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TMI Blog1965 (2) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rules as ultra vires in Syed Mohamed Co. v. The State of Madras[1952] 3 S.T.C. 367. This impelled the Government to omit sub-rule (5) of rule 16 from the Statute Book. Sometime later, i.e., on 3rd September, 1955, the Government substituted a new rule with effect from 1st April, 1955, abolishing the distinction between licensed and unlicensed dealers. While matters stood thus, the Supreme Court rendered judgment in State of Madras v. Noor Mohamed Co.[1960] 11 S.T.C. 570. , reversing the decision of the Madras High Court in Noor Mohamed Co. v. State of Madras[1956] 7 S.T.C. 792., and upholding the validity of rule 16(5). Basing himself upon this pronouncement of the Supreme Court, the Deputy Commissioner of Commercial Taxes sought to revise the assessment proceedings of the concerned Commercial Tax Officer. For this purpose, he issued a notice under section 32 to the assessee to show cause why the order of the assessing authority should not be revised. It is to prohibit the Deputy Commissioner of Commercial Taxes from proceeding further in this behalf that the writ petition giving rise to this appeal was presented. The argument advanced on behalf of the appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contravention or non-observance took place, may be assessed to tax or taxes under section 3, as if the provisions of section 5 or of the notification under section 6, as the case may be, did not apply to such sales and notwithstanding that a licence, if any, taken out or renewed by the dealer continued or continues to be in force during the year." As contemplated by section 3 and pursuant to the power conferred on the State Government, rules were framed, called "The Madras General Sales Tax (Turnover and Assessment) Rules", of which rule 16 is one, and also "The Madras General Sales Tax Rules". Rule 16, it must be incidentally mentioned, satisfies the requirements of section 5(vi) of the Act. Rule 16, as it originally stood, read as follows: "16. (1) In the case of hides and skins the tax payable under section 3(1) shall be levied in accordance with the provisions of this rule. (2) No tax shall be levied on the sale of untanned hides or skins by a licensed dealer in hides or skins except at the stage at which such hides or skins are sold to a tanner in the State or are sold for export outside the State. (i) In the case of all untanned hides or skins sold to a tanner in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be levied from a person who is the first dealer in such hides or skins not exempt from taxation under section 3(3) on the amount for which they are sold by him. Provided that, if he proves that the tax has already been levied under sub-rule (1) on the raw hides and skins out of which the dressed hides and skins had been produced, he shall not be so liable. (3) The burden of proving that a transaction is not liable to taxation under this rule shall be on the dealer." It appears from the above narration that, at the relevant period, i.e., between 1st April, 1954, and 31st March, 1955, there was no provision in the rule covering the case of an unlicensed dealer, since sub-rule (5) had been omitted on 26th February, 1954, and new rule was introduced in September, 1955, with effect from 1st April, 1955. This appeal is concerned with the effect of hiatus. Before we proceed with this enquiry further, it is necessary to refer to rule 5 of the General Sales Tax Rules, which enacts thus: "5. (1) Every person who(a) deals in cotton and/or cotton yarn other than handspun yarn, or (b) deals exclusively in cloth woven on handlooms wholly with handspun yarn, or (c) deals in cloth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. We do not think we can accede to this proposition. A consideration of the several statutory provisions extracted above can lead to only one inference, viz., that it is not by virtue of rule 16(5) that the taxability of an unlicensed dealer in hides and skins is determined, but it is by reason of the Act and the Rules framed thereunder. Taxes on sales and purchases are imposed under section 3 of the enactment. Under that provision, all sales and purchases, as the case may be, are subject to multiple taxation. Thus, the general rule is the multi-point. But certain exceptions are created to this rule under section 3 read with section 5, the former of which commences with the words "subject to the provisions of this Act." In order that a dealer in hides and skins may avail himself of the benefits envisaged in sub-section (vi) of section 5, he should satisfy certain conditions, i.e., conditions prescribed in the relevant rules, rule 5 being relevant in this behalf. This result flows from the language of section 5, which says: "Subject to such restrictions and conditions." If the conditions enumerated in the relevant rules are not satisfied, the concerned dealer could not get the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 16(5) was enacted by the Government obviously with a view to bring prominently to the notice of the unlicensed dealers that failure to get a licence would put them to certain disabilities and it was not intended that this rule should take the place of, and substitute, the statutory provisions in this behalf. That being so, it is not the presence or the absence of provision that decides the question as to the liability of unlicensed dealer to pay tax on his turnover. Thus, the judgment of the Supreme Court has placed this matter beyond a shadow of doubt. Abdul Salam and Co. v. Government of Madras[1962] 13 S.T.C. 629., which was called in aid by learned counsel for the appellant, does not interpret State of Madras v. Noor Mohamed Co.[1960] 11 S.T.C. 570. in a way different from what we have done. It does not support the proposition of Sri Srinivasan that unlicensed dealers could escape liability for payment of tax for the period when there was no provision in the Turnover and Assessment Rules to cover the case of an unlicensed dealer. On the other hand, the learned Judges have referred to the passage in the judgment of the Supreme Court which we have already extracted, viz. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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