TMI Blog1977 (5) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion referred to us. The applicant, a registered dealer, was assessed on sales worth Rs. 6,906.26 in respect of the spare cycle parts purchased from another registered dealer exempted from payment of tax under a Government Notification No. F. (134) E T/58-1 dated 1st January, 1960, in the assessment year 1960-61 by the Sales Tax Officer, Jaipur City, Circle A. The Sales Tax Officer was of the view that the manufacturer-dealer alone could claim exemption under the aforesaid Government notification dated 1st January, 1960, and the first point of tax devolved upon the applicant-assessee. The applicant, being aggrieved, went in appeal before the learned Deputy Commissioner, Commercial Taxation (Appeals), who held that the first point in the series of sales was in the hands of the manufacturer-registered dealer and so no sales tax could be charged on the sales effected by him. It was now the turn of the department which took the matter by way of revision before the Board of Revenue. The Board of Revenue accepted the revision and set aside the order of the Deputy Commissioner, Commercial Taxation (Appeals), and restored that of the assessing authority. The Division Bench of the Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich no tax is leviable under this Act, (ii) which have already been subject to tax under this Act, (iii) which have been sold to persons outside the State for consumption outside the State, and (iv) which are taxable at the last point and have been sold to registered dealers for the purpose of resale within the State." Section 4 of the Act provides that the Act will not apply to certain sales. A relevant portion of this section may be reproduced as under: "4. Act not to apply to certain sales.-(1) No tax shall be payable under this Act on the sale or purchase of any of the exempted goods if the conditions specified in column 3 of the Schedule are satisfied. (2) Where the State Government is of the opinion that it is necessary or expedient in the public interest so to do, the State Government may, by notification in the official Gazette, exempt from tax the sale or purchase of any goods or class of goods or any person or class of persons on such conditions and on payment of such fee as may be specified in the notification.........." Then comes section 5 of the Act. It reads as under: "5. Rate of tax.-The tax payable by a dealer under this Act shall be at such single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn that nothing contained in rule 15 shall be construed as affecting any exemption granted by or under section 4. Section 4 empowers the Government to exempt certain goods from the levy of sales tax. A combined reading of sub-rules (1) and (3) of rule 15 leads to an irresistible conclusion that merely because the goods are exempt in the hands of the manufacturer that will not shift the point of tax in the series of sale. Sub-rule (3) of rule 15 of the Rules is of great significance inasmuch as it clearly says that nothing in rule 15 shall be construed as affecting any exemption granted by section 4 of the Act. Further, in the explanation clause in rule 15, the rule-making authority has specifically clarified that the expression "the first point in the series of sales" means the first sale in such series by a registered dealer. The explanation in this behalf does not make any limitation as to the category of sale. Merely because the first sale is exempted is hardly of any significance while reckoning the first point in the series of sales, in view of the explanation incorporated in rule 15. Had the legislature intended otherwise then it would not have provided the explanation in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court should not depart from the view taken by the Division Bench. We have carefully examined the Division Bench case(2) relied upon by Dr. Tewari, but, we regret, we cannot endorse the line of reasoning adopted in that case. In the Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh's case(2), the Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh, hereinafter to be referred as the Sangh, was a registered dealer under the Act. The Sangh had purchased cereals from certain registered dealers in Ganganagar, who were exempt on the basis of exemption certificates held by them. The Sangh claimed that it was not liable to sales tax under the Act. The Sales Tax Officer, however, disallowed its claim and held that the sales pertaining to the cereals were also taxable. The assessment order passed by the Sales Tax Officer was challenged by way of a writ petition before the Division Bench of this Court. In the writ petition, it was contended that as the Sangh had purchased the cereals from Ganganagar and Bharatpur dealers, who held exemption certificates, they were not liable to pay the sales tax. This contention was overruled. The Division Bench speaking through Kan Singh, J., observed that: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hand, if the Crown seeking to recover the tax cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be. In Banarsi Debi v. Income-tax Officer[1964] 53 I.T.R. 100 (S.C.); A.I.R. 1964 S.C. 1742., Subba Rao, J., speaking for the court, ruled as follows: "Before construing the section it will be useful to notice the relevant rules of construction of a fiscal statute. In Oriental Bank Corporation v. Wright[1880] 5 App. Cas. 842 at 856., the Judicial Committee held that if a statute professed to impose a charge, the intention to impose a charge upon a subject must be shown by clear and unambiguous language. In Canadian Eagle Oil Co. v. R.[1946] A.C. 119 at 140., Viscount Simon, L.C., observed: 'In the words of Rowlatt, J., ...... in a taxing Act one has to look at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.' In other words, a taxing statute must be couched in express and unambiguous language. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not warrant such shifting. To us it is clear that rule 15 is comprehensive so as to embrace in its fold all sales irrespective of whether they have been actually subject to payment of tax or not. The first point in the series of sales therefore has no relation to its actual taxability as has been ruled by the Division Bench. With great respect to the learned Judges, we regret to say that the decision in the Nagaur Sahar Kendriya Sahakari Kar Vikraya Sangh's case[1968] 21 S.T.C. 114. , so far as it relates to converting the second point sale to a first point is concerned, is not a good law and we are constrained to overrule it. We are supported in our view by the decisions of the Madras High Court and the Allahadad High Court reported in A.K. Munuswamy Mudaliar Co. v. State of Madras[1956] 7 S.T.C. 1. and Barjatya Traders v. Sales Tax Officer[1968] 21 S.T.C. 197. respectively. In the A.K. Munuswamy Mudaliar Co.'s case(2), the assessees were licensed tanners and dealers in hides and skins. They purchased raw hides and skins outside the State and were exempt under the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. The sales tax authorities held that the hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of the subsequent dealers and whether subsequent dealers should also hold exemption certificate to save themselves from payment of tax. The Commissioner after examining the question observed as follows: "That the scheme of our sales tax law is first stage single point and the first stage or point has been defined as the first sale by a registered dealer. As such the sale of goods by a dealer in a series of sales subsequent to the first sale by a registered dealer would not be taxable. As the liability to pay the tax is exhausted at the stage of sale by the first registered dealer, who enjoys exemption, the subsequent dealer in the series of sales cannot be made liable to tax and, since the subsequent dealers are not liable to tax at all, there is no obligation on them to obtain exemption certificate for the sale of such goods." In view of the circular of the Commissioner, Excise and Taxation, it has been contended by Mr. Mehta that there is no scope for interpreting the rule in any other manner excepting the one interpreted by the Commissioner. The learned counsel for the department, however, contends that the Commissioner's circular has no force of law. It is true that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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