1967 (2) TMI 91 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the explanation appended to Rule 15 of the Rajasthan Sales Tax Rules, 1955.
2. Whether the explanation to Rule 15 contradicts the provisions of the Rajasthan Sales Tax Act, 1954.
3. Liability of the petitioner for sales tax on cereals purchased from exempt dealers and government departments.

Issue-wise Detailed Analysis:

1. Validity of the Explanation Appended to Rule 15 of the Rajasthan Sales Tax Rules, 1955:
The petitioner, a registered dealer under the Rajasthan Sales Tax Act, 1954, challenged the validity of the explanation appended to Rule 15 of the Rajasthan Sales Tax Rules, 1955. The explanation defines "the first point in the series of sales" as the first sale by a registered dealer and "the last point in the series of sales" as the last sale to an unregistered dealer or consumer. The petitioner argued that this explanation limits the levy of tax to the first sale by a registered dealer only, which contradicts the Act's provisions.

2. Whether the Explanation to Rule 15 Contradicts the Provisions of the Rajasthan Sales Tax Act, 1954:
The court analyzed the relevant provisions of the Act and the Rules, particularly Sections 2(f), 3, 5, and 26 of the Act. Section 5 of the Act prescribes that tax is payable at a single point in the series of sales by successive dealers, and the point of incidence for tax can be prescribed by the rules. The court concluded that the explanation to Rule 15 does not contradict Section 5 of the Act. It merely provides a basis for the realization of tax at the first sale by a registered dealer, which facilitates tax recovery without precluding the liability of preceding dealers if they are liable under the Act.

3. Liability of the Petitioner for Sales Tax on Cereals Purchased from Exempt Dealers and Government Departments:
The petitioner claimed exemption from sales tax on cereals purchased from dealers holding exemption certificates and from government departments. The court noted that the dealers from Ganganagar and Bharatpur had exemption certificates, and thus, their sales were not taxable. However, the court held that the mere fact that these dealers were exempt does not mean they were not the first sellers. The taxability arose only after the goods came into the petitioner's hands.

Regarding sales from government departments, the court emphasized that it was necessary to show that these departments were "dealers" under Section 2(f) of the Act, which requires carrying on business with a view to earning profit. The petitioner failed to provide sufficient evidence that the government departments were carrying on business. Therefore, the court concluded that there was no preceding dealer liable for tax before the goods came into the petitioner's possession.

Conclusion:
The court found no inconsistency between the explanation to Rule 15 and the provisions of the Rajasthan Sales Tax Act, 1954. The explanation facilitates tax recovery without relieving the liability of other dealers. The petitioner's contention regarding exemption from sales tax on cereals purchased from exempt dealers and government departments was not upheld due to the lack of sufficient evidence. Consequently, the writ petition was dismissed, and the assessment order against the petitioner was upheld. The parties were directed to bear their own costs.

Petition dismissed.