S. K.DAS, J.: - (1.) THE following Judgment of the court was delivered by
(2.) THIS is an appeal by special leave from the judgment and order of the High court of Madhya Pradesh dated 14/12/1959, by which the said High court quashed an assessment of sales tax made against the respondent for the assessment year 1956-57. The appellant before us are the State of the Madhya Pradesh, the Commissioner of Sales Tax, Madhya Pradesh. 'and the Sales Tax Officer, Circle No.2, Indore. We may first state the circumstances under which the respondent was assessed to sales tax and the reasons for which the High court quashed the, said assessment. The respondent carried on the business of importing and selling different types of footwear in the State of Madhya Pradesh under the name and style of Munwar Shoe Company, Indore. During the assessment year 1956-57 the taxable turnover of the goods sold by the respondent was determined to be a little over Rs. 60,000.00 , and he was assessed to sales tax on his taxable turnover in accordance with item 32 Sch.3 of the notification dated 24/10/1953 issued under s. 5 of the Madhya Bharat Sales Tax Act, 1950 (Act 30 of 1950) 'hereinafter referred to as the Act). Section 3 of the Act is the charging section which imposes the tax. Section 4(3) empowers the government to grant exemption by means of a notification in respect of the sale of any goods or class of goods. Section 5 of the Act fixes the rate of tax and states that the tax payable by a dealer under the Act shall be a single point. It permits the State Government to notify the goods and the point of their sale at which the tax is payable. Item 32 of Sch. 3 of the notification referred to above was in these terms. JUDGEMENT_1237_AIR(SC)_1963Html1.htm Though the item in question made all leather goods and all shoes, chappal etc. liable to sales tax at the point of sale by the importer or manufacturer, an exemption was granted in respect of certain sales of footwear by means of notification issued under s. 4 (3) of the Act. We may now refer to these notifications. The first notification was dated 27/05/1955 and was in these terms: 'In exercise of the powers conferred by section 4(3) of Madhya Bharat Sales Tax Act, Samvat 2007 the Rajpramukh has passed order exempting from the payment of sales tax, all such shoes, the selling price of which does not exceed rupees to per pair and such country shoes which are prepared by the manufacturer himself and for the production of which power is not used in any stage if the same are sold by the Manufacturer himself or any member of his family.' This notification was later superseded by another notification dated 28/01/1956, which read as follows: 'In exercise of the powers conferred by section 4, sub-section(3) of the Madhya Bharat Sales Tax Act, Samvat 2007 the Rajpramukh in supersession of the notification No. 59(c)(t) P.R. 412-54, dated 27/5/1955 of this department has exempted from the payment of sales tax, in case of sale by the manufacturer or any member of his family, the sale of all such shoes, chappals, country shoes and footwears which are hand-made and which are not manufactured on power machine and whose sale price does not exceed Rs. 12.80 .' The respondent contended before the Sale Tax Officer that he was not liable to pay any sales tax on the sale of hand-made shoes, chappal and other type of footwear whose sale price did not exceed Rs. 12.80 per pair on the ground that such footwear was exempt from tax by reason of the notification dated 28/01/1956. The Sales Tax Officer negatived this contention. He pointed out in his order dated 25/03/1958 that the condition laid down in the notification to the effect that the sale must be by the manufacturer or any member of his family was not fulfilled, and as the respondent was an importer and dealer of footwear and not the manufacturer or a member of the family of the manufacturer, he was not entitled to claim any exemption under the notification. Consequently the Sales Tax Officer passed an order assessing sales tax on the total turnover of the respondent. The respondent then moved the High court of Madhya Pradesh by means of a petition under Art. 226 of the Constitution and in that petition the respondent said that the notification dated 28/01/1956, exempted from tax all sales of footwear which fulfilled the following to conditions, viz., (a) such footwear was hand-made and not manufactured on power machine, and (b) the sale price whereof did not exceed Rs. 12.80 per pair. The respondent further averred that if the exemption were held to be in favour of sales by a manufacturer or a member of his family and not sales by an importer, then the notification would be discriminatory in nature and would contravene the provisions of Art. 304(a) of the Constitution. On these grounds the respondent prayed that the assessment order dated 25/03/1958, be quashed and the Sales Tax Officer be directed to 'exempt from tax such sales by the respondent as were covered by the exemption granted by the notification dated 28/01/1956. In their reply to the writ petition the appellants pointed 'out that the notification dated 28/01/1956 did not in any way discriminate between footwear manufactured or produced in the State of Madhya Pradesh and footwear imported from outside, because the conditions laid down in the notification were equally applicable to both types of goods and one of these conditions was that the sale which was to be exempted from tax must be by the manufacturer or a member of his family.
(3.) THE High court accepted the petition of the respondent and held that the respondent's contention that hand-made shoes, chappals and footwear purchased by him directly from the manufacturer outside the State and imported by him for sale were entitled to exemption under the notification dated 28/01/1956, must prevail. THE High court said: 'What that notification does is to exempt from sales tax the sale of hand-made chappals shoes, footwear 'and country shoes if the price of the article sold does not exceed Rs. 12.80 and if it is sold by the manufacturer or any member of his family. It makes no difference whether the sale is by the manufacturer within the State directly to the purchaser or whether it is by the manufacturer outside the state to the importer who then sells it to the purchaser. THE notification is, no doubt, not clearly worded. x x x x x x THE notification has to be read in consonance with the provisions of Article 301 of the Constitution. So read, it must be held that the exemption applies to hand-made shoes, chappals etc., whether made within or outside the State if the other conditions mentioned in the notification are satisfied.' Accordingly, the High court quashed the assessment dated 25/03/1958, and directed the Sales Tax Officer to make a fresh assessment in the light of the decision of the High court. On behalf of the appellants it has been contended before us that the interpretation which the High court put on the notification dated 28/01/1956, is not correct. We think that this contention is right and must be accepted. The notification clearly lays down three conditions for the grant of exemption: one of the conditions is that the sale must be of such shoes, chappals, country shoes and footwear as are hand-made and not manufactured on power machine; the second condition is that the sale price must not exceed Rs. 1,218.00 ; and the third condition is that the sale mast be by the manufacturer or any member of his family. The notification when it uses the expression 'in case of sale' must refer to the sale which is being exempted from tax in the State; in other words, it has reference to the taxable event in the State as per Sch. 3 of the notification dated 24/10/1953. That notification makes it clear that the tax is a single point tax, and the taxable event is the sale by the importer or manufacturer in the State. Therefore, the expression ',in case of sale' in the exemption notification can have no reference to 'a sale outside the State,. The High court was in error when it said that, it made no difference whether the sale was by the manufacturer within the State directly to the purchaser or whether the sale was by the manufacturer outside the State to the importer who then sold the shoes to the 'purchaser in the State. When a manufacturer sells shoes outside the State to an importer And the importer again sells shoes in the State, there are really two sales, one outside the State and one inside it. The sales outside the State are not taxable under the Act and the notification of 28/01/1956, has no reference to such sales. When the notification uses the expression ',in case of sale by the manufacturer or a member of his family', it has reference to such sales as would come but for the exemption within item 32 of Sch. 3 of the notification dated 24/10/1953. If the interpretation put by the High court is correct, then the practical effect will be to obliterate one of the conditions laid down in the notification, namely, that the sale, which is the taxable event, must be by the manufacturer or any member of his family. We do not think that the notification is capable of such an interpretation. All the three conditions laid down in the notification must be fulfilled before the exemption referred to therein can be claimed and we cannot, by interpretation, delete one of the conditions.;