1. ' The petitioner-Company manufactures electric fans. It was a licensee under section 8 (1) of the Sales Tax Act upon June 1965. Thereafter, licence was refused to the petitioner on the ground that the electric fans ceased to be taxable. The result of the non-issuance of the licence to the petitioner is that it has ever since been paying sales tax on such partly manufactured goods as are concurred in the production of the electric fans. All its attempts to persuade the authorities to issue licence to it and also to refund the sales tax so far paid on such partly manufactured goods having failed, it has invoked the jurisdiction of this Court under Article 199 of the Constitution.
2. The contentions of the learned counsel for the petitioner are manifold. The first contention is that the rule in pursuance of which licence has been refused has not only been misconstrued by the authorities but the rule itself is ultra vires the Sales Tax Act. The relevant rule is No, 4 of Sales Tax Rules, 1951. Sub-rule (4) thereof reads as follows:- "4.-(4) the Sales Tax Officer shall, if he is satisfied that the application is correct and complete in all respects and the prescribed fee has been deposited, pass an order in writing granting a licence and issue a licence in Form SS. T. 3 (R)."
2. ' In view of this sub-rule, the learned counsel for the petitioner asserts that the application made by the petitioner being correct and complete in all respects and the prescribed fee having been deposited, there was no option left for the Sales Tax Officer but to issue the licence. But the case of the department is that unless all the conditions mentioned in sub-rule (1) of rule 4 are satisfied, the licence cannot be issued. In the context of the present case, they insist that since electric fans ceased to be taxable, clause (c) (1) of sub-rule (1) of rule 4 operated against the issuance of licence. For the convenience of reference the said clause (c) is reproduced here to the extent it is relevant:-
(c) Such application shall contain verification as under:-
(1) that the applicant is a Iona fide manufacturer of taxable goods."
3. Now, the learned counsel for the petitioner contends that it is wrong to hold that electric fans have ceased to be taxable goods within the meaning of clause (c) of rule 4 (1). According to him, the fans are still taxable under section 3 of the Act. According to him, it is a different matter that the manufacturers have been exempted from paying the tax on them. He has sought to draw a distinction between taxability and payability. He further contends that under subsection (2) of section 8, as it stood before 1972, the Central Government has the power to grant exemption from the payment of tax to any class of manufacturers or producers and not the manufactured goods themselves as such.
3. ' In the present case, it is an admitted fact that it is the electric fans that have been exempted and not the manufacturers of electric fans as a class of manufacturers or producers. But regardless of the section mentioned by the authorities in the order granting exemption, it is to be noted that under section 7 (1) the Federal Government had the authority to exempt any goods or class of goods from the tax payable under the Act. In order to appreciate the issue raised by the learned counsel for the petitioner, it is necessary that sections 7 and 8 be properly interpreted in juxtaposition with each other. For the convenience of reference again subsection (1) of section 7 and subsection (2) of section 8 are reproduced below:- "7. (1) The Federal Government may by notification in the official Gazette, exempt any goods or class of goods (or any person or class of persons) from the tax payable under this Act, and may also, by notification as aforesaid, make a reduction in the rate of tax leviable in respect of any goods or class of goods (or any person or class of persons)." "8. (2) The Central Government may grant any class of manufacturer or producer exemption from the payment of the tax on goods manufactured or produced by him and no person who is a member of a class so exempted shall be given a licence."
4. A comparison of the two provisions will clearly show that while under) section 7 (1) not only any goods or class of goods but also any person or clans of persons can be exempted from payment of tax under the Act, under section 8 (2) only a class of manufacturers or producers can be exempted. The distinction between the two provisions is evident. The goods can be exempted only under the former and not under the latter. Further, under the former any person or class of persons dealing in any manufactured goods liable to be taxed under the Act can also be exempted. But under the latter it is not any person or class of persons but only a class of manufacturers or produce that can be exempted with reference to a certain manufactured goocle.
5. ' My reading of these provisions, therefore, leads me to the conclusion tha where certain manufactured goods have been exempted from tax, the exemption must be deemed to have been granted miler section 7 (1). And that will affect all persons connected there with according to the provisions applicable to them respectively. However, if the goods are not exempted but only class of persons, e. g. And only the sellers of the go xis are exempted then in my opinion, the goods remain taxable bat the tax is not payable by the sellers. In such a case a valid distinction between taxability and payability can be drawn. Further, the exemption grante I to the sellers alone can have no bearing on the liability of the manufacturers. Taus, while the sellers will remain exempt from payment of tax, the manufacturers may still have to pay tax on those goods. Similarly, if the manufacturers alone are exempted from tax, it can perhaps be said that while tax is not payable by the manufacturers the goods are still taxable and a class of persons dealing in such goods other than the manufacturers are still bible to pay tax. But sine in the present case the electric fans themes Ives have been exempted, the petitioner-Company comes squarely under the purview of clause (c) (1) of rule 4 (1) as a manufacturer of non-taxable goods.
6. ' I am, therefore, of the view that no fault can be found with the departmental interpretation of the said sub-rule of rule 4 read with sub-rule (4) thereof.
7. ' As to the vires of rule 4, it is to be noted that according to subsection (4) of section 39 of the Act, rules made under the authority of that section have effect as if enacted under this Act. In view of this provision of law, the learned counsel for the respondents argues that the vires of the rules cannot be questioned. But the contention of the learned counsel for the petitioner is that unless the rule is validly and competently ma le, it cannot be conferred the status of a legislative enactment by virtue of subsection (4) of section 39.
8. ' In my opinion, however, if the contention of the latter be accepted, subsection (4) of section 39 becomes almost redundant. For, any statutory rule has even otherwise the force of law so long as it is competently and validly made. This means that once it is held to be intra vires and not in conflict with the Parent Act, it has the same effect as if enacted under that Act. Therefore, it seems that if subsection (4) of section 39 is to bear a meaningful interpretation, the Courts have no alternative but to hold that the rules made under section 39 are immune to the challenge made on the grounds that they are beyond the scope of the Act or in conflict with any provision thereof. Thus a rule which is apparently beyond the scope of the Parent Act will be deemed to have expanded the scope thereof. And if there is a conflict between a rule and a section of the Act, then the conflict will have to be resolved as though it is a conflict between one section and another of the same Act.
9. Therefore, even if the condition contained in clause (c) (0 of rule 4 (1) be beyond the scope of section 8, it cannot be struck down as ultra vires the Act. It can only be construed as having expanded the scope of section 8 with the result that not only in case where a class of manufacturers or pro. Ducers has been exempted from payment of tax on goods manufactured or produced but also in case where the goods themselves are no longer taxable, the manufacturer or producer will not be entitled to the licence stipulated in section 8.
10. ' The second contention of the learned counsel for the petitioner is that although the electric fans were exempted from sales tax by the Notification dated 14th of June 1965, the sales tax continues nevertheless to be levied in the garb of the excise duty. According to him the Finance Minister while piloting the relevant finance bill, made it clear in his speech that the intention was in fact to merge the sales tax and the rehabilitation tax with the excise duty. In the light of this speech, he contends that the sales tax has not been abolished but it is still being recovered in the form of excise duty.
11. ' In my opinion, however, such speeches are meant for the consumption of the lay public but cannot have any effect on the legal consquences of the relevant enactments, the rules made thereunder or the notifications issued in pursuance thereof. Excise duty is levied under a different Act altogether. The Sales Tax Act is independent of it. If sales tax is abolished under the Sale Tax Act, then it will react on all the relevant provisions of that Act even though the excise duty may have been enhanced, under the relevant Act, by exactly the same amount as the tax previously recoverable under the Sales Tax Act. So, in the present case due effect will have to be given to the fact that electric fans have been exempted from the sales tax under the Sales Tax Act. Therefore, under the provisions of that Act, the petitioner is not entitled to a licence under section 8 thereof and as such to the exemption from payment of tax on the raw material or the partly manufactured goods.
12. ' For the foregoing reasons I am of the view that there is no good ground for interference with the refusal of the respondents either to grant a licence or to refund the tax so far paid by the petitioner on the partly manufactured goods.
13. ' It may further be noted that the petitioner's application for licence was rejected for the first time in the year 1965. It was open to the petitioner to challenge the decision of the respondents at that time. However, he failed to have recourse to the law. He applied again for licence in the years 1969, 1970 are 1971 in vain. It is true that these applications have not borne first to this date. But this inaction on the part of the authorities concerned was itself actionable. The failure of the petitioner to act promptly in the matter argues against him.
14. In view of this circumstance the petition is clearly hit by laches. Regardless of whether the respondents raised this objection in the written statement or not, the Court may refuse to grant a discretionary relief under Article 199 of the Constitution if the petitioner is found t be negligent in seeking it. The fact that the wrong sought to be red; eased is a continuing one does not in the circumstances of this case detract from the effect of laches.
15. ' The writ petition is accordingly dismissed. The parties shall, however, bear their own costs.