HARLAL BADRINARAIN Vs. STATE OF RAJASTHAN

JUDGEMENT

(1.) THIS revision application is directed against the assessment order of the Sales Tax Officer; Jaipur dated 10. 9. 57 whereby the applicant was assessed to Tax for the year 1956-57 in respect of hat-ware cloth other than hand-loom. The assessment order states that it was found that the applicant deals in hatware cloth purchased through commission agents from local chipas. It is the contention of the applicant that he is not liable to tax in respect of his turn-ever as according to him he is not the first point dealer. We have, therefore, to examine this contention in the light of the relevant provisions of Rajasthan Sales Tax Act and the Rules made thereunder. Sec. 5 of the Act runs as follows: "the tax payable by a dealer under this Act shall be at such single point in the series of sales by successive dealers as may be prescribed and shall be levied at the rate of 4 percent on the taxable turnover. " Rule 15 sub-rule (1) of the Rules says that: "the tax payable under the Act shall be at the first point in the series of sales and this sub-rule shall apply to all dealers, including manufacturers and importers and applies to all goods. " THIS is further qualified by sub-rule (3) of this Rule which says that 'nothing in these rules shall be construed as affecting any exemption granted by or under sec. 4 of the Act. On 25. 4. 57 an Explanation was added to this rule which says that: "for the purpose of this rule, the expression "the first point in the series of sales" means the first sale in such series by a registered dealer. " It is the contention of the applicant that this explanation cannot be applied retrospectively as the assessment in question relates to the period before this explanation was notified. We shall first examine the position independently of this explanation. Sec. 5 of the Act begins with the words "the tax payable by a dealer under this Act. " THIS governing expression makes it quite clear that the sec. does not refer to every dealer but only to such dealers as are liable to be taxed. Sec. 3 of the Act specifies the limits of 'turn-over' which if exceeded render the dealer liable to pay tax. Sub-rule (3) of r. 15 says that nothing in these rules shall be construed as affecting any exemption granted by or u/sec. 4 meaning thereby that dealers or goods exempted from tax u/s. 4 of the Act shall not be liable to tax. Therefore, Rule 15 (1) clearly refers only to such dealers and goods as are not exempted from tax under sec. 4 of the Act, and in determining the first point in the series of sales of taxable goods those dealers who are exempted under sec. 4 are not to be reckoned at all. By this reasoning, persons who are not liable to pay tax under sec. 3 of the Act because of their turn-over falling short to the specified limits are also not to be reckoned in the series of dealers within the meaning of R. 15 read with section 4. THIS interpretation of ours is supported by the Explanation dated 24. 5. 57- We consider that this explanation is not an amendment in or addition to the scope of the Rules, but merely an elucidation or clarification. By applying the above reasoning to the present case, the tax is leviable from the first among such dealers who may be liable to pay the tax in terms of sec. 3 of the Act and are not exempt under sec. 4. The learned Sales Tax Officer should have first determined whether the dealers who preceded the applicant in the series of sales of hatware cloth were exempt under sec. 4 or were otherwise not liable to pay tax in terms of sec. 3 of the Act. THIS has not been done, and in the absence of such a determination, it is not possible to decide whether the present applicant is indeed the dealer who is liable to pay tax at the first point of sale. We, therefore, accept this revision application and set aside the order of the learned Sales Tax Officer to the extent that it required the applicant to pay tax in respect of hatware cloth other than handloom cloth. The case will now go back to the learned Sales Tax Officer for a fresh decision on this point according to law, and in the light of the observations made by us above. .