RAMAKRISHNAN, J.

This appeal under the Letters Patent is filed against the judgment of Ganapatia Pillai, J., in W.P. No. 104 of 1959. The facts necessary for disposal of this appeal are succinctly the following :

One Purushothama Raju conducted a business known as the All India Trading Company, and he was the sole proprietor. He was assessed to sales tax, in respect of his turnover for 1948-49 and 1949-50, the dates of the assessment being 20th March, 1950, and 30th March, 1951. The assessee paid some amounts towards the sales tax thus determined, but there remained substantial arrears for 1948-49 (Rs. 3, 836-4-0) and for 1949-50 (Rs. 1, 218-1-9). The department took coercive steps including prosecution, to collect the arrears from the aforesaid assessee, but the proceedings were not pursued after the criminal proceedings were dropped on 10th December, 1955. Thereafter, on 5th October, 1956, the assessee transferred his business for a consideration of Rs. 25, 000 by a registered instrument to one Sukraj Peerajee, the petitioner in the writ petition as well as the appellant before us. By a notice dated 17th April, 1957, the Deputy Commercial Tax Officer, Park Town, Madras, called upon the petitioner to pay the arrears. The petitioner denied his liability, but his contentions were overruled and his appeals to the Commercial Tax Officer as well as to the Board of Revenue were dismissed. For the purpose of imposing the liability on the petitioner, the sales tax department relied upon rule 21-A of the rules framed under the Madras General Sales Tax Act, 1939, which is in the following terms :

"When the ownership of the business of a dealer liable to pay the tax under the Act is entirely transferred, any tax payable in respect of such business and remaining unpaid at the time of the transfer shall be recoverable from the transferor or the transferee as if they were the dealers liable to pay such tax, provided that the recovery from the transferee of the arrears of taxes due prior to the date of the transfer shall be only to the extent of the value of the business he obtained by transfer. The transferee shall also be liable to pay tax under the Act on the sales of goods effected by him with effect from the date of such transfer and shall within thirty days of the transfer apply for registration or licence, as the case may be, unless he already holds a certificate of registration or licence, as the case may be." *

This rule was issued by the State Government in Government Order No. 477, Revenue, dated 2nd March, 1954.

Ganapatia Pillai, J., who heard the writ petition, dismissed it. It was urged by the petitioner before him that the liability to pay sales tax is imposed by the Act on the individual who carries on the business, and this liability could not be enforced against another, unless there was privity or devolution of interest. When rule 21-A sought to shift this liability to the transferee of the dealer who effected the sales, it involved a contravention of the statute and must therefore be struck down as ultra vires to that extent. Ganapatia Pillai. J., held,

"What is taxed under the Act is really the transaction of sale and that is the subject-matter of the tax. But who is the person that is called upon to pay the tax may vary in individual instances." *

He also observed that it might not be correct to say that in every instance of payment of sales tax, the incidence of the taxation fell only upon the trader who was responsible for the transaction of sale and not upon the successor of that trader. The learned Judge further observed :

"Apart from the question whether section 19(2)(c) of Act IX of 1939 would cover a case of collection of tax already levied from the purchaser of the business, I would, though with some hesitation, hold that section 19(1) of the Act would give power to the State Government to make the rule in question, as the collection of the tax already lawfully levied under the Act is one of the purposes of the Act, and the Government have power to make rules to carry out all the purposes of the Act." *

For these reasons, he held the rule to be valid. Secondly, the learned Judge came to the conclusion that on a true construction of the instrument of transfer, the transferee undertook to pay the liabilities of transferor, which would include the liability to sales tax accrued due, and that that finding would be sufficient to dismiss the claim of the petitioner, that the levy upon him was illegal. The writ petition was dismissed and the petitioner has appealed before us.Both the above points which were found against the petitioner by Ganapatia Pillai, J., were the subject-matter of attack before us by the learned counsel for the appellant. In our opinion, this attack is well-founded, and the appellant is entitled to succeed. We give our reasons below :

We will take up the first point about the invalidity of rule 21-A. This rule appears to have been framed by the State Government under the rule-making power granted to it under section 19(1) and (2) of the 1939 Act. We must point out initially that the Act we are considering in this case is the Sales Tax Act of 1939 before its amendment in 1959. Reference in this judgment will be made throughout only to the old Act. Section 3(1) of the Act is the charging section. It imposes a liability to pay sales tax on every dealer for each year, and the tax is to be calculated on his total turnover for that year. The word "dealer" is defined in section 2(b) of the Act, to mean any person who carries on the business of buying or selling goods. The word "turnover" is also the subject-matter of definition in section 2(i) of the Act, as the aggregate amount for which goods are either bought or sold by a dealer. Therefore the crux of the liability to sales tax is that it is imposed on a person defined as dealer, and it is calculated on the quantum of his turnover during the year of assessment. No doubt, the word "dealer" would include a seller or a purchaser, both of whom are parties to a given transaction of sale.

A person who has purchased the business as a whole from a dealer, can obviously be assessed to sales tax only in respect of his turnover. Under the scheme of the charging provision of the Act, he has nothing to do with the sales effected by his transferor. The turnover in respect of such sales remains the turnover of the transferor, and not that of the transferee, except in so far as the Act itself provides for a different construction. But until the sales tax was amended in 1959 (vide section 27 of Act I of 1959) such a provision did not find a place in the enactment. Rule 21-A introduced a provision for this purpose in 1954 by a notification of the State Government issued under its rule-making power. This rule which has been extracted above, by a fiction, constituted the transferee of the business, a dealer liable to pay the tax in respect of the turnover of the transferor. In effect, this legal fiction added an amendment to the definition of "dealer" in the Act. The State Government relied upon section 19(1) and 19(2)(c) of the Act, for giving it power to frame such a rule. Ganapatia Pillai, J., stated that, though with some hesitation, he would hold that section 19(1) empowered the State Government to make the aforesaid rule. Section 19(1) of the Act empowers the State Government to make rules to carry out the purposes of the Act. But such authority cannot be utilized to amplify the definition of a dealer in the Act, so as to constitute by a legal fiction some other person as a dealer, who does not fall within the definition of a dealer in the Act. In making a notification of the above kind the State Government clearly did not further the purposes of the Act, and acted beyond the scope of its rule-making power.As regards section 19(2)(c) of the Act, it does not help the Government Pleader, who relied on it before us. Actually the learned Judge (Ganapatia Pillai, J.) did not rely upon section 19(2)(c) for upholding the rule. The reason is plain. Section 19(2) of the Act gives a list of situations wherein the power under section 19(1) can be exercised by the State Government for framing rules. section 19(2)(c) deals with the assessment to tax of businesses which are discontinued or the ownership of which has changed. The word "assessment", in the scheme of income-tax legislation, is a term of varying import. It is used sometimes to mean the computation of income, sometimes the determination of the amount of tax payable, and sometimes the whole procedure laid down in the Act for imposing liability on the taxpayer. As the Privy Council pointed out in Seth Badridas Daga v. Commissioner of Income-tax the words "assess" and "assessment" refer primarily to the computation of the amount of income. Similarly, in Whitney v. Commissioners of Inland Revenue ( 1926 AC 37 at p. 52), Lord Dunedin observed :

"Now, there are three stages in the imposition of a tax : there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That ex hypothesi has already been fixed. But assessment particularises the exact sum which a person liable has to pay ....." *

These principles laid down in the application of the Income-tax Act can also be extended to the General Sales Tax Act. Therefore, the word "assessment" used in section 19(2)(c) cannot be equated to the determination of the person, who has to incur the liability to pay the sales tax. It is presumably after realising that rule 21-A went far beyond the rule-making power of the Government, that, when the Sales Tax Act was amended in 1959, the Legislature thought it fit to embody a suitable provision in the statute itself. Thus the rule is clearly beyond the rule-making power of the Government whether under section 19(1) or section 19(2)(c) of the Act.We will briefly refer, before parting with the case, to an argument of the learned Government Pleader, based upon certain observations of the Supreme Court in Pandit Banarsi Das v. State of Madhya Pradesh At page 394 of the report, there is an observation

"that it is not unconstitutional for the Legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be levied, the rates at which it is to be charged in respect of different classes of goods, and the like." *

The learned Judge (Ganapatia Pillai, J.) apparently had this principle in mind when he observed that the person that is called upon to pay the tax under the scheme of the Madras General Sales Tax Act may vary in individual instances, and he referred to the instances where sales tax is made payable by the purchaser and in other cases where it is made payable by the trader who sells the article. But it is to be remembered that under the General Sales Tax Act, the definition of "sale" includes both sale as well as purchase; the definition of a "dealer" includes both seller and the purchaser; and the definition of "turnover" includes both sale turnover and purchase turnover. When the Legislature left it to the Government to decide as to whether the seller or the purchaser should be taxed in respect of a given transaction of sale, it was not conferring on the State Government any power to alter the definition in the statute, but it granted power to the Government to decide whether in the circumstances of the trade in regard to a particular commodity, the incidence of tax should fall on the purchaser or on the seller in respect of a transaction of sale. Such a delegation of power can be easily distinguished from the framing of rule 21-A, where the rule-making authority, in substance, has proceeded to enlarge the definition of "dealer" in the Act itself. Such a rule is obviously beyond the power of the rule-making authority, and requires to be struck down by this Court.The next argument, based upon the instrument of transfer, is easily met. The deed is silent about the sales tax liability. The learned Judge (Ganapatia Pillai, J.) observed that on true construction of the deed, the transferee undertook to pay not only Schedule I liabilities but also other liabilities. By implication, the learned Judge held that the other liabilities would include accrued sales tax liabilities, and that this would be a reason for realising the tax from the transferee. But it has to be pointed out, that a deed inter vivos between the transferor and the transferee does not create a liability between the State on the one hand and the transferee on the other. If such a liability has to be deduced; it will also carry with it the several obligations regarding the submission of returns, the liability to penalties, and also the liability to submit to coercive steps for its realisation provided in the statute. All these cannot be created by an instrument inter vivos between the parties. Therefore, even if the instrument of transfer provided for the payment of sales tax by the transferee that will not enable the taxing authority to rely on it for making an assessment on the transferee and imposing on him the several penalties and obligations, which the statute provides for.

For the aforesaid reasons, we are of the opinion that the appellant is entitled to succeed. We allow the appeal and make the rule nisi absolute. The appellant will be entitled to his costs throughout.