taxing statutes must also satisfy the test of equal protection and are liable to be struck down, if they do not : vide southern railway v. Greene (216 u. S. 400; 54 l. Ed. 536).

"every taxing law must pass the constitutional test applied by the courts to the method of imposition"

: stewart dry goods c. V. Lewis (294 u. S. 550; 79 l. Ed. 1054).

(6) there is a strong presumption in favour of the validity of legislative classification and it is for those who challenge it as arbitrary and unconstitutional to establish it beyond all doubt.

"it must be presumed that a legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based upon adequate grounds"

: middleton v. Texas power and l. Company (248 u. S. 152; 63 l. Ed. 527).

"by reason of the presumption of validity which attends legislative and official action one who alleges unreasonable discrimination must carry the burden of showing it"

: concordia fire insurance company v. Illinois (292 u. S. 535; 78 l. Ed. 1411).

"it is a salutary principle of judicial decision long emphasised and followed by this court that the burden of establishing the unconstitutionality of a statute rests on him who assails it. A statutory discrimination will not be set aside as denial of equal protection of the laws if any state of facts reasonably may be conceived to justify it"

: metropolitan casualty insurance co. V. Brownell (294 u. S. 580; 79 l. Ed. 1070).

Willis in his work on constitutional law at page 579 states : -

"if any state of facts can reasonably be conceived to sustain a classification, the existence of that state of facts must be assumed. One who assails a classification must carry the burden of showing that it does not rest upon any reasonable basis. "

To the same effect are the observation of fazl ali, j. , at page 34 and of mukherjea, j. , at page 54 in charanjit lal choudhury v. Union of india ([1950] s. C. R. 869; [1951] s. C. J. 29).

Such being the principles, the question is whether there is anything in the madras general sales tax act and in the rules which offends article 14. The contention of the petitioners is that the singling out of purchasers of untanned hides and skins for taxation, while imposing tax on the sellers in most of the other businesses, cannot be justified on any ground pertinent to the purpose of the act, and that it is naked discrimination which is repugnant to article 14. The burden of establishing that the impugned provisions offend article 14 being on the petitioners, what are the materials which they have placed for discharging that burden ? none. They merely argue that on the face of the act, it does not appear that there is any difference between trade in untanned hides skins, and other trades in which purchasers are not taxed. That however is not sufficient. In metropolitan casualty insurance co. V. Brownell (294 u. S. 580; 79 l. Ed. 1070, at p. 1073) a statute of indiana enacted that agreements made by foreign insurance companies limiting the period within which claims could be made against them were to that extent unenforceable. In repelling the contention that this was discrimination, the court observed : -

"there is no showing that the situation of foreign corporations writing casualty insurance contracts in indiana is so similar to that of domestic corporations as to preclude any rational distinction between them as regards the times required for negotiating settlement of claims. Where the record is silent, we cannot presume to declare that there is such similarity, or to say that a state is prohibited from making any distinction in the length to time within which suit must be brought"

.

In charanjit lal chowdhury v. The union of india ([1950] s. C. R. 869; [1951] s. C. J. 29) fazl ali, j. , observed : -

"now, the petitioner has made no attempt to discharge the burden of proof to which i have referred, and we are merely asked to presume that there must necessarily be other companies also which would be open to the charge of mismanagement and negligence. "

And mukerjea, j. , stated : -

"throwing out of vague hints that there may be other instances of a similar nature is not enough for this purpose. We have not even before us any statement on oath by the petitioner that what has been alleged against this company may be said against other companies as well. "

The petitioners before us have not shown that the conditions in other trades are similar to those in the hides and skins business and in the absence of such showing it cannot be presumed in their favour that no such differences exist as would justify a differentiation. Conditions differ from trade to trade and, therefore, prima facie what applies to one trade may not necessarily apply to another. Indeed the records show that the trade in untanned hides and skins has certain special features peculiar to it. In the affidavits filed in support of these petitions, it is stated that the south indian hides and skins commands great popularity in the world markets being popularly known as "east india kips" and that there is considerable demand for them in foreign countries. The untanned hides and skins would either be tanned in this state or exported for tanning to foreign countries. As section 5 (vi) provides for a tax being imposed on untanned hides and skins only at a single point in the successive series of sales, rules 4 and 16 provide that this should be done at the stage of their being tanned or exported. It is intelligible that if the article which is to be taxed is liable to be converted into another kind of article by process of manufacture, the proper stage for imposing the tax should be when it is transformed into a different article. On this reasoning, the tax will fall on him who tans the hides and skins and there is, therefore, reason for making the person who purchases untanned hides and skins for the purpose of tanning liable for the tax. In like manner, when the articles are exported to foreign countries for tanning they might be taken to lose their character as untanned hides and skins in the hands of the exported and in reason, the dealer who purchases them for export should be treated on the same footing as a tanner who purchases them for tanning and tax imposed on him on the amount for which he purchased them. It is not without significance that the two other articles in respect of which the sales tax is levied on the purchaser under rule 4, viz. , groundnut and cashew, are also articles which are much in demand in foreign markets for being manufactured into other products. It would, therefore, appear that the trades in these articles have distinctive features which mark them off from others and it is impossible to hold that the differentiation in the matter of taxation has no relation to the nature of the trade. The learned advocate for the petitioners has been unable to suggest any reason why the legislature should have capriciously taxed the purchasers in some cases and the sellers in others. Even though the grounds of distinction are not manifest on the face of the statue, this is a fit case for invoking the presumption which the law raises in favour of legislative classification.

It was next urged that the presumption in favour of the validity of classification would arise only when it is made by the legislature and that such a presumption would not extend to a classification made by rule - making authorities and reliance was placed for this proposition on certain observations occurring in stebbins v. Riley (268 u. S. 137; 69 l. Ed. 884 at pp. 888, 889) and metropolitan casually insurance co. V. Brownell (294 u. S. 580; 79 l. Ed. 1070). In stebbins v. Riley (268 u. S. 137; 69 l. Ed. 884 at pp. 888, 889) , it was observed, that the basis of classification was

"not open to objection unless it precludes the assumption that the classification was made in the exercise of legislative judgment and discretion;"

and this passage was adopted in swiss oil corporation v. Shanks (273 u. S. 407; 71 l. Ed. 709 at p. 714). In metropolitan casualty insurance company v. Brownell (294 u. S. 580; 79 l. Ed. 1070) , it was observed : -

"that courts may not declare a legislative discrimination invalid, unless viewed in the light of facts made known or generally assumed, it is of such a character as to preclude the assumption that the classification rests upon some rational basis within the knowledge and experience of the legislators. "

It is argued on the basis of these observations that the presumption in favour of the validity of legislative classification could be made only when the legislature applies its mind to it and that such presumption is precluded when the classification is proved to have been made by the rule - making authority. But the point in controversy in these cases was not validity of classification made by the administration in contra - distinction to one made by the legislature. The question actually under consideration was how far classification made by a statute could be impugned as denying equal protection, without any differentiation between classification made in the stature itself and classification made by the administration acting under statutory powers. The legislative knowledge and experience referred to in these observations would include in the context not merely the knowledge and experience of the legislators but also of the members of the administrative body functioning under the legislation. It is worthy of note that in all the three decisions cited above the validity of classification was upheld. It is well - settled in america that the power to make classification could be exercised not by the legislature but also by administrative bodies acting under the act. In bradley v. Richmond (267 u. S. 477; 57 l. Ed. 603) , an ordinance imposed a tax on the conduct of various businesses and a power of classifying them was granted to a committee, which imposed different rates on different classes of bankers. It was held that the classification did not offend the provision of equal protection of the laws. In new york rapid transit corporation v. City of new york (303 u. S. 573; 82 l. Ed. 1024) , reed, j. , observed as follows : -

"no question is or could be made by the corporation as to the right of a state or a municipality with properly delegated powers to enact laws or ordinance passed on reasonable classification of the objects of the legislation or the persons whom it affects. "

In concordia fire insurance company v. Illinois (292 u. S. 535; 78 l. Ed. 1411) , the presumption of validity of classification was stated to applicable not merely to legislative but also official action. In the present case, there is the additional circumstance already referred to that under section 3 (4) the rules had to be, and were in fact, approved by a resolution of the legislative assembly and the classification can, therefore, be properly described as made with the knowledge and experience of the legislators.

And above all, there is the fact that the madras general sales tax act is a measure of taxation and in respect of taxing statutes, the legislature enjoys wide powers of classification. It has the power to determine which class of persons or properties shall be taxed and such determination is not open to question on the ground that the tax is not levied on all person or on all properties.

"a state does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation, if it does so reasonably."

(willis on constitutional law, page 587).

If it is competent to the legislature to select some commodities and impose tax on them and such imposition is not open to attack on the ground that it is not made on all commodities, a law imposing a tax only on the sale of hides and skins and making the purchaser liable therefor, could not be challenged under article 14 on the ground that purchasers of other commodities were not also taxed. If among the purchasers of hides skins a differentiation was made without a rational basis therefor, different considerations would arise. Here, there is one law of taxation made applicable to all purchasers in the same trade and such a measure is not open to attack under article 14. At any rate as observed in madden v. Kentucky (309 u. S. 83; 84 l. Ed. 590 (593)) ,

"in taxation even more than in other fields legislatures possess the greatest freedom in classification. The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it"

and that burden has not been discharged by the petitioners.

Considerable reliance was placed for the petitioners on the decision of the supreme court in state of west bengal v. Sircar ([1952] s. C. R. 284; [1952] s. C. J. 55) , in which it was decided by a majority that section 5 (1) of the west bengal special courts act (x of 1950) was void as being repugnant to article 14. Under that section power was conferred on the government to constitute special courts and to direct such offences or classes of offences or cases or classes of cases as the governments might order in writing, to be tried by such courts. The procedure prescribed for the trial of cases before the special courts was different from that which is prescribed by the criminal procedure code. The question was whether the power conferred on the government under section 5 (1) was discriminatory and opposed to article 14. It was held that it was. A reading of the judgments shows that the controversy was not so much about the principles applicable as to application of the principles to the facts of the case. This would be clear from the judgments of the supreme court in kathi raning rawat v. The state of sowrashtra ([1952] s. C. R. 435). The statute that was in question in that case was the sowrashtra state public safety ordinance (lxvi of 1949). Sections 9, 10 and 11 of the ordinance proceeded very much on the lines of the west bengal special courts act; it empowered the government to establish special courts and to direct offences to be tried by that court according to a special procedure prescribed by the act. But there were was one fundamental difference between the west bengal special courts act and the sowrashtra state public safety ordinance. Under the latter, the government had the power to direct only classes of offences or classes of cases to be tried by the special court, whereas in the former the power could be exercised with reference to individual cases. The court held by a majority that the sowrashtra state public safety ordinance was valid because the power to transfer cases to the special court could be exercised only with reference to classes of cases and that therefore there was classification such as would take the statute out of the operation of article 14. Applying these principle to the provisions of the madras general sales tax act and the rules, we are unable to agree with the petitioners that they offend article 14 of the constitution.

(4) it is finally contended that the rules framed under the act do not properly carry out the policy laid down therein and they are even inconsistent therewith and they are therefore void. To appreciate the true position it is necessary to examine the scheme of taxation which has been adopted in the rules with reference to untanned hides and skins. As already mentioned, these articles are much in demand in foreign markets and their export forms one of the main items in the foreign trade of this state. It also appears that this state enjoys considerable natural advantages for carrying on the business of tanning because the "avaram bark" which is specially suited for tanning grows in plenty in this state. The course of business appears to be that untanned hides and skins are acquired locally or by import from other states and are either tanned here or exported to foreign countries for tanning. In broad outline, the scheme of taxation adopted by the rules is to levy the tax at the stage when the articles are tanned in the state or exported to foreign countries for tanning. Thus, under rule 4 (2) (c) when a licensed tanner purchases untanned hides and skins for tanning, the amount for which he purchases the goods is to be included in his turnover and he is taxed thereon; and under rules 4 (2) (d) when a licensed dealer purchases untanned hides and skins for tanning, the amount for which he purchases the goods is to be included in his turnover and he is taxed thereon; and under rule 4 (2) (d) when a licensed dealer purchases untanned hides and skins for export, the amount for which he purchases would be included in his turnover and he would be taxed thereon. Then comes rules 16 which has come in for considerable criticism. Rule 16 (2) fixes in accordance with rule 4 the points of taxation at the stage of tanning or at the stage of export. But then, it limits the operation of this rule to sales by licensed dealers. It is this limitation that furnishes the ground for attack on the rules. To understand the objection it will be useful to analyse the possible cases which might arise on the application of rule 16 (2). Taking first the case of hides and skins which are tanned within the state, four possible situations might arise. There might be a sale by a licensed dealer either to a licensed tanner or to an unlicensed tanner; or there might be a sale by an unlicensed dealer either to a licensed tanner or to an unlicensed tanner. When the sale is by a licensed dealer, rule 16 (2) (i) provides for a tax being levied on the tanner whether he is licensed or unlicensed. But where the sale is by an unlicensed dealer, there is a difference in the incidence of taxation. If the sale is to a licensed tanner, then under rule 4 (2) (c) , the purchaser has to pay the tax. But where the sale is to an unlicensed tanner rule 4 (1) will apply and the tax fall on the seller. Rule 16 (5) provides that sale by dealers other than licensed dealers will be "liable to taxation on each occasion of sale. " under this sub - clause when there are successive sales by unlicensed dealers the tax will be leviable on such occasion of sale and that will be inconsistent with section 5 (vi) which provides for taxation at a single point.

Likewise when untanned hides and skins are exported, the last purchaser will be liable under rule 16 (2) (ii) whether he is a licensed dealer or unlicensed dealer, if he purchases from a licensed dealer. But if he purchases from an unlicensed dealer, but is himself a licensed dealer, he will be liable to pay the tax under rule 4 (2) (d). If there is a sale by an unlicensed dealer to an unlicensed dealer who exports the goods on whom does the tax fall ? under rule 4 (1) it is to be borne by the seller. Such a case will fall within the mischief of rule 16 (5) , if there are successive sales.

Now the contention of the petitioners is that where there are sales by unlicensed dealers to unlicensed tanners or unlicensed dealers, there is the possibility of taxation and that would be in violation of section 5 (vi). It is not disputed on behalf of the government that rules 16 (5) is repugnant to section 5 (vi). It must therefore he held to be ultra vires. But this can bring no relief to the petitioners, as they are all licensed tanners and are in no manner hurt by the operation of rule 16 (5). This was conceded the learned advocate for the petitioners.

Another contention against the validity of the rules was founded on the language of the forms which are prescribed under the rules for making returns as provided in rule 15. Form a - 4 is prescribed for tanners and it is intended to apply to the imposition of tax at the stage of tanning. From a - 5 is prescribed for dealers and is intended to apply for imposition of tax at the stage of export. In form a - 4, the third column is headed "amount for which hides and skins were purchased for tanning by the assessee". The criticism of the petitioners is based on the words "purchased for tanning". Their contention is that after purchasing hides and skins for tanning, the tanner might change his mind and sell them to a dealer and after successive sales those goods might be exported in which case the last purchaser will also be liable to pay the sales tax. The goods are thus taxed in the first instance when they are exported without having been tanned. This, it is argued, is multiple taxation and opposed to section 5 (vi). But when the matter is closely examined it will be found that there is no substance in this objection. When a tanner purchases the goods, he himself makes a return stating the amount for which he purchased hides and skins for tanning. If the goods are actually tanned, then no further liability for tax will arise. But if the tanner instead of tanning the goods sells them to the dealer, he is entitled under rules 15 (5) to deduct the purchase price paid for those goods in the return for the next month or to get a refund of the excess. Thus though there was initially a purchase by a tanner, when once he sells his untanned goods, he occupies the position of a dealer and he will not be liable under rule 16 (2) (i) and the matter will be governed by rule 16 (2) (ii). Thus there is no infringement of section 5 (vi) which provides for taxation on a single point.

It is also contended that it is wrong on principle that a tax should be levied before it is finally determined; that under section 3 (2) of the act the assessment should be only on the annual turnover and that, therefore, rule 15 (2) which provides for advance payments of tax every month before the liability to pay arises, which is only when the goods are actually tanned or exported is unconstitutional and that position is not altered by rule 15 (5) which provides for deduction of the amounts which turn out in the events not to have been payable in the returns for subsequent months. But advance payment of tax is a well - recognised feature in the mode of realising tax and the provision in rule 15 (2) is in accordance with the practice generally obtaining in this branch of the law. In discussing the validity of a somewhat similar provision in a taxing statute of southern iowa, the court observed : -

"it is of course true that as the report is required on the twentieth of the calendar month for transactions of the preceding month, there may at times be gasoline received in the month covered by the report which has not been exported by the twentieth of the succeeding month; but the distributor is entitled to a credit for such exportation in his report made in the next month, and the mere fact that he cannot claim an anticipatory credit for gasoline not yet exported, but intended so to be, seems to us to be too slight a burden to be of any moment, or to raise a substantial constitutional question"

: monamotor oil company v. Johnson ( 292 u. S. 86; 78 l. Ed. 1141 (1148)). The attack on rule 15 (2) must accordingly fail. It may be added that this contention is of academic interest so far as the petitioners are concerned, as it is admitted by them that they tanned all the goods purchased by them for tanning.

Lastly, it was argued that the rules make a distinction between licensed dealers and unlicensed dealers and that is an arbitrary distinction repugnant to article 14. A classification of merchants into those who take out licences and those who do not is one resting on a rational basis and must be upheld. Moreover, if it is a discrimination, it is one in favour of those who take out licences and against those who do not and it is difficult to see how the petitioners who are licence holders can make a complaint of it.

In the result it must be held that the provisions of the madras general sales tax act and the rules except rule 16 (5) are intra vires and valid not obnoxious to article 14. These petitions must accordingly be dismissed with costs.

Before concluding, we think it desirable to observe that some of the difficulties and anomalies which have been shown to exist in the working of the act could be avoided by making it compulsory that all tanners and dealers should take out licences and this is a matter which should engage the attention of the government.

Rajamannar, c. J. - i agree and have nothing to add.

Petitions dismissed.