- (1.) THESE are two revision applications by the dealer, M/s. Kanakmal Roopchand of Ajmer, under Section 14 (2) of the Rajasthan Sales Tax Act, against orders dated 5. 6. 67 and 30. 5. 67 by the Deputy Commissioner Commercial Taxes (Appeals) Ajmer, in respect of assessments for the periods 21. 7. 63 to 9 8. 64 and 10. 8. 64 to 30. 7. 65 respectively.
(2.) THE dealer had purchased 'utensils' from the Govindgarh Kansara Sahakari Samiti (a Cooperative Society) and sold them, such sales during these periods amounting respectively to Rs. 2557. 49 and Rs 2422. 96. THE Cooperative Society enjoyed exemption from sales tax in respect of its sales of utensils. THE assessing authority held the sales of the said utensils made by the present dealer to be taxable and the Dy. Commissioner upheld the assessment order. The notification dated 14. 4. 55. under which the Cooperative Society enjoyed exemption, contained the following words in this respect - "hand made utensils made of any metal when sold by the maker of such utensils himself or by any other member of his family, provided the maker of the utensils does not employ paid labour or use power at any stage for making the utensils; or when sold by a Cooperative Society registered under law. " Learned counsel for the dealer argued that Govt. 's intention was to exempt hand. made utensils. They would, but for the exemption, have been taxable at the first point. That point having been exhausted at the hands of the Cooperative Society, which enjoyed exemption, the sales of utensils could not be taxed at any later point in the scries of sales. He referred to "state of Rajasthan vs. Rathulal Badrilal" (1967 RRD 353) in support of his contention. This was also a case relating to sales of utensils by a dealer, who had purchased them from a Cooperative Society holding an exemption certificate. It was held in the judgment that the dealer was not in the circumstances liable to tax on the sales of the utensils by him. The departmental representative argued that by the notification relating to the exemption, sale of hand. made utensils by particular classes of dealers, as defined and delimited therein, had been exempted; it was not as if hand-made utensils had been exempted as a class of goods. Government's intention was to make the exemption available only by certain classes of dealers and not others. He further argued that under clauses (1) and (11) of Section 2 (5) of the RST Act only sales of goods (1) on which no tax is leviable under the Act, or (2) which have already been subjected to tax under the Act, could be deducted from a dealer's turnover in working out his 'taxable turnover'. The utensils in the present case had not 'already been subjected to tax* In view of his earlier argument (para 6), they were also not goods on which no tax was leviable. There was no reason therefore, why they should not be treated as part of the dealer's taxable turnover. He referred to the Rajasthan High Court judgment in 1968 XXI STC 114 (N. S. K. . S. Kraya Vikraya Sangh vs. State of Rajasthan) in which it was held in similar circumstances (though not pertaining to utensils as in the present case) that taxability arose after the goods had come into the hands of the dealer subsequent to the exempted dealer and sales by the former would be taxable. The Board itself, he said, had reconsidered the view taken in the S. B. judgment in 1967 RRD 353 (cited by learned counsel for the dealer) in the light of the High Court judgment in 'm. S. K. S. Kraya Vikraya Sangh vs. State of Rajasthan and in a D. B. judgment in 'state of Rajastan vs. Cycle Hat' (1968 RRD 433) decided that the said S. B. judgment 'state of Raj. vs. Nathulal Bidrilal' (1967 RRD 353) no longer held good. In the D. B. judgment the case related to the sale of Cycle parts purchased from a manufacturer thereof, who enjoyed exemption, and the circumstances were, therefore, similar to those in the present case. In this rejoiner, learned counsel for the dealer said that the High Court judgment in 1968 XXI STC 1?4 related to a case for the period 1. 7. 60 to 30. 6. 61 Rule 15 relating to point of tax had, however, been amended by a notification dated 28. 6 61. The rule as it stood before amendment read as follows - "15. Point of Tax. (1) Subject to the provisions of sub r. (2) 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. (2) The tax in respect of the sale of such goods as may be notified in this behalf by the Government, shall be payable at the last point in the series of sales. (3) Nothing in these rules shall be construed as affecting any exemption granted by or under Section 4. Explanation: - 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, and the expression 'the last point in the series of sales' means the last sale in such series to an unregistered dealer or a consumer, or to a registered dealer for purposes other than resale within the states". The amended rule, on the other hand, reads as follows - "15. Point of Taxation - Unless otherwise directed by the State Government by a Notification in the Official Gazette, the tax payable under the Act shall be at the first point in the successive dealers. Explanation - For the purpose of these rule, the first point in the sales, means the first sale in such series by a registered dealer and the second and subsequent points shall be determined accordingly while the last point in the series of such sale shall be the last sale in such series to an unregistered dealer or to a consumer or to a registered dealer for purposes other than resale within the State. " Learned counsel argued that the omission of sub-rule (3) had made a substantial difference and the judgment in 1968 XXI STC 114 would not, therefore, apply to the present case which related to the period from 21. 7. 63 to 30. 7 65. The point relating to omission of former sub-rule (3) of Rule 15, raised by learned counsel for the dealer in his rejoinder was, in fact, taken in the SB judgment in 1967 R. R. D 353 already referred to. The relevant observation in the judgment was us follows - "22 I have shown above, this sub-clause (3) has now been deleted. The very fact that this sub-clause has been deleted and an explanation added to Rule 15, which makes it very clear that the first point sale would be a sale to an unregistered dealer or a consumer, makes it clear that the intention of the Legislature was that if goods or class of goods or person or class of persons have been exempted in public interest under Section 4 (2) of the Act, they were not to be charged sales tax at any subsequent stage if the tax leviable on them was at the first stage". ,
(3.) THE learned member referred to the addition of the Explanation, because he was considering an earlier shape of the rule. THE explanation referred to by him and reproduced in para 11 above was inserted by an amendment dated 25. 4. 57 prior to the amendment dated 28 6. 61, which omitted sub rule (3), and retained the Explanation, suitably amended in consequence of the changes in the rule. For the period 25. 4. 57 to 27. 6. 61, the sub-rule and the Explanation in the form reproduced in para 11 existed together. THE addition of the Explanation was not, exemption for "goods or class of goods or persons or class of persons", as if all these were in the same category. THEre is, however, manifest difference between an exemption in respect of a particular class of goods, as such and by whomsoever sold, and an exemption for the sale of the goods by a particular class of dealers. While the first category of exemption would be available at all stages in the series of sales irrespective of who sells them, the second category would be available only for sales by those dealers who fall in the particular class. As very correctly pointed out by the departmental representative, the exemption in respect of hand-made utensils is not for hand made utensils, as such, without condition. It is available only "when sold" by the makers thereof or their families subject to certain conditions or by registered Cooperative Societies. As already observed by me, the exemption would be limited by its terms and would exhaust itself at the point at which it is available. It can not affect the liability of other dealers, arising from the operation of various Sections of the Act. My conclusion above is in accordance with the view taken in the DB judgment in 1968 RRD 433. It is true that the effect of the deletion of Sub-Rule (3) of Rule 15 was not discussed in that judgment, but in view of my observations regarding that aspect, the ruling in 1968 RRD 433 does in no way loose force. The revision applications are in consequence rejected. .;